PREFERENCE TO BRITISH TENDERERS.

Otago Daily Times, Issue 18467, 31 January 1922, Page 2

PREFERENCE TO BRITISH TENDERERS.

TO THE EDITOB. Sir, —Economy in Governmental and public works .expenditures Hals become a slogan of to-day. The dire: necessity for reduced expenditures is emphasised ‘ by the public, the press, and ultimately by Cabinet Ministers themselves—even to the extent of putting the brake on our hydroelectric development schemes. In view of this proclaimed stand towards reduced expenditures,' it is somewhat surprising to find that while in general “outs” are being made' mostly, so tar, on the salaries of public servants, in other directions an unwarrantable wastage occurs which should not be entertained even under the most flourishing conditions. Ihe Hon. J. G. Coates in his annual statembnt with regard to hydno-eleotrio development says: To reduce the interest charges during construction also it is .essential that, once started,. the works' must bo carried along on business-like lines, so that they may ■ reach a revenue-producing stage'as early as possible. When it is realised that a reduction of . 1 per cent, in the, rat© of interest payable on the loan-moneys means that the .cost of power supplied’ can be reduced at least IX per cent., apart from any reduction due to the general reduction in cost of material that would naturally follow a reduction in interest, it is evident that we should very carefully consider embarking on any undertaking involving large capital expenditure. if : . there is any early prospect of a drop in the money market, unless by delay we are seriously retarding the industries of the country. Now, air, the most recent expenditure in the electrical branch of the Publio Works Department has been the purchasing of the main generating plant for the Mangahao Hydro-electric Scheme, and in turning the circumstances of this contract over tor reflection, one can hardly trace the slightest ■ oansistenoy ■ of action with the business-like’ policy outlined above. The matter, apart from being an interesting example of mis-spent public money, brings up what I claim to be a question ct grave national importance—the qustion ot our patriotic preference tor British goods, and- what it costs-us. • Speaking from memory I believe that the Government paid £25,000 more for the ' plant than .was necessary—and. in the light of other considerations, this wastage seems --to be only-a- small-'part of the total loss. "l|he tenders.accepted were from three separate' British manufacturers at a total cost of approximately £IOO,OOO while ■several other more favourable tenders were turned down. One American manufacturer offered the .complete plant at a saving of about £l6,fiM/. ,while at the same time it provided to pay duty to the Customs Department to the /extent of some £IO,OO0 —, an item which was hot included, in, the British tenders., ; The immediate effect of this deal as. a , business proposition is the loss of £25,C00 of public funds; a - great deal of unremunerative, work and expense for our local electrical firms who tendered fidr •the supply; the distributing of the manufacturing ; work betseon three separate firms whereas the interest of design require con--centrated work; a,greater uncertainty with' regard to delivery of the goods; and a -certainty that with this class of hydroelectric machinery we are throwing away the experience of the world’s greatest manu- . facturera and undertaking the risk of paying for the experimenting of manufacturers ■With coriipajratively mdeh - * less*experience. This is not. good business. ’ : Looking further into the deal with the aid of the interesting information contained in the Minister’s statement quoted above, we cannot but be forced to admit some grave inconsistency. Mr Coates stated that tor every 1,, per cent, rise , in _ interest On loan money . the cost of electricity to the consumer rises at least 11 pox .cent. .Well,the on" this plant (£IOO,OOO at say 6 per cent) will amount to £6OOO per annum.aigl the interest on the American tender .offered less amount collected by the customs, (fays £76,000 at 6 per cent.) would amount to £4500 per annum. The amount payable to the American tenderer would be 4j per oent for capital on which we pay, 6 per cent.—a difference of IJf. per cent., .aiju it cannot be said that the goods at the lower price would not be worth fully as much as those purchased at the higher price. While it is granted that the generating plant is not by any means the, greater part of the complete ;toystem,_ it is_‘Cfeif tayily on the cards that if the transmission and reticulation gear is to b« -purchased on the same- basis,'and, • Government labour is to be employed on the construction yvork, the consumer will fined' himself loaded with 16£ per cent? dearer olectricty for the duration of the Government loan. What this will amount to on the output from Mangahao fully developed to 24,C<X) h.p., is hard to say, but wo may ■reasonably estimate its value on'the revenue obtained from the Coleridge scheme, developing ,8030 h.p. for the past year—he.. £51,000. A rise of 16i per cent.