WARNING ISSUED.

Auckland Star, Volume LXX, Issue 28, 3 February 1939, Page 11

WARNING ISSUED.

DOMINION'S FINANCES,

DANGER OF CONTROL SYSTEM STATEMENT BY MR. COATES. Alleging that "reckless mismanagement" was responsible for the present position in Xow Zealand, the lit. Hon. J. CI. Coates, M.l\ for Kaipara, in a statement issued last night regarding the Government's trade control scheme, -pointed out that drastic action was cer tainly necessary, but this did not relieve the Government of its responsibility for having allowed the ilrift to occur. Mr. Coatee said that as a former Minister of Finance, and liic immediate predecessor in that ollice of the Hon. W. Xash, lie was concerned at the '■financial .bungling" that' had taken place in an attempt to prove the eflicncy of socialistic theories. "It is only fail*,"' said Mr. Coates, "that I should re-direct the public attention to the statement 011 national finances which I issued on relinquishing office in .November, 1935. In that statement, with a backing of Treasury figures, I allowed how Labour was taking over the reins of Government with tho finances of the country in first-class order; how all accounts and Departmental balances were in credit; and how the budgetary position justified not only my earlier estimates, but also a general feeling of confidence in the future. "Xow lot us see how things have changed in throo years. The finances of the country are no longer sound; Departmental balances, it seems, have been dissipated; the budgetary position is shaky; and nothing that tho Government is doing can justify confidence in the: future. After four or five years of unparalleled trade depression, the finances of the 'country wore sound; now, after three years 'of prosperity, tlicy are in chaos." Drain on Sterling. ~ The most glaring examplo of the Government's profligacy, said Mr. Coates, was to be found in tho drain on the Dominion's sterling balances and in the geiieral weakening of the position of the Reserve Bank. "Tho last Government lias been blamed, I know, for accumulating excessive reserves of sterling exchange in London. The fact of the matter was that we were facing a. financial and economic situation which was changing almost daily. In tho Natural course of events, sterling balances would have been reduced to soino extent as trade conditions improved, but the . last Government lic'ld that it was wise to keep adequate reserves in London. Those reserves have now been stupidly squandered, and we shall have to tighten our bolts and save in London in order to get out of difficulties which originated not overseas' but in New Zealand. ' "The budgetary position is far from being sound. In budgeting for a small surplus this financial year Mr. Nash \ allowed for a small natural decrease in Customs revenue; According to reliable estimates, imports under the trado control scheme are likely to bo cut in a full year by 33.1-3 per cent, but, as many of the goods affected ave dutiable at the highest rates, the reduction in Customs revenue is likely to be. as groat as 50 per cent. Apart from Customs revenue, sales tax arid income tax will also show a decline, and tho framing of noxt year's Budgot will probably give Mr. Xash all the hoadaches that he deserves,- • Heavy Expenditure. .''Govprnment expenditure ' has . increased enormously during the last three years and there are- further heavy commitments ahead,. Government revenue for other purposes 'will also be down, and the. two. alternatives' facing Mr. Xash are taxation so heavy as to knock industry clean .out of existence or cut - rciK-v manipulations which will have the immediate effect of destroying the purchasing power ,of the-worker's wages. "The: importers are protesting at present," said. Mr. Coates, "but soon every other section of the community will bo joining in tho protest. Some of the unions which have recently been passing i YO f "- o'f confidence in the Government will —obably be among the first to feel the - : Hch. 'Wholesalers, manufacturers, retri''""! and all other trade interests I will be Vrouglit under Government direcr tion. There will be fixing of prices ami nrofH ca'gins and bofore long industry will be reduced to the point where it ... longer continue. Then, to talltobjectives achieved, the Goyernn.e,.t will he able to step in and, in the sacred name of Socialism, place thing under tho absolute control of tlio State."