The Dominion. TUESDAY, DECEMBER 13, 1938. WHAT WE HAVE INHERITED

Dominion, Volume 32, Issue 68, 13 December 1938, Page 10

The Dominion. TUESDAY, DECEMBER 13, 1938. WHAT WE HAVE INHERITED

It was certainly no fault of the Government of today that they “inherited” a public debt when they gained office.. No exception can be taken to Ministerial spokesmen directing attention to the fact that a loan which falls due for repayment had been borrowed by a previous Government. But when the Prime Minister talks of his party "inheriting” a debt as though it were some burden unfairly placed on his shoulders, it is only right and proper that he should explain what his Government and the country have “inherited” to offset the debt. What stage of development would New Zealand have reached today without the use of the money borrowed to provide roads and bridges and railways, and to promote and assist settlement. le progress of a country in its developmental stage is greatly accelerate by prudent borrowing and wise expenditure of loan money. As Sir Thomas Buckland, president of the Bank of New South Wales, remarked in an address to shareholders on one occasion, The main test of the wisdom of public borrowing lies in what the borrowing public authority expects to do with the loan money, and the reasonableness of that expectation.” Public borrowing in the earlier stages of this country’s development was mainly resorted to for the purpose of financing reproductive enterprises, and the present generation is reaping the benefit of the assets, conveniences and amenities of life provided thereby. Up to 1891 loan expenditure had been chiefly concentrated on railways and roads for the purpose of opening up the. country and developing settlement, the liquidation of the loan liabilities of the Provincial Governments on their abolition, and the expenses of the Maori wars. This, notes the Government Statistician, marked the first period of the history of the New Zealand Public Debt. The funds then and for many years to come were not available in New Zealand itself, and the respective Governments and people of those times were grateful for the assistance they were able to obtain from their kindred overseas by way of loans and advances. The second period of our Public Debt, from 1891 to 1914, covered a phase of intensive development in land settlement, extension of communications, and a substantial enlargement of the scope of the State’s activities, such as financial assistance to. settlers and workers, the repurchase of alienated lands, the beginnings of. hydro-electric power installations, and so on. During the third period, from 1914 to 1920, the exigencies of wartime finance demanded the expenditure of large sums of loan money, much of which, from the nature of the circumstances, was entirely unreproductive. From 1920 onward was the period of post-war rehabilitation, the restoration of normal peace conditions, and the re-institution of public works programmes of a reproductive kind to overtake the leeway of the war years. It is not suggested that borrowing policies of past Governments have been bevond criticism, or that the expenditure of loan moneys has always been as wise and prudent as it might have been. But from all this expenditure over the years there has been an accumulation of assets which each succeeding generation has enjoyed in steadily increasing measure, and to which they, have contributed in turn a quota of repayment, determined by the circumstances of their time, in taxation, and payments for the use of the amenities provided. Mr. Savage has, therefore, presented the public with only half the truth, leaving it to be imagined that his predecessors in office left the nation with a millstone of debt and nothing to show for it. There is a great deal to show for it—railways, roads, post and telegraph services, hydro-electricity, schools, libraries, hospitals., land settlement, home-ownership, a rapid development and extension of our primary industries, and the provision of social amenities in steadily-increasing number and variety.