Evening Post. THURSDAY, JUNE 10, 1937. THE COST OF MONOPOLY

Evening Post, Volume CXXIII, Issue 136, 10 June 1937, Page 8

Evening Post. THURSDAY, JUNE 10, 1937. THE COST OF MONOPOLY

The announcement by thfe Minister of Transport of the riuiriber of roaU freight services which the Government proposes to purchase has caused tHe eoffirnercial cdriimunity to perceive how" Wide are tlie ramifications of this poli6y arid how farreaching may' be its consequences. Over ; fifty services are .included in the list published on tiiesday arid the number of vehicles employed in these service's is 191. Tlie Government will acquire the services by purchase, and special officers have been appointed to undertake the negotiations. A tribunal on which the Government and the road services will be represented under the chairmanship of Sir Frdncis Frazer will consider the reports' of the negotiating officers and, where a bargain lias not been made, will hold a public inquiry; As to what may happen if-the negotiations and the tribunal jriquiry do riot lead to a bargain we Hive a plain" hint in the Minister's statement:

In cases' where operators are not agreeable to negotiate; the consideration $f'the agplicatioiis for the renewal of thlir existing licences which expire on May 31, 1937, Will be proceeded with as provided for. lin the Transport Licensing Act. As trie Transport Act | requires thai; eabh application must Be considered 6n its merits, it is not possible, tb forecast what the decision of the Licerisini Authority would be ih any particular csiSe.

Authority exists, however, to refuse the renewal Of Existing licences: It is not suggested that the Goverririifetit will take advantage of this tb drive a hard bargain, with the operators; but operators who are riot willing to sell must take the risk of being refused permission to continue. The terms .of purchase are* we believe, iftteridted id be fair, arid the main purpose of the purchases—to prbrribte cO-brdinatibh and prevent waste—is laudable, yet the pblicy riiay be attended by undesirable results.- The Wellington Chamber bf Commerce mentioned one of these results ih a preliminary consideration of the subject bri Tuesday. Government ownership of road transport on the scale contemplated, it was pointed out; Would restrict the scope for private enterprise. Some of the services will be continued, and the operating employees will be added to the growing army of' public servants. The' opportunities for employment will probably be very little reduced; but the scope for private initiative arid business developriient Will be riarrbwed; Every State venture has this result ih a greater or less degree. The question is whether the compensating benefits are likely to be such that, when everything is taken into account, the comrriunity has gained.

Before answering this question other" drawbacks to the State purchase must Be reckoned; We lriaY leave in the meantime consideration of whether it is in the''public interest that the number bf voters dependent on the State for their livelihood should be further increased. That is a general political issue, but it is one that cannot be overlobked in View of the steady growth of numbers oh the Government payrolls. More directly related to the welfare of business are the effects of the purchase iti adding to the capital charges of the Railway Department as that Department gradually becomes responsible for Bbth railway and road transport. Will the cost bf taking over road transport be an investment returning full valiie to the people responsible for Government debt, or will part of it be dead capital, the service of which must be met from taxation? This is a consideration of the utmost importance, having regard to the great and growing weight of taxation. Equally important is the question whether monopoly, even State monopoly, will assure to the users of transport the high standard of service and cheapness which they have the right to expect. The Government has stated that it will continue roafl services, which are necessary in the public interest. It is not buying them up simply to stop them. But the decision whether such services are necessary in the public iriterest will be influenced by the Government interest ih the railways. Conditions will not be exactly the same as if the decision between road and rail were to be made either by the user or By an independent licensing authority. Without the spur of competition there will be a tendency to move slbwly in the development of the road side of the biisitiess.

We freely admit that unrestricted competition has, in the past, been wasteful. Oh many occasions we have pointed to the weight of charges imposed on industry by unregulated 'transport, growth. We are not prepared to admit that there is no way of avoiding this except the way of State monopoly, involving heavy additions to capital costs, restriction of private enterprise, and. removal of the.competitive incentive to efficiency. We are not convinced that full trial has been made of the alternative methods which were placed before Great Britain in

somewhat similar circumstances by the Salter Conference Report. That report prbposed two methods: control by licensing and establishment of a fair competition basis by placing upon road transport the full and fair cost of its permanent way. There has been no complete inquiry in New Zealand to determine whether road freight Services are bearing their fair share or rhbre of road construction and maintenance. And we db not think that regulation of the services by licensing has been tried so fully that it can now be declared a failure, with no alternative except State purchase of competitive enterprise and creation of a State monopoly. The principles involved in this policy have a direct bearing on businesses other than road transport. Business men, therefore, investigate their application thoroughly. They are concerned With the Cost of transport, and with the weight of taxation. They are even more concerned with principles which may govern the extension of State monopoly into many enterprises Other than transport.