Evening Post. WEDNESDAY, AUGUST 14, 1940. TALK OF SECOND BUDGET

Evening Post, Volume CXXX, Issue 39, 14 August 1940, Page 8

Evening Post. WEDNESDAY, AUGUST 14, 1940. TALK OF SECOND BUDGET

Four-fifths of Britain's expenditure is for war purposes; one-third of New Zealand's is for war. Yet Mr. Armstrong, Minister of Health, quotes the British Government's action in bringing down a second Budget this year as a precedent for possible similar action in New Zealand. Before considering a second Budget New Zealand should most certainly consider whether the twothirds of budgeted civil expenditure cannot be pruned to provide more for war purposes. To budget for more taxation with this altogether disproportionate allocation of expenditure as between war and civil needs unchanged would be the height of financial folly. It would place upon industry and production, already heavily burdened, a still heavier load, reducing their capacity to produce the wealth from which alone taxation can be drawn.

If a second Budget is brought down it will not be for war needs, for the war effort has not been intensified since the first Budget was introduced. What, then, are the possible needs that Mr. Armstrong had in mind when he gave his hint? He did not say, but his answers to questions regarding payment of the 5 per cent, wages increase to Government employees, supplies a possible clue. The Minister said: "The Government has always conceded to civil servants what is awarded outside by the Court, although they might not have any legal right. I do not think there is the slightest doubt in the world about the Government doing it now."

If the Minister is correct in his forecast of Government action, the Budget estimates will be upset by the addition of 5 per cent, to that part of the expenditure which represents wages and salaries for almost eight months of the financial year. This is further evidence that the economic and financial conditions (which the Court was specially required to consider) received insufficient attention in making the general order. If all public employees are included, it will mean that the non-participating sections of the community—farmers, traders, small business men, and professional workers—will have to carry still more of war and civil costs, so that others may be relieved. The process of piling taxes on taxes cannot be continued indefinitely. Mr. Armstrong supplied the reason when he said that measures now proposed —compulsory loans and confiscation of excess profits—were "conscription of wealth with a vengeance." The argument that the money for the war could be obtained from the rich, the Minister added, would be better employed in countries other than New Zealand, where there were not so many poor and not so many rich. The national income was more equitably divided than in any other country. If the Government relied on the rich it would get nowhere near what was wanted. The workers of New Zealand were, in proportion to income, let down more lightly, and the rich were taxed heavier than in any other country. In the light of this statement, it is evident that the Government has no vast resources of wealth to draw upon by taxation. If it goes blindly ahead in adding to civil expenditure (now two-thirds of the total) it will bring the country nearer to disaster. There are, of course, clamant minorities who talk loosely of conscription of wealth and credit issues. They protest strongly against the National Security tax. Yet that tax, for award workers, is now to be balanced by the 5 per cent, wages increase, so that those workers who pay little income tax will escape war taxation except the additional sales tax. Workers, according to Mr. Armstrong's figures, last year received in wages £43,900,000 more than in 1935. Now they are to have 5 per cent. more. Yet they protest against helping even a little in paying for a war fought to defend their liberties and living standards. We cannot believe that the protests come from the real working people of New Zealand. They suggest rather the influence of those persons who, under the guise of friends of the workers, aim at disruption.