REDUCTION OF FIXED CHARGES.

Otago Daily Times, Issue 21627, 23 April 1932, Page 10

REDUCTION OF FIXED CHARGES.

»)•;< i it ’> _ When Parliament resumes nex£ week, the House of Representatives will give its attention to ithe less contentious provisions of the .National Expenditure Adjustment Bill, those relating' to the compulsory reduction of charges. We describe these provision? aS the f less contentious, not because,there is not, in principle, a great deal of reason for criticism of them, but because there is simply no escape from the conclusion./ that, when reductions are being statutorily made in Salaries, wages, pensions, and allowances a reduction must logically be made also in interest rates and rents/ Compulsion is less desirable than voluntary agreement. as a means of effecting a reduction in fixed charges I ,’“but it operates, more swiftly and it .operates with certainty; Generally speaking,, the equitableness of this reduction, 'however it/ may be brought about, is beyond, dispute.. Unfortunately, equitableness is absent from one provision of the Bill which was passed in the Lower House before the full import of it. was realised even, it seems, by those who are most severely affected by it. A section of the Bill provides that where grants are made from the Consolidated Fuqd to the governing bodies of 'educational institutions, and where such grants are available for the payment of salaries, the amount of the grants shall be reduced, by an amount equivalent to the reduction to be .effected in th'e amount of the salaries. On paper that may seem a reasonable provision. If, however, it is. finally passed in its present form it will impose a serious- hardship on the University Council of Otago. The grant • received from; the ■ Government by the University is . about £17,000, aQ d the salaries paid by the University exceed £40,000.- If the salary payments are reduced by 10 per cent, this year the amount of the grant will be reduced by,£4ooo. There are departments of the University, however, which a dp’ maintained' out of benefac- . tions, at no cost to the Government. But the reduction-in the salaries paid’ in these departments will automatically cause a reduction in the amount of the Government grant. The effect is that the University will/ actually be penalised because it has been fortunate enough to receive private benefactions that; have enabled it to establish departments without Government aid ~As the University will suffer q heav}' •loss, in terms of the Bill, upon* ite return from its invested funds, and in a’reduction of its revenue from eidowments, and as its revenue from fres is bound to decline, it is in danger of being placed in an entirely untenable position if the section, of the measure relative to Government g-ants ffs not amended before the Bill passes into law'. It is fair to assunte that the Government has not appteciated the serious effect; which the passage of the section in its original-orm will have on the finance of the Thiversity.