Under A Searchlight

Gisborne Times, Volume LXXXII, Issue 12526, 11 April 1935, Page 5

Under A Searchlight

.UNEMPLOYMENT EXPENDITURE DEFENCE OP BOARD'S POLICY PROBLEM CANNOT BE SOLVED BY CHANGE 'OF GOVERNMENT (Special to the Times) WELLINGTON, April 9. , 'I; V’;,, V . In an address given before the Auckland. Chamber 'of Commerce, i\fr Bromley, dep.dty-chairman of the Unemployment Beard, opened by stating 'that "unemployment, not only in New Zealand) b.ut the world over, remained one of our greatest problems. Very many causes for tins problem have been suggested, amongst them being:—

(lj The complete collapse of inter--i-riiationaE'Ciiedit. 1 ! 1 (2) Over production and under- • consumption. (3) Tho idead-weight burden of international war an?d other debts. (4) Displacement of of worv, kers'- 'through highly npecialiscd mechanisation, more commonly called “rationalisation of industry. (5) The .failure to maintain a proper balance between spending and Jng; and, of course many others. POLICY AMOUNTS TO INCOME RE-DISTRIBUTION “The present magnitude of the problem ob unemployment so deep l seated in our industrial system, as to be quite unaffected by changes in governments or in systems of government. Perhaps it is because the problem is so great, taxing ' a.s it does the skill and the wit of the statesmen of-the world, that so very many persons, who have ho responsibility for putting their theories into practice, so confidently claim to hold the key to the solution. The problem on which the' Unemployment Board is engaged is really 'supplementary to the major problem of unemployment. It is a question of arranging and putting into effect a redistribution of the incomes of those remaining in employment ini order that widespread' distress and privation may be avoided. Stated another way, it has the job of taking some of the income earned by those engaged in industry amd giving it out again to those whom industry lias rejectedTruly no position offers' such wide scope for winning personal unpopularity. Should this world of ours ever reach such a height of moral and spiritual development as to make it possible that such a law as our Unemployment Act could be- administered without: incurring criticism, then I fancy that in such a social atmosphere unemployment as we know it would certainly perish. Criticism, then, we must' have'.' Criticism by the unfortunate unemployed worker, or of Ins wife is, indeed pardonable. I trust that 1 shall never think less kindly of them or treat them with less courtesy or with less justice, because they become impatient with the administration. Criticsm of the administration by the politician—well, we all understand that and I won’t say any more on that subject. The criticism of the disinterested section of the community although often ill-founded, often causes me to feel quite- cheered, because to me, it denotes a lively awak ening of the body politic to personal individual responsibility in the question of relief o,f distress caused through involuntary unemployment. This point, however, should he 'Stated here. The unemployed has some personal responsibilities himself and to hiiSi family if he would qualify for the support of h-.s fellow-men. ANALYSIS OF BOARD’S DIS- - BURSEMENT2 Some concern over the question o,f how the Unemployment Board .spends its funds has been manifested. I will say at once that over 95 per cent, of the payments made from the fund clearly, provide direct and indirect benefits to unemployed, or to workers who would be unemployed if the payments were not made. The estimated expenditure on relief direct and indirect for the four weeks to February 8, is £324,000, in addition to which, authorised under the Public Accounts estimates by Parliament itself, an estimated amount of £12,040 was provided' for "administration, making a total estimated expenditure for the four weeks of £337,440. If that fig. ure were maintained 'for each of tho thirteen four-weekly periods, »fc would total £4,386,720. Our estimate of levenue for the year was £4.496,<XX>. These figures will discount the idea that the board is deliberately conserving funds in face of used. This point I shall stress later. “What everybody seems anxious to know, is, how is this huge sum of money disbursed? Who gets it? The largest item on the list, the amount required againnt Scheme 5, accounts for £191,315, or £6.7 per cent, of the total. To further dissect this item, £151,828 was for rationed part-time employment; £10,031 represents subsidies paid to local bodice on th-e basis of Scheme 5, the condition be: ng that further money is found to provide standard wages, and in most cases of this kind, full-time employ- 1 ment is also insisted on; £13,408 is for country work.in camps, organised fey county, councils where , men -arc engaged at special rates on road work and land development'; while the balance of £16,048 is the amount paid to gold prospectors operating through county councils and mining executives. Next . come 'sustenance payments and rations, including pa.ymnts to a. few gold prospectors who are unablo to operate through a. county council, amounting to £32,938, including 'sustenance payments amounting to £I2OO to men > under the small farm plan. Then there are payments made through the Public Works Department, including wages and keep for'merit in single men’s camps together- with subsidies in respect of "-married" men whose wages are made up to standard from the Public Works Department / Fund. This -item accounts for £26,828. Fnr-

