LOANS AND EMPLOYMENT

New Zealand Herald, Volume LXXI, Issue 21938, 23 October 1934, Page 8

LOANS AND EMPLOYMENT

In the report which will be presented to the annual meeting of the New Zealand Employers' Federation a reasonable programme of public works, financed by internal borrowing, is suggested as an aid to restoring employment. The proposal is based on the assumption, a very sound one, that the curtailment of public works programmes and the slump in building have combined to create the real hard core of the unemployment situation. Systematic investigation in the United States l has indicated that sluggishness in tha industries supplying capital goods, and in the markets for their output, has been the most marked and stubborn feature of depression there. Public works and building construction are the New Zealand equivalent of the capital goods industries. To that extent the assumption of the report is supported. New Zealand has been one of the few countries to provide for unemployment relief almost wholly out of special taxation, with but little resort to borrowing. Other countries have borrowed considerably for this purpose, risking all the time the problem of swollen loan obligations with an undiminished, or even an increased, demand for relief. In this country the way has been left clear for judicious borrowing when objectives of a desirable kind can be found. It is essential, of course, that work of national value, of a productive kind, should be undertaken in any programme of loan expenditure. To find it is not easy, with ruil-way-building abandoned and hydroelectric power development almost completed. Yet the restoration of public works activities to any extent- would unquestionably have a markedly stimulating effect upon employment. The consequences would be widespread, especially if material produced in this country were utilised to any considerable extent. So there is a good deal of argument in favour of a cautious and judicious resumption of capital expenditure by the State as opportunity offers; the size and nature of the programme must be regulated by recollection of the present burden of debt, but, within the limits set by such circumstances, the proposal made to the federation demands consideration.