PAYING ITS WAY

Evening Post, Volume CXIII, Issue 57, 8 March 1932, Page 6

PAYING ITS WAY

"The country is paying its way out of revenue as a result of the drastic economies put into operation for this * purpose last-September." This information was given in ah official wireless message received yesterday, and it refers to British Budget prospects. We hope that it will be read and remembered by those members of Parliament who may be inclined to follow the Economic Committee in favouring budgeting for a deficit. The'references to this question in the Committee's report are brief, and evidently the subject is discussed in greater detail in those sections of the report which have not yet been published. ,ln its general summary the Committee states: —

A condition essential to permanent equilibrium is the balancing of national and local body budgets. Eventually this; may •be effected by additional economies and some increase in taxation', but in the case of the national Budget the gap cannot be completely bridged until the general process of economic adjustment is well under way. Meanwhile, it will be necessary, as a part of the policy, of reconstruction, to finance deficits by means of loans or Treasury bills, as well as those public works whoso completion promises a net gain.

In another section it is held that the banks could take up Treasury bills for a manageable deficit without impairing their resources. We cannot follow this argument. If the banks lend to the Government there must be some reduction of their resources. But we are at present more concerned with the principle than with the method. No doubt there are precedents in Australia for deficit Budgets; but on this point we are firmly convinced that the better precedent is that of Great Britain. This applies to

State finance just as much as to reduction of interest, wherein British and Australian practices also differ. If Britain, with burdens far heavier than burs, can pay her way out of revenue, we should seek to follow that more inspiring example.