RESTRICTION BY LEGISLATION

Southland Times, Issue 23345, 1 November 1937, Page 6

RESTRICTION BY LEGISLATION

GOVERNMENT POLICY CRITICIZED COMPLAINT OF EFFECT ON INDUSTRY (Special to The Times) WELLINGTON, October 30. “The restrictive character of the Government’s legislation, with the high rate of taxation, is imposing a very severe hindrance orf industrial development and is thus accentuating the very evil which it is designed to cure. In these words Mr A. C. Mitchell, president of the New Zealand Employers Federation, concluded a summary, given in his address to the annual meeting of the federation in Wellington, of the present state of industry in New Zealand. Any substantial drop in the value of exportable commodities, especially wool, would create a serious situation, Mr Mitchell claimed, and he criticized also the Government s policy in coping with unemployment, stating that the real cure lay in enabling the manufacturing industries to absorb more labour. The legislation placed upon the Statute Book of this Dominion by the present Government was all tending in the direction of increased costs and prices, he said. Few would probably seriously question the sincerity of purpose or good intentions of the Government, but there was a large and rapidly increasing volume of public opinion which challenged the statesmanship of the Government policy. Some of the first measures placed upon the Statute Book were the imposition of the 40-hour week in industry, the restoration of the 1931 wage cut which was ’forced upon the country as a measure of economic necessity during the depression period, and an adjustment of wage rates to ensure that workers should have, in addition to the restoration of the wage cut, an amount for 40 hours’ work equal to that previously earned for 44 hours. It was inevitable that this legislation would result in increased costs and prices, and the effect was seen today in increased retail prices for all commodities, a condition that to a great extent cancelled the advantage to the wage earner of the increased wage rates. Manufacturing costs had risen to such an extent that the value of imported goods had increased by more than £1,000,000 a month for the first five months of this year for which returns were available.

INCREASED TAXATION “In many businesses the increased taxation has resulted in 50 per cent, of the year’s total net income now being paid to the Government in land and income tax alone—an amount in ex cess of that available for the payment of a return to the shareholders who provide the whole of the capital in the undertaking,” he said. “Unemploy • ment taxation to the amount of about £5,180,000 is still collected in spite of the claims of the Government that unemployment has been substantially reduced. At the end of July we still had 22,210 men on sustenance and upwards of 38,600 unemployed. When one considers the tremendous increase in the number of men on public works undertaken and financed by the Government —many of which undertakings are regarded by thoughtful people as being of an uneconomic character—it will be realized that the claims made by the Government of their ability to absorb the whole of the unemployed in industry were not well founded, and it is open to question whether the present policy is not having a demoralizing effect on the men themselves, many of whom have absorbed with zest the doctrine that it is a good idea to spend their earnings as they collect them and to rely upon the Government to provide, out of taxation, the wherewithal to carry on when they get out of a job. Instances, too, are not wanting of men who are in receipt of sustenance and relief payments who have refused work at their own trade offered to them, as being less congenial than continuing on relief work or sustenance.

“DEMORALIZING EFFECT” “For confirmation of the demoralizing effect of the present system one need only consider the recent prosecutions and convictions of men making false declarations to enable them to make illegal drawings on the funds — a scandalous disclosure which has called forth severe strictures from Magistrates dealing with these cases. The police stated in the Dunedin Court on October 1 that the total number of cases in the Dominion up to June was 1547—the amount involved being £7955, with several hundred more prosecutions to come. “In the manufacturing industriesor indeed any industry in which labour represents an appreciable proportion of the cost—one who tries to persuade himself that we can with impunity introduce the 40-hour week with the substantial increase in wage rates and other expensive concessions already granted without prejudice to our ability to compete successfully against the manufactured products of other countries working longer hours at lower rates of pay is harbouring a delusion. “The high prices which are ruling at present for wool and other export - able commodities —the former representing an increase of £10,502,247 over the 1934-35 return, and £5,067,830 over the previous year’s return—have largely offset the increased costs and prices of other commodities by making additional money available for circulation, and to that extent have postponed the day of reckoning. Yet in spite of the extra evenue coming into the country though that channel and the huge programme of public work in hand, we find that unemployment is actually on the increase at present. “The effect of a drop in wool prices to the level of two years ago can readily be appreciated and the position is such as to call for a searching examination of the problem by those in authority to ascertain and determine whether the present method of dealing with the unemployment problem, witn its associated system of sustenance and relief payments, is the correct one. The true test for the cure of unemployment is surely not the placing of men on work provided by the Government and paid for out of taxation, but by so improving the position of the manufacturing industries as to make it possible for them to absorb the men at present unemployed, in their own trade or calling or other kindred occupations to which they could readily adapt themselves. That there is room for a very large increase in the manufacturing industries is conclusively proved by the very large increase in the volume and value ot goods imported during the present y ear __many of which could and should be produced in our own factories, but which, as a result of the present high costs, it is not possible to produce at a competitive figure, even with the present high exchange rate and duty in our favour.”