PUBLIC FINANCE.

Press, Volume LXVI, Issue 19942, 31 May 1930, Page 15

PUBLIC FINANCE.

MR HOLLAND ON THE POSITION. prime minister criticised. (press ASSOCIATION telegbam.) WAT MATE, May 30. Mr H. E. Holland, Loader of the Labour Party, addressed a largelyattended meeting here to-night, and in the course of his address made reference to the Hon. G. W. Forbes's statement rogarding the financial position. Mr Holland said lie had not had time to go fully into details, but in view of the extremely gloomy nature of that pronouncement, which was so markedly in contrast with the glowing promises of a little more than a year ago, he was not sure the Prime Minister had not done the Dominion the greatest disservice imaginable. Some time back the Hon. W. A. Veitch was found declaring that confidence in the economic stability of the Dominion might be shaken if the figures relating to unemployment were permitted to be published, but if anything were wanted to weaken the confidence of creditors it had certainly been supplied by the Leader of the Government. However, he was not prepared for a moment to agree that the position was so <Jark and dismal as Mr Forbes had painted it. It seemed almost astounding that within two months of having proclaimed, a surplus of £150,000 and with only one complete month's figures on which to base his calculations, the Prime Minister should precipitately announce a deficit of three millions to be achieved during the present financial year. To sav the least, it would set enquiries going as to how the surplus of March 31st was built up. Exports.

Mr Forbes had prefaced bis statement with a reference to a drop of £8,100,000 in the value of New Zealand exports for 192030, as compared with the previous year, but he did not mention that both 1927-28 and 1928-29 were abnormal years, in each of which the value of our exports exceeded the average by between £7,000,000 and £8,000,000. In 1929-30, the value of New Zealand's exports was slightly over £49,000,(XX), and that value had been exceeded in only four of the ten preceding years. In each of the other six years the State was well below that figure. The average yearly value of exports for the ten years, 1920-1929, was just under £49,500,000, a difference of £448,000 in comparison with last year. Bearing iti mind the fluctuating nature of export values, there was nothing to be alarmed about when 1 a fall of less than half a million in the yearly average occurred,. and more especially when the capacity of the Dominion to rise above a really adverse situation was taken into account. It had to be remembered that at least 115,000 bales of wool had been held back from sale owing to the unsatisfactory prices'ruling. At a moderate estimate of £ll 10s per bale, tins meant a value of £1,322,000. Added to_ the exports, this woujd lea.vq the position last year nearly V nujlibn better than the' yearly average. J It was not true that thero was' a shortage of money in New Zealandj nor had there been a shortage in 1929, for in that year New Zealand's surplus funds were seeking investment in Ausf tralia. The Chrisfcchurch City Council in response to its advertisements, received offers from all over the Dominion to take up its debentures at 5J per cent., and easily got all the money it wanted, , running into several thousands of pounds. This position continued until the Government placed its loan on the market offering 5} per cent. The immediate effect of the Government's,,action was to send up the rate of interest and the cities had to pay 51 while the smaller local bodies had to pay higher rates. The banks followed the Government's examnle and. increased the overdraft rates. He contended that if a City Council could get the comparatively low rate of 54 per oent., the Government could have borrowed on more favourable terms. The Railways. Referring to the loss on the failways, Mr Holland said the objective of the railway system was wholly similar to that of the roading system, the getting of the products to an effective market, and while it was a good thing if . this could be done and- a balancesheet prpfit disclosed in-doing it, or if any loss shown could be minitaised, still there was no more reason to feel dismayed over the loss on the railways than on the Main Highways. If the goods were conveyed to economic markets, the country reaped the benefit to that extent. However, if it should be laid down that the railway systerii must be treated wholly as a commercial venture, then the railways should be. credited with "the values created by their construction and operation, in which case the balance-sheet : would show a jrreatly altered result. Everyone would agree that there was need for co-ordination of motor and railway services, .but this could only be done by drastic changes that would make motor vehicles act as feeders to instead of competitors with railways. The pre-sent-competitive system represented an enormous economic wastage.

Reduction of Expenditure, Mr Holland proceeded to say that the references to education expenditure were extremely disquieting and hands off the Education vote would express tho public sentiment in this connexion. The Government's attitude in regard to hospital, subsidies would call forth the closest watchfulness on tho part of the Labour Party. There was a danger of the responsibility that belonged of right to the whole-Domin-ion being thrown on the local ratepayers. From the viewpoint of the public servants the Government's now policv was not encouraging. There was no indication that the promises made would be: lived up to. On the other hand there was a fairly strong hint that both the pruning knife and guillotine would function in place of the salary improvements promised last year. If retrenchment were really necessary, one legitimate source of saving would be found in the cutting down of the Naval and Military Estimates. Generally speaking, both Reformers and. Liberals had opposed every effort in this direction m the past. The suspension •of military camps was good so far as it went, but what was wanted was the abolition of the useless and costly compulsory military training system. The Singapore Base represented another waste of £125 000 a year, and this could be saved to New Zealand by the Government intimating to the British Government its willingness that the construction of the base should be discontinued.

T n conclusion Mr Holland said Mr Forbes need not be surprised if his Government's attitude was taken for a renunciation of Sir Joseph Ward's policy and his statement regarded as a smoke screen to oover a carefully

planned evacuation of the position taken up by the United Party m 1928. (fSSSS ASSOCIATIO* TEUMBUI.) AUCKLAND, May 30, "Mr Forties is to be eomplimonted OB taking tho public into his confidence, but there is method in his madness,?' said Mr Bobinson, secretary of the Auckland Farmers' Union. The Prime Minister, he said, appeared to be trying to paint the. case aa black as possible so. that the public would be prepared for a further Increase in taxation. Dr. Bclshaw, Professor of Economies, said that great dependence on Oustoma revenue as a source of taxation was p4rticularly unfortunate at a time like this. A long range view of national finances should be taken. It iras not a year-to-year problem. Railway losaee could be reduced if motor competitors were made to pay their fur share of road maintenance, and if unpayable branch lines were closed. If . local districts were opposed 'todosing, -they should be prepared •to make a special contribution to meet the loss.