IS IT ECONOMIC?

Nelson Evening Mail, Volume LXXI, 4 May 1937, Page 4

IS IT ECONOMIC?

PUBLIC WORKS PROGRAMME VIEWS OF COMMISSION The taxpayers have reason to feel some concern as to the economic value and timeliness of the projects comprising the Government’s public works programme (says a statement by the Associated Chambers of Commerce of New Zealand). In a recent statement, the Minister of Public Works denied that the works were uneconomic, and said the projects “were reviewed in the minutest detail by men of wide experience and proved ability.” On the other hand, little heed appears to have been given by the Government to the very definite opinions expressed, and the guiding principles laid down, by the National Expenditure Commission of 1932, which went very thoroughly into almost every aspect of Government expenditure.

£10,000,000 PROGRAMME The following is how the Government’s programme of expenditure on public works in 1936-37 is made up:— £ Railways 2,350,000 Public Buildings .... 1.300,000 Roads and highways 3,760,000 Land development .... 1,550,000 Hydro-electric supply 510,000 Other works 980,000 £10,450,000

Of this total, £5,940,000 represents borrowed money. The Expenditure Commission said that “the financial position of the country was in no small measure the result of extravagant expenditure out of loan money on. schemes which, from a national point of view, had not justified the expendi-, ture which had been incurred on them.” The Minister of Public Works has stated with regard to uncompleted railway lines that it would be better to complete them and get the benefit of whatever developmental value they possess, than to allow the exepnditure previously incurred to continue to be a dead loss. There is reasoning in this, but would it not have been possible to have made financial provision in 1936-37 merely for the maintenance of such uncompleted railway lines as can be completed with advantage, without entering into further construction, which could have been delayed as a desirable work for the next inevitable depression? The mistake made in the past of borrowing and spending too freely in prosperous times is only being repeated. Apart from railway construction, the public works programme includes provision for £790,400 to be spent on railways improvements and additions to open lines. How much of this is represented by accrued depreciation which is being spent on new capital works, instead of being set aside to provide a fund for the replacement of assets as required in the future? The item for public buildings will bring the total already spent by the State on public buildings in New Zealand to approximately £20,000,000. The Expenditure Commission, in expressing the opinion that the expenditure of large sums of loan moneys each year on such buildings should cease, said the period within which the public debt was being funded was 60 years, and it was obvious there would be charges on taxation for many years after assets which were being created out of loan money. The result, it said, must be an incerasing burden on posterity and an increasingly pressing burden on general taxation for interest and amortisation charges.

INADEQUATE NATIONAL BENEFIT

In the matter of expenditure on roads and highways, the Commission stressed its opinion that the Dominion had reached a stage in its development far ahead of the population requirements, and said it was this rapid development, coupled with a consequential dependence on loan moneys, which was partly responsible for the unemployment evil. It considered that road construction should be the first to stop. The item “land development,” listed above, includes irrigation, water-supply and drainage, swamp land drainage, native land settlement, and settlement of unemployed workers. In regard to lands improvement, the Commission says “the history of State enterprise in land development projects generally is such that it appears to be certain losses will accrue therefrom, and it is questionable whether the national benefit by way of increased production will compensation for the additional charges which will be thrown on taxation . .

The experience of the State in connection with land-drainage and riverimprovement schemes has been disastrous . . . We are forced to the conclusion that these schemes cannot be justified by the results obtained .-. It is certain that the national benefit accruing in no way compensates for the large sums of public money which have been sunk in these ventures . .

If land is worth developing, private enterprise will be attracted.”

Finally, in connection with hydroelectric supply, the Commission said it was definitely of opinion that the present stage of development in the matter of hydro-electric power was sufficient for the needs of the Dominion for many years to come, and that, in view of the uncertainty as to what would prove to be the cheapest form of power development in the future, any move for the commencement of further works, whether by the State or by local authorities, should be strenuously opposed.

The National Expenditure Commission, which had powers and privileges giving it access to information not available to the genera] public, has therefore expressed no uncertain opinions on the types of undertakings which broadly comprise the Government’s present ten million pounds public works programme. The nature of these opinions is such that taxpayers will feel more is needed than just the Minister’s denial that the present programme is uneconomic.