EXIT THE INDIVIDUAL

Evening Star, Issue 23099, 27 October 1938, Page 2

EXIT THE INDIVIDUAL

ENTER THE BUREAUCRAT OLD ECONOMIC ORDER PASSING A DUBIOUS OUTLOOK In bis presidential address at the annual meeting of tho New Zealand 'Employers’ Federation at Wellington to-day, Mr A. C. Mitchell examined the probable effect, upon the- industrial and commercial life of the Dominion, of the new legislation placed upon the Statute Hook.

in retrospect (he said) we cannot fail to realise that recent happenings in New Zealand, in common with many other countries of the world, have completely changed the old economic order; and that the individual control of one’s business on which the prosperity of this Dominion has been built up during the past century, is making way for a system of bureaucratic and oppressive Government .control—not only of our business activities, but of our entire social system. There is, of course, one school of thought that considers that tho Government is better able to control tho destiny and business of this country than those individual interests who have found, the capital, enterprise, and sound business management responsible.for its present development, but in legislating for the control of business by the Government, they quite overlook the fact that the shareholders—represented in this ease by the electors—have it in their power to entirely change the system or control and personnel of the executive every three years, and no one with experience in business management would seriously suggest that such a policy could possibly result in efficient management of any business concern. Tho overwhelming vote of confidence tendered to the ' Labour Government at the recent election is the clearest possible evidence that there is a majority of the electors of the Dominion who are prepared to adopt the popular and perhaps natural .-course of endorsing a policy which appears to offer the maximum immediate reward for services rendered, rather than to take the long view which involves a calm consideration of tho ultimate consequences. to themselves of the poliev which is being put into operation to-day. ' CRUSHING TAXATION,

The extension of State Control, which has been introduced hv the present Government has already increased the load of taxation to record levels, and the new taxation imposed under the social security legislation which has now been placed upon the Statute Book imposes further crushing taxation on industry. With every expansion of Government control of industry, there must of necessity be a corresponding reduction in private ownership and control—on the profits of which the State has to rely for the necessary revenue by way of taxation to_ finance its own undertakings which in turn involves an increased pro rata levy on those remaining in business. The capacity to pay bears a very definite relationship to the volume of production and the prices realised from the sale of the goods produced in the Dominion, and any fall in overseas prices must have .serious repercussions on the revenub the Government might collect through ordinary taxation channels. The question then naturally arises as to where the additional revenue required to meet the obligations of the State is to he found, hut that question remains unanswered. Tt lias been stated both hv the Prime Minister and the Minister of Finance in reply to questions on that point that they are relying upon a gradual progressive development and expansion of production and revenue from the sale of such increased production. We have been assured that the Government has developed a scheme wherebv this Dominion will be _effectively insulated against the possibility of another world depression, but experience in the past has proved that in such circumstances only those countries, trading concerns, or individuals who have taken the precaution of building up reserves in prosperous times can long survive economic disaster. AN ANXIOUS TIME.

Probably never before in the history of the world has there been greater cause for anxiety than at (present, in Great Britain we have a programme of rearmament in full swing involving a huge expenditure of public money in the bunding up of adequate Ue- ' fences to ensure the safety of her people, her country, and lier sea-borne commerce. Central Furope is to-day a huge armed camp, with the mobuisa*tion of the greatest force of highlytrained and disciplined troops ever assembled since • the Armageddon ot 1914-18; equipped with what is claimed to be the most formidable concentration of mechanised engines of destruction ever made available to any ariii3’. After reviewing this aspect ot in-security-at some length, the President continued: With the Central Buropean rulers constituted as they are to-day, and with the experience of thenactions during recent years as a guide to their policy, a happy issue is perhaps too much to expect, but even were it otherwise, past experience teaches that prosperous trade conditions cannot be relied upon as a permanent condition, and that history has a habit of repeating itself. We may therefore reasonably expect to experience periods of trade fluctuation with cycles of depressed prices for the commodities we have to sell, and even in 1 the event df a substantial increase in the volume of production, the operation of the inflexible law of supply and demand persistently shows that it is not always possible to ensure or guarantee «i\ increased return from the sale of our increased production. As evidence of this, Mr Mitchell quoted the comparative Customs figures for the seven months ended July, which showed that the excess of exnorts over imports had contracted from £16,354,000 in 1937, to £9,370,000 in 1938. He then proceeded; INSULATION FALLACY. Having regard to the oft-repeated assurances of both the Hon. the Prime Minister and the Minister of Finance that they are relying upon the prosressive development and expansion ‘of production and the revenue from the sale of such increased production to assist in providing the necessary funds wherewith to finance the social security scheme which has been placed upon the Statute Book, the above figures surely provide convincing evidence of the fallacy of that assumption, and must cause thoughtful people to realise upon what an unstable foundation that costly structure has been erected. Surely it cannot be suggested that the serious fall in revenue as disclosed by tho figures issued by the Customs Department, covering a period whilst the Treasury benches are occupied by a Labour Government, is due to any subtle machinations of vested interests for the purpose of embarrassing the Government. Neither does the frank admission that out of tho £20,000,090 odd which it is proposed to spend this

