STATE MINES

Grey River Argus, 10 February 1933, Page 8

STATE MINES

ATTACK MADE By Chambers of Commerce (From Our Parliamentary Reporter.) WELLINGTON, February 9. The Associated Chambers of Commerce have recently issued a statement attacking the State Coal Mines, and the Minister of Mines has dismissed it. The Chambers’ statement is as .follows:“The reaction of the ordinary taxpayer to the report on the working of the State coal mines, recently presented to Parliament, is possibly one of satisfaction at the fact that a net profit of £3,146 was made, despite bad trading conditions (says a statement by the Associated Chambers of Commerce). What is not generally appreciated is that when extraneous revenue is disregarded, there was actually a substantial loss on the year’s working. The Minister of Mines (the Hon. C. E. MacMillan) has made a public denial of a statement that the State -collieries arc not returning a profit to the State. Nevertheless, on analysis the profit on the State coal mines vanishes like a pricked bubble. Included in the latest accounts is the sum of £8402 for royalties received on account of coal taken from Crown lands. One private company alone paid £3,633 of these royalties—more than the profit shown on the State mine. It is therefore clear thaj this “profit” has not accrued from the State undertaking .as a working proposition, but that there is actually a substantial loss on its working operations. The position can be shown as it is in the accounts only because heavy royalty payments made by competitive private companies have been taken in as revenue to the department, instead of being credited to the Consolidated Fund. In reply to this, it may be said that the State department subsidies the cost of workmen’s railway and bus fares, supplies coal to employees at reduced rates and makes grants for street maintenance. This it does, but on the other hand the department pays no income tax, no rates, no royalties and no heavy traffic fees. The whole basis provides no comparison whatever with private companies, which have to meet these charges and try to carry on business against a State competitor that is exempt from them. The National Expenditure Commission has pointed out that the State is losing a considerable sum by way of royalty in respect of the State collieries, and it suggests that this and all State enterprises should bear the charges applicable to similar undertakings conducted by private enterprise. A weighing-up of State trading in coal-production in New Zealand is timely in view of a recent' decision of the New South Wales Government. The latter, declaring that the cost of producing coal from the State mine at Lithgow was 5s a ton greater than at private collieries, resolved in July last to close down the mine altogether, and then decided that the mine be reopened, but that in. future it would be required Io pay the same rates and taxes as all private mines, including municipal, Federal and State taxation. This is a decision of the utmost importance. It recognises an inescapable principle of taxation and it marks the turn of the tide of so-called progressive legislation that gave tax-exemption to State trading departments and still looked for taxation revenue from private concerns that had been made profitless in consequence. For the sake of fair trade, the relief of the general tax-paying community and the employment of the people, the New Zealand Government would usher in a

new era if it followed the example of the. New South Wales Government in subjecting the State coal mines to the same rates, taxes and charges as are required of private traders, and if it also placed every State and municipal trading department, as well as 'power boards, in the same position. THE MINISTER’S REPLY. To the criticism made by the Associated Chambers, the Minister for Mines (the Hon. 0. E. Macmillan), replies as follows: — The Minister said that, in commenting on profits from the State mines last year, the Associated Chambers said what was not generally appreciated was that when extraneous revenue was disregarded there was actually a substantial loss on the year’s working, and on an analysis the profit on the State coal mines vanished like a pricked bubble; that £8402 for royalties received on account of coal taken' from Crown lands was included in the latest accounts, and that one private company alone paid £3633 of tljese

royalties, more than the profit shown on the State mines. “The deductions to be drawn from these statements are wholly incorrect,’’ said the Minister. “The amount of £8402 for royalties received is that shown in the receipts and payments accounts, the amounts appearing in the general profit and loss account being £5007 for royalties earned from the State coal reserve at Greymouth, and £7Bl net royalty, from the State eoal reserve at Waikokowai. M'Donald colliery area. Dealing with this latter item. First: The land which was freehold, was purchased and substantially developed -by the Government at a cost of over £53,000 out. ol funds from the State coal 'mines account, and consequently, any profit therefrom is rightly a credit to the State coal mines account. In regard to other royalties—those from

I the Sitate coal reserve at Greymouth—he State coal mines account had t< bear the cost of prospecting and bor ing, and, in many cases, expense wa: incurred in driving and development work and the cost of supervision gene rally of the small co-operative parties working thereon. PROFITS OF UNDERTAKING. “Some of the largest competitors of the State coal mines have leased portions of their coal-bearing lands and also take credit in their accounts for royalties received. The profits of the -whole of the undertaking of the State coal mines, including depots, 1931-32, before providing for a contribution of £7885 to the sinking fund for the redemption of loan capital and a special contribution of £5OOO to the Consolidated Fund in respect of ad-

iministration expenses* of previous years, was £16,032, so that even excluding the royalties which have been credited, the State eoal mines account I would still show a handsome profit. “In order to remove any misappreiliension it is pointed out that royalties !on Crown Lands, which are outside the two State coal reserves, are credited to the Consolidated Fund, the Grevmouth Harbour Board, the Westport Harbour revenue, and other accounts as prescribed by the Coal Mines Act 1925. It should also not be over looked that the State eoal mines account is a liberal supporter of re search, and last year the account paid towards cost of research work carried out by the Department of Scientific ami Industrial Research was about £ltm more than all the other coal mining companies and coal mine owners toge ther. ’ ’