The Dominion FRIDAY, JUNE 4, 1943. THE BUDGET

Dominion, Volume 36, Issue 213, 4 June 1943, Page 4

The Dominion FRIDAY, JUNE 4, 1943. THE BUDGET

The Financial Statement and outline of the Government’s policy proposals presented to Parliament last evening will be received by most people with a measure of relief not unmixed with some concern. The fact that for the moment there is to be no further increase in taxation will afford the relief, while the magnitude of the figures disclosed regarding expenditure and liabilities incurred and about to be incurred, with the heavy obligations they entail, must afford reasons for very serious reflection. In wartime finance the usual standards of comparison cannot be applied. Everybody realizes that the war effort must, be financed, that the money must be found, and possibly their one basic contention is that everyone should bear a share of the burden in proportion to his ability, that civil expenditure should be cut to the bone in order that the State itself shall be able to make a substantial contribution, and that where such vast sums are being expended there inevitably must be offered the greatest scope for effecting economies. Those are tests which most people would agree should be applied to any wartime budget. It may reasonably be asked, therefore, is everyone bearing a fair share, in proportion to financial ability. Last year the Financial Statement presented by the Government frankly admitted that “nearly 70 per cent, of the aggregate private incomes is beyond the effective scope of income tax.” So 70 per cent, of the national income escaped paying income tax. That big proportion of earned incomes—nearly three-fourths of the national income—is still to be excluded, That is one of the features of this year’s Budget which demands attention for it constitutes a weakness in the financial policy of the country. Then comes the question of civil—that is, non-military—expenditure. Has it been cut drastically? Let us see. In 1938-39 the expenditure under annual appropriations, leaving out the cost of defence, was £19,695,000 and last year it was £19,954,000. Admittedly the lastfnentioned figure was below the total of 1941-42, due largely to a very heavy reduction in two £916,000 and Agriculture £984,000 —but the fact remains that the non-military expenditure covered by the annual appropriations is still above the pre-war level of 1939-40. That is neither wise, nor prudent, nor sound. Few people will be convinced that the opportunity for far-reaching economies have not been presented and are .not still available. The criticism made by many people in past years still stands—that the war budget is apparently regarded as something to be super-imposed on an already expanded civil expenditure. -The views of the Minister of Finance regarding the prosecution of the war by “the use of prior or current production and services” will be generally endorse, as will also his rejection of the wild idea of using State credit to finance the war effort. The issue of a flood of paper currency would smash any dam built to effect stabilization. But while the views expressed by Mr. Nash on this,principle can be fully approved, it is just as well that he should be reminded of the realities of the actual position which has already developed. The Government has been leaning heavily on the Reserve Bank, and this year’s Public Accounts indicate an item of £22,000,000 Treasury bills issued. , The light thrown on the operations under the Memorandum ot Security with the British Government and the lease-lend agreement with the United States will be welcomed and no doubt will have very careful study as time permits. Anew development, incomplete but certainly in the right direction, is the inclusion in the Statement of a table giving some of the figures of the three national accounts, which together go to make up the national Budget. If it were elaborated it would be the most interesting table in the annual review of the country’s financial position. There are many aspects which will require close examination, but it is satisfactory to have a detailed statement after the two bare and unilluminating documents presented to Parliament and people last year. Plans for the rehabilitation of returned soldiers are sketched in the Budget, but the discussion in Parliament during next week may be expected to throw greater light on this important matter, which should be quite outside the realm of party politics. There should be only one purpose in view and that is to plan on the broadest and most liberal basis possible within the bounds of the country’s resources. To many people the chief merit of the Budget probably will be the increases in pension benefits of one kind or another. No doubt many pensioners have felt the pinch of the increased cost of living and will find the additional few shillings helpful. It is noticeable, however, that once again the Government has neglected to grant any relief to that section of worthy people, men and women, of small or moderate means living on fixed incomes derived from their own savings. Surely they are equally deserving of consideration. On the whole it is probable that the general impression of this year’s Budget will be that though it deals in some detail with wartime measures its framer was fully conscious of the fact that this is tlie year of a general election.