year on public works, no less than £14,500,000 is to be borrowed money, suggest that the Government’s “ insulation scheme ” is functioning quite according to plan. The plain fact is that the taxpayers throughout the Dominion will be called upon to provide the necessary funds to meet the obligations of the State, The present basis of taxation is already causing serious embarrassment to many of those engaged in industrial undertakings in which the whole of their capi- : tal is invested, and the effect of the recent increase in taxation has been dearly indicated by the discussions at a, largely-attended meeting of business men held recently at Wellington. When the time comes that the taxpayer is unable to find the necessary money, then the social security scheme will crumble as a house built upon the sand, and in that event would probably carry with it in the crash our present superannuation and pensions schemes, as well as many private superannuation schemes subsidised by private employers, and the operation of the universal social security Scheme will in the meantime have seriously prejudiced the welfare of all friendly societies,; and, if it remains in operation long enough, might well bring about complete disaster to them. NO CURE. The method which has been adopted bv the Government of dealing with the problem of unemployment is open to the same serious objection as it was a year ago when I made the suggestion that the only practical method of solving the unemployment problem was to give such encouragement and security to the manufacturing industries as would make it possible to reabsorb those men into their normal occupations or other kindred occupations to which they might readily be. adapted, instead of etilploying them on under-' takings financed by the Government from moneys collected as excessive taxation; many of which are regarded by thoughtful people competent to express an opinion as being of an uneconomic character. Oil the completion of such works the unemployment problem still remains, and in the meantime the policy adopted has so increased the cost of work and services of all descriptions as seriously to curtail private enterprise, thereby accentuating the problem it was designed to cure. Some indication of the effect on costs as a result of the industrial legislation of the Government may be gathered from a consideration of the information available as to the cost of its own housing scheme, which shows that the cost per house is substantially hipher than the original estimate, compelling a drastic revision of the rentals winch were originally suggested by the Government. Practically every other industry’s costs are similarly adversely affected. The costs of the dairy farmer —recently reviewed by an independent tribunal set up by the Government to make a recommendation in regard to the guaranteed price—nas caused them to furnish a report which has created a new problem for solution. Although following upon a year of high export prices, an increase in the value of irapprts in the following year is the natural consequence—the huge increase in the value of imports for the first seven months of the current year as disclosed in the return of the Customs Department—in a great many cases of goods normally produced in the Dominion and which, were prices competitive, could and wmild be manufactured in this country, is convincing evidence that the cost of production under our present conditions makes_ it impossible to compete successfully with countries in which restrictive legislation such as we have in New Zealand does not apply.

LOCAL ORDER PLACED ABROAD. It was recently announced that the Government has placed an order in Great Britain for the supply of 30 railway locomotives at a cost of £400,000, and more recently a large order for rail cars. Whilst it is a matter for congratulation that this order has been placed in the Mother Country, the question naturally arises as to whether it would not have been wiser policy and more in line with the expressed policy of the Government to have placed these orders in the Dominion and to have insisted on manufacture in this country. UNPAYABLE STEEL WORKS. In addition to the public works, which, with the exception of an amount of £6,887,500 which comes within the Public Works Fund (hut under the control of Ministers of other departments), authority has been granted for an expenditure of an amount up to_ £5,000.000 for the establishment of iron and steel works at Onakaka. When the relatively sipall total requirements ol

this Dominion of all classes of steel and iron arid the variety of sections and sizes called for are. taken into consideration, it must be obvious that suca.an expenditure cannot be justified on economic grounds. Years ago this proposition was investigated, and inspections then made raised serious, doubts as to whether the original estimates as to the quantity of ore available were reliable, and- it is interesting to note that the Minister under whose Control this undertaking comes has .recently made a statement that the original estimates are not being. confirmed by the exhaustive investigations which are at present being made. . ■ , The'Minister is to be congratulated on the caution which he has displayed in making these exhaustive investigations before committing the country to the expenditure involved in the establishment of the undertaking, but he might well go further and seriously consider the propriety of embarking upon the undertaking at all, m view of the sniall annual, output necessary to meet the; total ..needs pf tbe * minion. Parliament has, however, decided' that the, undertaking , shall be established, quite, regardless of the severe competitive handicap to which it will be subjected by reason of OUp 411hour week and. restrictive labour legislation. It is a reasonable assumption, once the works are. in production, that an embargo must be placed upon the importation of steel from overseas, or alternatively such Customs duties will be imposed as to have, the same restrictive effect on importations.-- Apart altogether from the effect of labour costs, Die small output will result ,m higher costs and prices; which in turn will be reflected in higher costs for building arid other industries in which Steel is used. The alternative, of. course, Is to maintain prices . competitive, with, overseas products,; in which rase the taxpayer will Once- again be, called oppn to make good-the loss on the undertaking. KILLING THE GOOSE. . Having regard to the extra company taxation, also the additional-individual .taxation imposed during the last session of Parliament—to say. nothing of the present Undisclosed liabihtv whifch is inevitable to meet the commitments which have been imposed upon, the country by the Government policy; tf» the substantially increased cost of all commodities ana services; to the serious- shrinkage in overseas trade returns and huge increase in value of imports as disclosed by the return of the Customs Department;' to. the difficulties experienced by many manufacturing concerns to-day with the additional restrictive provisions to face recently imposed by awards of the Arbitration Court —employers have cause for serious anxiety as to the store for the capital invested in their undertakings, on the return from .which, after all, the employment welfare and social security their workpeople so largely depends. Industry ill New Zealand to-day is rapidly reaching the>tage where the old story of “ the killing or the goose that laid the golden eggs - mav have a special significance.