“STARTLING” IDEA

Grey River Argus, 11 October 1930, Page 8

“STARTLING” IDEA

PJIOFESSOR FISHER’S STATEMENT - RETRENCHMENT AND ECONOMY. | (By “Investigator” in the “Katipo”) I The startling idea of one genera- j tion often becomes the platitude of j the next, and while a recent statement I of Professor A. G. 3. Fisher on the [ subject of economy in Government ex. penditure has beeu considered as d j . new and unusual point of vie-w it Tvould be better if it were the settled I conviction of. the Dominion at large. ' | Professor Fisher, when comment, j ing upon the retrenchment cry is re-J ported to have said that examination proves that there are very few ? directions when it would be desir-J able to curtail. Government expendi. J ture, and that, on the whole, the I ' services of the Government were the (cheapest things which were purchas- | cd in New Zealand. In making that ’ statement, Professor Fisher was do- | ing no more than affirming the belief of most writers on public Fin-* J ance to.day. Men as different in i temperament s.nd background as Seligman, of Columbia, the Hon Hugh ) Dalton (new Undersecretary of Foreign Affairs in the British Cabinet; . and Sir. Joseph. Stamp all believe that ■ once the State enters upon expenditure any substantial reduction in thc { amount spent is not feasible. The grow ing complexity and tenuity of modern ’ civilization makes sweeping economics impossible because of the dependence | of the whole upon its parts. The Govi ernment could not for instance, cm j bark upon a programme of wholesale dismissals in the Public Service or declare a “holiday” in the construe-i tion of public works without adding | substantially to the weight of une a1 ployment, not only in the case of. the men directly * concerned, but ju J Ithc case of employees of private concerns which are able to obtain Government contracts. The immediate ( [ cessation of public works would af- ’ feet titormeu, packers, clerks, and typist no less than navvies and engineers. » WEAKNESS OF ECONOMY CRY. In addition to this country, a great ! ! deal of exj icnditure of the State is j made in three large departments—the i Railways, the Post Office, and the . Education Departments. In answer te criticism some years ago Mr. A. D. M’Leod, when Minister of Lands, drew attention to the fact that the greatest percentage of State employees \were ; in these Departments (the 1927 Year ( r Book, which holds the last available I figures, shows them as totalling 37,400 • out of a grand total of 54,800) and ask ed where the reductions were to be ’ made. Reductions, of course, are not! , often politically possible, aud are economically possible scarcely more .' frequent! y. j The weakness of the economy cry ’ is manifest. Each section demands that the economy shall be in some > a other direction than the one in which ' it happens to be interested. Any largescale raid on-the railways would arouse I much greater opposition than has beeu j i shown to the reduction in the Defence i ] Vote, severe economies in education ] j (which is costly, though probably not I I worth the annual vote) would be even more stubbornly resisted, and reduc- < tions in postal services seem already } possible. For years there have been discussion of the trend of increased public ex. penditujie, the growing numbers of Pub lis Servants, the interference with private enterprise, But it must be obvious after very little thought that the increased public expenditure came about because the public desired it. If < there had been no demand for backblocks schools our education bill woul ! not run into £4,000,000 per annum, and the backblocks children would be some j what worse off when it came to writ* I ing a letter. If the motorists them.f selves had not wished for well-surfac- j led roads there would have been n<*. I Main Highways Board and our yearly I .expenditure on roads would not have been up at such a sharp curve. The | concern at increasing public expendi-1 I ture conies, in fact, from the historic ' idea that all taxes are an evil. Jbc I early economists thought that most private expenditure, which taxation cheeked, was productive, and that pub. lie expenditure, which was paid for by taxes, was unproductive. But, as the Hon. Hugh Dalton has pointed out. “The idea is fallacious and the sup-| J posed distinction which it implies lus • been long discredited- The only econ- . oiiiic te-st of the i productiveness ’ of j any expenditure in its productiveness ( of public welfare, and public expendi- i ■ ture on education and health, for ex. > ample, is often productive of greater J ' economic welfare than private expendi- , ture on luxuries, or even new capital | goods. ’ ’ I WHAT IS BEST WORTH WHILE, j l The incessant head-shaking over ( l increasing public expenditure is disI missed by Dalton thus: “A long sue. cession of Chancellors of the Exehe- ‘ quer have arranged successive Par. liuments upon this theme with traditional gloom and . set phases of dis- ! may. But a Chancellor of the. Ex. chequer deprecating in the House of Commons, expenditure sanctioned ‘I by the Cabinet, of which he is, >r .3 should be one of the most influential members, is surely a slightly absurd spectacle. For, if he has not considered the expenditure to be reasonably neees : sary, he should have resigned.” The trend uf increasing expenditure, in fact, is world-wide. Once embarked . upon, as has been stated above, it is ■ almost irrevocable. To a country such as New Zealand, where most public • undertakings arc financed with loan money, this has a very urgent- meaning. If we agree with Professor Fisher and with the conclusion of the general run of authorities on public finance, that’ economies . are not merely difficult, but impossible, we should realise that ,in making any expenditure we are: committing ourseh-es’for good. We' should realise that in the.country ,whi« h ■ir. not woaHliy, but poor in mineral placed at .a: great • distance from the . world’s markets and haudicapped by

enormous internal transport difficult ties, the criterion of future expendi. ture is not what is worth while, but what is best worth while. We must, in future, cut our coats according to our cloth. We are in the position of a man who realises that he should have a life insurance policy and who wishes to play golf. And we should give up the golf.

Some increase in public expenditure > in the future is inevitable. But a rcali j safcion of the position which we create may help to deter us from increasing ’ that expenditure at too fast a rate. It , should also help us to realise that our State trading Departments should be placed on a better footing—that the Railways, for all their present deficit, \ pay no land tax and no local rates, 1 and the Public Trustee does not stamp j his receipts, and that reserves must be built up for replacements and for bad times. These reserves can be created in only one way by increasing the cost of some services, and that fact should I be faced. We should know, for in it- / ante, what is the Position of the Post j and Telegraph Departments; whether L the telegraph and postal services arc ! really functioning at an economic rate, j lor whether they are running at a loss , | which is covered by the profits on tele | j phone and toll services, as has been \ I claimed. We need an economic stock- J taking, a sounder basis for our State a . enterprise and the knowledge that as ] j our present level of expenditure is iu- | . evitable we are getting good value for | it.