STATE AND MUNICIPAL TRADING.

Taranaki Daily News, 16 March 1922, Page 8

STATE AND MUNICIPAL TRADING.

WHAT IT MEANS. INEFFICIENCY AND WASTE. “Certain State services have hitherto be’en conducted at an annual loss which has to be met by the general taxpayers instead, of by the users. These services should be self-sup-porting and should be conducted upon a proper business basis.” The above statement was made by the Prime Minister in the budget submitted to the House of Representatives in November last. Of its accuracy there can be no doubt and of its significance little question. Mr. Massey was speaking with a full knowledge of the facts, and with an earnest desire, we may be sure, to remedy a state of affairs which conduces neither towards national efficiency nor towards national economy. Faced by the necessity of maintaining the financial stability of the country under conditions of unparalleled difficulty he was driven to admit that State and municipal trading undertakings were not only competing unfairly against private undertakings of a similar nature, but were also failing to realise the beneficent objects for the attainment of which they were promoted. With so much conceded, it may he reasonably assumed that in the near future the Prime Minister will apply himself to the restoration of the sound conditions of trading which provide f<»r equality of opportunity and stimulate enterprise and efficient service. Meanwhile, however, it will not be ami« to mention some . aspects of the question which the public may not be familiar.

In the remark with which Mr. Massey emphasised the need for placing the various State enterprises upon a proper business br sis and making them selfsupporting he merely indicated what might be attempted to improve the existing position without entering upon any radical reform. His suggestion, in short, was rather a palliative than a cure.* “With this object,” he said, “expenditure has been reduced, in several eases, whilst in others a re-arranga-ment of certain fees and charges is being made which will largely reduce the r charges at present borne by the Con- <• solidated Fund.” This implies that the activities by certain continuing State trading departments have been restricted and that the fees and charges cf others have been increased. If these steps are effective from the financial point of view, the result will be contrary to the expectation and experience of most business men. Lessened services and higher charges are not calculated to attract additional patronage and in a State trading concern the greatest good to the greatest number surely is a factor to be taken into account.

It is quite true that State trading, in the imagination of sanguine and not very observant people, may develop a glamor which makes it a very attractive proposition. Nor need it be denied that there are great national undertak- , ings, such as railways, post and telegraph offices and so forth, which properly remain in the hands of the State. These are so vital to the development of the country and to the well being of its people that it would be impolitic to commit them to the custody of private enterprise maintained for the sake of profits. But State coal mines, State tourist resorts, State house-building, State saw mills. State fisheries, and Slate steamer, services, like municipal milk supplies, fish distribution, tram services, electric lighting and gas works, stand in quite a different category. State railways and State post and telegraph services, though notoriously lacking in the “proper business basis” which the Prime Minister declares to be necessary to ensure the best results from such undertakings, are essentially monopolies that could not be removed from Government control in existing circumstances. But, speaking generally, the other undertakings mentioned, both State and municipal, serve merely sections of the community and are neither so economical nor so efficient as are the private undertakings against which they compete. Though provided with ample funds at a low rate of interest and relieved of income tax. land tax, and. in the case of State undertakings, of Customs duties, harbor dues and municipal rates, in no comparison that has been made has a State undertaking been shown to be as economically and as efficiently conducted as are private undertakings of the same nature.