The Dominion WEDNESDAY, AUGUST 5, 1931. OUR BORROWING POLICY

Dominion, Volume 24, Issue 265, 5 August 1931, Page 8

The Dominion WEDNESDAY, AUGUST 5, 1931. OUR BORROWING POLICY

In the Financial Debate which opens in the House of Representatives this evening, members will find plenty of™ ater ’ al J ' Budget itself and in the prevailing economic conditions to d scussThe urgency of the times, however, encourages the hope that they wifi no&e occasion talk at large and in detail on everything and nothing, but will strive to see the financial problem as a whole, thus opening the eyes of the public to present dangerous ten and demonstrating the need not merely, of calling a halt but also of retracing many steps already taken on the primrose path. Because taxation is taking such heavy toll of the public pocket, members may be inclined, with a general election looming, to direc their criticism at the revenue side of the Budget. But they shou d remember that taxes have been made so heavy simply to satisfy ‘ voracious appetites of themselves and the public for State spend . In various ways, however, the public is learning that it must itse pay for its own demands and is coming to examine with narrow eyes where the shoe pinches. The public wants to know how its money goes and whether shift could not be made with less, since it can ill spare the drafts made on’it. , In the past some members—and it would be easy to name a tew ,—have been inclined to run with the hare and hunt with the hounds. On the one hand, they make all sorts of costly demands on the Government and condemn all or.most cuts in expenditure, on e other hand, they fulminate against every new tax altnough only y taxation can their demands be met. They cannot have it both ways, and must know it, but they think to hoodwink the public. They salve their consciences by calling their double-dealing po t » then wonder why the name of politics is not in good favour. But, under whatever disguise this irresponsible trifling may be camouflages, its real name is downright dishonesty. This sort of political hypocrisy may formerly have passed muster but the public sense of discrimination, sharpened in the school of adversity and quickened by the- tax collector’s unending demands, will in future brand it for the counterfeit it is. In fact the country expects that members shall approach the financial, problem with a responsible mind which will necessarily include a critical examination of spending. On the expenditure side, the first thing to note is that public-debt charges and social services between them account .for 75 per cent, or three-quarters -of the whole. Some attention, has previously been given to the high cost of social services especially education—and it is proposed here to emphasise the staggering cost of past borrowing. Last financial year the payments arising out of the national debt totalled £10,952,505, and in the current year an increase of £350,000 has to be provided for although, owing to certain adjustments and postponements, the whole weight will not actually be felt. 1 , ' .. Last year, however, debt charges absorbed 44 per cent, of ail expenditure and if we. go on borrowing at the present rate (an average of over eight millions in each of the last three years) the burden will become insupportable. Consider our railways as one instance —on these we have spent over 68 millions but they are expected to pay interest on only 47 millions. Their actual rtturn last year was £685,000 or about 1| per cent., on their written-down capital and 1 per cent, on the money sunk in them. The rest of the interest must be found by the taxpayer. Loans invested in hydro; electric works and State advances are barely paying for themselves and the soundness of the investment of 37 millions in advances is 'now about to undergo a severe test. And these items, with those invested in telegraphs and telephones, represent the bulk of our directly “reproductive” capital. There is a heavy deadweight besides. While it is not possible to lighten the interest bill, the. care of Parliament should be not to increase it. That means stopping borrowing and. will raise awkward questions of how to absorb men at present employed on capital works. Nevertheless the difficulty must be faced as Australia has had to face it since July, 1929, when the flow of loan moneys was stopped. This is a negative sort of economy since it aims only at preventing fresh capital expenditure>and therefore increase of debt charges. It is necessary to take the step, however, not only by consideration of our present annual obligations but also by referring to the high cost (over 6 per cent.) of our last. London loan and the unpromising works, chiefly railways, on which it is to be spent. A great deal more could relevantly be written on a subject which has merely been opened, but enough should have been said to induce members to think reasonably and speak with responsibility in the debate opening this evening.