“THE FIRST ROUND”

Otago Daily Times, Issue 21998, 6 July 1933, Page 3

“THE FIRST ROUND”

CHALLENGE TO GUY COUNCIL WORK FOR UNEMPLOYED MAYOR'S PROPOSALS REJECTED Outspoken comment was the feature of one of the most remarkable meetings last night of the Dunedin City Council, when the Mayor (the Rev. E. T. Cox) took the gloves off, as the saying goes, to the council and the Finance Committee, and Cr Allen, chairman of the Finance Committee, gave him a Roland for his Oliver. In moving the adoption of the Finance Committee’s report—which stated, inter alia, that “Accordingly we have to recommend that the amended proposals outlined by his Worship the Mayor be not entertained.” —Cr Allen said, in the first place he wished to point out that the amended proposals submitted to the committee by the Mayor were in direct conflict with the original he placed before the council, and any attempt to support these new suggestions on the arguments adduced by the Mayor when submitting his original scheme completely fell to the ground. The original scheme was to provide for constructive reproductive works upon which the relief workers were to be paid award rates of pay. That scheme was investigated by the Finance Committee, and. it was at once evident that to extend to any large numbers of relief workers the opportunity of earning_ award pay and employ then on capital works was hopelessly out of the question. It was shown that to subsidise relief pay up to award rates for 1000 men for three days per week on works requiring 50 per cent, for materials and supervision charges and 50 per cent labour would entail a yearly expenditure, not of £70,000 as suggested by the Mayor, but of £140,000 to £150,000. That position was explained to the Mayor, and he admitted that such a course was impracticable , qnd submitted new proposals. The points of difference in his two schemes were that, instead of subsidising relief pay up to award rates, as he first proposed, married men were now to be given 10a per week and single men 5s per -week in addition to their relief pay. and, further, the class of work upon which they were to be used was to he radically altered, with the result that only about 6| per cent, of the total wage bill was to be used on 50-50 works and the large percentage of 56J per cent, on works of a class in which only £lO for each £IOO was to be expended on supervision, material, and cartage charges—in other words. 90 per cent, of the total was to go _in relief labour. That result induced him to say that the whole argument upon which the original proposals were based had been scrapped. A certain amount of capital expenditure on works, either at present fully justified on the score of necessity or on works that could be justified in anticipation of early future needs, was no doubt sound policy under existing conditions, and amongst such works he could name the Post Office, the Deep Creek water scheme, and an extension of the storm water drainage of the city. These two last-named works were mentioned in their report, and each would entail an additional burden on the ratepayers without adding a further £70,000 to that burden for expenditure on the class of works as now suggested, with the great possibility that another "such dose might be qalled for next year. This to his mind was the height of folly. In his amended scheme the Mayor pointed out the action of Auckland in promoting a loan of £121,450. He understood that this money was to be spent on drainage, water supply, and street improvements. Auckland had double the population of Dunedin. The Dunedin programme was to spend £IBO,OOO on water supply and a further £20,000 to £30,000 on drainage, in addition to loan expenditure on drainage works now in progress. If Auckland were able to do such works as these and yet employ sufficient workers to bring the jobs into a class in which the labour cost was 90 per cent.. then_ Auckland was able to do what Dunedin certainly could not do. The economic difficulties of New Zealand to-day were largely due to the extravagant borrowing policy of recent years, and- if,sas they were suffering a recovery, they sought assistance in further borrowing they might well ask who was to pay for it! Such a proposal as the Mayor’s would aggravate their difficulties and ;place an unfair burden upon their children. Borrowing acted as a stimulant it produced a temporary improvement, hut would be followed by a very disagreeable relapse unless the money were borrowed for reproductive purposes. A study of their, revenue in relation to their annual charges on loans revealed the unsatisfactory fact that over half their rate revenue was absorbed in interest and sinking fund chargee. The approximate charges for the past financial year were:—

