NEW HOUSES

Evening Post, Volume CXXII, Issue 134, 3 December 1936, Page 10

NEW HOUSES

GOVERNMENT PLAN

BUYING MATERIALS

MERCHANTS' REQUEST

Information, regarding the purchase of materials for the houses to be built under the Government housing scheme was sought by a deputation representing building merchants and allied trades, which waited on the Prime Minister (the Rt. Hon. M. J. Savage) and Mr. J. A. Lee, Parliamentary Under-Secretary in charge of the housing scheme, today. Mr. A. Tyndall, Director of Housing, was present. The deputation asked that purchases be made through the usual channels.

An assurance was given to the deputation that the Government desired the good will and co-operation of those engaged in and associated with the building industry, but it was stated that prices charged would, and must be, an important factor in determining the extent of the utilisation of such services. At the same time it was pointed out that if the prices were considered uneconomic and it was felt a saving could be effected by entering into an agreement with a group of producers, the Government did not intend to forgo that right. Mr. Lee said, however, that he thought the bulk of the material would come through the ordinary trade channels. In respect of the initial contracts it was not their intention to buy a single commodity.

The ■ deputation represented hard-' ware merchants, plumbers' merchants, timber merchants, glass, oil, and colour merchants, and electrical traders in, Auckland, Wellington, Christchurch, Dunedin, and Invercargill—about 200 merchant houses on whom, it was stated, some 10,000 employees were dependent. There were also represented allied trades, such as master builders, master plumbers, and master painters. Mr. H. M. Taylor, Christchurch, was the spokesman.

"The deputation," said Mr. Taylor, "seeks information regarding the purchasing of materials for the houses to be built under the Government housing scheme. The system in operation in the building trade in New Zealand is that merchants take'the whole output of manufacturers and sell to builders and contractors as required. This enables the manufacturers to concentrate solely on manufacturing and their selling prices are consequently lower than if they had"*to market their own products. In effect, this system enables the manufacturer to specialise in manufacturing and the merchant to specialise in marketing the products. As merchants, we feel we. can definitely render a service to the Government and we are here to offer that service.

"We are pleased that the Government has reduced the size of groups for which it is calling tenders to twenty, but suggest that groups of ten houses would enable smaller firms to,tender. We presume that by reducing the size of groups it is the Government's intention to spread the work among a number of contractors instead of one or two. ! ELIMINATING THE MERCHANT? , "It has been stated in, the Press that the Government intends to eliminate the merchant and: deal direct with the manufacturer. We consider that if the Government does this it is doing an injustice to the merchants of this country. Hence this'deputation. "We ask that purchases for the Gov- , ernment housing scheme be , made through the usual channels and we feel sure that if this is done the Government, will soon appreciate the services rendered by the firms represented here today."

Replying first to the suggestion that the size of the groups of houses should be reduced, Mr. Lee said that twenty was not the maximum, and if one contractor tendered for the whole of the groups of twenties and his price was the best possible price, he would get the job. That was the principle the members of the deputation applied in their own businesses every day. The groups obviously would be smaller in the smaller towns, but,he did not think a group of twenty was too small in relation to 400 houses. A BEDROCK PRICE. Dealing with the question of the purchase of materials, Mr. Lee said that what the Department had in mind was this: contractors would be asked to specify a price for the houses and they would be asked to make out a schedule showing the rate they expected to pay for nearly all; the commodities that went into the house. If the Department coujd secure an agreement with any group of producers that made it obvious that materials could be obtained at a much cheaper rate than that specified by the contractor, his tender would be adjusted accordingly. AIJ though it would take time and would not happen in regard to the first contracts,' the Department 'eventually hoped to be able to get a bedrock price for every essential going into the houses to be built. It would not be reasonable to ask the Government, which was going to spend five millions on housing, not to attempt to come to some agreement with manufacturers. The Department, continued Mr. Lee, would not be buying the material in the first instance. It wanted an understanding from manufacturers before their article was specified that that article was going to be available at a reasonable price. If the price was considered reasonable and in accordance with the Department's views, the commodity would come through, the ordinary trade channels, except where -other arrangements were made. He ■=hould say, however, that the overwhelming bulk of material would come to the contractor through the ordinary trade channels, but if the Department could.effect a substantial saving by coming to an agreement with a group of producers he thought the deputation would admit that it would be unreasonable not to accept that saving. ENTITLED TO CONCESSIONS. "After all," said Mr. Lee, "our mass buying is entitled to some sort of concession. If the only virtue of us deciding to spend five millions on housing is that we are going to set four or five hundred firms competing: against one another, the only result is going to be increased costs that will .weckour enterprise. It is not our intention to wreck any enterprise. Where a contractor specifies a price we think is right . T . his supplies obviously will be drawn as at present through the normal channel, but we are not going to forgo our rights to accept such concessions as we are able to secure.

