THE CO-OPERATIVE SYSTEM OF PUBLIC WORKS (STATEMENT FORWARDED BY THE MINISTER FOR PUBLIC WORKS TO THE PREMIER OF SOUTH AUSTRALIA RELATIVE TO).

Appendix to the Journals of the House of Representatives, 1893 Session I, D-05a

X>.—sa.

1893. NEW ZEALAND.

THE CO-OPERATIVE SYSTEM OF PUBLIC WORKS (STATEMENT FORWARDED BY THE MINISTER FOR PUBLIC WORKS TO THE PREMIER OF SOUTH AUSTRALIA RELATIVE TO).

Return to an Order of the House of Representatives, dated 28th June, 1893. Ordered, " That a return be laid before this House setting out a copy of the statement forwarded by the Minister for Public Works to the Premier of South Australia, explanatory of the co-operative system in connection with public works." —(Mr. G. Hutchison.)

The Hon. the Ministee for Public Woeks to the Hon. the Peemiee, South Australia. Sib,— Public Works Office, Wellington, 22nd March, 1893. As promised by my colleague the Hon. the Postmaster-General, and by cablegram yesterday, I have much pleasure in sending you information in regard to the working of the co-operative system of carrying out railway construction and other works, introduced in this colony by the present Government. Accordingly I have the honour to enclose a statement explanatory of the system ; also the Public Works Statements presented to Parliament during the sessions of 1891 and 1892, with passages marked bearing on the subject; and I trust that from these and other data enclosed herewith you will be able to glean the information desired. Should you wish for any further particulars in relation to the matter, I shall be glad to supply them. I have, &c, E. J. Seddon, The Hon. the Premier, Adelaide. Minister for Public Works.

List op Enclosures. A. Statement explaining the system, B. Public Works Statement for 1891. C. Public Works Statement for 1892. D. Standard specification and conditions of the Public Works Department. E. Standard specification and conditions of the Mines Department. F. Form of monthly return of men, wages earned, &c, filled in, as an example. Enclosure A. Public Woeks, New Zealand. — Statement explaining the Co-opekative System, foe the Information of the Hon. the Peemiek of South Austealia. An account of the origin of the system, and how it was proposed to work it, was given by the Minister for Public Works in the Statement presented to Parliament by him in 1891. (See pages 5 and 6.) The method of working has, however, been somewhat modified since the Statement was delivered, and it has been found better, and really necessary when the men were not well acquainted with one another's capabilities, to form them into smaller parties than originally intended. The average strength of the parties now is not more than eight to ten men; and for these small parties we do not insist on trust deeds being drawn up and having trustees duly appointed, but simply direct each party of men to elect two of their number as "head men," who represent the party in dealings with the Government and engineer in charge of the work, and give acquittances on behalf of the party for payments made. The classifying of the men is also more easily arranged under the small-party system. The co-operative system, as at present worked, may be shortly described as follows : —• When, say, a piece of railway is to be constructed, the number of men that can be advantageously employed on it is estimated. When the men are selected, they go on to the ground either

D.—sa.

