THE STATE IN BUSINESS

Hokitika Guardian, 10 May 1929, Page 2

THE STATE IN BUSINESS

SOME PROBLEMS.

(Taxpayer.) Although the Prime Minister during bis week-end visit to the Taranaki district did no more than indicate the nature of the various problems confronting the Government at the present time, he made it quite clear that in his opinion it was only by the cooperation of the mass of the people and a majority of the members of Parliament that they could be satisfac-, torily solved. “I hope,” he told his audience at Hawera, “to be able to submit to Parliament proposals that will be satisfactory to the whole of the people, and to a majority of the members rif Parliament.” Always an optimist he appealed to the widest constituency with characteristic confidence, and the public in general and the business community in particular will await the unfolding of his proposals with keen interest. Mutual understanding and lack of friction between the Government of the day and the community at large are essential to national prosperity. The preservation of these conditions is as important to the workers as it is to the captains of industry. The State, like private enterprise, is engaged in many commercial undertakings, employing both capital and labour in buying and selling, building, transport, settlement and so forth. Jt is imperative, therefore, if the public is to receive fair play, that the State in these purely trailing functions should observe ordinary economic laws and see that those who enjoy the benefit, of its services pay for them.

. .WHAT HAPPENS. It is obvious that private enterprise paying all the taxes that are levied and all the other charges that are imposed, must secure a reasonable profit upon the capital it employs. It is also clear that the Government, in the public interest, is entitled, where necessary, to standardise the quality of goods and to prevent the undue exploitation of the consumer by means of monopolies and combines. It does not necessarily Ifollow, however, that the State Departments and .State officials should bo immune from effective criticism by commercial experts in cases where these officials are wasting public money or unduly hampering legitimate private enterprise. For these reasons it is highly desirable that the proper basis and the precise limits of State activities, be exactly defined. It is not disputed that certain functions of a public nature are properly discharged by the State. These include the control of Railways, the Post and Telegraph Department, the Education Department and the hydro-electric services. Yet in all these cases there have been developments of policy, or costly experiments,

which were not originally contemplated and would be difficult to justify from an economic point off view. The house factory and sawmill established by the Railway Department at Franklin is a case in point. The original purpose of the factory was to supply the Railway Department with timber from theS.tate 'forests. In due course, however, the factory, with Government approval and 1 with exemption from rates and taxes and many charges imposed upon its rivals, largely extended its operations, becoming one of the most (formidable competitors in the limber trade and actually supplying “ ready cut bouses 1 ” wherever they were required. Yet with all its exemptions and opportunities the factory made a loss of £3,907 in the last year for which returns are available, and, what was even worse, crippled by its price cutting tactics one of the largest bodies of contributors to the railway ervenue. As for the house building, the rentals in 1927 amounted tp £83,374 and the net loss to £54,172 and in 1928 the rentals to £93,643 and the net loss to £68,620. Comment would bo superfluous. HOW THE MONEY GOES. The Prime Minister in the course of his speech at Hawera on Saturday laid 'frankly before bis audience the facts concerning the branch lines of railways which have been leaning upon the taxpayers during the last three or four years. “The Government wants to stop forever if possible,” lie said, “the short fragmentary portions of railway lines put down in response to pressure from members who wanted a vole for their district. The losses on these lines last year was approximately £770,000 and this became a charge upon the taxpayers because it bad to lie carried to the Consolidated Fund. Had that figure not been charged against the Consolidated Fund revenue there would haVe been no deficit at MI in the country’s finance for the financial year just ended. The present system of transfer is pernicious, bad and injurious to the whole financial fabric of the country. The only way to check it is to'remove it.” The Taxpayers’ Federation lias protested repeatedly against this method of passing on to the taxpayers, small and great, the losses incurred upon these unpaying branch lines and it will welcome Sir Joseph Ward’s .determination, while the public will be glad to’ be relieved of its incubus, it is ’only fair to say, however, that no party in the present Parliament is responsible for iho existence oil’ these lines and that no party raised its voice in protest against the legislation which made them a tax upon the Consolidated Fund. But to the present Prime Minister belongs'the credit of having faced courageously a very difficult problem. Wellington, May 7th., 1929.