COST-CUTTING

Evening Post, Volume CXII, Issue 81, 2 October 1931, Page 6

COST-CUTTING

Is this a time to raise or to reduce prices? Not very long ago the Railways Department raised the prices of passenger travel; the Post and Telegraph Department raised the prices of some of its services; and the Government is still intent on raising the price of government (per medium of higher taxes). The Railways Department, on the other hand, now reverses its price-raising policy and makes decided cuts in passenger travel. Clearly the new Railways Board hopes that lower prices will increase business; and much importance attaches to the acid test—will railway users respond to the policy of cheaper service? . On every side one hears citizens stoutly,maintaining that suppliers of service (all sorts) should cut their charges "in keeping with the times" and reap "the resulting wider business." Well, it is to be hoped that everyone who thinks or talks in that way will make a careful note of what the Railways Board has done, and will personally help to bring about "the resulting wider business." The cost-cutting citizen should be particularly anxious to support re-duced-fare railways, because, if his own argument is sound, the "wider" passenger business will provide new work tending to keep railwaymen in their jobs. Then the Railways Board, pointing to bigger business and a busier staff, will be able to say with pride: "Less tax, less axe.", In his message published in this issue, the General Manager Bays it is imperative "to adjust the staff more nearly to the requirements of the business." What a chance for the cost-cutting citizen to come to the rescue of the business by means of railway travel!

Those branches of the Public Service that have little or nothing to sell to the public at a retail price cannot very well carry out the interesting experiment lhat is being made by the

Railways Board. Most of the Departments are not trading undertakings in the same sense as are the Department of Railways and the Post and Telegraph Department. But, lumped' together, they are more or less paid for by the people through taxation, which we have referred to as the price of government. So the National Cabinet, in drafting the Budget, is, like the Railways Board, deeply concerned, from different angles, in the same old question of axe and tax. That is to say, the degree to which Budgetary difficulties are to be met by taxation, or by economies (in material and personnel), presents a problem that reaches practically every home. If the times do not demand a reduction in taxation, they at least impose a limit on the revenue yield of increased taxes; while such taxes may aVert the axe in one place (the Public Service) they will not better the unemployment situation if private industry, under tax-pressure, further reduces bands. There is no empiric way of demarcating the spheres of economy and added taxes; and the proof of the pudding will be in the eating, which means that judgment on the Budget may not mature till next year. But there is opportunity for a much more speedy judgment on the wisdom of cutting railways fares. It rests with the public to decide what that judgment will be.