CANADIAN WAR FINANCE—AND OURS

Dominion, Volume 34, Issue 127, 22 February 1941, Page 10

CANADIAN WAR FINANCE—AND OURS

Last year the Canadian Government reduced the civil expenditure bv 74 000,000 dollars, or within 3,500,000 dollars of the original estimates This year, despite a slight rise in civil service salaries, there is to be a further reduction of 18,000,000 dollars, thus making a total reduction of 92,000,000 dollars in two years. It is a splendid achievement for it means that the money thus saved will be diverted to war purposes, and Canada is carrying her full share in that respect, ihe policy adopted is, of course, in keeping with the principles oi sound finance, and in line with that followed at Home. In times ot war it is essential to keep ordinary expenditure down to the minimum. 10 the fullest extent possible the financial resources available must be transferred to the war account, thus reducing the volume of public borrowing, and lessening the interest charges that will have to be met in the years ahead. Contrast the Canadian Budget with the policy—if n can be teal I \ termed a policy—adopted by the New Zealand Government. In Ins last Budget, tlie Minister of Finance estimated the decrease in the revenue of the Consolidated Fund at 12,100,000. but the only reductimis he proposed to make, to offset this loss of revenue, amounted u £900,000. The gap was to be bridged by the usual methods, the chief being an increase in taxation. Clearly no serious effort has been made in this Dominion to effect economies in ordinary expenditure in order to assist with war finance. The peacetime level is being maintained, together with an extensive and expensive public works programme, and, superimposed, is the heavy burden of war expenditure. In the result taxation is at a record peak. People would not object to that if they knew that the demands made were largely for war purposes. Unfortunately that assurance cannot be provided. Last year the Canadian authorities cut down ordinary expendituie bv nearly 15 per cent. This year —and, of couise, the same late of reduction could not be maintained indefinitely—they propose to effect a further substantial saving. This did not involve any handicap on industrial expansion. In his Budget speech last yeat the Canadian Minister of Ifinance sai(l that, despite the large diversion made to war purposes, “the Government were endeavouring to leave sufficient stimulus to bring the country, as rapidly as possible, to the maximum use of its industrial strength and resources. 1. hat must commend itself as a sound policy. Industrial expansion in Canada has passed all previous records, thus building up the national income. In Canada, and other parts of the Empire, determined efforts have been made to reduce ordinary expenditure and adjust the finances to meet the requirements of a mighty war effort. The exception is New Zealand, for here the reduction has been exceedingly smallestimated at under 2|- per cent. —not sufficient even to meet, the estimated decline in ordinary revenue. Government expenditure will have to be reduced, if only as a contribution to the cost of the war. The need is for a policy, definite, clear-cut. which the communitv can grasp, and, provided it enables the maximum war effort, willingly support