Rate revenue .. •• •• £lll,OOO Interest and sinking fund charges •• •• £58,000

It should be emphasised, said Cr Allen, that the Dunedin City Council had s fouud employment for every man sent to it by the Unemployment Board at ( their schedule rates of pay, which was more than could be claimed by other centres. The Mayor claimed that his scheme would provide for approximately 1200 men at award rates for one year, but recently they had in their employ 1900 men 'and other local employing authorities had an additional 800 or 900. To give increased pay_ to 1200 men only would cause dissatisfaction to the remainder, and would further induce unemployed outside the city boundaries to gravitate to this centre and accentuate the existing distress. He considered that the proposals, as amended, quite apart from the primary objection to a borrowing policy, were none the less attractive from a city improvement point of view than those originally put forward, and this was obviously due to the attempt to spend £30,000 of the total in supplementing labour costs, making the total wages bill of £160,000 and only a meagre £40,000 on materials, transport, and supervision, Cr Campbell second the motion. Cr Munro said he would move that the clause be referred back for further consideration. He was quite familiar with the arguments brought forward against the Mayor’s proposal. It appeared to him that the main argument was that practically half of their rate money was going to pay interest and sinking fund. While that was quite true —and he supposed no councillor was more hostile to borrowing than he was—he believed that borrowing at this particular time was justified —more so than at any time in the past, or possibly in tbe future. If they only took the £IO,OOO in the Mayor’s scheme they would increase the spending power of the unemployed workers. A number of their unemployed workers were down and at the point of destitution, and had been in that position for the past two years. The speaker said that he believed that things were now on the up-grade. — ("Hear, hear.”) He was convinced of that. It might he only a flash in the pan, because of the Economic Conference in London A councillor: It’s a wash out. Cr Munro said it might he a wash out, and he then referred to the increased prices for sheepskins, hides, mutton, lamb, rabbitskins. metals, etc. The intention of the Government to erect their Post Office in Dunedin showed that it had greater confidence in the position. He asked them to increase the spending power of the unemployed. The Mayor’s scheme would increase the spending power of the unemployed—it would give a benefit at least to the bulk of the unemployed. He did not think the Mayor’s scheme would have any effect on the water loan. The speaker said that the proposals of the council for spending money would not assist the position immediately. If they could not get the full £70,000 he hoped a compromise would be made, and they would get the £IO,OOO suggested by the Mayor. Cr Jones seconded the 'amendment. He said that tbe great bulk of the work being carried out by the unemployed was of no value and was a waste of money. There was no doubt good work could be done in the city. He did not think there would be any difficulty in raising the money. Tbe right time for a local body to borrow wa« during a depression. By the-spending of £70,000 their trading departments would benefit indirectly.

