UNEMPLOYMENT

Evening Star, Issue 23015, 21 July 1938, Page 9

UNEMPLOYMENT

POSITION GREATLY IMPROVED Passing reference to the great amelioration which the Government claims to have effected in the unemployment position was made by the Minister of Finance (Mr Nash) in the course of his Budget speech last night. The process of the re-absorption of men in industry was described as a slow one, but its possibilities were enhanced by the provision of works of a useful kind. In the depths of the depression, Mr Nash said, the number of registered unemployed rose to as high as 79,500. To-day that number has been reduced to a total of 8300. In addition, there are approximately 8000 men who, on acount of their physical inability to work, should not qualify for relief on account of unemployment, but until such time as the social security legislation is passed and the necessary administrative machinery established, assistance is being provided for them from the Employment Promotion FTmd. The absorption of the unemployed into industry is essentially a slow process, and until this can be fully achieved it is the policy of the Governihent to find useful work for all fit, able-bodied men on public works, land development, and local body works. Past experience has shown that the payment of sustenance for lengthy periods not only destroys a man’s ability to work, but in a number of cases the desire for work has also been lost. By providing worth-while work . for the unemployed their industrial ability is maintained, and the possibilities of their absorption into permanent employment is thus enhanced. Position of the Fund The balance in the fund at the beginning of last financial year was £253,000, which, together with revenue from taxation amounting to £5*105,000, interest and other miscellaneous receipts of £40,000, provided the sum of £51398,000 for the, promotion of employment during the year. Of the taxation revenue of £5,105,000 the sum of £448,850 was received from the registration levy, £3.027,480 from wages tax, and £1,628,670 from the specia) charge on other income. ; In last year’s Budget it was estimated that the total revenue would amount to £5,180,000. The actual revenue was £5,145,000. Compared with the previous year, the revenue from taxation shows an increase of £BBO,OOO, equivalent to 20.83 per cent. The increase in the revenue from wages tax was £436,650, or 16.85 per cent., and represents an increase during the year ended March 31, 1938, in the amount of salaries and wages paid to persons liable for the tax on no less than £13,100,000. The increase in the revenue from the special charge on “ other income ” is £435,100 in excess of the receipts lor the year ended March 31, 1937, In the latter year, however, credit notes to the extent of £36,866 (issued in the previous year to persons who had paid the whole year’s tax at the rate of lOd in the £) were used towards payment of tax, and if this sum is added to the actual collections for the financial year 1936-37, the true increase in the revenue from the special charge on “other income” will be £398,267, equivalent to an increase of 32.36 per cent. This sum represents an increase during the year ended March 31, 1937, in the incomes of persons liable for this charge of £12,000,000. Expenditure Disbursements from the fund for last year totalled £4,239,456, made up as follows; — £. Wages and other payments under various schemes •. 2,519,523 Food, clothing, and other necessities .. .". .. .. 7,564 Sustenance payments .. .. 1,349,162 Sundry loans and grants .. 72,919 Christmas bonus and other miscellaneous payments .. 55,288 Administration expenses .. 235,000 £4,239,456 Estimated Revenue Revenue for the current year is estimated at £5,377,000, being an increase of £231,900 over last year’s receipts. The balance in hand at April 1 last was £1,158,890, so that the sum of £6,535,890 will be available for expenditure out of the fund during the year. The increased resources available have enabled the Government to offer work to practically all physically fit men who were unemployed. The results that have been achieved in this direction are most satisfactory, and before long all the fit men registered should be in full-time work. •

OVERSEAS TRADE MORE ORDERLY MARKETING An important factor in the development of the Dominion’s overseas trade, said Mr Nash in his Budget address, has been the Primary Products Marketing Department, the export division of which administers that portion of the Primary Products Marketing Act relating to the purchase and sale of export dairy produce. The division is now approaching the completion of its second year in operation. The policy adopted in regard to the marketing of butter and cheese has been fully successfully, and there has been general agreement amongst those qualified to judge that the present procedure is superior to that of the past.

