Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, WEDNESDAY, SEPT. 13, 1933 THE BUILDING SUBSIDY

Poverty Bay Herald, Volume LX, Issue 18192, 13 September 1933, Page 6

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, WEDNESDAY, SEPT. 13, 1933 THE BUILDING SUBSIDY

After being three months in operation the Unemployment Board’s subsidy on labor engaged in the building industry has been withdrawn. That the scheme succeeded in its avowed objective of providing a stimulus to renewed activity in this direction cannot be denied, and it must not be

forgotten that the benefits obtained will not cease with the suspension 0 1 the measure of financial assistance that has been available to applicants during the past three months, Naturally, there will be a gradual , , . , , slackening of work, but many undertakings that have recently been put in hand will not bo completed for , 0 , . „ some time to come. Sooner or laitor, • .. Ml . . however, the question will arise as to whether or not building will proceed at a normal pace without the inccn- ~„, , - tivo that has been provided in the past. Then will come the real test of whether the success of the scheme iv . 1 . „ has been permanent or merely tornporary. It has frequently been emphasised that building and allied trades aro among the most important factors contributing to the extent of , T .„ unemployment throughout the Dominion, and the board, in launching its scheme, was of the opinion that the subsidy it offered was all that was required to start an. era of re- , .. mv . . newed activity. Die correctness o{ this view is borne out by the official figures relating to the number of per-

mits issued since tho subsidy became available. In April last the total value of buildings for which permits were Issued amounted to only £76,000, whereas in the succeeding three months, without taking into consideration the last-minute rush that set in when the withdrawal of The subsidy .was announced, new buildings were authorised at a rate of more than £BOO,OOO a month. This was

equal to the figures for the corresponding months of 1920, when building was at its peak. It can safely be said, therefore, that the availability of the subsidy increased operations and employment tenfold. There is, of course, scope for considerable criticism as to the wisdom of the board’s policy, since it meant, in some cases, that public funds were being employed for private benefit, or that a virtual gift was being made towards the cost of buildings that would have been erected in any event. Theso are dangers which have to be guarded against in any scheme of subsidy—that the ..enefits arc derived by those least in need of them—but it is apparent that in this particular case an incentive was given to much work which would not otherwise have been contemplated. The Unemployment Board fulfilled the main function for which it was established; it provided much work which would not have been available in the ordinary course, and, indirectly, created activity in a number of trades and industries which were not directly subsidised. Now, however, the scheme has ceased to operate and it becomes necessary to look to the future; to consider whether or not it has defeated: its own ends. There can be no questioning the fact that during recent years building activity throughout the minion has been considerably less than normal, largely through lack of confidence, and that, in consequence.

there was a great deal of leeway to be made up. That there was work to be done is borne out by the experience of the subsidy, but the point now arises whether as a result of the stimulus that was given arrears have been completely overtaken and the present boom will be followed by another period of depression. Even the suggestion of such a possibility justifies tire abandonment of the scheme, * for otherwise there was at serious danger of the subsidy being respons- ( iblc for a few months of artificial prosperity in the building industry being followed by some years of gen- ( oral inactivity. This , was precisely what happened in regard to public works throughout the Dominion. For

a few years tho, Government employed a record number of men on various undertakings', and then found that, funds being exhausted, it could not continue to engage even the normal complement. As a general practice it is infinitely better to have activities of this nature spread evenly over a long period of years, sinco a boom is invariably followed by a slump; but the position in regard to the building industry was somewhat different as tho stagnation there was caused by the lack of incentive rather than by an absence of demand. The existence of the demand has now been proved, and' the necessary incentive was provided by the subsidy. Tho board’s next problem is to endeavor to maintain the activity without the stimulus 01 the. subsidy. Admittedly this will not be easy, but one thing which the board can, and should, do is to clarify its future attitude. With the removal of the subsidy it is only natural that there should; be, at least, a temporary lull, but the length of this will depend very largely upon a knowledge of what the board intends to do. The present. feeling is that, sooner or later, the subsidy will be renewed, arid the tendency, therefore, is 1o await this development. For this reason the board should lose no time m making an official statement of its policy. Unless it can. state definitely that the scheme will not be resumed as soon, as there is a slackening in the industry, it will be confronted W’ith further stagnation and little will havo been gained from the immediate advantage its policy has undoubtedly secured. Remaps a better plan would be for the board to continue a modified subsidy on certain classes of work only, for it is possible that if plans were developed to the stage of seeking assistance many undertakings would be proceeded with even though the applications for subsidies were not granted.