OTHER MEASURES

Evening Post, Volume CXI, Issue 38, 14 February 1931, Page 11

OTHER MEASURES

CONTROL OF RAILWAYS

TO BE NON-POLITICAL

Other measures to. overcome the prospective Budget deficit next year were also outlined by Mr. Forbes. "Towards meeting tho prospectiveBudgetary shortage of £4,500,000, the reduction's in salaries and wages as outlined above trill, it is calculated, provide nearly £1,500,000," ho said. "This amount includes the .saving arising from tho reductions in.the salaries and wages of tho general Public Service, including teachers, directly chargeable to the .Consolidated Fund, together with the benefit to be derived from similar reductions to be made in .the Kailway and Postal services, and also trom the" reduction iv tho amount of subsidies payable to public bodies. "In addition, as a result of the work oi the Economy Committee, it is anticipated that further substantial reductions can- be made in expenditure oi: tho Consolidated Fund and the Kailways, apart from the proposed sill-round reduction in salaries and wages. In regard to expenditure on Education, I may say that the Government intend to set up a Special Committee to investigate fully the financial side of this important social service which, including the debt charges on tho loan expenditure on buildings, is at present costing the Dominion about £4,600,000 per annum, which is too heavy a burden on taxation under present economic conditions. "It is hoped that this Committee will be able to find ways of making large savings without in any way lowering !thc standard of education. As to tho Railways, the Government has decided to give effect to ■ one of the main recommendations of the Royal Commission of Inquiry, and place tnis national transport system under the control of a non-poli-tical Board of Directors. REPAYMENT OF DEBT. "As a temporary mestsufo for one or two years, further relief for the Consolidated Fund is to bo obtained by utilising" the reparation moneys received from Germany for debt repayment purposes as part- of the provision required under the general repayment of. the Public Debt system. In this connection, ifinay.be explained that at present the reparation moneys_ as received arc applied _ in. reduction of the war debt, in addition to tho repayment of debt effected under the Funded Debt Agreement with the British Government, and the cumulative repayment of the Public Debt system. The proposal is that, i'oi' a year at two, tho reparation moneys shall form part of the financial provision required for tho latter instead of being additional thereto. HIGHWAYS FINANCE. < "Another majtter that will have to b.c brought under review is the present arrangements concerning highways finance. It will be remembered that last session as part of tho adjustments made in connection with tho finances for the current financial year, portion of the roading costs previously payable out of general taxation was transferred to tho highways account, and tho petrol tax increased.by 2d to cover tlie cost of the additional items in order that the amount made available for highways expenditure should not be diminished. Even so, in view of the difference of opinion about the matter) and also in regard to the allocution of part of the petrol tax to 16c8l authorities, the amending legislation 'Was made operative until tho 31st August next only, and au undertaking was given that the whole question of highways linam-c would bo investigated before that date by a-Parliamentary Committee. This undertaking will be duly given effect to, but it will be apparent to all that tlie highways finance cannot be considered apart from public finance generally. At present the whole of tho proceeds from Customs duties on petrol and tires, together with certain licence fees and fines, etc., are earmarked for roading expenditure, but circumstances have changed i considerably, since those arrangements Wore made. In principle the ear-marking of any tax: for a particular purpose is quite unsound, and tho amount winch the community flan afford to spend on roads' is a matter- which should be determined in relation to the relative urgency of all the other calls on the public purse, and the financial position of the country generally. "As it is, the relief to general taxation through transferring the charge for subsidies to-local authorities, and sundry other items to the taxation earmarked for highways will certainly have to be continued, and in addition it would appear that the serious position of the public finances generally will render it necessary to make other radical changes in relief of general taxation. The ear-marked revenues are at present more than sufficient to cover the maintenance expenditure on highways. "The reductions in expenditure, apart from salaries and wages and tho various adjustments that J! have referred to will, it is estimated, improve the position of tho Consolidated Fund to the extent of about £1,250,000. It is proposed to obtain further assistance towards the Budgetary shortage by increasing the postal rates, the additional revenue—estimatod at about £900,000 per annum —to come to the Consolidated Fund. "The Government recognises that the Id postago has been an incentive to business generally, arid it is with much regret that this proposal is brought forward. At the same time it is felt that it is the lesser evil, iii that it is preferable to increase postage rates under present circumstances than to impose heavy increases in taxation in other directions, and thereby hinder a revival of business to a much greater estent. INCREASED TAXATION. "Some increases in general taxation will, however, be necessary to make up the balance of the anticipated shortage of £4,500,000. Part of the additional amount required the Government proposes to obtain from income tax, which is not only the most equitable form of taxation, but the one that has tho least effect upon working' <-osts. Detailed proposals or an amended schedule of vntns have not yet been worked out. "In addition to income tax, it is quito probable that, some increases will have to bo made in indirect taxation, but the Government is anxious to keop flueli iucreascs as low as possible, in

order that the- cost of living and working costs of the primary producers anil of business generally should not be thereby increased. THE EARTHQUAKE. "The recent disastrous, earthquake in Hawlces Bay will undoubtedly moan heayy additional expenditure on the part of the State, but until more definite information is available as to the losses that have been incurred, and restoration plans are most advanced,..it will .not be possible to even approximately estimate what the cost to the State will be. Under theso circumstances, it is obviously not possible for mo to indicate at present in what manner, the State's share in the restoration work is to be financed. In the meantime, no allowance has been made for earthquake expenditure in this survey of the budgetary position for next financial year, and any requirements out of the Consolidated Fund on that account will increase the' prospective shortage, and provision will bo made accordingly. PROPOSALS SUMMED UP. "To sum up the Government's proposals for balancing the next year's Budget, it is proposed that the anticipated shortage of £4,500,000 shall be provided for in the following manner:— ■ . "■-'&' Reductions in salaries and wages "1,500,000 Reductions in other, expenditure and'flnancial _ adjustments ' ' ... 1,250,000 Increase-in postage rates 900,000 Additional taxation (direct and indirect) 850,000 ' £4,500,000 "As indicated earlier in this statement, these measures for balancing the Budget have been chosen with a view to assisting also as far as possible the solution of the 'wider economic problem on which depends the maintenance of budgetary •equilibrium. The proposals are- admittedly drastic, but it will be agreed that nothing but drastic nieasures will meet' the serious position that, has arisen as a result of factors entirely beyond, our control. "OUR HOUSE IN ORDER." "It only remains for us to face the facts resolutely and put our house in ;order. New Zealand has a great reputation for sound iinaiico built up over a long period with, balanced budgets, and though, we are now beset with many difficulties, it is. our 'boundeu duty to safeguard- New . Zealand's name by balancing the Budget. In any ease, any temporary advantage or relief that might be obtained' by doing otherwise would have to" be paid for with, compound interest in the future, and the not very distant future at'that. The experienco in other countries since the war ia eloquent testimony to that fact. In other -words, the State must make ends meet sooner or later, and any delay in doing so only makes recovery increasingly difficult. Accordingly, the Government gives 1 balancing ,tho Budget a paramount position in its policy, and -while there may be a diversity of opinion as to how it should be done, I feej. sure that the principle,- at any rate, is heartily endorsed by every section of the community.