SHOWING THE TRUE POSITION

Evening Post, Volume CXVI, Issue 146, 18 December 1933, Page 8

SHOWING THE TRUE POSITION

The Treasury reply to the AuditorGeneral's criticism of the method of showing exchange payments in ,the Public Accounts appears to miss the main point. As we read the criticism it suggested no "permanent fundamental changes" in the method of dealing with London remittances; but pointed out that a.system which did not show the cost of exchange in departmental accounts rendered those accounts less than accurate. The Treasury letter does not answer this point, but refers to two other aspects: equity and the possibility of collecting the added charge from the Departments concerned. On neither aspect is the argument convincing. As touching equity it is submitted that, as exchange was "deliberately pegged at its present level as a matter •of economic adjustment" (this seems to conflict with Mr. Coates's plea that we were forced off sterling as Britain was forced off gold), "it is a debatable point how far it is equitable to load the self-contained activities with any portion of the State's share of the additional exchange costs." But all activities other than the State's have had to submit to this loading. None has been offered the chance of transferring the load to the general taxpayer. That is the Southland Power Board's complaint. The cost, was increased by State action and must.be met by the private consumer and ratepayer. If there is a case for passing on lo the general taxpayer that part of the cost which would otherwise fall on the State trading activities is there not a case for similar treatment of the exchange costs of oilier services? The Treasury argument regarding the impossibility of collecting the added cost from the Hydro-Electric and State Advances Accounts really serves to emphasise the point of the Auditor-General's criticism. The sale of electric power is a competitive enterprise. Other. competitors must pay exchange costs and other concerns in the same business must pay. The Southland Power Board again comes into the picture. We do not suggest that it is practicable for the Government to put the whole exchange load on the taxpayers' shoulders, or tliat any Government which had raised the rate would be likely -thus to expose the fallacy of exchange inflation. But it is necessary that the adverse effect of the policy upon Government enterprises should be shown in the accounts — that the public should be able to judge how far this policy has added to the difficulties of the State Advances Department and increased the load borne by hydro-electric and railway enterprises. This is the more important when the State is in direct competition with private enterprise which has no means of shuffling off its exchange burden on to a Consolidated Fund. Even if, as the Treasury suggests, the State enterprises cannot make the payment, it is desirable that the liability should be shown. It may have to be met by Consolidated Fund grant or subsidy; but that is not a sufficient reason for concealing the fact that such a taxpayers' subsidy is necessary or why it is necessary.