REPLY TO MR. POLSON

Evening Post, Volume CV, Issue 125, 29 May 1928, Page 14

REPLY TO MR. POLSON

INCREASE IN PUBLIC DEBT (By Telegraph.) (Special to "The Evening Post.") MORINSVILLE, This Day. ' The attack on the Government's borrowing policy delivered last week by tho Dominion president of the Farmers' Union (Mr. W. J. Poison) was the subject of reply by the Prime Minister in the course of his speech here last evening.,. The critic, said' Mr.'Coatos, had made a general charge of public extravagance against the Government, and had stated that the Public Debt had increased in the post-war period at the rate of nearly a million a month—that is, £84,000,000. "Although the statement is belied by the figures quoted by him," said Mr. Coates, '' tl]o actual increase in the seven years ended 31st March, 1927,. is £44,680,000. This may be a large sum, but it is no proof of extravagance. Instead of making wild statements, why did the speaker not 'say what this money was,used for, or offer some constructive criticism? To mention one item, some £.15,000,000 was borrowed in this period for State advances, which cost the taxpayer nothing by way df interest. Can this be called extravagance? The balance of the money was spent on- public works, as was explained by tho Finance Minister in his-speech at Dunedin last March. The main items of expenditure were on railways, hydroelectric supply, telephones, and roads and highways—all necessary works, do-, signed to aid tho development of tho Dominion, and all reproductive. It ■tfould bo much more useful if such critics would go into the figures and point out wherein lies the extravagance referred to. THE LAST LONDON LOAN. "For some unknown reason," continued Mr. Coates, "an attempt was mad© by the same speaker to belittle tho achievement of our last • loan in London, which was an outstanding success, and inaugurated a departure from tho. 5 per-cent, rate which had been ruling in London, for some time." The speaker referred also to a recent Commonwealth issue. "Presumably," said Mr. Coatos, "this was their £10,000,----000 loan at 92$ in New York bearing interest at 4$ per cent. Our loan in London was 4J per cent, at £94 10s. The.longer period brings the return to the investor in tho; Commonwealth loan down to £5 per cent., against £4 ,19s 8d for our loan. It is well known, however, that the cost of raising loans is heavier in New York than in London, so that our terms are doubtless more favourable than people are led1 to believer" ■ ' BALANCE OF TRADE. Dealing with the balance of trade, said Mr. Coates, the statement was made that our trad© position- in the last seven years had gone to the bad by many millions. At one time the figure quoted was £ 80,000,000, and now £25,000,000. If this was correct how j could it be explained that the exchanges jwero not violently adverse to the Do*minion? "It was also stated that we are buying imports on borrowed capital, which was^de,scribed as the worst form of .extravagance. This.is:-'really an extraordinary statement/ For what else can we do with money (borrowed or otherwise) than spend it on goods and services % If a man borrows money to put: up a seven-storied : : filiilding-Svhat does ho. do but spend it '.on steel, eon-« crete,- arid .wages? Tho Government does exactly the," same ■in/;-:;building,_ say, a hydi'o-electric power station. How, then, is this 'the worst form of extravagance'?-" asked the Priino Minister. "Capital goods are tho same as any other goods, and for tho most part cannot be distinguished in the imports. It is only the purpose to which they are applied which makes the distinction.".