THE OTAGO DAILY TIMES WEDNESDAY, JUNE 21, 1933. CAPITAL EXPENDITURE

Otago Daily Times, Issue 21985, 21 June 1933, Page 6

THE OTAGO DAILY TIMES WEDNESDAY, JUNE 21, 1933. CAPITAL EXPENDITURE

The Government does not lack advice respecting the policy which it should adopt in combating the evil of unemployment. According to a much respected authority, in a multitude of counsellors there is safety. Certainly there is variety in the counsel which is being offered to the Government. But there is some significance in the fact that what may be called unofficial opinion is tending to the view that recourse to capital expenditure on the part of the Government with the view of creating a demand for labour may be justifiable 'and desirable. The objection to this view, that it would involve fresh borrowing by a State which has indulged in an orgy of borrowing in the past and is now paying the penalty for the excesses that were practised by it, is not without weight. And even the claim that, while the loan moneys in former years were squandered to a large extent on unproductive undertakings, the mistakes that were then made would be carefully avoided now, may not be wholly convincing. For the allocation of the loan moneys would rest with the Government, and the liability to err still exists in the case of all Governments. Yet there is unquestionable substance in the complaint that the bulk of the expenditure that l is being incurred in the relief of unemployment is being as completely wasted as if the money were thrown into the sea. The taxpayers, who are now providing more for the relief of unemployment than accrues to the Consolidated Fund from the ordinary taxation of incomes, must experience a sense of disappointment and irritation from their knowledge * that hundreds of thousands of pounds are being spent on the most futile work — work that, to quote a report by a sub-committee of the Dunedin Chamber of Commerce, “ is apparently regarded by the workers as merely a test by which they are required to put in so much of their time at a stated place to make them eligible for a relief allowance in the nature of sustenance.”

The wastefulness of this expenditure has been a factor in influencing the minds of members of the community in favour of some scheme of national capital expenditure. But, upon other grounds, influential opinion at Home has lately been expressed in advocacy of some form of capital development as a method of increasing the purchasing power of the public. Mr J. M. Keynes, in a series of articles in The Times, initiated a discussion that brought out the distinction, in Great Britain as in New Zealand, between the improvisation of public works that are disastrously extravagant and the encouragement of normal business enterprise, fostered (it was suggested) by Government credit. Among those to participate in the discussion ■ was Sir Arthur Salter, who expressed the view that the expansion of public works is the orthodox remedy to be applied. ' “ Whatever may be the case at other times,” he wrote, “public expenditure does not now involve corresponding restriction of private investment,” because the increase of bank deposits (as in New Zealand), combined with a reduction of bank advances (as in New Zealand), clearly indicates the existence of large unused savings, though it does not measure their volume. This latter argument is one upon which the Dunedin Chamber of Commerce has founded the opinion that “the time is ripe for the participation in, and encouragement by, the Government of a policy of wise capital expenditure in works of a necessary and permanent character.” The Chamber suggests a two or three years’ programme of capital expenditure. That might require a loan of dimensions as imposing as was proposed by a deputation to the Acting Prime Minister at Auckland a few days ago, and it seems highly questionable whether, if a policy of capital expenditure is desirable, as it may be, subject to the provision that the necessary funds should be raised locally ahd that they should be applied only to demonstrably reproductive undertakings, the Dominion should commit itself to a programme of such magnitude.