9

D.—lb

Tn Repty to the Chairman's Introductory Remarks to Mr. Lowe's Report. Paragraphs 1 and 2. The question is asked, " What effect will the competition of the hydro-electric schemes of the Government have upon the gas industry ? " the answer to which " involves an examination into the economic soundness of the schemes themselves." The answer to this question is direct and simple —viz., that gas and electricity each has its special function, and that in its own special field of usefulness there is no competition between the two. Where, however, the gas industry has had the field to itself the introduction of electricity has necessitated a readjustment, of its business, but in every case much to its advantage. Instead of answering the question in a direct and simple manner, Mr. Lowe was instructed to prepare a report which involved " an examination of the economic soundness of the Government schemes," and the answer to the question of " What effect will the competition of the hydro-electric schemes of the Government have upon the gas industry ? " is sought by propounding another question, " Are these schemes financially and economically sound ? " The motive is obvious viz., to discredit Government enterprise ; and I notice that under similar circumstances the tactics are always the same. Recently the financial papers of the world affected to be, scandalized at the business methods of the Hydro-electric Commission of the State of Ontario. The agitation originated in the Now York financial papers. But why should financial houses in New York take such an interest in the conduct of a State department in Canada ? The reason is simple. It has found that power could be obtained in the Province of Ontario much cheaper than in the State of New York, and, moreover, the provincial scheme was so comprehensive as to render a supply of electricity generally available in country districts as well as the towns. The result of this was that the citizens of New York State and other States began to agitate for a similar system conducted by the State on similar lines ; hence the alarm of the New York financiers. And instead of reforming their own methods in order to enable the citizen of the United States to obtain electricity at the same price as the citizen of Ontario, they adopted the method of trying to discredit the Hydro-electric Commissioners of Ontario. Paragraph 3. Mr. Upton has arrived at the conclusion that the Government would be unwise to embark upon any more hydro-electric schemes, and that the money would be better spent on railways and roads. He bases his conclusion upon " reliable " calculations by Mr. Lowe, based upon an analysis of the Lake Coleridge figures as disclosed in the Public Works Statement for 1917. It will be seen in my reply to Mr. Lowe's report that his premises are unsound, and even if sound the deductions therefrom arc quite illogical. As regards expenditure upon railways and roads : The existing railways cannot be worked to their full advantage unless certain critical sections are, electrified ; whilst the question of roads is largely a question of the nature of the settlement. It is very little use opening up baokblock sections whilst at the same time the population is drifting into the towns. It is claimed that a supply of electricity to the settler will provide him with such amenities as will induce him to stay on the land, and will ease the burden of the housewife and contribute to an increased production. It is claimed that production in a certain district in Canterbury has increased considerably since the farmer has been supplied with electricity, in spite of the fact that the sons are at the war It can be confidently predicted that electricity on the farm will conduce to closer settlement, and closer settlement demands and justifies good roads. Another aspect of the question is that not only does a general supply of electricity stimulate production and attract new industries, but it also economizes coal to such an extent that the whole expenditure is recoverable in a few years. Paragraph 4. In this paragraph Mr. Upton points out that the Lake Coleridge scheme was selected for development because it promised the best results for the smallest outlay ; and that, as any other scheme will necessarily cost more, especially if Mr. Lowe's calculations are correct, in consequence the prospects as far as gas investments are concerned are very reassuring. The cost of developing Lake, Coleridge as a power source is low in first cost considering the amount of power developed, but at the same time the cost is nearly twice as much per horse-power developed as some of the North Island schemes when fully developed. So that the prospect is not at all reassuring as far as gas investments are concerned, if the view that, cheap electricity is detrimental to the gas industry is the correct one. My view is that gas and electricity react one on the other, and that the prospects as regards the gas industry are just as reassuring in spite of and probably as the result of (•heap electricity. Paragraph 5. In this paragraph it is pointed out that "the first outstanding fact disclosed by Mr. Lowe's report is the proof that electricity for lighting and power cannot be supplied to consumers in Auckland at lower rates than are already current in the city if the bulk supply business as undertaken by the Government is placed on a self-supporting basis." He also points out that the Auckland City Council generates steam from slack coal, which is a waste, product at the mine. In answer to this: Mr, Lowe is very far indeed from proving the above contention, but in any case the supply of electricity in Auckland is comparatively restricted. There are townships and boroughs outsidelthejpresent limits which have no supply of electricity, and the Auckland Province as a whole does not seem to merit any consideration at all either in Mr. Lowe's report or Mr. Upton's introduction. Whilst it may be granted that the City of Auckland can very well provide for its needs

2—D. Ib.