all at once or in lots, according to circumstances, and, with the assistance of the Eesident Engineer, arrange themselves into parties. Each party elects its head men, and all the members of the party sign a printed order, authorising the " head men " to receive payment on their behalf. All the members of the party also sign a set of specifications and conditions and schedule of prices, the prices having previously been fixed by the Resident Engineer with the approval of the Engineer-in-Chief. These prices are fixed on the following basis : — 1. What it would cost to do the work at per day's wage current in the locality for a similar class of work. 2. To this is added a percentage of profits which a contractor would require. The earnings of the men, with all first-class men in a party, should therefore be 10 per cent, higher than the current rate of wages for similar work; and when the men engaged are under the first-class standard the earnings are correspondingly smaller. Each party has a section of the line assigned to it, and is paid for the work done at the said previously-fixed schedule rates, there being no lump contract sum, and the right being reserved to the Government to stop the works at any time. The selection of workmen is made through the Government Labour Bureau. When a portion of railway or other work is to be put in hand, the Bureau is advised by th& Constructing Department of the nature of the work, and the number of men required; the Bureau then takes the responsibility of providing the men, and sending them on to the ground, preference being given to married men out of employment where the work is situated, and preference is also given to married men on Labour Bureau list. When the Bureau pays the railway fares of men, the Secretary sends orders for same to the Public Works Department, and the amounts are deducted from the men's earnings. The parties are supplied by Government with tents and tools, and the cost of the tools is deducted from their earnings, the tents remaining the property of the Government. The heavier and expensive plant is also found by the Government, and a percentage for the use of same by th& workmen is deducted in fixing the cost price of the work. -The system originally adopted, more especially with reference to railway formation (earthworks), has since been applied also to the laying of the permanent-way, and the construction of roads. More recently it has also been extended to the erection of buildings, and in all cases the results have been satisfactory. The materials for the buildings are provided by the Government, and the work of erection is carried out at prices fixed by the Government Engineer. Enclosed are copies of the Public Works Statements for 1891 and 1892, with passages in reference to the co-operative works marked, also a copy each of the standard specification and conditions used by the Public Works and Mines Departments in carrying out the system. In reporting on the progress of the works each month, the Eesident Engineer sends in a statement showing the number of men employed, wages earned, &c. A copy of the form of this return (filled in as an example) is also enclosed. These returns show the number of hours and days on which each man worked, and from this is worked out the average wage earned by the party per hour per actual day worked, and per ideal day of eighb hours. The cost of materials, hire of horses, &c, incurred by the party for carrying on their work is deducted from the gross earnings, and the net earnings are shown. For some of the data of this return —as for example, the number of hours and days worked by each man —the Government overseers have to depend mainly upon information furnished by the head men of the parties, which they (the overseers) check as best they can. So far, however, there is no reason to believe that the information thus obtained is not reliable enough for the purpose for which it is wanted. The average number of men employed by the Government under this system, on railway- and road-works, during the past year, has been about 1,900. E. J. Seddon. Enclosure B. EXTEACT FROM PUBLIC WoBKS STATEMENT, 1891. " Contemporaneously with the question of sub-contracting, I also took into consideration the question of the necessity of inaugurating a new system in connection with the construction of our public works—a system which, in the near future, must, I think, obtain throughout. I allude to the system of constructing works on the co-operative principle—that is, giving the work direct to the workmen, and dispensing with middlemen altogether. An opportunity for introducing the system occurred in connection with the construction of certain sections of the Ngakawau Eailway extension to Mokihinui. Public tenders had been invited for certain sections of this railway, the conditions being of the most liberal character : no deposit was required, and the work was cut up into short lengths. Almost immediately the tenders were accepted for some of the sections the contracts were thrown up ; and it became a choice, therefore, between calling for fresh tenders on the original method and giving the co-operative principle a trial. On arriving in Westport I found a large number of men who had flocked there from different parts of the colony, expecting to get employment on the construction of this railway. To avoid the delay that calling for fresh tenders would have involved, I decided to let the sections referred to —three in number—on the co-operative principle, and asked the men to divide themselves into parties of about fifty each, and to select from each party certain trustees, the trustees to take the work from the Government in the ordinary way, but the work itself to be done by the whole of the men, each one having equal interests with his fellows ; the price to be given to be fixed by the Engineer in charge of the work. On this the men went to work in a few days. They have now almost completed their contracts, and are very well satisfied with the result. As often occurs when new methods are adopted, there was a little friction at first, and a little difficulty in the classification of the men ; the strong and ablebodied men did not altogether like to work for the aged and the feeble : but, after classifying both

2

D.—sa.

the men and the work, and giving the lighter work to the aged and less capable men, and the heavier work to those best fitted for it, the earnings, as a whole, proved satisfactory, and the men are quite prepared to go to work again on the same principle if further work was available. "The experience gained in this instance has indicated the course which it will be advisable to adopt in the future. It should be arranged—(l) That the men form themselves into parties voluntarily; (2) in case there are more men than work can be found for, the men of equal capabilities should ballot amongst themselves as to who is to get the work; and (3) that a classification of the men be arranged beforehand, so that the abler and stronger men, and those accustomed to the work, might receive the largest share of the profits, the next or second-class a slightly lower rate, and older and weaker men a somewhat lower rate again. By so doing, the feeling of a man working for his fellows would be avoided, also the feeling on the part of others that they were dependent on their fellows. With a suitable classification, on the lines that I have indicated, the system would, I am satisfied, work on the whole admirably. " Considering that the system is only now being tried for the first time in connection with our public works in New Zealand, it must be conceded that it has proved fairly successful; and, as we gain further practical experience with its working, I have no hesitation whatever in saying that it ■will ere long be recognised as the proper system on which our public works should be constructed. " The colony in the past has not received the benefit that it should have received from the public-works expenditure. We have had contractors who have made large fortunes, and who have taken the money so quickly and easily made and spent it in the Mother-country or in the other colonies. Again, we have had large sums of money expended in the different districts, yet the districts have not profited by the expenditure. W T e have had large estates made valuable by the construction of works, and yet we have not increased the settlement on the land. Had the system of co-opera-tion obtained in years gone by, —had lands adjoining the works been thrown open for settlement as. the works progressed,—had those employed shared in the profits in addition to their wages, which is the principle of the co-operative system—then, as they shared their profits, so they would have taken up the lands and settled thereon. It is necessary that a remedy should be devised for the mistakes of the past, and that remedy is the construction of works on the co-operative system, and the simultaneous throwing-open of lands for settlement in the vicinity of the works. The work will not cost the colony any more, and a large portion of the money expended on the same will come back to the Treasury in the shape of payments made for the purchase or rent of lands. " Another advantage to each district will also ensue. In calling for tenders for wwks on a large scale it has often occurred that in the locality in which the work is situated there has been a large amount of labour available, but the contractor, coming, as he frequently does, from another provincial district, brings his own men with him. The work, therefore, instead of providing labour for those resident in the district, has the reverse effect, as men who go there expecting to obtain employment do not receive it, owing to the contractor having brought his men with him, and hence the labour-market in the district, instead of being relieved, is congested more than it was before. Not only so, but, as our experience has recently demonstrated, we have had the labour-market glutted in one part of the colony whilst in other parts labouring-men were not obtainable. I attribute this inequality, to a large extent, to the system that has obtained in the construction of our public works. There is, doubtless, a certain class of public works where technical skill is required —such as large bridges, and so forth—in which the old system of doing the work by public tender, and having a middleman in the shape of a contractor, will, for a time at least, be necessary ; but, in the course of time, even this, as working-men gain more experience, and the absurdity of the middleman being kept to make a profit from both the Government and the workmen is more clearly recognised, will be seen to be entirely unnecessary."

