THE New Zealand Herald. AND DAILY SOUTHERN CROSS. MONDAY, NOVEMBER 8, 1920. THE BASIS OF THE BONUS.

New Zealand Herald, Volume LVII, Issue 17622, 8 November 1920, Page 6

THE New Zealand Herald. AND DAILY SOUTHERN CROSS. MONDAY, NOVEMBER 8, 1920. THE BASIS OF THE BONUS.

The Prime Minister may have better reasons than appear on the surface for questioning the figures on which the Arbitration Court has based its latest bonus of 9s a week ; certainly there is every justification for the investigation of the cost-of-living statistics which Mr. Massey has ordered. In announcing the bonus Mr. Justice Stringer said: "The Court has now received a report from the Government statistician showing the further increase in the cost of living during the half-yearly period ending September 30." This bald statement is not satisfactory to the general public, nor is it fair to employers who are compelled to dance to the tune arranged between the Government statistician and the Court. The report should be made public. It is not available through the usual official channels, and the monthly Abstract of Statistics contains only an uncertain indication of its character, because the statistics do not include all the factors on which the Court bases its judgment. It is admittedly difficult to establish an accurate test of the cost of living; the very difficulty of securing accuracy makes it all the more necessary that the data laid before the Court should be published for open examination and criticism.

_ The confusion of the present situation is increased by the fact that there have been differences of opinion between the Government statistician's office and the Arbitration Court as to the fairest basis for calculating the cost of living, and the Court has already revised its system. To make this clear it is best to glance for a moment at the statistician's method. In the Abstract for April of this year, Mr. J. W. Butcher, who was then in charge of the office, classified the, expenditure of the average household into five groups, divided in the following proportions— _ _ Percentage of Group. Total Expenditure, Food 34 Housing 20 Fuel and light . . . . 5 Clptninfr 14 Miscellaneous . . . . 27 Total 100 Very full particulars, gathered from 25 centres throughout the Dominion, are published by the statistician, covering the three food groups, groceries, dairy produce, and meat. Statistics of house rent are also collected in 25 centres, but the index numbers for fuel and light cover only the four chief centres. Retail prices of clothing are, in the opinion of the department, not capable of accurate statistical measurement, and no figures are published, while the fifth group, miscellaneous, clearly admits of no calculation, but the department considers the increase in this class Jess than the average because it . includes rates, tram and train fares, and other items which have not been raised in proportion to the increase in the cost of living. In his April article, Mr. Butcher came to the conclusion that, as the clothing and miscellaneous

groups could not be accurately measured, the increase in food prices alone gave the truest indication of the general increase in retail prices and the cost of living. The Court has never accepted the basis put forward by the statistician's. office. Up to November, 1919, it based its awards on the three food groups and rent, a combination which gave a result less favourable to wageearners than the three food groups alone. In November it decided to include clothing and fuel and lighting, all the known factors except the miscellaneous group. The three bonuses which have become operative this year have Deen determined on this basis, the statistician having made special inquiries into the cost of clothing from time to time for the benefit of the Court.

The' question arises which of the three bases is the fairest, that first adopted by the Court, that now accepted by it, or that recommended by the statistician's office. It will be observed that the Court has swung from one extreme to the other, from a combination of food and rent which gave an artificially low estimate of the cost of living to a combination which excludes one factor which is below the average. This change in the policy of the Court partly accounts for the large bonuses awarded this year,, one being generally referred to bv the recipients as the "clothing bonus," in honour. of the Court's decision to widen the basis of its determination. Many will share Mr. Massey's surprise at the dimensions of the latest bonus. Comparing the returns for March and September, the index number for groceries rose from 1843 to 2052, that for dairy produce from 1641 to 1745, that for meat from 1647 to 1664, and comparing the March and September quarters rent rose from 1100 to 1129, and fuel and lighting from 1719 to 1899. There have therefore been fairly heavy increases in groceries— now" show a tendency to fall—fuel and lighting and dairy produce and nominal increases in rent and meat. To what extent

these increases justify the new bonus is a matter that should be openlyexamined, all the statistics ' being made available for the public. Without attempting to pre-judge such an investigation, it may be pointed out that the scale of the Court's bonuses is wholly irreconcilable with the statistician's belief that the cost of living is best measured by food prices alone. The following table shows the increases of food prices over three half-yearly periods and the bonuses awarded for the same periods:—

Increase Index Per cent, over Bonus o . -„>.,„ No July. 1914. Per Hr. Sept., 1919 .. 1585 4P.13 Id March. 1920 . . 1730 61.68 lid Sept , 1920 . . 1849 72 80 2id By the statistician's method of estimating the cost of living the latest bonus should have been appreciably smaller than its predecessor the Court has made it 50 per cent. more. It is impossible, on the published information, to say whether the statistician or the Court is right, but obviously systems which produce such curiously divergent results require reconsideration. The inquiry promised by the Prime Minister should at least determine the fairest basis of calculation and place the public in possession of all the information necessary for an independent judgment.