THE PUBLIC SERVICE

Manawatu Standard, Volume LII, Issue 73, 25 February 1932, Page 10

THE PUBLIC SERVICE

/ WAGE CUTS OPPOSED. MEMORANDUM FOR COMMISSION A representative deputation from four organisations in the Public Service—the Post and Telegraph Employees’ Association, the Railway Tradesmen’s Association, the Amalgamated Society of Railway Servants, and the Locomotive Engineers, Firemen and Cleaners’ Association—lias drawn, up the following memorandum for presentation to the Special Ecoridmv Commission, through the Prime Minister, setting out the views of the Publio Service on matters at present under consideration by the Commission: “We thank you for giving us this opportunity of placing our views before you, and, as we recognise that the present financial crisis has added so heavily to your load of responsibility,, we wish to assure you that we come in a helpful and constructive spirit. We will be as brief as possible, but it will dear the way for what follows to explain that, while we are particularly anxious to protect the interests of our thousands of members—who are State servants—we are fully alive to the fact that the very general nature of the country’s economic troubles makes it imperative that remedial action shall he on broad lines, calculated to relieve the general tension, and that special consideration of sectional interests would be unfair and impracticable. “In a sentence, our status as citizens is pre-eminent over our positions as State servants. In passing, however, we wish to refer tq the tendency, frequently demonstrated by deputations to the Government and by way of published statements, to specially single out public servants for attack, which, perhaps, indicates a fairly general opinion that normal rates of salary and conditions of State employment are comparatively so good that they should be the first to be reduced in the cause of economy. Such opinion is very ill-informed, but so far as the Government is concerned the case for public servants generally is so well known that recapitulation is unnecessary, and we will content ourselves by saying that, in consideration of the efficient and useful services they render, any further inroads on the economic position of public servants Should be tho last resort of a Government faoed with difficulties in balancing its Budget. THE PAST TWELVE MONTHS. “Wo believo we are only stating a fact when we say that the steps taken last year to meet the financial situation, namely, salary and wago reductions, taxation increases and alteration of, Arbitration Court awards, have failed to produce the results expected of them. Internal purchasing power has diminished to tho extent of paralysing business. Imports have fallen away to the point where the loss in Customs revenue almost counterbalances the Treasury gain from the wage reductions, and the ability of the payers of income tax dues to meet the claims against them has been very substantially affected. “In addition, local manufacturers, experiencing reduced demands for their products, have paid off their staffs, thereby adding to the expense of unemployment relief, and also to the claims on local authorities for charitable aid. The restriction of trade in all directions has added thousands to the unemployed, and has accentuated the resultant hardships of poverty and its attendant evils. In addition to the effect on the adult population, the influence of unemployment and of blind alley occupations upon the future citizens of this country is a grave responsibility upon the Government.

“Poverty, misery, and hunger cannot steadily increase in any Community without the grave risk being run of loosing social forces of an uncontrollable and even terrifying nature. The urge for food, oombined with the ‘herd’ instinct for the protection of weaker dependants, is tho strongest passion of mankind, and a realisation of the present danger is becoming increasingly apparent among people in all walks of life. “The search for a solution, or of any thing tending, to assist in that direction,, is engaging the attention of all thinking citizens, so it may be said with certainty that the soil was never more fertile for the reception of any ideas possessing reasonable merit, which might be advocated as alternative to tho Government’s present policy. FIVE POINTS SUBMITTED.

“Our association, therefore, in their desire to assist in the bringing about of a general economic improvement, at the same time easing the Burden of the Government, direct the attention of the Government first, and then of all sections of the community, to the following points which are aimed, firstly, at affording the Government temporary relief without the hardships of wage reduotienSj and, secondly, at increasing production and industry, the stimulating of consumption combined with the regulation of currency and, within certain limits, the stabilising of internal levels: “1. The issue of Treasury notes as legal tender to a limited extent not greater than the Budget deficit, or, preferably—“2. Control of currency by a central hank or currency and exchange board having statutory' instructions to use the recognised machinery of central banking in order to maintain our local price index within reasonable limits, suoli hank or hoard to he the only issuing authority in the Dominion. “3. Mobilisation of gold, Stato monopoly of gold purchase, and utilisation overseas of gold reserves. “4. A closer land settlement policy. 5. Reduction of Government’s interest bill by collection of income tax half-yearly. TREASURY NOTE ISSUE.

