The Dominion. THURSDAY, JULY 21, 1939. OUR FINANCIAL RESPONSIBILITIES

Dominion, Volume 32, Issue 256, 27 July 1939, Page 8

The Dominion. THURSDAY, JULY 21, 1939. OUR FINANCIAL RESPONSIBILITIES

The recent experiences of the New Zealand Minister of Finance in London should have made it very clear that the financial credit of the country has had a serious setback. It should have been equally plain that to restore confidence in those overseas with whom our trading fortunes are so closely linked there must be a material modification of the policy of spending which has placed this Dominion in such a state of financial stress. Quite as important, too, is it that the Government and its followers should abstain from threats and actions directed against private trading and business interests and the free exercise of individual rights in respect of savings and investments. In plain words New Zealand cannot afford to have its credits further weakened overseas. The export credits recently obtained by Mr. Nash were “tagged with conditions as to the uses to which they were to be put. There was also an undertaking given as to future trading policy; and the credits granted were “short-term” credits in respect of the £4,000,000 for commercial trading purposes. These facts should be kept in mind because they further indicate the low state of our credit; and they make it clear that the accommodation granted is restricted and also of a temporary nature. Another matter of concern at the moment is the £17,000,000 loan conversion operation, still, apparently, under discussion. It has been suggested that the only way to meet this obligation is by a short-term loan which would tide the Dominion over the next year or two when it might be hoped conditions would be more propitious than they are at the present time. Here again the state of our credit overseas comes- into prominence. How is it to be improved ? Certainly not by threats against the investments overseas of private citizens. The £17,000,000 loan falling due early next year is only one of. a number of heavy obligations which have to be taken into account in measuring the financial responsibilities to be faced in the near future. Between 1940 and 1946 State loans fall due totalling over £76,000,000, nearly £50,000,000 of this amount being due in London. In the case of one of these loans (for £10,500,000) due in’London, the Government has the option to pay at any time between 1942 and 1963. But even excluding this loan it will be seen that in the next few years a tremendous load of debt has to be converted or paid off quite apart from the £17,000,000 operation now under discussion in London. What will be the state of New Zealand's credit when these transactions have to be faced if we go on squandering our resources as we have been doing during the past three and a half years ? The Prime Minister is to bring down his first Budget as ActingMinister of Finance within the next week or two. Will he face the realities of the position as he did when he wisely decided to meet the market in fixing the terms of issue of his recent locally-raised loan? Most people, even including those outside Parliament who support the Government, are awakening to the fact that the “spending for prosperity” policy has reached its limits, having brought the country to the verge of commercial default in its overseas trading. With the added knowledge of the heavy capital obligations to be met. in the next few years, quite apart from our increased annual commitments, the urgent necessity for a modification of the existing policy of extravagant spending and discouragement of private enterprise should need no further stressing. Mr. Savage’s first Budget, in the circumstances, should prove of momentous importance.