MUCH BORROWING

Auckland Star, Volume LXI, Issue 103, 3 May 1930, Page 10

MUCH BORROWING

GOVERNMENT CRITICISED FORMER FINANCE MINISTER. "SALUTARY CHECK" IMPOSED BY MONEY MARKET. Trenchant criticism of the Government's financial policy was forthcoming last evening from the Hon. W. Downie Stewart, M.P. for Dunedin West, and Minister of Finance under Reform, who spoke in support of Mr. W. P. Endean, at his Remuera meeting. Mr. Stewart said the Reform party had been unjustly blamed for the present state of affairs. There had been too much borrowing under the United regime, but the Dominion's debt was not so large as it would have been but for the check imposed by the money market. A salutary check had been imposed, and it was well for the country that such was the case. Mr. E. W. Inder presided over a large attendance in St. Mark's Hall. Those on the platform included Mr. Downie Stewart, Mr. R. A. Wright, M.P. for Wellington Suburbs, Mr. H. Holland, M.P. for Christchurch North, and Mr. A. W. Hall, M.P. for Hauraki, in addition to the candidate. Mr. Stewart said it would appear that the three-party system had arrived in New Zealand, for the time being at any rate. There was, of course, 110 indication as to how long it would continue. It was difficult because it gave no guarantee that it represented the wishes of the electorate. During last Parliament the Labour party was the real Opposition, but they were now only third of the trio. In billiard terms they were snookered, or in golf terms, stymied. Another dr-gcr of the three-party system was i-ii the country might be deceived by promises which could not be fulfilled. If a fresh general election took place there was no guarantee that the major problems would be solved. There was at present every indication of grave dissatisfaction in the ranks of the United party, and it might be that the developments of the next session would lead to a simpler settlement. Responsibility For Deficit. Dealing with finance, Mr. Stewart said it was fair to admit that the conversion of the £29,000,000 lean had been carried out ou as satisfactory terms as possible, but it is not fair to throw on to_ the Reform Government the responsibility for the present deficit. It must not be j forgotten that £156,000 of that deficit was due to the negotiations of the present Government. To say broadly, as Sir Joseph Ward had said, that the deficit was due to the Reform Government was'not fair. Out of each of the three years in which he (the speaker) , had control, and they were hard and "Tuellin!? years, they had come with a surplus. He did not say that Sir Joseph could have avoided the deficit, but it was not fair to place the responsibility on Reform The expenditure of the Government had foile up by over a million, and when it was remembered that they had promised not to involve the country in extra taxation this was a total wlncn was hard to understand. The criticism that Reform had to make was that the schemes of borrowing which the United party had undertaken were not likely to stabilise the credit of New Zealand. They-bade fair under United policy to follow the example of Australia, whose credit was badly undermined in the European market. During the last year of the Reform Government, said Mr. Stewart, the net increase in the national debt was only five and a quarter millions. It seemed clear that the gross borrowing for the first year of United Government had increased by about eight millions. That, said Mr. Stewart, was more than was good for this country. (Hear, hear). Not Expended Wisely. A very salutary check had been placed on the borrowing operations of the present Government by the action of the London money market. Loan expenditure had been a great deal higher than the Reform Government had desired, and the action of the London money market had been a good thing. As recently as 1926 Sir Joseph Ward had criticised proposed scheme of rural advances When the scheme, which involved adding ten millions to the public debt liabl !f announced, Sir Joseph said it would make New Zealand the most profligate country in the world. It was curious that the United party should immediately embark on a scheme of heavy borrowing Mr. Stewart said, m his opinion, "the present Government was incurring heavy loan expenditure with out sufficient investigation. The mo y borrowed was not being «P® d e<l Interest rate, had gone crone up, and it was not difficult to understand why they Had described themselves as the Uppo party. Unfortu nately, everything had gone: up^excep Srf'rid Mr. s^ort, "but. lu. blaming tlcm for bragging, as tliej to don?, that they wonld solve them. The "London Loan Mystery. Stewart expressed the opinion £15^000, Sii' Joseph Ward not got , . ' r- nnn 000 in London on condition that he did not come back on the marke during 1929-30. That, stipulation was known as the "London Loan awl the Prime Minister had sought to lay the blame for the «nbargo at his (the speaker's) door. However, after fierce controversy in the House he ha admitted that he was wrong in dom£so- - had been announced that the Gov ernment proposed to Taise a loan _of £5,500,000 for the present year s requirements. Had Sir Joseph Ward been able to carry out the policy he announced at the general election he would presumably have tried to borrow more, and possibly he might go back for a further loan. "While some of you may think it unfortunate that the Government is not able to borrow all it wants to, I personally think it is a piece of good fortune, added Mr. Stewart. "The credit of New Zealand is still good, and we want to keep it so." (Applause.) _ The Government had indulged m many loan expenditures without adequate investigation of the schemes for which the money was being used railway lines m the South Island, for instance. Seeing that the railways were losing £1,000,000 a year, and the losses were increasing, it -was due to the public to place the full facts before it before such heavy -ex-, penditure was undertaken.