tiicr items paid through other State Departments include £1,176 for freemployment otV unemployed school 'teachers; "£3240 for relief of natives through tho Native Land Settlement Board; - Lands Department, Agriculture'and Forestry, expended . £11,'633. These items are mainly di--1 reet wages, and, added to the Scheme 5 amount, bring the total now'accounted -for to £267,230, or 79.2 per cent, of the total. Next we have our ;■ farm schemes, 4A now discontinued; except where assistance is being given to a worker to establish himself lon his own farm; 4B Where a subsidy -of 50 per cent, of the labor cost of on. purely developmental contract to met' from the Unemployment Fund; assistance to rabbiters, pocket money to youths learning farming, and including subsidies under BB' gold i mining 'scheme. These payments, to; tailing £12,160, are all wages payment'., and are operated -through private persons who generally augment the wages to standard rates. Our total is now £279,390' or 82 per cent. The whole of those payments now accounted for are in tho elm's of direct payments to the ‘unemployed. The remaining items in the main, although not d : roct payments to the unemployed, -often provide a more substantial- though indirect, benefit. ILL-INFORMED CRITICISM In all, £34,000 represents building subsidies promoting the expenditure of an amount in wages within _ New Zealand-seven times greater than the amount of the subsidies paid. May I pause here to say that of all the criticism levelled against the Unemployment Board’s policy, I think the criticism of the building subsidies bar:, been the most ill-informed and the mo-st unfair. £1760 is the amount paid in subsidies on flax exported. This , one item most eloquently emphasises the damage .suffered' by a New Zealand industry as a' result of the depression. Once a great employer of labor; the flax industry was almost exterminated. Although the wages being paid to the workers engaged in the industry to-day are so low. that often labor resists leaving relief work on Scheme 5 to take lip jobs in 'the flax swamps( the cost of. production still exceeds the market price of fibre on the English market, the exchange advantage notwithstanding; and the flax miller, once an important client of the income tax collector is, to-clay, for the most part carrying on at tile pleasure of his. hanker. This subsidy payment, if not paid direct to unemployed men is certainly keeping men off the register of unemployed. £360 represents assistance to the timber industry by way or-subsidies to millers to enable New Zealand manufactured fruit cases to be used in place of imported casen. There is an item -of £1154 representing grants to gold prospectors. This represents equipment issued to gold prospectors,' and although put through, our accounts a, 3 a grant or grants, it in part comes hack from deductions' of gold won by the prospectors, who had the materials or equipment advanced. Repayments of granbi, including wages -sub sidles- advanced under our gold-min-ing scheme No. 88, and assistance to private concerns tor . the past year, have averaged ££6so a month. A few other smaller items, covering grants to women’s committees, £860; sundry loans £2OOO, and miscellaneous £2036; Humphreys Gully water race £432, all: wages; insurance of relief workers, £1000; surveys, £608; bring us to tho total of £324,800, or 96.3 per cent, which, with the amount, for administration mentioned earlier, £12,640, gives us our total for the four weeks of £337,440. ADMINISTRATIVE COSTS NOT EXCESSIVE ; “This accounts for the whole of the expenditure covering a typical four-weekly period.-I have shown, 1 think, that slightly over 96 per cent, of the expenditure very definitely benefits directly or indirectly those i for whose ass’stance the fund has been created. The item of £12,640 for administration, although often the subject of criticism when the Public Account’s estimates are be'ng considered, cannot by any stretch of the imagination be regarded as excessive. Administration costs in Britain approximate about 8 per cent and in Queensland, Austra :lia, 5 per cent. It is only .fair .to mention that because the Board has approved of much of th.e routine work in our bureaux being done by men from the unemployment register who are pain direct fror the fund like Scheme 5 workers, hut on a bas.s conunensurat with the importance of the work it hats the effect of reducing The apparent cents of administration perhaps by 1 per cent. On this basis the administration cost should perhaps be .statetl-as--4J per’cent, ’approximately. Some appreciation of the work of administration may be gained by a study of these facts. It covers not cnly'the cost of administering expenditure, but of collection of the fund. The work therefore extends to every post office in the' e-ountry. “In October last there were 500,000 males between the ages of 2u and 65- registered under the. Act, Forms have to be issued- and received from each of these and coupon books issued. Quarterly payments of levy in volve an-immense amount of detail work. If the size of the tank of deal ing with the levy payment is appreciated, little, difficulty will be experienced in visualising the mass of de-tail-in connection with th&cemergency charge on wages and' salary and other income's; Imagine tho difficulties that arise because payments are net made 'promptly, and ■ you may get some idea of the number of these canes if- I just tell you that in one year the -.fines for- ■ late payments of the levy produced over £20,000; Further'than that, 4300 letters each month go out .to persons whose payments are in arrears. In one office in Wellington; where: only unemployment taxation is ‘dealt- With, 'over 100

