The Auckland Star WITH WHICH AND INCORPORATED The Evening News, Morning News, The Echo and The Sun. THURSDAY, OCTOBER 8, 1936. AUTHORITY TO BORROW.

Auckland Star, Volume LXVII, Issue 238, 8 October 1936, Page 6

The Auckland Star WITH WHICH AND INCORPORATED The Evening News, Morning News, The Echo and The Sun.

THURSDAY, OCTOBER 8, 1936. AUTHORITY TO BORROW.

For the cause that lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that we can do.

With tlie first, memorable session o£ a Labour-dominated Parliament drawing to a close, the Government is taking authority to borrow a total sum of £13,000,000 for public works, main highways construction and housing. In view of the large expenditure to which the Government is already committed, the announcement is not surprising, although it should be remarked that only two months ago, in his Budget statement, Mr. Nash stated that "the moneys required for this financial year for an expanded programme of public works are available without any loan iss>ue to the. public." However, there is yet no indication either as to when, or to what extent, the authority now sought will be utilised. All that the public knows is that the borrowing permit now sought is for one of the largest sums, if not the largest, ever proposed by a Government in this Dominion in one year. The Government has set its face against increasing the Dominion's overseas indebtedness, and it can be safely assumed that its financial operations will, at least for a considerable time, be conducted within New i Zealand. The sums to borrow which authority is now being taken are to bear interest at ' rates to be fixed by the Minister of Finance, and this provision seems to carry an assurance that the Goverment does not 1 intend to finance its expenditure by an issue ' of "costless credit," for if it is to be "costless it must be free of interest. The conclusion to be drawn, in the absence of a statement by Mr. Nash, is that the Government means to exercise part or the whole of its boiiowing authority in an "orthodox" manner. In other words, the Government is likely to require the Reserve Bank to underwrite the loans. The Bank Board, although it may express its view as to the wisdom and expediency of any such proposals, cannot persistently refuse to carry out the wish of the Government. It is unlikely that the Government will attempt to exercise its borrowing authority except by instalments, for a proposal to borrow £13,000,000 at once would defeat itself, if only because of the uneasiness that would be aroused by the magnitude of the total. There are ample funds available for subscription to a smaller proposal, and if there were an atmosphere of confidence, such funds would be readily offered, even at a comparatively low rate of interest. But, before there could be the requisite confidence, the investor would need specific assurances as to the borrowing intentions of the Government subsequently. he statement yesterday of. the Undei'-Seeretary for Housing implies that expenditure on housing will be both heavy and rapid, and in that respect public works expenditure will be no different. v The prospect is unsatisfactory at present, because it is so nebulous, and the Government, before Parliament goes into a long recess, should take an opportunity of making a full statement of its intentions.