REDUCE COSTS

Sun (Auckland), Volume IV, Issue 1000, 17 June 1930, Page 10

REDUCE COSTS

EFFECT OF TAXATION ON UNEMPLOYMENT MR. W. J. POLSON’S ADDRESS Special to THE SUN WELLINGTON, Today. Unemployment necessitates Government assistance. Government help means the expenditure of public money. That spells increased taxation. Mr. W. J. Poison, M.P., president of the Dominion Conference of the New Zealand Farmers' Union, made the above remarks at the opening of the conference today. After dealing exhaustively with the subject of the Government's proposed scheme to deal with unemployment, he said he was willing to let the commission’s scheme be tried out. “Only cost reductions will increase production, reduce living expenses and help us out of the morass in which we are sticking,” he said. “The scheme propounded by the Unemployment Committee set up by the Government is one which merits full consideration. The worker gets a weekly wage,” said Mr. Poison. Because the prices of our primary products are decided for us by world market considerations it does not follow that we can be indifferent to the existence of a considerable and increasing body of unemployed workers within the Dominion. Human considerations alone impel us to consider this problem; although tiur own interests are not served by the presence of unemployment. HONEST THINKING “The reports of the special committee indicate that the committee has done a lot of honest thinking. Some people have been quick to criticise the report, but what muse be recognised is that the committee had very limited material to work on and evidently the committee wanted to make some concrete proposals. The cure for unemployment, says Mr. J. H. Thomas, the British Cabinet Minister in charge of the problem, lies in reproductive work. “The final report of the Balfour Committee states: —‘The main practical problem which emerges from all our inquiries is a perfectly plain one, that is, to find the means of restoring the com- j parative power of British industry and . trade -without impairing the standard ! of living, and of enabling British exporters to place their products in external markets in sufficient volume on terms acceptable to overseas buyers.’ “The British Treasury also has stated, ‘Unemployment must be solved by reducing the costs of production and the cost of living.’ These two points need emphasising. Now the report of the committee on unemployment appointed by the New Zealand Government proposes to add to the burdens of the taxpayer in one way or another by increasing the burden of taxation by £ 1,000,000. Last year the Government budgeted for £25,172,000, so £1,000,000 is a heavy addition. This £1,000,000 is to bo raised by an employment tax producing £500,000; £200,000 from a flat income-tax of Id in the £ ; extra landtaxes; and a levy on local body rates. The Consolidated Fund is to supply £300,000 to make up the round million. The total value of production in the year 1927-28 was £121,000,000. Brices have fallen since then and possibly last year’s figures of total production were about £100,000,000. Roughly, then, the financial burden of the committee’s scheme represents an average of 1 per cent, on production, which at first sight does not sound much of an addition. DECEIVING AVERAGES

“Average percentages are deceiving. Some firms and some farmers are making profits, but there are others who are just carrying on, making no profit, while others are making losses. Some firms and farmers are gaining on some operations and losing on others. No check of this has been made in New Zealand, but an analysis has been made in England, and this is very instructive. Dr. W. H. Coates prepared for the Colwyn Committee a memorandum giving the percentage of output by certain firms. These percentages of English trade reveal that an addition of 1 per cent, in the shape of unemployment tax can be a serious item in the costs of production, making a load too big for industry to carry, and resulting in a curtailment of production. “At June, 1927, there were 20 fewer factories operating, and 2,363 fewer factory hands working than a year earlier. Factory output dropped by £4,473,101, and the total drop for the two years amounted to £7,814,000. These were not years of bad harvests or bad prices. “The cumulative effect of all the factors operating, such as higher wages m town, shorter hours, the growth of retail profits, the uneconomic handling of our imports and exports at the minor ports and the protection by the customs tariff of those industries which are lame ducks and will never be anything else, has been to draw workers from profitable occupations to those that can only be maintained by subsl?dl€Ls * 1<: is her § that the vital point of the problem is to be found. The Unemployment Committee’s conclusions on this point are undoubtedly sound. ONE OF THE COMMISSION’S FINDINGS If “our principal business is the production of exportable farm products ” then our principal business should, if given fair play, be able to sustain an mcreasing percentage of our population whi.e there is still land to be occupied. But what do we find. In 1926 the percentage of our male population enln agricultural production was 36.02 per cent., in 1926 it was 23.99, a decline of 12 per cent. During the same period the proportion of males engaged in transport and communications has advanced from 5.75 to 9.92 an increase of 4.17 of the male population. Phis, it must be remembered means that despite the fact we have equipped harbours with wharves, machinery and other assistance, that we have built railways and laid down roads, despite this large capital outlav, we require 4.2 per cent, more workers to conduct our transport and communications. Despite the improvements in laboursaving equipment, 2,266 men are lookS* to «“* c'ass of work to sustain “e™, °^ e P ajid above the number which would be employed if the percentage of 30 years ago remained the same. “There is another considerable increase m those engaged in commerce - n< Lo? anCe from 11-57 in 1896 to 14.15 m 1926, an advance of 2.58 per cent, of population. This percentage is however nearlv a per cent, advance on the percentage in 1896. It is doubtless accounted for by the fact that during the period of high prices retailers’ stock turnover was higher, and that induced people to go into the retail distribution. The percentage on public administration and professional occupations has advanced, but this is only natural in an advancing community. Domestic and personal service has declined, but the unclassified class lias also advanced by over 3 per cent. The percentage of the industrial population has however advanced by of New Zealand therefore reveal that population is out of alignment for the main purpose of the Dominion’s business. Unemployment sustenance payment would hamper this readjustment at the present time by increasing the resistance to wage adjustments and by hampering the expansion of farming operations by added costs. “I have come to this conclusion with great reluctance because 1 re-

gard the Unemployment Commissions report as an honest and careful attempt to deal fairly with this great problem, but the disease lies deeper than the commission has probed. I have pointed out the disadvantages of the proposals, but I am not willing to have it supposed that we should do nothing for unemployment, it must be tackled. Women and children cannot be allowed to starve in this country. Palliatives are as useless as a curs* for unemployment, as charity is a cure for poverty. . The most dangerous plan of all, is more taxation —particularly taxation along the lines of past policy. It would be better to make sacrifices for economy, always provided there is ! some equality and justice in the sacrifice than to still further weaken the , Dominion’s powers of recovery by increasing taxation. INDIVIDUAL THRIFT PRIME MINISTER S APPEAL TO FARMERS’ UNION MUST INCREASE PRODUCTION Press Association ■WELLINGTON, Today. Opening the Farmers’ Union eonferencsWday, the Prime Minister the Hon. G. W. Forbes, said that no Government could carry on unless it balanced its Budget, and similarly it behoved individuals to balance their budgets also. There was an all-round call for thrift as over-spending uou d bring disaster on the Dominion s credit ab One d of the biggest difficulties was unemployment, which had in a large measure been due to the introduction of labour-saving devices. Is ext session the Government would bring down legislation to endeavour to put the position on a sounder footing. There was no need for pessimism. They should pay every attention to increasing produejion in order to answer the depressed prices.