“The dangers attendant upon the indiscriminate issue of inconvertible notes are well recognised, but tho safeguard of a definite limit removes the main objection. This system has worked successfully, and it would enable the Government to negotiate it? deficit temporarily, with much less detriment to the country than the continuance of ita policy of last year. The placing of the notes upon the market at intervals would not cause inflation because the already restricted monetary circulation is inadequate—in short, it would help to restore the previous monetary balance. “The restricted currency in actual circulation to-day is shown by tho following tables: Value of exports. Money in circulation. 1913 .. £2lj millions £l3 million notes plus gold coins. 1930 .. £554 millions £6 million notes, no gold. Faotory output. Wage bill 1911 .. £l&3 millions £64 millions. 1929 .. £93 millions £l7 millions. CURRENCY CONTROL. “The realisation of stable prices is the greatest necessity to-day in the interests of producers, businessmen and wage-earners generally. This is endorsed by the Macmillan Report, President Hoover, Hon. R. McKenna and- numerous prominent authorities on banking and commeroe. The disadvantages of ever-changing price! levels

and the consequent effect on industry, commerce, farming and business of! Parliament and .Arbitration Court ! awards are obvious. The present index of stability is falsely taken as the exchange rate instead of the ‘all-groups’ ■ price index. It is just as easy to control the mean price level as to alter wages, “Currency control will ensure stable prices for primary products, stimulate industry, and enable it to function without fear of depression and unemployment. Goods can be received from overseas without affecting internal prices, internal financial burdens can be met in the same money unit as that in which they were incurred, while trade cycles of alternating booms *.nd slumps would disappear. All currency being issued and controlled by a central bank of statutory board, the only legal tender would be that issued by the State, the community through the bank or board would be enriched by all new issues, value being taken from no one’s pound, and taxation would be correspondingly reduced. Confidence would be restored and a return to internal prosperity obtained. MOBILISATION OF GOLD. “The Government’s encouragement of the search for gold should be followed by the purchase under State monopoly of such gold and of gold ornaments and trinkets the organised buying of which is already being undertaken for private profit. “The advantages accruing from the mobilisation of all free gold in the country, by all fair means, is mo6t obvious. Further, the acquisition of and use 'eas by the Government of gold rCserW* held in New Zealand would be of immense benefit to tbe country. LAND SETTLEMENT. “A most practical suggestion is the adoption of a policy of closer land settlement. We believe the .real hope of our unemployed lies in a vigorous and practical policy of developing small holdings. Our population has increased by 33 per cent, since 1912, but our land holdings have only increased by 16 per cent., and most of this increase in holdings! is in urban areas. Indeed, the acreage held shows this, for the 40,000,000 acres of 1912 has only increased to 43,000,000, or an increase of 7$ per cent. “Some means must he found. whereby men can have acoess to pieces of land adequate to provide for the support of themselves and their dependants. If this were supplemented by a System to make available (say) acre holdings for men engaged in * casual work in towns and cities, a big step would bo taken toward finding sustenance for the many families now dependent on public funds. “Even if these small holdings aro let rent free for a year or two, and the rest capitalised for later payment, the State stands to gain almost immediately by the lessened calls upon its funds and immensely in‘the end by building up the spirit of sturdy independence which comes from the tilling of the soil on one’s own holding.

