WARTIME FINANCE

Evening Post, Volume CXL, Issue 60, 8 September 1945, Page 10

WARTIME FINANCE

PRUDENT CONTROL

"BANKING STRUCTURE STRONG"

When reference was made to New ! Zealand's financial policy there was an unfortunate and deplorable tendency to disparage it and to give it the entirely wrong and misleading impression that the country was teetering on the edge of financial catastrophe, said Mr. G. Lawn, economist to the Reserve Bank, in an address to the Wellington Town Planning Institute yesterday. "Such an impression," he added, "is grossly unfair to New Zealand. The wartime finances have been managed with great prudence and skill and compare very favourably with those of other countries. "As a result the* financial and banking structure is strong, and this strength enables the country to face the problems of financing rehabilitation and post-war reconstruction with confidence. In all the countries involved in war there has been recognition of the dangers of monetary inflation. The policy of every Government has been to finance its war expenditure as far as possible out of the current incomes of the people by taxation and' loans from current sayings, and not by loans from banks. This has been the policy in New Zealand, and it has been carried out with a greater degree of success than has been found possible in most other countries. It is a highly creditable achievement and should be fully recognised as such." TOTAL REVENUE RAISED. Mr. Lawn quoted figures to show that during the last six financial years, from April 1, 1939, to March 31, 1945, the total revenue raised by the Government, excluding lend-lease and mutual aid was £780,000,000. Taxation supplied £471,000,000, or 60 per cent, of this total. Loans amounted to. £260,000,000, and other revenue provided £49,000,000. Of the net borrowing only £3,000,000 came from overseas, for, although a debt of £19,000,----000 had been incurred to the United Kingdom Government under the Memorandum of Security Agreement, it had been almost entirely off-set by the repayment of £16,000,000 of prewar debt' In other words, all except £3,000,000. of the total revenue of £780,000,000 had been provided in New Zealand. "At the end of June, 1945, the Re- i serve Bank held £66,000,000 overseas I and the trading banks £13,000,000, making a record total of £79,000,000," said the speaker. "This large accumulation of overseas funds is due to the fact that many kinds of essential imports have not been available. New Zealand badly needs imports to replenish deteriorated capital equipment m the primary and secondary industries, in transport and communications, in hydro-electrical schemes, to provide equipment for further development, raw materials for manufacturing and building construction, essential household goods, ajid scores of other items. Wise use "of these accumulated funds and current receipts from exports will strengthen i the economy of the country and facilitate economic planning. The funds are large, but the' needs are great, and necessitate that essential imports ! should have priority over the less I essential."