pdles arc constantly employed. Then ffe have', more particularly with the expenditure side, over 300 certifying officers- In the head office of.,the,UnBoard the .staff numbers over 90. In the records room there are over 175,000 correspondence L s and some of them are very large jj y now . Jf the administration, were worried, out at no. cost to. the. fund, (Tnd if the month’s expenditure I have Just reviewed may bp .tajkon as tvpical, the increase in the amount paid for relief could only he increased by I s P el week %

WIIEEE the MONEY COMES FROM “I want now to isay a word or two a boat where the fund comes from. We do not hear so much controversy about this side of the question, but it really is of .some importance, and especially at a time when incessant demands are being made to consid- | erably increase the amount of expenr diture! II said at the commencement that <>ur job could.be. described as redistributing the national income, tak ing from some, and giving to others. The one you.take from considers you are taking too much; the one” you give to insists that you don't give enough, and both of them are quite sure you are losing .some in transit. The total income of the Board from the emergency unemployment charge for the year ending March 31, 1934, (this time I have gone back a year to get complete figures) was £3,981,486. The levy- payments for the .same period accounted ,for £432,500. The total registrations under the Act up ■fb October, 2934, were totally exempt from payment of both levy and emergency charge- It follows then that 465,000 male persons of ages ranging from 20 to 65 years are. liable to pay the levy and emergency charge. If we. assume that all the emergency charge on-.salary, wages, and other income . has been paid by the males over 20 liable to pay the charge, the average income may be stated as £l7l per annum, or £3 6s per week. That, however,,.is not the cai'-c.' A fair siim must ho received from females and in that year .from , males and females, under 20 years of age. It is difficult to. arrive at even nn approximate estimate of the 'amount of tax received, from this class of taxpayer. Nor- is there any reliable source of information enabling one to arrive at the mean income of all males between the ages of 20 and 65. If we take the mean income of all males as at the last census in 1926 add "reduce it by 33 1-3 per cent being 'the.-.approximate• fall estimated by./the. Census Office,' wed get a mean income ifor, all male's; of ; £2 12s 7d per week. I think it clearly establishes that a large., proportion of. .the taxpayer, affected by our emergency unemployment charge, are in receipt of lens,.income '-than many of the . unemployed''on relief work- This side of my story is not developed, for the purpose of proving that we should not give more.to the unemployed hut m 0 draw attention to the difficulties, at least under the present incidence of taxation, of taking more from the taxpayer.. I am painfully conscious ot' the. delicacy required in handling this part of my case, for it opens the door wide for misinterpretation as to my motive. May I therefore be' permitted to explain that to me no system will appear perfect that deprives a willing worker of employment and calls upon him to suffer hardship and to .see his children suffer. THOSE CASH BALANCES! /‘My next point is to clear up the misunderstanding about the huge cash balance in the ,fund. If no explanation of that wore possible, what I have just stated would 'sound hollow indeed. Attention has been drawn to the large cash balance held Jn the Unemployment Fund as revealed by the figures published in the New Zealand Gazette, at the end of each quarter. Suggestions have been made that the Unemployment Board is purposely