Cr M. Silverstone suggested that if the Mayor had brought down half a dozen schemes the committee would have found them all unworkable. They had been told that their difficulties to-day were due to unwise borrowing in the past. This was a unique explanation, and one that no economist would support. Generally speaking the reasons advanced by the committee for turning down the Mayor’s scheme would be a credit to a anathema* tician. The fact remained that men, women, and children in Dunedin were starving slowly, and if another war broke out New Zealand’s manhood would be classed as C 3. Cr J. L. MTndoe: Rubbish. Cr Silverstone; Cr M’lndoe is an expert on that. “ I’m not C 3 anyway,” retorted Cr MTndoe. None of the reasons advanced by the committee for turning down the Mayor’s proposal. Cr Silverstone contended, were sound—-they were only excuses. For years past no attempt had been made to stop borrowing, and now. when the committee was asked to borrow £70,000, of which the city would receive the full benefit, it said “No.” The council already had a loan in view, and he' supposed that the Drainage Board would also be raising a loan. If they were going to keep on borrowing let them make a “ welter ” of it and keep-on borrowing for revenue-pro-ducing purposes only, Cr J. B. Shaddock said he saw no reason for sending the report back to the committee, which had put the position very fairly, notwithstanding the nonense that Cr Silverstone had talked. The speakers on the other side contended that something should be done immediately. He took this to mean commencing to spend the money as quickly as possible. If the committee’s report was adopted money would be available far sooner, as the water works loan had already been sanctioned by the Loans Board. If the £70.000 loan were carried it would undoubtedly increase the indebtedness of the city, and the position would not be improved if this were done. They must keep the city sound so that the people would be in a position to pay their rates. If the proposal to borrow £70,000 were adopted, it would simply increase the rates and .make the burden heavier than’ it was at present. Cr W. H. Borrie wanted to know what evidence there was that there were so many starving children. If such were the case, the children’s wards in the hospital and the convalescent homes should be full, when, as a matter of fact, they were rather empty. No reports were forthcoming from the school medical officers that children were starving, and while it had been reported that some of them were badly fed, none were reported to be underfed. If the depression were local, he would support the amendment, but it ■was a general depression, due to over-borrowing-—local body, Government, and international-all _ non-productiv,e, especially the international borrowing which all ended in smoke _ and bullets. If they went on borrowing it would only result in more distress, not only for themselves, but for their children and their children’s children. Cr Marlow said that the borrowing of money to find work for the unemployed was not the right procedure. They could not compare Auckland with Dunedin. Auckland had to spend £30,000 on drainage and so had Dunedin. Dunedin proposed to spend actually more on a water supply than Auckland. The proposed £70,000 would be spent on non-productive work. He suggested that they should endeavour to get through the £IBO,OOO loan for the water supply and have the proposed drainage works in the city carried out. They could not get these works if they borrowed money for non-productive work. He believed in standard work at standard rates of pay. The city proposed to go in for a water supply and drainage, and there was also the Leith protection work. Wellington had borrowed money to help the unemployed and had got into trouble. He intended to oppose the amendment. Cr M’lndoe said that some of the money which Cr Jones said could be obtained had already been. spent by the council. His amiable friend Cr Silverstone had made a very impassioned speech, and he had stressed the amount of destitution in the city and the fact that people were going about starving—— Cr Silverstone: So they are. Cr M’lndoe: Well, send them. along to me, and we will give them assistance. The Mayor: I will send along 50 if you like. Cr MTndas said, in regard to the need of immediate help, they had to remember that it would take at least five months to get such a loan as that suggested by the Mayor through. At the present time the council’s overhead cost on works was 22i per cent., and the Mayor’s proposal averaged 25 per cent., so that the Mayor’s scheme was only _2i per cent, better than with the works going at present. Then the Mayor’s scheme proposed to take over £4OOO from the surplus in the insurance fund to meet charges. He suggested this was a rather roundabout way of doing it. They might as well take it from the trading departments straight out. The Finance Committee desired, however, to raise the insurance fund ’to £IOO,OOO. It would only require one good fire to wipe out the whole amount standing to the capital account. It would be a very unsound"practice to deal with the surplus. The Loans Board would have to authorise the loan proposed by the Mayor, and a schedule of work would have to be prepared. Christchurch had borrowed £39,000 in 1931 to assist the unemployed, and the Loans Board had insisted on a term for the loan of seven years with a sinking fund of 12 per cent. The estimate of 6 per cent, for the sinking fund for a loan in Dunedin was, therefore, a very conservative one. When all the trimmings were taken off the proposal, it practically amounted to giving £30,000 to the unemployed, and he suggested it would be far more honest to borrow the money and give it to them. Cr Silverstone: Would you vote for it? Cr MTndoe replied that he would not say, but it would be far more honest. He was not dodging the issue. Cr Silverstone: You are.

Cr MTndoe referred to the works that were proposed to be carried out by the council, and said it seemed to him a rather poor attempt, to throw the responsibility of redeeming; election promises made. ' , . The Mayor: Your election promises, Cr MTndoe: The election promises of others, and the council hag been put in the position of having to turn them down. BLIND AND DEAF. The Mayor said that there were three points in connection with hia proposals which had not been really discussed by the Finance Committee nor by the meeting that night. He had tried to effect a compromise with the Finance Committee, and now they wished to accuse him of a subterfuge in bringing down his other scheme. When the question of a coinpromise came up he found that the Finance Committee was to have the whole loaf, and he was not to get a crumb. He might have made some mistakes in, his calculations, but the_ Finance Committee had made greater mistakes. The speaker referred to a report which had appeared in the press, and criticised the action of the councillor who had supplied it. In that report it was stated that his proposals would provide for only 477 men. A third standard schoolboy could find that this was simply juggling with figures, and he thought the gentleman who made that statement could nob read his own writing. That glaring inconsistency in the councillor’s calculation was allowed to go unnoticed and uncorrected, and that was the type of the discussion at the meeting of the Finance Committee in regard to his proposals. He did not desire to discuss that point further. Having brought down two proposals he intended to bring down 20. He intended to find work for the unemployed. This was only the first round of perhaps a ] 5-round contest. — (Hear, hear, from the audience.) The Mayor said it was stupid to do the work they were doing with the unemployed. He could almost weep when he saw the canal 1 being constructed from Mornington to Bellekuowes. Nobody would ever walk up it. He did not wonder that the men did not work.

