THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JULY 30, 1938 TIMING PUBLIC WORKS

New Zealand Herald, Volume LXXV, Issue 23103, 30 July 1938, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JULY 30, 1938 TIMING PUBLIC WORKS

Even Labour supporters must have been puzzled by the Prime Minister's emphatic rejection of tho Ee serve Bank board's suggestion that public works should be used as a kind of balancing factor to stabilise the national economy. It seems to offer a sensiblo method of trying to iron out the curves in the economic graph. Indeed the best opinion overseas lias recently approved the idea of so planning public works as to cushion slumps and restrain booms. A few months ago sonio of the keenest brains in Britain turned to a discussion of this very point through the correspondence columns of the Times. The lead I came from a speech by Lord Home, I a former Chancellor of the Exchequer, who announced that the Great Western Bailway, of which he is chairman, was postponing the expenditure of millions of pounds for the period when industry would be less active. He considered it a wise course, for the railway would be able to get supplies at a cheaper price and at the same time provide work for people when the present activity was over. Those and other postponements, Lord Home added, were being made not only by Government departments and municipal bodies, as they ought to be, but by private individuals. The cue was taken by Sir Arthur Salter —civil servant, economist, transport expert. League of Nations adviser and Oxford professor—who commended the judicious timing of public works in accordance with the general condition of production, industry and trade. In the ensuing correspondence, while some authorities denied the efficacy of public works as an economic stimulant or restorative, the consensus of opinion was with Sir Arthur and Lord Home. Even some of those opposed to public works agreed that, if they were undertaken, then they should certainly be wisely spread. The argument was clinched by the settling of that intellectual eagle, Mr. Maynard Keynes, who wrote: "Public Joan policy remains vitally significant, partly because it is the most controllable element in the (economic) situation, and partly because, in the modern world, a very large proportion of domestic investment necessarily depends on the policy of Government departments, local authorities, public boards, and semi-public corporations, such as the railways. It is therefore very generally held to-day that there is a good deal of advantage in retarding expenditure by such bodies when other sources of demand are strong and in accelerating it when other sources are weak. This is probably a reason for not pushing such expenditure at present." Apparently the weight of first-class opinion impressed the British Government, because a few weeks ago it asked local authorities to make a survey of capital expenditure and works for five years ahead and submit their proposals. The idea was stated to be to reserve non-urgent works for times of depression. Of course Mr. Savage denies that slumps will affect New Zealand in the future. "It ain't goin' to rain no more, no more." This opinion is not shared bv the International Labour Organisation, Geneva, by which Mr. Savage and his colleagues set great store. It is apprehensive of present economic trends, which "might easily give rise to a slump of the first dimensions." Its annual report goes on to issue a warning against complacency, stating that any satisfaction at present prosperity "rflust inevitably be tempered by anxiety for the future and should be accompanied bv comprehensive planning to avert the dangers with which the present situation is fraught." Incidentally it is worth noting that the author oi the report is Mr. Harold Butler, ex-director of the 1.L.0. and first principal of the new Nuffield Oollege of Social Studies at Oxford University.

Mr. Butler goes on to quote the example set by the Labour Government of Sweden, which last year set up a committee to make a complete survey of all public works, local or national. The committee has recommended that a large number of projects should be kept in reserve, to be started as soon as unemployment again threatened to become serious. Finance for them should be provided partly by taxes, partly by borrowing, and partly by reserves accumulated in good years. This provident idea has actually been adopted by the Government and applied by setting up a Regulation Fund within the Budget. Sweden has also adopted proposals to slow down all non-urgent public works, local and national, in good times. The Swedish example is so telling that the 1.L.0. is seeking to organise international co-operation on similar lines and has received favourable replies from South Africa, Belgium, Canada, Czechoslovakia, Egypt, Estonia, France, Great Britain, Luxemburg, Norway, Poland, Bumania, Sweden, Switzerland, the United States and Yugoslavia. But riot from New Zealand. For all her lip service, to the 1.L.0., she. is not numbered with the Wise Virgins who would have their lamps trimmed arid ready. The Labour political pundits do not believe in timing public works. Mr. Nash is almost as direct in the Budget, as Mr. Savage in his reply to the. Beserve Bank board. A balanced and ordered economy is advocated in other directions, private production, industry and commerce is much regulated and controlled, but Mr. Scruple is to have the spending of twenty millions, in despite of balance, order or control, and in the face of the. best authority, whether in London or Geneva. It is for the people to reflect on the action of their leaders and judge of its wisdom or folly.