Enclosure C. EXTEACT FROM PUBLIC WoiiKS STATEMENT, 1892. " The result of the experiments in the construction of our railways and public works on the co-operative principle has proved highly satisfactory, though, as in all new systems, there was a little friction at first. "Amendments have been made in the terms of agreement between the workmen in the direction of reducing the numbers in each party, it being very difficult to get thirty or forty men who can work harmoniously together, and who are physically and otherwise capable of performing an equal amount of work. But by subdividing the parties, and allowing the men to select their own co-partners, it is found that they practically classify themselves, and thus very largely reduce one of the principal difficulties in working the scheme. There have, in some cases, also been little difficulties at first with the officers of the Government in dealing with the system, owing to their being accustomed to deal only with contractors, and owing also to the subdivision of the work, and having so many separate parties of men to deal with, entailing a considerable amount of extra work upon both the engineers and the overseers. The engineer, in fact, has practically to take the position of the contractc r, whilst the overseers have to act not only as overseers for the Government but also as foremen of works for the contracting parties. Taken as a whole, however, every satisfaction has been given by the staff, with one or two exceptions; and at the present time the whole of the works are going on quite smoothly and satisfactorily to both the Government and the men who are doing the work. The work has cost no more than it would have cost if it had been done under the contract system, and, at the same time, a better class of work has been done. " A great advantage in constructing works under the co-operative system is that the Government has the expenditure thoroughly under control. Should any circumstances arise rendering it desirable to curtail expenditure, it is simply necessary to reduce the number of men, the agreements with the men providing that the Government is at liberty to order the work to be discontinued

3

D.—sa.

at any time without payment of compensation. Under the contract system, works cannot be stopped when once the liability has been incurred without heavy compensation having to be paid to the contractor. The state of the labour-market can also be studied, and a very much better attempt made to equalise supply aud demand than under the contract system, as, when once a contract has been signed, binding a contractor to complete works within a definite period, they must be continuously pushed on with, even when labour is very scarce and in great demand for •other purposes. " The contention that, when a large amount of labour is unemployed, pressure which is well nigh irresistible would be brought to bear on the Government to find employment, has been proved to be altogether erroneous, as is evidenced by the large reductions in the number of men employed on the Government co-operative works during the last few months. " A matter now requiring consideration is the application of the system of co-operation to large works requiring skilled labour. Ordinary railway culverts of brick- and stone-work, and some small bridges, have already been successfully attempted. " A question at the present time is whether the laying of the permanent-way could not also be advantageously undertaken on the same principle. This matter lam now going carefully into. I have already let one experimental contract of two miles in length, and am awaiting the result. If satisfactory, an attempt will be made to apply the system to the laying of the permanent-way on the different railway-works now in course of construction. On several of our lines we have a large amount of formation-work done ; and it is necessary, in order to give the districts in which the railways are situated the full advantage of their construction, and also with a view of obtaining returns on the expenditure that has been incurred, that the work of laying the permanent-way should now be gone on with; and, with that object in view, I am having reports made by the engineers in charge of the several districts as to how far the work can be done under the co-operative system. There may be some places where it can be done to advantage, while in others it could not be done advantageously and with due regard to economy. It is my fixed intention to adhere to the principle laid down at the commencement, that the work should not cost more than if it jvere done under the contract system."

Enclosure D. Standard Specification and Conditions of the Public Works Department.

Enclosure E. Standard Specification and Conditions of the Mines Department.

Enclosure F. Form of Monthly Beturn op Men, Wages Earned, etc. (filled in as a Sample). Approximate Cost of Paper.— Preparation, not given ; printing (1,250 copies), &1 7s.

By Authority : Samuel Gostall, Government Printer, Wellington.—lB93. Price 3d.}

4