The Timaru Herald WEDNESDAY, SEPTEMBER 13, 1939. Public Works Survey

Timaru Herald, Volume CXLVII, Issue 21449, 13 September 1939, Page 6

The Timaru Herald WEDNESDAY, SEPTEMBER 13, 1939. Public Works Survey

TWO possible views may be taken of a vigorous public works policy. The first is that Iliis method of employing labour should be used in periods of depression when the more profitable markets for workers are contracting. Public works, in other words, should be regarded as a second line of economic defence. There is a great deal of reason in this view, for in prosperous times it seems preferable that employers who could expand their enterprises and use labour profitably should have unrestricted access to the market. The other view, however, has been expressed by the Hon. R. Semple in the annual Public Works Statement, which lie presented in lhe House of Representatives yesterday. '‘Since this Government assumed office,” lie said, “the general prosperity of the country has increased, and it naturally follows that an expansion in public works is necessary not only to keep pace with, but to stimulate and promote development.” The Minister’s assumption is that it should be possible to accelerate the effect of a boom by forcing forward an all-embracing public works programme. There may be somethi ng in that contention, too, even though few economists would be prepared to support it. Naturally a third point which enters into the discussion was not mentioned in the Minister’s statement. The Government was not free to choose •my oilier than a costly public works policy. When it came into office it was faced with the responsibility of giving succour to thousands of unemployed men who in 1935 were not absorbed in the normal labour markets, and who had no immediate chance of being so absorbed. The solution of the problem was to create work for them and the simplest way of doing that was to begin public works on a big scale. In any case, this, too, was the best method of giving new velocity to money which had remained in idleness for a long time because of business slackness. Inflation was necessary to some extent if the general policy of the Government was to function satisfactorily; again, public works expenditure was the most effective method of achieving this end. Once, of course, this policy was put into operation there could be no drawing back, and the result has been larger public works expenditure in each successive year. The Dominion has certainly got value for its money, but the fact that value has been obtained cannot be proof that the policy was justified. A num earning £3OO a year, and having no savings behind him, could pledge his credit to the extent of £lOO in a year on furniture he did not need. He would have had value for his money, but that could not be accepted as condonation of such financial imprudence. It is the same, surely, with a public works policy financed to a large extent by loan moneys. But once the Government had decided that unemployment could be cured by a vast public works programme it created a new difficulty for itself: there was no chance of reversing the process without causing disturbance. This instrument, once chosen, had to be used continually. There was, of course, a limit, and the Government, as the Prime Minister’s Budget speech showed, is now conscious of the fact that the limit has been reached. It will be remembered what Mr Savage said then: “The present basis upon which we have reached a state of full employment cannot be anything but a temporary phase, because it is not economically sound to keep so many men engaged permanently upon works, however desirable they may be, that do not add to the present flow of consumable goods. The standard of living depends mostly on the latter, and if public works were continued at the present level for long the present difficulties would be accentuated, and in one way or another the result would be a lowered standard of living generally.’’ In that statement the Government, after a long and valiant pretence that the position was otherwise, came out finally on the side of the orthodox. That public works expenditure has been too high in the past three years does not mean that much exceedingly useful work has not been done. Ou the many tine national assets have been created and the Public Works Department has been in tile hands of the most efficient Minister it has yet known. Mr Semple has brought about a revolution in the methods of his Department, and for this he is entitled to the gratitude of the country as a whole. Nevertheless, lie lias been fortunately placed in having the money to meet his demands. Mr Semple's personal success would not hate been so conspicuous had lie not had means commensurate with his ideas.