THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, NOVEMBER 23, 1932 PUBLIC WORKS POLICY

New Zealand Herald, Volume LXIX, Issue 21347, 23 November 1932, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS WEDNESDAY, NOVEMBER 23, 1932 PUBLIC WORKS POLICY

The profound change which has overtaken public works policy, the drastic curtailment of activities forced by circumstances on this great department of State, are illustrated in complete form by the statement which has just appeared. There has been plenty of time to grow used to what is revealed, for the year is more than half over, and at its beginning Mr. Coates stated that the expenditure of loan money was likely to be restricted to a total sum of £1,231,000. Actually that figure will be substantially exceeded, for the amount is now given as £2,634,700. Since Mr. Coates made his preliminary statement a loan of £5,000,000 has been raised in London. Of this £4,000,000 was required for the redemption of Treasury bills. In the Budget it was explained that onehalf of the remainder would be devoted to general public works purposes and one-half to hydro-electric power works. This helps to explain how the March estimate of available funds has been increased by more than £1,000,000. Even at the larger figure the allocation means a tremendous reduction from the sum of £4,815,500 spent last year, and it appears absolutely insignificant compared with the outpouring of £8,300,000 of loan money in 1930-31. The change which has occurred is exemplified by nothing better than the statement that only £IOO,OOO would be spent this year on railway construction, apart from improvements and additions to open lines. Last year the expenditure was £590,500. Next year it may easily be nothing at all. A chapter in the history of New Zealand development and transport has been closed. It is dangerous to prophesy, but there is little risk in suggesting that railway building will never again resume its old place in the public policy of New Zealand. Some six years ago, in the Financial Statement of 1926, Mr. Downie Stewart forecasted the need for a tapering off of loan expenditure on public works, and particularly for care to see that there should be a sound assurance of prompt returns where money was spent. The Government of which he was a member followed that policy to the extent that expenditure for the next two years declined by approximately £1,000,000, compared with the level reached in 1925-26. Then other counsels prevailed, with the result that from 1928-29 to 1930-31 the annual expenditure was in the neighbourhood of £8,000,000 a year, a _ level never reached before in the history of the country. Since then there has been, not a tapering off, but an abrupt and precipitous fall to the level of £2,600,000, the figure already mentioned for this year. The reasons for it need no explaining; they are only too well known. Having come suddenly and uncontrollably, without the adjustments that a gradual process would have made possible, this curtailment of activity left a department organised to an £8,000,000 basis with only the work involved by the expenditure of £2,600,000 to do. It should not be necessary .to prove that it must be top-heavy, unwieldy and enormously overstaffed. The fact is self-evident. The Minister, in his statement, said a reduction of nearly 40 per cent had been made in staff and a search for further reorganisation was well in hand. This is a summary dismissal of a subject in which the public is very deeply interested. It is necessary to give much more detail. How has the staff reduction been effected 1 ? Has it been a case of paying off workmen as the projects on which they were employed have been finished or suspended, while over-weighted administrative and clerical staffs remain untouched 1 ? There is no evidence, no assurance, on this point, and it is one on which the public wants both. The Minister must tender much more convincing evidence than the bare sentence quoted before a very vital subject can be considered as dealt with satisfactorily.

The question of staffing and reorganisation is important because, as has been pointed out before, the prospect of operations being renewed on anything approaching the old scale simply cannot be counted. The outlook for new railway construction needs no further comment than the figures for this year supply. Hydro-electric power development is ncaring its conclusion on a major scale as a natural process. The Minister himself, in the Statement, reserves enthusiasm for irrigation projects in Central Otago and Canterbury. Before endorsing what he claims for these projects, it is well to recall what the National Expenditure Commission had to say about them. Its report shows that the direct return from these schemes is barely sufficient to meet maintenance costs, and that interest and capital repayment arc almost wholly a burden on general taxation. The commission did not accept- the contention that the increase in production was sufficient recompense for the direct capital loss. It said a pound for pound subsidy was the most the Government should consider as a contribution to irrigation schemes. The Minister shows how much more the Government has contributed and will continue to contribute if his plans are carried out. In the same breath he admits that rates for water are not being paid where the evidence shows they could and should be paid ; and he suggests very definitely that arrears are being allowed to accumulate in the definite expectation of their being written off by a complacent Government. All this is very poor support for his irrigation plans. The inference is that in this, as in every other phase of departmental activity, policy must be scrutinised with the principle of direct return on capital in the foreground all the time. The need for it has always existed, but it has been thrown into bold relief by the conditions prevailing as this year's Statement is produced..