Those in. charge of the housing scheme wanted the support of New Zealand industry and wanted to utilise existing New Zealand building organisations* If they had to start to create fresh organisations they could not carry on the programme, but at the same time they were not going to forgo any advantage to which they believed they were legitimately entitled and to which Governments from past practice had been entitled. Governments in the past, by virtue of mass

buying, had been able to-.enter into long-term contracts. THE COST OF SERVICES. The deputation, said Mr. Tyndall, was offering its services. The important question was what the Department would have to pay for those services. No indication had been given of that. He gave an example of a saving by the Public Works Department of £ 1500 on the purchase of machinery in support of the contention that the Government must have the right to purchase from manufacturers direct. Reference had been made to the reduction in the size of the groups, but no decision as to the size of the groups of houses had actually been made until he was appointed Director of Housing. The Prime Minister said he found some difficulty in being dogmatic on the subject. He pointed out that the Government's policy was not one of smashing. . • , The Government as far as was humanly possible wanted the good will of those who were giving: the services today. He desired to assure the members of the deputation that where there was a service required that they could give they were going to give it if they wished to do so, but, as "Mr. Tyndall had pointed out, the question of price must play some part.

The Government was going to spend pretty freely on something that everyone admitted was absolutely necessary. The Government wanted it done at the lowest possible cost, and the question was how to bring the merchants into the service of the people. That was all there was in it, and if he. were to say dogmatically to the'merchants present that they were going to be in whatever their prices, or that they were going to be out whatever their prices, he thought he would give evidence of lack of intelligence. But he repeated that the Government wanted their co-operation. If the merchants could give their co-operation in carrying out the scheme and convince those in charge of it that they were riot asked to • pay unduly high prices for that service they were giving, he did not see anything to worry about. Four or- five millions of money were involved in the housing scheme, and things could not be done in a slipshod way. He thought Mr. Lee had put it fairly well when he said, in effect, that the bulk of those in' the trade today would be still in the trade helping the Government to do this job. Mr. Lee: We wouldn't be able to do it otherwise, sir. . THE STATE'S DUTY. Where the private individual failed to give the service at an economic price, said Mr. Savage, it was up to the State to do something. That was all. They would realise that when those in one line took more than they wereentitled to, those in other lines suffered accordingly. If- he. got more than he deserved, someone else must be getting less. However, he did not see any reason for.thinking that the services- of those present would not be required in the housing scheme. It is something that was going to last for a number of years, because ; he could not imagine the housing problem was something that was going to be solved simply by building a certain number of houses. Houses had been going to wrack and ruin for years. They had to try and pull up the slack now, and the job was not easy. "We need your assistance," added Mr. Savage, "and as far as is humanly possible our actions will be directed towards having your assistance and your good will right through the whole piece." . Replying to Mr. Taylor, the Prime Minister said that as long as the merchants could give a service at an economic price they would be able to give it. ■ .: .■'■■-■ THE SMALL BUILDER.' Mr. L. Boielle, Wellington, said that one of the "evils" suspected in connection with proposed contracts for groups of-twenty and multiples of twenty houses was that it might result in- the elimination of the small builders. A contract might be let to build 400 houses, and the result would be that for a small saving in money small master builders would become servants of the one big employer. Mr. Lee pointed out that the State Advances Corporation was still advancing money for the building of

houses. The Prime Minister stated that.the aim of the Government was to do justice to the people. Where the small builder could build as economically as the big builder, he would get the job. Mr. Boielle: It is impossible, sir. The Prime Minister asked whether the Government, was expected to pay uneconomic prices for. the sake of maintaining small industries. Mr. Boielle said he felt that the advantage in contract price .would be so small and the economic advantage so great, that it would be well worth considering. "We came in here for the purpose of making some intelligent change and I think we can carry the people with us—builders and all," replied Mr. Savage. He thought some builders had got wrong ideas of what the Government had in mind. The only worry he had about the whole thing was that there would not be enough builders.

Mr. Boielle: You certainly won't have enough builders. You are going to convert employers into employees.

Mr. Savage said he hoped the deputation would get the idea into their minds that he felt that the only worthwhile monument he could leave behind him would be the service he had been able to give. to this country. He wanted to see something done while he was here. ,

Replying to points raised by Mr. Boielle, Mr. Tyndall said.that while men of straw would, not be able to 'stand up to the conditions of the contracts, he did not think any man who had any backing would have any trouble, in getting a housing contract if he liked to quote. Mr. Boielle seemed to be afraid of one big firm getting the lot, but one big firm could not possibly build the number of houses the Government proposed building. It should be remembered that the 400 houses was only a start. He was under instructions to prepare plans for a number of houses in the smaller towns. There would not be 400 in every centre, but there would be innumerable smaller contracts of under 20 houses which would give ample scope for every small builder- to have a go at.

"As far as we can bring you into the scheme of things we want you in it," said the Prime Minister in conclusion. "It would be foolish to suggest anything else than that." The merchants could help by the prices they quoted from time to time. -