Cr Marlow suggested that the Mayor should wait till the work was finished.

The Mayor said he did not want to do this. “ It is one of the most glaring examples of the stupidity this city is perpetuating.” He said £30,000 was to give relief, and another £7500 would give relief to the same number of men at the same rate of pay and give them a sense of security. The idea that the city could not afford the money was an utter absurdity. The council was spending money, but not in cleaning up the back streets of the city. He had been offered £IOOO to clean up one street, but the Citv Council refused to take it. The Citv Council was, however, spending thousands in cleaning up other streets. The sum of £2200 was given to the landlords in one street in the city. He had to sign a document the previous day, and he was very sorry to have to do it, to

continue that work. £2200 had been given to the nabobs of the city, and the council had beeu improving properties and improving streets, and then paying the owners for a foot of land—giving them £250 on an average. That was squandering the money of the city, and they haa to pay interest on the loan. That was the way the City Council had worked. That was the way the Finance Committee worked—giving to men who had plenty, and leaving the poor people in the back streets, in houses covered with newspapers to keep out the wind and the rain. It was nonsense to say that the city could not pay for this loan. There was another point, said the Mayor, he wished to stress. The work the unemployed were doing was utterly demoralising to them. If they could not give these men reasonable work they were going to he saddled with thousands of men industrially demoralised.

The Mayor referred to the population of Auckland, and said the city area there was not much larger than that of Dunedin, so that the comparisons made did not hold water. He said he had not suggested taking the surplus from the insurance fund. He had suggested taking the premiums, which were not reeded. If they were needed, what a calamity would have happened 10, or five, or two years ago if there had been this wonderful fire that was contemplated. Cr MTndoe: There is always the possibility. The Mayor: It was greater 10 or 15 years ago. He added that the fund had now nearly reached a stable position. The Finance Committee and the council had already filched —if he might use that term —from the renewal funds this year, and had practically spent £IO,OOO on the relief of unemployment. Only £2377 allocated' for this expenditure had come out of the general fund, and yet he was accused of being a raider! “It seems to me,” said the Mayor, in conclusion, “ that the members of the Finance Committee are blind and deaf. I can only wish that they were also dumb, and then we might make some progvess.” Or MTndoe (cynically): Take a note of that, Cr Miinro. “AN UNDIGNIFIED ADDRESS.”

“ I was sorry,” said Cr Allen, on rising to reply, "to listen to such an undignified address by a Mayor to his council. It is shameful to hear a Mayor say that his councillors are dumb.”

The Mayor: I didn’t say they were dumb.

Cr Allen; You wished it, and I djd not think it of you. The Mayor; Thank you. Cr Allen went on to say that when he personally had asked the Mayor if he would consider a compromise he had been told “ No.” With regard to amending his scheme, the Mayor had amended it three times, so that some of his 15 rounds had gone. The Mayor: I asked if you would agree to this, that, and the other, and after being given a refusal each time I then said I could not compromise. Cr Allen: You definitely refused to compromise. Cr Allen went on to refer to the Mayor’s remarks regarding the nabobs of the city. He did not know who these were, but he and the members of his conimitttee would yield to no one in a desire to help the unemployed and relieve distress. Tuey were aiming at standard work and standard rates of pay, and they were anxious to put in hand capital work so that the workers would get as much employment as possible. He objected to the Mayor talking of the council squandering money for the benefit of any particular person or persons. This wag not true. " Why,” he added, " the very £250 you mentioned was used for street widening purposes; will you deny it? The Mayor: No. Cr Allen went on to say that if the premiums were taken from the Insurance Fund they should go back to the departments charged for them, with a consequent benefit to the ratepayers. He thought, however, that it was a wise policy to go on building up the fund, which, he would point out, was uot only for fire but for accident also. “I am only sorry,” said Cr Allen, in conclusion, “that the Mayor has treated his council so lightly. It was most undignified. When the depression is over the ratepayers will thank the council for conserving its funds, and I would remind his Worship that Christchurch tried what he has been advocating and failed.” . The amendment wag then put to the meeting and was lost, only the Mayor and Crs Munro, Jones, and Silverstone voting for it, and . the . report was adopted.

