Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, JULY 28, 1938. PUBLIC WORKS POLICY

Poverty Bay Herald, Volume LXV, Issue 19694, 28 July 1938, Page 4

Poverty Bay Herald PUBLISHED EVERY EVENING GISBORNE, THURSDAY, JULY 28, 1938. PUBLIC WORKS POLICY

I If the programme outlined in the : Budget is carried out, the Dominion : will spend £20,719,700 on State public = works. In addition, local authorities 3 will probably spend more than £lO,- - 000,000 on similar undertakings, making a grand total of over £30,000,000. The figure is impressive, if, indeed, it is not alarming. Taking the State expenditure alone, it is found that for every working day more than £82,000 is spent, and has to be found by the people, for public works. Just what this means may be better understood when it is stated that it involves a contribution of one shilling for every day of the year by every man, woman, and child in, the country, or more than £1 a week for a family of three. It is obviotis that expenditure at this rate could not possibly be maintained, and this explains why seven-tenths of the sum required is to be obtained by borrowing. The £14,263,000 to be borrowed this year, however, will have to be repaid in the future, and, in the meantime, the annual interest bill, also chargeable to the public, will be increased by more than £500,000. If borrowing is maintained at the same rate for three years, the people will need to pay an additional £1 per head to meet the increased interest bill alone. If it is not maintained, how arc the 21,000 employees and their dependents who have been encouraged to rely on public works to be catered for? And if it is necessary to borrow to this extent in a prosperous year, what will be the position during a lean period? «j public works policy Remands consldI" eration. In his 1936 Budget, Mr. Nash J» stated, with seeming approval, that •J practically all authorities agreed that c in times of depression public works / should be expanded to relieve the V economic pressure. That year he pro- \ vided for a total expenditure of £lO,- / come from loans. In 1937, when the % depression had been left further beJ hind, Mr. Nash allowed £17,307,000 for

public works, of which £5,851,000 was to come from borrowing. In that year he commented that public works activity "supplies a stimulus to secondary employment, which is most desirable and necessary to the progress of recovery," thus implying that recovery was not complete. This year he considers that a stimulus of £20,719,700 is needed, and the inference from this is that recovery is further off than ever. The change in policy is interesting. In 1936, public works should be expanded in times of depression; in 1937, when there was no depression, they were expanded as a stimulus to recovery; and what of 1938? Realising that an explanation was necessary, Mr. Nash says "the present Government does not subscribe to the view that public works should be regarded as a palliative ... or to offer the required employment. The policy is to promote or expand public works on their individual merits."

It is permissible, of course, for a Government to change its public works policy, and it is understandable that there should be differences of opinion on the subject. As Mr. Nash stated in 1936, however, most authorities are agreed that the basic principle should be an expansion of public works in times of depression. This view was strongly reinforced by last year's conference of the International Labour Organisation, at which the Government's representative, the Minister of Labour, supported a recommendation "concerning the national planning of public works." The preamble to the resolution commented that "expenditure on public works tends to increase in years of prosperity and to diminish in years of depression," thus aggravating unemployment in time of depression, and urged that it was desirable that public works should be used to reduce fluctuations in employment. Part lof the resolution recommended that such works should be timed to increase in periods of depression and that works exceeding ordinary requirements should be held in reserve. Part II recommended that in prosperous times resources should be placed in reserve and that borrowing should be restricted and the repayment of previous loans accelerated. The policy of the Government, therefore, is the exact negation of that which its representative endorsed at Geneva.

The only possible conclusion to be drawn from these facts is that the Government has found it necessary to revise its policy in the light of existing conditions. While approving the principle enunciated by Mr. Nash in 193 G and endorsed at Geneva last year, it has found it impossible to apply it to present-day circumstances. The reason is not far to seek. This principle presupposes that in time of prosperity private enterprise will expand to an extent sufficient to absorb most of the unemployment, but in New Zealand this has not been the case, and the result is that it has been necessary, notwithstanding unprecedented prosperity, to launch a public works programme that dwarfs anything else previously attempted. The situation is an alarming one from every point of view. The finances of the Dominion, both present and potential, are being used and mortgaged in order to carry out public works that are not necessary and not reproductive and there is no timing or preparation of works to be held in reserve for de-

pression years. In the meantime, an army of men, most of whom should be engaged in productive industry, is being encouraged to rely on State activities which cannot possibly be maintained at the present rate.