MUNICIPAL TRADING.

Dominion, Volume 3, Issue 735, 7 February 1910, Page 4

MUNICIPAL TRADING.

In one of our Notes of .'the Day, last week, commenting upon ati observation by t-ho Chairman of ; the Gas Company, We stated, very briefly one OH: two of the principles that should be borne mind when municipal . trading is under . discussion. To : day we, print somo bearing upon ■ this subject, the immediate themd being the City Council's reoent extension of the scope of the Electric-; Lighting: Department. The argumentsadvanced by the firms dealing in electrical fittings will riot; strike anybody as being particularly sound or strong, for they do not found their case on the right premises. They do not attempt to makti a ca& "against .the municipalization of the electric-' lighting business. Haying thus allowed ..propriety' in the establishment oi the Department they have : reallyno case in principle. Pof,' as we stated in olir earljer. reference .to the subject, the: municipality's embarkation upon -this 'of trading earindt be justified Unless the Department is tun on the lines on which a provident private firm Would run it. and such a firm would certainly add the supply of fittings to its DUsineM. ■ .It was actually urged that it is. "unfair that the Council, • which could buy in much bigger lots, arid - consequently cheaper than "private firms, should ' undercut '■ legitimate importers." That 1b a very ridiculous assertion :' it 'affirms'.the principle- that dearness, or ' imperfect. 'su'pply, , is better than cheapness,, or abundance (a fallacy, by the way, that underlies many popular political doctrines). We wish, here, however, to note,the very interesting statement, of the Mayor in defence of municipal trading generally—a statement which, despite its unsound foundations, is' a conscientiously, clear :.and straightforward 'presentation of the policy of municipalising industry. Personally, the Mayor said, he ' believed in municipal trading, a,nd if it was carried out on sound business lines' it proved of great' benefit to citizens." Few people will disputed that opinion, but it really begs the question, for the tendency of municipal as oi State trading is always. to diverge fwin sound business .lines,' and i.that _ tendency ' will always, ..exist until, in the perfect State, municipaltrading ' is ' cpn,ducted, as it |wore, iii vacuo'. . Municipal enterprise .is liable to- come under exactly the same undesirable influences as make State enterprises economically ' Wa&tefiil, ;and socially and politically undesirable. •' It is not difficult to detect the fallacy— or rather, the several fallacies—that underlie the Mayor's , fundamental proposition:—

The old idea of civic government was that the municipal!icouncils should polico the streets, that, they should make roads and keep them in: repair, ■ that they should do-. too : sewage and all theun : profitable .work, .hut :that the profitable works, such, as water,, and electric lighting l and; tramwiiy-jin , short, everything that showed;, a profit should 'be "done, by private, enterprise.: - "He stronglj held the view that}:tf .the, oity > councils : were capable of doing all such unprofitable works as . road-making, 1 scavenging, etc., they werejust :as capable of running : tha -undertakinirs : :that .wore profitable. Also, 1 the 'proiits which came out bf the' peckets of the 'whole of the people should hfclp to pay : for , the. heavy'; es pense of : the. unprofitable works. ■ ; .;.

The first fallacy ib in ■ the misuse :'of the terms ' "profitable" and "unprofitable." Surely it is wrong to say that roads and drains arc '(unprofitable things 1 iThey yield no yearly: dividend in hard cash, it is true,. but/that is nimply because the unseen "profits" of their working remain automatically m the pub; lie's pockets. And in what sense can a lighting or transit, system' be called "profitable" if it is run. at a loss, or it it -just pays its way, or even if it yields a cash profit that simply takes the plaoe of cash that would require to oe taken from the public in some other way ? , \Ve have not the least doubt .that ill; the long run private enterprise is more "papable —to use' Dr. Newman's own word—of working.jany trading conoern than is almost any municipality' uiider existing; conditions., The municipalisation of ttie roads and drains has its justification in the same .facts as justify the socialisation ofv-national;; defence and ,the public safety. It affords no: real aid to the policy rif municipal trading;. Nor 'can! it be allowed that the extent of iiunioipal trading'in older countries is itself a sufficient warrant for supposing that New Zealand is a .good field for the extension of municipal enterprises. We readily admit that there, is nothing immediately: .objectionable in the policy Db. Newman so warmly commends where economy and providence are 'the guiding principles of a city's governors. But even in the beat-managed city there is always a danger that the foroes that work for evil.in connection with the State-, owned "enterprises of this country, and in some of the municipalities and States of America, may neutralise the zeal and care of those of the authorities whd are attached only to the public interest. The-great danger of the policy of. municipalising industry cornea from, the tendency of that policy to spread more and more widely, and to grow more wasteful is it widens. The actual case that is the text of the Mayor's statement illustrates one phase of this tendency. The best safeguard for a municipality, onoe it has etitered business as_ t. trader of any kind is the retention of the'ultimate control by those ,wh<) are directly Responsible for tho money in! the civic treasury—responsible for any deficits that may be the result of/ running the business "for the .good of : the general public;" There would be little cause for conosm if everybody connected with the'' management of the, city were as sensible of the need for ' economical management as Dr. Newman. But unfortunately they often are not.