MAIL CONTRACT SUBSIDY.

New Zealand Herald, Volume LXVI, Issue 20263, 24 May 1929, Page 10

MAIL CONTRACT SUBSIDY.

It is the deliberate intention of the Government that the Southern norts of call for the proposed subsidised mail service shall receive full payment of harbour dues in respect of the two steamers to be engaged in the contract. That is made perfectly clear by the statement of the Postmaster-General. The omission of the exemption clause was not due to oversight, for the matter was submitted to the Minister, no doubt through the departmental officers drafting the contract conditions in accordance with the Pacific mail contracts, but was due to an explicit decision that no such exemption should be granted. Since this decision involves many thousands of pounds, with a corresponding inflation of the prospective subsidy, it would be referred to the Cabinet, so that it may be concluded that the present Government has proclaimed the principle of no privileges—at the expense of harbour boards —for subsidised mail steamers. It is, however, curious that a decision of such vital importance should not have been announced by the Prime Minister in the statement intimating that the conditions had been finalised. There need not have been any diffidence in acknowledging the Government's determination to reverse the policy established by a previous regime under Sir Joseph Ward's leadership, since the present Ministry professes an entirely different conception of the relations between the State and private enterprise and the new principle is undoubtedly sound. As Mr. Donald says, the exemption from dues is not fair to harbour boards. Nor is it fair to taxpayers. The effect is to conceal the real cost of a subsidy by special taxation of ports of call, and it is wrong to pay a subsidy at all unless it can be so completely justified that the whole cost may be fairly charged to national taxation. Of course, if the Government scrupulously practised its professions, it would refuse to sanction any shipping subsidies at all, for nothing in the realm of State interference has been more strongly condemned by shipowners. However, having enunciated the principle, it cannot be content with a particular application, especially as its anxiety to be fair to the harbour boards promises a very substantial increment to the revenues of only three South Island ports—the benefit to Wellington, owing to its lower charges, will be small. The Pacific mail contracts were renewed as from April 1, evidently beforo the Government had laid down the new rule, as the contract steamers are still claiming exemption. Until the conditions can again be reviewed, the Government will presumably ask Parliament to compensate the Auckland and Wellington boards for the loss of dues of which they arc being unfairly deprived. It will, of course, maintain the principle even if Parliament decides that the cost of subsidising the Dunedin-Melbonrne ser vice, including the increment to the income of South Island harbour boards, is too great to be imposed on the taxpayers of the whole Dominion for the benefit of only a section of the community.