The Dominion. WEDNESDAY, SEPTEMBER 27, 1939. WAR FINANCE MEASURES

Dominion, Volume 33, Issue 2, 27 September 1939, Page 8

The Dominion. WEDNESDAY, SEPTEMBER 27, 1939. WAR FINANCE MEASURES

The first reaction to the Government’s war emergency finance proposals probably will be that the demands on the public might have been worse. On examination, however, it will be seen that by the exercise of economies in other directions they could have been very materially bettered so far as relieving the people of part at least of the increased burdens proposed is concerned.. The weakness in the policy indicated by the Minister of Finance is that, while it makes very definite provision for increased demands on taxpayers, it is ‘vague and indefinite as to the economies proposed.to be undertaken in ordinary expenditure. The greater the economies in .normal expenditure the less demand there should be for extra taxation for war is true that the Minister of Finance referred to the possibility of transferring to the War Expenses Fund moneys voted under. the Consolidated and Public Works Funds which might not be required for the purposes for which they were orginally voted. He also stated that it was hoped to make economies which would enable this to be done. But he had little to say as to the economies actually contemplated. Possibly at a later stage he will be more specific in this respect. Something over £70, 000,000 has already been voted by Parliament for this year’s expenditure—a record amount for this country—and of this huge sum, as we have pointed out on previous occasions, quite a substantial amount could be saved and used to lessen the burdeq created by the demands arising out of war conditions. Briefly put, the cost of the war for the current year, so far as expenditure within New Zealand is concerned, is estimated to amount to £9,750,000. Of this amount £3,200,000 has already been provided under the authority given in earlier enactments. This leaves some £6,550,000 to be raised. It is proposed to secure £2,408,000 of this sum by taxation and the balance of £4,142,000 by loan. But although only £4,142,000 of loan money is required, authority is to be taken to raise £10,000,000 by borrowing. Actually, then, the authority asked for is over fifteen and a half millions, made up as follows: War Expenses Provision Up To March 31, 1940. £ Already voted 3,200,000 New taxation. 2,408,000 Borrowing 10,000,000 Total 15,608,000 This, however, does not exhaust the resources available for, according to the Minister as already stated, surplus sums may be transferred to the War Expenses Fund from the Consolidated and the Public Works Funds. . Seeing that the estimated expenditure required, this year is only £9,750,000, it may reasonably be asked why provision is made for £15,608,000? Especially, is this the case when it is borne in mind that further authority is sought under which any expenditui e incurred overseas in connexion with the dispatch of an expeditionary force will be met out of additional borrowing in London and will not be charged against the money to be raised in New Zealand. No one in the present emergency is going to cavil at expenditure which is essential in connexion with our war measuies, but it is of 'the utmost importance and a vital part of our war financing that all spending on normal requirements - should be carefully scrutinized and anything not urgently necessary ruthlessly pruned.. The weak spot in the Government’s plans, as so far disclosed, is a seeming disinclination to face up to the responsibility, of cutting down its normal rate of spending. As to the new taxes imposed, exactly what they will mean on top of the existing scales, of taxation will call for closer examination than it has yet been possible to give them. It is obvious, however, that a harsh impost has been, made on the estates of deceased persons by way of death duties; while the duty on wines and spirits is approaching an almost prohibitive level and may defeat its purpose. A proposal which should meet, with general approval is the creation of a War Expenses Fund, into which all revenue specially raised for war purposes will be paid, and out of which all war costs will be met. . , f There is at this stage only one thing to add. The Minister or. Finance indicated the intention of the Government to amend the law relating to the Reserve Bank in order to permit of borrowing from the Bank beyond the limits of safety now imposed. This means further inflation—it further endangers our already depreciated currency. If it is what is suggested it is a reckless and unwarranted step, which cannot be justified either as a war measure or on any grounds at all.