COLLECTION OF INCOME TAX. “What the Government needs sorely at the present time is ready mqney, and we submit that if income dues were accepted in half-yearly instalments , this need would be met to a certain extent, while the circulation of currency would also be speeded up to a considerable degree. We realise that hardships might accrue in some cases, but, on the other hand, it would provide for the practical demonstration of patriotic help by those with the means, of which Great Britain recently set a striking example. “Wo give precedence to these proposals, because in them lies the greatest good for the greatest number. In our opinion a return to higher and stabilised levels is imperative in the interests of the country, and we are fully prepared in the meantime to pay the higher prices resulting from an upward trend, which will benefit all in the long run, if accompanied by an increase in the spending power of rhe people. “Only by these means, by the restoration of confidence, and the usd of capital now locked up,, can the present situation be improved, while on the contrary further wage reductions will re-act with disastrous effects on almost every section of the community. v “Should these proposals not find favour with you, we submit alternatives which should more evenly Bpfead the burden of sacrifice, still without recourse to further wage reductions: r—“6. The flotation of a fresh internal loan at a lower rate of interest to be popularised to the greatest extent ny the Government. “7. A conversion loan, and conversion of tax-free bonds to taxable bonds. 1 “8. Reduction of interest rates and rents by Legislative enactment. LOANS. “With the resultant saving in interest, a conversion loan, and the flotation of an internal loan, are matters which should not present insuperable obstacles to a country with New Zealand’s record in the Great War. Citizens who were prepared to give their sons should not now withhold their savings in a time of national stress, and steps should be taken by the Government to popularise their internal loans by material means as well as to seek tbe aid of the Dress in appealing to the patriotism of citizens in meeting the enemy on the homo front, namely, unemployment. “If the Australian Commonwealth could arrange a satisfactory conversion loan, at the same time enhancing that country’s credit in the eyes of local and overseas investors, New Zealand should certainly be able to do likewise. Prominent newspapers in their leading articles hold the opinion that a compulsory conversion is tantamount to confiscation, nevertheless they agree that receivers of interest should accept the same percentage _ income reduction, apart from. taxation, as the wage-earning community. INTEREST RATES AND RENTS. “Although we are living in the midst of a superabundance of good things, tens of thousands of good and worthy citizens are denied access to a fair share of them bv reason of unemployment and restricted spending power. It is clear to us that a further reduction in the income of wage and salary workers is not the solution. Recent experience has shown that only too clearly. The wage and salary worker spends on his domestio needs nearly 100 per cent, of his earnings, and to reduce those earnings is, broadly speaking, a curtailment of the circulation of money. “We, therefore, submit that to further reduce salaries and wages will not help the Government out of its dilemma —it will only make bad worse. Indeed we believe a step in the other direction would be the most statesmanlike one to take. Either that, or steps which will result in the wage and salary earnings going further than they do at present. In this connection the rent and interest field is the one that opens up the greatest possibilities. “While salary and wages are ranidly returning to the 1913-1914 level, house rents are disproportionately higher than in that year. A compulsory reduction of all rents by 20 per cent, would 'still leave the landlords a, decided advantage over the 1913-14 level, and would allow tenants to spend in other directions moneys that are now earmarked for rent purposes. It would

[also make it possible for the large porIcentage of trading people who ® r6 j l . O leading a ‘hand-to-mouth trading existence to make ends meet. We seriously put this proposal forward ior. by its adoption, we foresee a revival of trade, with consequential demands for New Zealand-made goods and commodities, leading to a call for the services of men now engaged on reiier work. ’if . “If rent reductions were supplemented by compulsory reduction of all existing interest rates by, say 1 P® r cent, on State, local . body and mortgage loans domiciled in New- Zealand, the relief would extend to those people who have been purchasing their own homes. We estimate that a reduction of 1 per cent, would bring relief to the whole community of approximately £5,000,000. The saving to the Treasury would b 6 £1,165,000; to local bodies £368,000. the balance representing the reduction . in mortgage interest. As a very high proportion of these loans was arranged when the spending power of the interest involved was much lower than it is to-day, no great hardship would be imposed on the holders of the securities in dealing with them in this wav, especially as they have the P r j a *f r stake in balancing the Budget and the stabilising of values at the highest possible level. “It may be ‘unpalatable medicine, _ but so were the wage reductions of a year ago, with the difference that one should stimulate, where the other has been proved to react. While the wage reductions had the disadvantage of reducing the circulation of money, a reduction of rents and interest rates would have negligible effect in *his direction and would go a long wav toward assisting the State and local bodies to balance their annual accounts. At least it would be a more equitable way of assuring equality of sacrifice. CONCLUSION.

“There is no virtue in bankrupting a large percentage of the community in an attempt to enable the State to meet its commitments. The State depends on the prosperity of all sections of the community, yet the spectacle of a solvent State consisting in the main of bankrupted individuals is one which will be realised if a change in - policy is not forthcoming. “It has been argued that because wage-earners have been reduoed but 10 per cent., and the farmers! income has dropped by, say, 40 per cent., no hardship and injustice would be done wageearners by further reductions. It does not require much imagination to visualise the effect on the business man, the landlord, the rate and tax collector, and the reaction on the farmer himself if such a course be further pursued. “No other State has been able to return to prosperity along the road of deflation, and it is not to be expected that New Zealand will be an exception. Recent events both in Britain , and America are in the direction of higher price levels. “The rejection by the Government of all or any of the suggestions made will not convince the public in general, and organised bodies in particular, that the Government’s inaction and possible continuation of their 1 past policy is for the betterment of the country. Public opinion is being formulated on all sides in a steadilygrowing recognition of tbe need for currency control, and for different methods of improving the current economic position from those in practice. ■ , “We believe that the views we have taken the responsibility of putting forward are held by a large proportion of the community. From that standpoint alone they should prove useful—as an indication of what, the people are thinking. Our own members think that their direct interests are best served by taking into account the interests of their fellow citizens, and it is from this angle we earnestly hope' there is sufficient that is useful m •what we have put forward.”