POST-WAR PROBLEMS

Dominion, Volume 36, Issue 217, 9 June 1943, Page 4

POST-WAR PROBLEMS

Matters of wide-reaching importance were mentioned by the retiring chairman of the Auckland Transport Board, Mr. J. Sayegh, when he reviewed the year’s operations of that body.. It had, for the first time in many years, shown a credit balance in the revenue account and that, at first glance, might appear to be in every way satisfactory. But the chairman stressed the fact that, in earning that profit, the undertaking was being worn out so rapidly that when the war ended a very large expenditure would be required to restore the pie-wai standard.” He added that the amount in reserve ivas barely sufficient to cover accelerated depreciation and deferred maintenance. This is a position that faces many industrial undertakings. Taxation is so heavy that it is virtually impossible for them to make full provision for depreciation and maintenance. Both, the State and private enterprises may find their future prejudiced in this way. Unless roads, railways and State buildings are kept in repair then the country is using up its capital resources. In the same way industries must make provision for replacement and maintenance or their future operations will be handicapped and re-establishment may call tor an expenditure that will adversely affect the earning capacity of the undeiThe danger was stated very plainly by the British Chancellor of the Exchequer when he brought clown his Budget in 1941.. He saic, when referring to the heavy demands made on company income by the excess profit tax: “This means that industry will not be in a position to put aside any of the excess to provide for the post-war problems of adjustment to oeacetime conditions.” For that reason Sir FLingsley Wood said that he proposed to treat part of the excess profit tax “as a reserve to Idc made available to industry at the end of the war for the purposes of reconstruction.” The proportion was fixed at 20 per cent, of the excess profit tax paid, less income tax. lhe purposes for which this reserve may be used include the replacing o obsolete or unsatisfactory machinery, the scrapping or adaptation o redundant plant to new uses and, in the case of farmers, improvement of the fertility of the soil. « . This aspect of the effects of war taxation has not been given the consideration it should have in this Dominion It is, of course, essential that plants should now be used to the full either to P rov ’ de what the war machine requires or to maintain as fully as. possible the supply of consumable goods. But if in the process, as is inevitaie, there should be accelerated depreciation then, unless those concerned can make reasonable provision for it, they will be faced with serious problems in the future, and the economic position of the country generally will be prejudicially affected. An aspect which the British Minister stressed also needs to be kept prominently in mind. He saw in the provision of this reserve, in the form of a post-war credit tot the taxpayer, something that would enable industry to. set about t re task of readjustment and reconstruction and so play a vital. part in reabsorbing “the mass of the nation as quickly as possible into prohtable peacetime employment.” "It is not sufficient, as many people seem to think, to regard the fact that profits are being made as evidence that things are going along well. If the profit has been obtained, a the cost of shortening the life of the plant, and adequate provision has not been made for depreciation, then firms may find themselves in somewhat the same position as the Auckland Transport Boa.ldhas made an operating profit, but its reserves are barely sufficient to cover accelerated depreciation and deferred maintenance, and so the future may be endangered.