COMMITTEE’S RECOMMENDATION. The Finance Committee’s report read as follows: — “The proposal to raise a loan to remodel the system of dealing with relief works, as submitted to council by the Mayor, was replaced by a modified set of proposals when the matter came before the Finance Committee. The amended scheme submitted by the Mayor is still based on a proposed loan of £70,000 for expenditure over one year. Of this sum material, supervision, cartage, and the Idndred charges now being paid out of council funds are to absorb £40,000, the balance, £30,000, is to be used in supplementing the relief pay of 1200 men. , “The Mayor’s proposal is to expend the £40,000 approximately as follows: “ (a) £IO,OOO on works calling for SO per cent, material, etc., and 50 per cent, relief labour. “ (b) £20,000 on works the total relief labour content of which is 75 pef cent, of the total. , “ (c) £IO,OOO for supervision on works the relief labour content of which is 90 per cent, of the total. • ■ • “The general effect of such proposals can be shown roughly on a pro rata basis, if it be assumed that particular works can he arranged as required to employ the labour in the three classes in the requisite proportion. The result would then he approximately a 9 follows:

“Thus, at a total expenditure for labour, of £160,000 (£30,000 of which is provided by council) the proposal is to supply an aditional £40,000 to represent the estimated cost for provision for material, supervision, cartage, and the other local costs as at present. That is, an addition of 25 per cent, in comparison with about 22} per cent, for similar charges last year- Such difference may be regarded as the added benefit to the city by way of engaging in works of a more beneficial character, a benefit that seems to us is reduced almost to the vanishing point, to say nothing of the additional £30,000 to be used in subsidising the labour cost from loan money. “ The proposal is to use the £30,000 in supplementing the pay of 1200 men—10s per week to married men and 5s per week to single men. We are dealing with between 1700 and 1800 men on an average, while there are some 700 or 800 others under other employing authorities within the city area. The Mayor deals with 1750, 350 of whom he estimates to be used on the Deep Stream water scheme, either in the factories or in the field, together with another 200 * in general trades indirectly.’ We have no means of determining the correctness or otherwise of this estimate, but it is certain that in any event, even should both proposals eventuate, they cannot function band in hand for a very considerable time.

“ Following the Mayor’s allocation of the expenditure and dealing again on a. proportionate basis, it ie to be noted that 6.23 per cent, of the total labour cost would he spent on work of the first class, 37.50 per cent, would be spent on the middle class, and 56.25 per cent, on the class estimated to consist of a 90 per cent, labour charge. Whether it is possible to provide a sufficiency of work of this last class we are unable to say, and that could he determined only from a detailed schedule of the works to be undertaken.

“ After giving the policy aspect of the subject full consideration we have no hesitation in reporting adversely on the proposal to borrow £70,000 for expenditure during one year, as outlined in the Mayor’s amended proposals. We are driven to this conclusion from a consideration of the fact that, even after allowing for the cut in interest costs, the loan liability of the general account at present absorbs over 50 per cent, of the general rate, and, whether or not the insurance premiums now being paid into the insurance funds be used to meet the charges on this proposed loan, the fact remains that, by further borrowing for non-revenue producing works, the charge must fall upon the city rates, either directly or indirectly. “It is hoped that in the course of a few weeks wc shall be submitting the

water loan proposal of £IBO,OOO to the vote of the ratepayers. That fact, coupled with the knowledge that the Drainage Board is now considering proposals for expenditure on further capital works from loans amounting to from £20,000 to £30,000 during the next year, should in our opinion represent the limit to the additional loan liability of the district to which it is possible to go at the present juncture. “ Accordingly we have to recommend that the amended proposals outlined by the Mayor be not entertained. “We have not thought it necessary to stress unduly the fact that the responsibility for the sufficiency or otherwise of the pay on relief works is not a.local, but a national, responsibility, provision for which is made by special taxation levied_ on a national basis, and which, in our ppipion, should be extended uniformly on that basis. Departure from that principle can only increase, not decrease, the difficulties of local districts. That' s uch a process already has been in operation far too long is fully attested by the experiences of most of the main centres.”

From Unemployment. From To Board. loan mate- subsidise ' Relief rial, etc. relief pay. pay. . £ £ £ p.C. fa) 10,000 1,875 8,125 6.25 (b) 20,000 11,250 48,750 37.50 (c) 10,000 16,875 73,125 56.25 £40,000 £30,000 £130,000 100