THE BUDGET.

Ashburton Guardian, Volume 56, Issue 263, 19 August 1936, Page 4

THE BUDGET.

HON. W. D. STEWART’S REVIEW.

SOME POINTS CRITICISED.

(Per Press Association.) DUNEDIN, August 18Speaking at the annual meeting of the Dunedin Chamber of Commerce to-night, the Hon. W. Downie Stewart (ex-Minis-ter of Finance in the Coalition Government), in a criticism of the Budget said: 'T am at a loss to understand the Minister’s statement that he had to raise taxation to pay the increased pensions. His increase of revenue’ on account of the general buoyancy was ’ £2,660,585, and other items of revenue brought up the total increase to more than £3,000,000. The increased pe’nsions cost £1,710,380. What he has really done is to transfer charges from the Unemployment Fund and Public Works Fund votes to the Consolidated ' Fund. In fact r ordinary increased revenue’ has been used to relieve these funds to an amount not wholly but largely equivalent to the increased taxation of £1,800,000. I cannot agree, therefore, that he had to increase taxation for the increased pensions.”

Continuing, Mr Stewart said that one of the chief aims of the Government was to force down interest rate's. He assumed that any. Government securities issued to the Reserve Bank would bear a rate of interest well below the' market rate. If the Bank retained these securities, he said, they would be worth less than their face value owing to the! lower interest they carried. “I do not know if it would bo the policy of the Bank to unload these securities on to other banks or financial institutions,” continued Mr Stewart, “but if so they would require to be sold at a discount. If they were retained by the Bank I assume that they would be written down to their market value, and this writing down out of profits would lessen the Government’s return of net profits from the Bank. “In a recent interview the Minister correctly states that the creation of capital wealth can come from savings, taxation or bank credit, and that savings are obviously the best source. This statement is confirmed by one of the’ chief experts on finance in Australia, who recently gave evidence before their Banking Commission. This expert stated that borrowing from the public is generally the' only safe borrowing course that a Government can pursue.”