Evening Post. THURSDAY, DECEMBER 1, 1938. STATE RAISES PRICES

Evening Post, Volume CXXVI, Issue 132, 1 December 1938, Page 8

Evening Post. THURSDAY, DECEMBER 1, 1938. STATE RAISES PRICES

Ministerial assurances that rising labour-costs and other costs would he swallowed up in turnover are not working out, either in private industry or in industries where the Government itself is the employer. The private manufacturer does not find that the people's increased purchasing power is making him sell so many more of his products that the higher wages he pays, for less hour? of work, have become negligible. Nor is the Government Railway Department selling so much more travel and transport that its higher wages and costs can be absorbed without raising prices—that is to say. without calling on the user of railways and road services to pay more. The Minister, Mr. Sullivan, is therefore following up his earlier word of warning with a 10 per cent, increase. Such an increase falls on all users proportionately, and',avoids the friction that would arise from h readjustment of existing rates of fares* and freights, placing a greateT burden on some users than ,on others. ; , . The Minister says that there are "two major remedies"*—to reduce wages (unthinkable) and to increase fares and freights. Not one word about the fully compensating increased turnover, which, was to be and is not. Is it already forgotten? The late Mr. Turnover having been removed from the scene, and wagereduction having been removed from the argument, a percentage increase remains the line of least resistance, and the Minister pleads that it is but a little one. He is taking back from the wage-earner—and particularly from the suburban wage-earner who, with his family, is a considerable user daily of Government transport by rail or road—a fraction of the recent rises in wages, and it is quite true that the fraction is small. But there are so many fractional increases in all kinds of costs, of which Mr. Sullivan's, 10 per cent, is only one. How different would it have been if the earlier Ministerial picture of higher wages and purchasing power devoted to New Zealand-produced goods and services (not so much to imports) had proved to be something better than a mirage! The impact of the 10 per cent, increase on users will be somewhat softened by the evidence that the Government still takes a balancesheet view of its railway and road services. But price-raising cannot be considered apart from an earlier cost-raising; and the balance-sheet view should have begun with the latter rather than with the former. Some of the reductions in charges made by the Government were gratei fully received by the users; but a reduction in Government charges, like a Government promise to pay benefits, must be valued not in the light of the Government's good intentions, but in the light of the Government'? capacity to give those intentions a long-term effect. So a balance-sheet view of railway reductions, or of agebenefits, should begin at the begin ning if continuity of good intention is to be assured. Mr. Sullivan may be correct when he says that railway charges are lower in New Zealand than elsewhere, and that, if a comparative calculation has any merits, he has a margin to work on. Sometimes increases of fares and freights defeat themselves by driving away business, but Mr. Sullivan is not afraid of any "material loss" under this head. Is that statement founded on competitive levels, or on competition's enforced absence?