Wairarapa Times-Age THURSDAY, JULY 28, 1938. PUBLIC WORKS AND OTHER WORK.

Wairarapa Times-Age, 28 July 1938, Page 6

Wairarapa Times-Age THURSDAY, JULY 28, 1938. PUBLIC WORKS AND OTHER WORK.

.(COMMENTING on some observations by the Board of Directors of the Reserve Bank regarding the coordination of employment on public works with other forms of employment, the Prime Minister, as he is reported, said: “I am not finding fault with anybody’s opinion, but I disagree with the idea of holding up public works waiting for a slump which some people say is bound to come.” Mr Savage seems rather to have missed the poilit of what the Reserve Bank directors had to say on the subject of public works. The passage in their report to which he was presumably referring reads as follows: — While not wishing to comment on the question of public works generally, the board regards it as highly desirable, on financial grounds, that the extent of such * works should be regulated as far as practicable according to the state of employment in other directions, a slowing down being arranged when the demand for labour for other purposes is relatively satisfactory and an acceleration during periods of comparative business inactivity. In this and in their further counsel that oversea funds should be allowed to accumulate when the proceeds of exports and the national income are at a high level, the Reserve Bank directors are not so much declaring slumps to be inevitable as pointing to the means of insulating the Dominion in some measure against the effects of trade recession, and so of averting, in times of adverse trade, at any rate the full development of slump conditions.

The main point in the counsel offered by the directors is that men should not be employed on public works when more productive and profitable employment is available, as it surely ought to be in times when good prices are'being obtained for exports.

.Mr Savage said that our production gave no evidence of breaking down, which of course is perfectly true, but when he went on to declare tha’t ‘‘therefore a slump can only happen when people are unable to buy what they are able to produce,” he overlooked the fact that New Zealand has to take account of oversea marketing as well as of production.

We have had in. comparatively recent times the experience of having to sell the products which constitute some sixty per cent of our total material production in this country at prices amounting to only about a third of the prices these products bring in better times. Bearing in mind the oversea obligations we have to meet year by year, and our need of a considerable annual inflow of imports to maintain established living standards, the wisdom of reasonably building up London funds ip periods of good trade is fully apparent. Those who advocate this common sense policy surely should not be accused of slump psychology, much less of hastening the coming of a slump.

An undue expansion of public works does more to delay than to promote the development of the Dominion. If public works that might reasonably wait are carried out with human and material resources that might have been devoted to an extension of productive industry, which would have broadened and enlarged the exchange of goods within the Dominion, the country is robbed of a permanent addition to its economic strength and one which would lighten the financial burden entailed in carrying out later public works.

It is, as the Prime Minister has fairly suggested, a matter of striking a balance. There are public works which have been delayed too long. For example, failure to carry out the deviation of the Rimutaka railway years ago has done a great deal to hamper and limit the development of productive areas in and beyond the Wairarapa. A good deal of development work at present in hand or in contemplation is much less urgent and less immediately essential, however, and the observations of the Reserve Bank directors are a thoroughly practical and timely comment upon the total public works programme of the Dominion as it is developing today.