The shipping programme of the de- . partment is designed to provide regular shipments of butter and cheese in f quantities to meet the needs of the markets, while the distribution of but--1 ter and cheese in the United Kingdom has been widened by means of direct shipments to the main United Kingdom ports. In order to ascertain the extent of . savings in the new marketing procei dure compared with the old, an an- ' alysis of marketing costs has been r made. This analysis discloses that the I saving on butter marketing is 12.89 d per cwtjor a total saving on an ex- . port of 150,000 tons of £161,125. Cor- | respondingly, the saving on cheese , marketing amounts to 8.275 d per cwt, i or a total saving on an export of ; 85,000 tons of £58,614. Thus on the ■ export trade in butter and cheese there ’ is an approximate annual saving to the industry of £219,739. Disbursement of Surplus The Government has realised that during the season just closing dairy farmers have experienced difficulty in ; obtaining farm labour at the wages , they could afford to pay, and in order to meet this difficulty, and also to I make some compensation for any increased farm costs, the Government l considered that an additional payment to the dairy farmers for their produce was justified. It was therefore decided ! that the guaranteed prices should be ; increased by 0.41 d per pound for but- ’ ter and 0.21 d per pound for cheese. In the past the market returns for cheese and butter have not shown the margin in favour of cheese that is necessary to maintain cheese production, and the pooling of returns from butter and cheese and the provision of a 2d margin for cheese over butter has done much to stabilise the cheese industry. The question of fixing the guaranteed prices for the coming season is now receiving consideration. Accepting the spirit of the representations which were made on behalf of . the dairy industry, the Government : decided to appoint a committee for ' the purpose of making the fullest in- [ quiry into the costs and other factors : associated with the production of ’ butter and cheese, and this committee : has now been appointed by the Go- ’ vernment. The committee will inset : at Wellington on Wednesday, July 27. Internal Marketing ■ Under the amended legislation i passed last session the Internal Marketing Division of the Primary ' Products Marketing Department was constituted, and a number of functions pertaining to the local marker i were brought within its jurisdiction. With butter, for instance, regulations were introduced in November, 1937, providing for a more orderly system of distribution as well as fixing wholesale prices throughout the Dominion. This ensured that dairy factories would receive the same return for that portion of their output sold on the local market as they re- ; ceived for butter sold for export. Producers and consumers have benefited by the removal of a number of anomalies and undesirable practices. SECONDARY INDUSTRIES ENCOURAGEMENT POLICY If this Dominion is to possess a properly balanced economy, Mr Nash said, it is essential that adequate attention should be given to the extension of secondary industries. Con--1 siderable progress has already been ; made in this connection, and every encouragement is givm to the establishment of new industries and to the extension of existing ones, provided < that on investigation hey appear to be economically justifiable. Basic industries naturally receive pride of place, as it is upon their success that j the prosperity of so many others de- j pends. ... A matter of far-reaching importance J in this connection was the recent decision of the Government, after the most exhaustive consideration of authoritative reports, to establish an iron and steel works in the Dominion. Preliminary work is now being pushed forward as quickly as possible. It is not too much to say that iron and 1 steel works arc essential if our secondary industries are to be developed to a stage required to give us . properly balanced economy. • . The Department of Industries and Commerce has made extensive investigations into possible new industries. A number of these proposed industries have been found uneconomic of operation, but it is hoped that as a result of the department’s efforts several new activities may be commenced locally. Among these may be mentioned the preparation of unfermented fruit juices, the raanuiacture of cream separators, linen fibre, linseed oil, Leicester goods, beet sugar, power alcohol, wallboards. and rubber tyres. Reference was made last year to licences issued to two companies to manufacture asbestos cement products in the Dominion. One factory has < commenced production, and the other is still actively engaged in developing a mine for the production of raw asbestos. Benefits of Protection During the year it was ascertained , that a number cf the local manufac- : turing industries, particularly foot- : wear, were experiencing difficulties in continuing to compete with the pro- 1 ducts of overseas countries. In consultation with the Governments of Australia, the United Kingdom, and Canada, adjustments were made in the rates of duty levied on importations of a number of commodities. Reports received since the adjustments were made indicate that manufacturing industries received great benefit from the added protection afforded them. Many have taken steps to expand their productive activities by engaging more workers, installing additional plant and machinery, and erecting new premises. In addition, a number oi overseas , manufacturers have taken steps for ; the manufacture of their products in New Zealand. The added protection ’ granted has been a material factor in . the encouragement of manufacturing ’ activity in the Dominion to the advantage' of both manufacturers and their employees. A further important matter to which reference should be made is the activity resulting from the pass’ng of the Petroleum Act last session. Consequent upon this legislation large sums have already been expended by private firms in prospecting for oil in the Dominion, and if these tests are successful —and there is ever'' indication that the possibilities will be thoroughly investigated—the resulting ■ industries will be of great economic 1 importance to New Zealand. CRITICAL COMMENT I j ECONOMIST’S VIEWS t WHAT IF INCOME CONTRACTS? E [Per United Press Association.] CHRISTCHURCH, July 20. “ The most impressive feature of this year’s Budget, as was the case last year, is its magnitude,” said Professor A. H. Tocker, of Canterbury College “During the last two years both the revenue and the expenditure in trie Budget have increased by about £10.000,000. Including the employment tax, the total taxation has grown from