endeavouring to build up an unnecessarily large’ balance in the fund. Dealing with the position of the .fund as at December 31 last, I would like to again point out that while the, actual cash balance in the fund at that date amounted to £1,475,0C0, the actual estimated surplus, after allowing for revenue received in advance, and expenditure . actually incurred to the 31st December but not yet brought to charge, was £684,000. It will he appreciated that under the method by which relief is distributed through local employing "authorities, considerable time elapses before the actual vouchers are submitted by the employing authorities for reimbursement from the Unemployment Fund. “The balance in credit of £684,000, although less than enough to cover expenditure for eight weeks, is still a sore point and we are asked the pertinent question why it is not used to increase the amount of relief granted. I want to say quite definitely that the Board’s expenditure for the current year was based on an estimate to absorb the 'whole of the available income. If the estimate has gone wrong and the demands have been less than anticipated as a result in the fall in registrations, which in turn iincreased the income from taxation it may he the subject;

o,f some criticism, but I feel that it is not to be compared with, the criticism that would be forthcoming if at tire commencement of the . winter we were facing an empty exchequer and proposing cuts in allocations. This eventuality has once happened and you will recollect some of the results. In 1932, in order to provide additional relief for the winter permission of the Government had to be sought for expending weekly a sum •nn excess of our anticipated income. In theory that would be alright if in the months following we coulci always rely on the turn of the tide as far as expenditure is concerned, blit this is precisely what did not happen in 1982 when the registrations at the end of the calendar year were in the region of 7000 in excess of tlie figure at the corresponding period of the previous year. This means cuts in allocations and general economies and that, procedure was no more popular than having a cash balance seems to he. In fact, as the following winter approached the position was becoming alarming as the numbers began to soar upwards earlier and more .steeply, and by June 1933, had passed the record of the previous winter. It was at this istage that the building subsidy scheme was again introduced on a wider basis. The beneficial result of tlivs. scheme soon began to have its effect.'- Tho effect was cumulative and by the end of the year the position seemed to lie . again under control. It is surely bettor for the unemployed to be in the position, we now find than to have a. recurrence of the period I have just described. The. Board last week made provision, ■as explained in the House- by the Alinister, for the expenditure of extra relief estimated to cost £160,000 —blankets boot;’,, rations, and increases in country allocations.

“May .1 conclude by a ,simple illustration of how the building scheme operated and why it so beneficially affected the' fund. The maximum subsidy per man taken from the register and directly employed on the building was 22s 6d per week. . Thousands of the men so transferred from Scheme 5 to building construction were receiving a larger amount as Scheme 5 workers than wan paid as subsidy. In addition, they became contributors, on the- basis of their full wages, and, above, all each man directly employed on a'Building gave employment to two others in related industries. Surely there is more merit in this picture ot the building scheme than there is disparaging the scheme because some of the buildings were carried out by wealthy firms ?”