THE LOAN AND AFTER.

Auckland Star, Volume LIII, Issue 95, 22 April 1922, Page 6

THE LOAN AND AFTER.

Since confession is good for the soul, Mr. Massey may feel better for his comment on the new loan. We invite our readers to take particular note of some of his "I am not keen on borrowing even at 5 per cent," he says, "for the simple reason that it is almost impossible for the Government to use the money for any purpose .which will return anything like that rate of Interest." What the Government can or cannot do in the future we do not know, but we do know that the largest trading concern of the Government, the railways, i.s now far from meeting even the inadequate interest rate for which the Department allows. Mr. Massey's frtatement emphasises the seriousness of the pftsition. ' The Department allows 3J percent for railway interest, although according to the Year Book tho average interest on the public debt, to say nothing of sinking fund charges, is £4 5/. This was presumably a- yeaT ago, since when five millions have been borrowed at about 6J per cent, and five millions at something over 5 per cent. It may be "almost impossible* for the Government to use 5 per' cent, money for "any purpose" profitably; certainly it will be difficult. But the country expects the Government to make heroic efforts to do so whenever it can. The railways are the most conspicuous case: in point. There are also hydro-electrical works, to which part of this loan is to be allocated.' Mr. Massey would sureJy not suggest that these enterprises are not going to pay interest on 'capital. But consider the continuation of Mr. Massey's statement: "In such cases there is only one way to make up the deficiency, that is by increasing /taxation, to which most people strongly object under the existing circumstances. However, the loan iS justified, /but it will be the business and' the duty of the Government to see that the money is used to the best advantage, so 'that in years to come there may be something left to show for it." We should say that "most people" did "stronglj- object" to increased taxation. If Mr„ Massey thinks he can balance accounts in this way he had better get rid of that idea at once. We hope that his reference to the duty of the Government in the spending of the money is more than a pious aspiration. If his own Government had been more careful about that duty during the past few years the country would be much better off to-day. "So that in years to come there may be something left to show for it!" A few unprofitable branch railways, perhaps. Finally We may note that "no definite allocution of the money can be given." The Act undeT which the loan is raised specifies; railway construction, additions to rtailway plant, telegraph extension, the construction of ro_ds and bridges and the development of goldfields, and "other public works." Mr. Massey mentions land settlement. This is not /specified in the Act, but probably it comes within the four corners of the compreliensively worded schedule. The Governraent can do what it likes with this monjsy within very wide limits, but the (public is entitled to know how It is going to be allocated. Mr. Massey's comment furnishes fresh and irresistible nvidence of the loss of control by Parliament" over the finances of the country.