The Dominion. WEDNESDAY, JANUARY 25, 1933. CONTROLLING THE BUDGET

Dominion, Volume 26, Issue 103, 25 January 1933, Page 8

The Dominion. WEDNESDAY, JANUARY 25, 1933. CONTROLLING THE BUDGET

of the higher exchange, a heavy deficit was in prospect. i i got into the habit of dismissmg . the VFsEßffi but if it enriches them,.it should enrich itse. • dustrv may v erv weight placed on the Budget in order to benefit industry may vei > "■ c " gw - of the load. But it is often difficult to prevent the weight again slipping to the end from which it was supposed to be lifted. It i; coi; naratively easy to say the State will take up some of the burden. But what supports the State, and the s whole economy, if it be not production? Will there be any gam if prices are assisted by addll Looked at from another angle, the Dominion’s main effort readjustment of the disparity between > nco f nin « d t ° U t tg n °S the been made in'the direction of reducing costs. With that policy the Government is now combining a measure of inflation in an endeavo to increase the producer’s receipts. But it is the balance betv.ee income and expenditure that matters to the producer. It. will not hel 1; him one bit if his costs rise 15 per cent, along with income Ye that will be the result before very long—the producer should reap a. ‘immediate bonus—unless a firm hand is kept on costs. To heap charges on the Budget means in the end heaping them 'on production. This inevitable incidence may-be delayed for a time by borrowing but must be felt some time. And the more credit that is appropriated for State purposes, the less remains for trade and industry. Before the higher exchange policy was adopted, Lew Zealand had begun to acquire a floating debt, transferred from one financial year into the next. She will add to it much moi e quickly now. Some months ago Australia’s floating debt had reached the appalling total of £B7 million, partly attributable to a high exchange. In proportion New Zealand may be about to repeat the process. No doubt up to a certain point it is unavoidable. But the process of piling up deficits is extremely dangerous and a close watch requires to be set. The Budget is not the first consideration but it is a highly important one.. If anyone has an idea, that by piling loads on the Budget they are somehow disposed of, he is much mistaken. It is the old idea in new form of a bottomless Treasury chest. Someone must pay in the first instance and in the final analysis he can pay only from the fruits of production. Items in the Government’s new programme should therefore be subject to at least two tests—their general economic effect and then effect on the Budget. As Minister of Finance, it will be Mr. Coates’s duty to keep the second aspect constantly before Cabinet and Parliament, and before caucus at its present meeting. On him rests the first responsibility and he possesses the force, if he uses it, to impress others. He will find that State expenditure has a chronic disposition to bolt unless it be kept under rigid control. There are other reactions to an unmanageable Budget which might be discussed but they are sufficiently familiar. The thing for Mr. Coates to watch is that immediate relief is not cancelled out by subsequent reckoning; that increased income is not eaten up by increased expenses. The country has no use for economic camouflage; it wants economic remedy.