THE OTAGO DAILY TIMES SATURDAY, JULY 1, 1933. PUBLIC WORKS PROGRAMME

Otago Daily Times, Issue 21994, 1 July 1933, Page 10

THE OTAGO DAILY TIMES SATURDAY, JULY 1, 1933. PUBLIC WORKS PROGRAMME

It is a matter for public gratification that the Government has come to the conclusion that the time is now opportune for launching a scheme of public development works. The scheme, in which the erection of the post office in Dunedin necessarily, in fulfilment of the undertaking given by the Prime Minister, takes first place, is limited in its scope by the finance available and it is to be noted that, in par£, it is to be spread over a period of four years. The policy which the Government has decided to adopt is one that is supported at the present time by a volume of influential public opinion at Home. The conditions which led Mr Keynes to advocate a policy of capital development in Great Britain are of course not identical with the conditions in New Zealand. In an important degree, however, the arguments which he employs are applicable to the Dominion, and not the less so for the reason that, while he seems to favour the expenditure of loan money on a generous scale at Home, the expenditure in New Zealand must be on a comparatively modest plan. Mr Keynes has minutely calculated the extent to which the employment of one man in a new enterprise calls into use the labour of other men. In this stimulation of employment consists what, has been called the immediate or short-term benefit of a constructional policy. Mr Harold Macmillan, M.P., puts the case more succinctly than Mr Keynes himself does.

In the first place the distribution of salaries and wages to men employed on schemes of capital development will increase the demand for consumption goods without immediately and directly adding to the stocks of such goods. This will have a healthy effect on the prices of those commodities which have suffered most in the slump. As prices tend to recover, confidence in the market will be restored and normal productive effort will be encouraged. But another effect of the capital expenditure which Mr Keynes advocates will be observed in the relief that will be afforded to the Budget. The expenditure on public works will reduce the number of men to whom unemployment relief is granted, and this will admit of a reduction of taxation, with respect to which, The Times has pointed out, the national finances stand to gain from remission as they are certain to lose from the opposite course, all the more so because it is the only immediate way of. liberating the will as well as the power to spend. This is briefly the argument in favour of a policy of capital expenditure. It is an argument which, within certain limits,- is distinctly cogent. And it is one which may be presented with a good deal of force in New Zealand. The Dominion has, it may be confidently asserted, touched bottom in the depression. Various indications during the past few weeks encourage the belief that the country is on the up grade. Most significant has been the fact that the prices of certain lines of goods have advanced —in a few instances to an amazing extent. A fresh spirit of confidence has been awakened! And a programme of constructional work, even if it be of a restricted nature, for which the Government believes the time is opportune, should have a valuable tonic effect.