- on this value would be £B4OO per annum, and if the loan lasted-for 30 years this would total £252,000 or. an 8000 h.p. output, and, with subsequent Mangahao nnrehoses carried out on the same plan, £756,000 on a 24,000 h;f>. - -output. -This* would be merely an additional amount tacked on to the initial ■wastage of higher first cost. Now, Sir, this sentimental buying is engendered by the worthy tendency towards British patriotism, backed up, no doubt, by the quite legitimate attentions of several titled gentlemen sent out from England, artd perhaps stimulated by propaganda and Mr Massey’s several visits to the Homo • £and., It is not alone restricted to Govern/.mont deals, but is prevalent to a great extent in municipal business. It is a sym-pathy-trade which kicks’if. two ways. It kicks him who- gives and him who takes. It embarrasses the development of our own .dominion-in competition with ojher countries. and it ultimately .injures. those whom it was intended to benefit, in so far it .help to perpetuate_an : unprofitable business, ; which, under. ordinary competitive circum-J stances, would evolve from its present state , to one-of health and vigour with a capacity to stand against allcomers. It is a tremendous barrier to our free_ development as a - virile outpost of the British Empire, and a tremendous barrier to the natural evolution of British industries towards their only stable hope for existence. Even if ive could 'afford' to be too generous, the surest way towards “doing our bit” to undermine England is to persevere with this sentimental buying. No country can afford to be so helped; it must help itself. Come to consider the . matter further, -do we not officially estimate what the extent, of our,', preference towards the British manufacturer Shall be by the- enactment of our Customs laws, granting him a perhaps justifiable 10 per cent, reduction? And when this is done, and every citizen is satisfied, by what authority does Mr Coates .decide to add £15,000 to the existing preference provided by this law? Or what constituted right has any city councillor to waive the fact that the people of this country have already decided for him the extent of .their .preference for British goods? With all due respects to the British flag, and the British unemployed, I, maintain that the next just cause for consideration, after a 10 per cent, favour has been handed out, is the cause of Our own country,, our own. unemployed, and our own merchants. When the Customs preference has becn_ complied with the only logical procedure is to eliminate the question of origin and get down to questions of, value for value. Unless this is agreed „to we have complications upon complications. Notonly do the people pay through the nose for their goods, but i he New Zealand merchants also are submitted to unfair and demoralising treatment. We have very honourable and experienced electrical merchants to whom the- country undoubtedly owes much for its electrical development.' These merchants know their, goods, and each chooses the best he cart' obtain from a business point of view. He knows the best business article—price and ■value considered— and he reckons on paying his preferential tariff in order to nut him. on the ground floor with any other article. So far this is definite and open for plain business, but what means has ha to estimate the trend of Ministerial or municipal generosity as it is prompted by individual interpretations of the meaning of patriotism? In the case of this Mangahao contract, the cost of tendering alone would amount to several hundred pounds. In one case is was oyer JB3OO. The, goods offered were American, of indisputable reputation, Ihe price, after paying the preference, was considerably lower than the accepted tenders; and yet the result® brought no business. Would it not bo fair play to our New Zealand merchants if this practice of selecting tenders irrespective of prices were intimated beforehand? Ihe specifications for the Mangahao plant contained no intimation that American tenders would not be considered, and .contained no intimation as to what .small extent they would be considered, as under rational circumstances they should be. •' Good luck to the British, manufacturer of hydro-electric machinery or any electrical goods! All hail to him oh this market under fair conditions and a preferential bonus thrown in; but after this, human generality soyst gitrto way to reason., We

cannot afford again to allow Mr .Coates to make a gift of a cool £25,000 in. such a quiet -way. Wo cannot afford again to allow’ Mr Massey - the pleasure of.handing out £2,000,000 to British locomotive manufacturers “because of the unemployed”; and in municipal and private business we cannot afford any longer to discard the orthodox rides . of- the game to 'satisfy those plausible but mistaken sympathies. which come under thq misnomer of patriotism. Competition is still the life of business, and when you knock the competition out you knock out the incentive to good business. Business connections which prove most profitable to the merchant under free competition, and which are' therefore most profitable to the mass of the people, cannot be sustained - under, - circumstances of mate and undefined 'exclusion. The loss of Those connections' is a public loss, and any failure of business houses through this cause is a lamentable impeachment of our awn ideas of patriotism. local business houses \with good connections,. American, Swedish/ or otherwise, are. entitled to our support’ under fair competition, and when we let these establishments down wo Tel pur own country down—and .bolster up .an. organisation <fail. — r am; "etc., "'" Jjs.' M: ASebnetht. Dunedin, January 30.