£25.500.000 in 1935-36 to £36.750,000 in 1937-38. This expansion is eloquent testimony to the improvement in the income and tax-paying capacity of the Dominion, for, apart from land and income tax. the rates of other taxation have been unchanged. “ Before the depression, when total taxation amounted in 1928-29 to less than half of its present total, no one would have believed it possible to extract the present amount of £23 a head from the population.” Professor Tocker continued, “ and one cannot but wonder what would happen should the income and taxable capacity contract. While taxation has swollen the revenue so greatly during the past two years, the other revenue from Government investments and State services has fallen substantially. The Budget is now more dependent on the taxpayer than ever before." m Meanwhile, Professor Tocker said, although a handsome surplus had resulted this year, the expenditure had fairly kept pace with the revenue, and the Government had committed itself to meet obligations which, while they could be borne in prosperous times, might quite prove beyond New Zealand’s means should the present prosperity fail. Over the past two years expenditure which was unproductive in a commercial sense had been quite exceptional, and it appeared likely that in future that expenditure must continue to grow. “It is not encouraging to see ma., while interest on the debt and exchange expands steadily, the interest receipts on the revenue side are contracting, and a larger proportion of the burden of the public deb' falls upon the taxpayer, who is also called upon to bear the rapidlydncreasmg expenditure on social services, Professor Tocker said. All this, however was generally in accord with the Government’s policy. The Government was certainly carrying out its promise to redistribute income by the taxation of one section for the benefit of another. At the moment the financial critic was puzzled to know how far this process could be carried, and by what means the Government would impose a check when the limit was reached. “The Estimates for the coming year appear to be very reasonable,’ Professor Tocker continued. “The fall in imports and Customs duties has been allowed for, and the handsome surplus of more than £BOO,OOO recorded this year, together with the additional £BOO,OOO put into the Reserve Fund—apparently the first payment into that fund for several years—proyide a very useful margin on which to work.” THE MINISTER’S OPTIMISM AN EXPRESSION OF DOUBT Doubts as to justification for the optimistic view on secondary industries in the Dominion taken by the Minister of Finance (Mr W. Nash) in presenting the Financial Statement to the House of Representatives were expressed by the president of the Canterbury Manufacturers’ Association (Mr H. B. Duckworth) to-night He said he trusted that the optimistic oulook in the Budget on the manufacturing industries would be fulfilled, but he indicated that some concern was felt on some of the points referred to by the Minister. Referring to the Minister’s statement that the development of secondary industries had resulted in the employment of a record number of persons, Mr Duckworth said: “The present indications are such that the manufacturers cannot feel the same degree of confidence in regard to providing continuous employment for a record number of persons." Dealing with the Minister’s statement that protective duties had encouraged the manufacturing industries, Mr Duckworth expressed the view that little had been gained. , “ Further development of the manufacturing industries due to protective duties has not had the effect, so far at any rate, that was expected,” he said. “In many cases the duties have only deflected imports from Canada and Australia to the United Kingdom, the New Zealand manufacturer gaining little benefit.” NO RELIEF HUGE WEIGHT OF TAXATION “ To the farming community the Budget brings few, if any surprises.” was the first comment of Mr W, W Mulholland, president of the New Zealand Farmers’ Union, this evening. Mr Mulholland said he was not prepared to make any detailed comment on the Financial Statement immediately, but the most striking feature at a super ficial examination was the size of the figures in which the Minister of Finance dealt—£2o,ooo,ooo to be spent on Public Works and a total expend) ture of some £55,000,000. “To support this enormous expenditure there must necessarily be a huge weight of taxation,” Mr Mulholland said, “and this must have its effect on the primary industries of the country The Minister commented on the record income from exports during the last year of £65,000,000, but it seems to me that he has not realised to how great an extent he owes his prosperous Budget to that rather than to the Government’s policy.” . An interesting item in the Financial Statement was that dealing with the income from State farm projects, Mr Mulholland said. If it was correct that the Government expected to receive more than £400,000 from the produce of State farms, it would seem that Mr Langstone’s policy in the development of State farms had already been carried much further than most persons realised. “The Budget contains some good proposals," Mr Mulholland continued. “ The farmers will be glad to see that the sympathetic hearing given by the Government to their representations on the need for a housing scheme for farm workers has been followed by the mention of such a project in the Budget. It is to be hoped that there will be no delay in putting this proposal into effect. “It is in many ways a commonplace Budget,” concluded Mr Mulholland. “There appears to be no change in the taxation and no relief. Relief is as necessary now as ever it was, but the farmers generally had no reason to hope for an improvement. The Budget is very much what they expected.” AT LEAST NO TAX INCREASES “I think that we can congratulate ourselves that there are no increases in taxation,” said Mr Henry Kitson president of the Stock Exchange Association of New Zealand in his comment on the Budget. At the same time, he thought that there was reason for a little disappointment that the Government had not amended the present form of land tax because without a doubt it had not achieved what it had set out to do and had caused grave hardship to many Discussing the Government’s public works programme part of the cost cf which is to be found from loan money, Mr Kitson said that before August 15 next the Government had to give stockholders notice of whether it intended to exercise its option of repayment of the 1941 3] per cent. loan by November 15 of this year. It would he interesting to see what action the Government would take. If it did not exercise that option, it was hard ti see how it could anticipate floating loans at below H per cent