Evening Post. FRIDAY, FEBRUARY 26, 1937. NOT IN THE BUDGET

Evening Post, Volume CXXIII, Issue 48, 26 February 1937, Page 8

Evening Post. FRIDAY, FEBRUARY 26, 1937. NOT IN THE BUDGET

In saying that the first Labour Budget differed very little from preLabour Budgets although the : taxation field had been further explored, the president of-the New. Zealand Society of Accountants was obviously referring only to the orthodox Budget form. The principal differences of Government policy appeared outside the Budget. This fact is of no small importance and may profitably engage the attention of accountants, since it must affect the public knowledge and understanding of State finances. Taking the Budget accounts and estimates alone one might assume, as Mr. Wynyard stated, that the "Budget differed very little." It showed an increase in estimated revenue of almost £5,000,000, almost £2,000,000 of whigh would come from higher taxes, the balance being from a prosperity yield on taxes framed for a depression period. Many people, especially when they are paying their income tax, will consider this more than a little difference. It does, indeed, represent a. different policy and outlook. Previous Governments professed, though they did not always practise, a desire to take from the laxpaying public; no more than was essential.to supply necessary State- services and approved social schemes. More or less they accepted the Gladstonian maxim that money should be left to fructify in the pockets of the public. The Labour government practice followed a different principle—that taxation should be used to extract from the pockets of the public as much as possible so that it might be transferred lo other pockets, or lo the pockets of the Government,'there to fructify or I not as the case might be.

A greater difference than .this, however, Jay in- the Government's credit policy which was touched upon I only incidentally in the Budget. !The Budget, for example, referred to the Government decision to build houses to cost about £3,000,000; but lit gave no details of the arrangement with the Reserve Bank for a new [ money issue for this purpose. It did, not reveal the terms of such an issue, whether it would bear interest, or be repayable on fixed terms, or be charged to the tenants of the proposed houses. Nor was any provision made in the estimates for any possible loss. Further, it was announced that any deficit from the operation of the guaranteed price for dairy produce would be ''not the, responsibility of the dairy farmer, but of the Government," though the dairy farmer would have the benefit of any. surplus; Yet no indication was given of how the responsibility of the Government for a possible loss would be met, whether by funding a -Reserve Bank credit issue as a loan, or leaving it as floating debt, or covering it by taxation. On these questions the public are still without exact; information —or, indeed, any information at all.

this state of affairs is not right or in the public interest. Credit operations, even more than orthodox loan and revenue transactions, should be made in the light of the clearest and fullest publicity. The only exception to this rule is where, as with the use of the British Exchange Equalisation Fund, publicity would defeat the purpose of the operations. This, however, does not apply to housing, dairy produce, or similar credits. There is with these accounts no valid reason for withholding information, but every reason for informing the people, who must eventually pay, what the policy is costing. Mr. Wynyard, though he did not advance it as a reason for more information, himself stated the argument. Internally, he said (referring to the nine months' financial returns), it might be said that the Government policy was justifying itself; but he added:

There is a feeling of nervousness in the business community which mitigates against that' return of whole-hearted confidence. It is generally felt that the large sums being expended by the Government will put a strain on our financial resources, and should our British market break, one wonders to what extent will the Governmental control of credit be used to keep up the high standard of living in an already over-taxed community. '''■~

The power to control credit is almost unlimited, and confidence can be built only on the most complete disclosure of the way in which that control'ia being.exercised. Certain information i? available to the public now through the ■Reserve

Bank returns. This week's return, for illustration, shows advances to the Dairy Industry' Account at £6,569,249, and to the Slate or Stale undertakings "for other purposes" at £1,800,000. It is not the province of the Reserve Bank lo reveal more than this; but it is the province and tiie duly of the Government to do so. Various estimates arc being made of the probable position of the Dairy Industry Account at the end of the season—whether there is any possibility of a balance being struck when the produce bought is all sold and, if not, what will be the amount of the prospective deficit and how it will be covered. The Minister of Finance or the Minister of Marketing should enlighten the public on' this question, and the Minister of Finance should explain also what are the advances "for other purposes." The Government's use of credit is new, and it is highly desirable that the form of the Budget should be recast to afford Parliament and the public all relevant, information on past and prospective'credit transactions. There should be provision also,for interim statements,, resembling those of the quarterly public accounts, to show the p.osition with respect to credit transactions. Unless such provision is made nervous anticipation of what may happen will always tend to prevent the return of confidence.