BUDGET UNCERTAINTY.

Auckland Star, Volume LXIV, Issue 145, 22 June 1933, Page 6

BUDGET UNCERTAINTY.

It is not possible to gather from Mr. Coates' comments on the Budget outlook exactly what change has occurred in the financial prospects of the country since ho made his statement in January. At that time he indicated that national expenditure would be higher this year by £.3,300,000, and that revenue was expected to be £5,850,000 lower, and that there was a gap in the Estimates approaching' ten millions. This figure was accounted for mainly by the direct and indirect consequences of the high exchange. To narrow the gap the Government in February imposed the sales tax, estimated to yield £1,500,000, and raised the imposts on sugar, tobacco, motor spirit and exports of gold, to bring in another million; and, as a further emergency measure, it was decided to pledge the remaining assets in discharged soldier settlement mortgages for £2,000,000. Mr. Coates led the country to believe that lie would be able to reduce the deficit in these and other ways to less than £3,000,000. Later there was a saving of £570,000 by conversion of the internal debt, which will be available to reduce still further the expected deficit. Although the position at the moment is by no means clear, and it is difficult to resist the impression that Mr. Coates is endeavouring to steer by shifting landmarks, it must be recognised that he is faced with an unusually difficult task. Until the first quarter ends next week he can have no exact knowledge of what the sales tax will produce, and at the same time the cost of buying exchange from the banks will be increased by the rising tendency of prices in Britain, unless there is at the same time a proportionate increase in expenditure on imports into New Zealand. The import situation is bound up with the question of tariff revision, now being considered by a special tribunal, and any estimate of Customs revenue for the year will be subject to changes in the rates as a result of this investigation, as well as variation in the volume of imports. Then, as regards direct taxation, the yield to the Treasury depends upon the progress of internal recovery, which, in turn, reflects the market situation overseas. For these reasons Mr. Coates finds himself surrounded by uncertainties, and in the midst of these he sees the outlook changing definitely in our favour. It is too early to rely much on the promise of better prices, and the Government's duty is still to press forward with its measures of internal reform. With the Budget at its present level the country is called upon to carry too heavy a burden, of expenditure.