RETRENCHMENT

Evening Star, Issue 18048, 16 August 1922, Page 5

RETRENCHMENT

ECONOMIES AND SAVINGS. •• JUSTIFIABLE EXPENDITURE POSTPONED.” In the course of the Budget last night the economies and savings effected undei the Government’s retrenchment policy vi're indicated by the Minister of Finnee. who said: — “ A general reorganisation to effect economy must be a gradual process, as illrnnsidered savings lead only to extravagance and waste. The duty which has devolved upon the Government is by no means a pleasant ono, especially when faced with the absolute necessity of reducing cash grants and services, as well as dispensing with staff, at a time when employment is difficult to obtain; but the balance between taxation and expenditure must be maintained upon an equitable and sound basis. Justifiable and desirable expenditure has had to be postponed, for wie simple reason that at present the country cannot afford it.

“ The period now under review runs from April 1, 1921, at which date I directed the operation of special measures to bring about the necessary reductions. As the adjusting and co-ordinating process js gradual, and I dosiro to bring these jhanges about with as little disturbance as possible to the various public utilities which' are used by all classes of the community, the full effect of the economies under action and proposed cannot yet showin the annual appropriations. .“The savings m interest and other economics in course of being effected amount to a considerable sum. Taking interest and sinking fund charges, the position is tiiat, had I during the preceding years allowed our surplus revenue to bo expended on annual services, not only would the Consolidated Fund expenditure have been much greater than it is, but the interest and sinking fund permanent charges would have increased proportionately. The use of these surpluses for capital purposes such as soldier settlement, etc. —purposes beyond administrative or policy control—undoubtedly obviated borrowing at heavy cost, and the amount given is based on a conservative rate, of interest. The complete summary of economies, savings, reductions, etc., show;— Actual departments and special Acts from Ist April, 1921 ... £2,552,863 Interest and sinking fund charges 696,950 Other economies proposed, effected, and in hand ... ... 1,676,000 Total Consolidated Fund ... £4,725,813 Miscellaneous departments and accounts ... 464,606 Grand total £5,190,419 “In considering the foregoing it is necessary to remember that the estimated expenditure includes the cost of those automatic increases which inevitably follow the growth of population and expansion of business. These are substantial items, which, being statutory, cannot he avoided; such, for instance, as interest and sinking fund, pensions, scale increases to salaries of public servants, education, hospital and other services; whilst, of course, administrative charges are proportionately increased. As the country develops new services require also to be undertaken. All of this represents expenditure that cannot be eliminated, and amounts to a largo sum, which tends to obscure the effect of the economies.

“ The figures, however, should, I think, satisfy honorable members that the attention 1 am giving to this important matter has already brought about satisfactory results. The estimated savings in full in respect of the economies and adjustments in course of operation should in the main be realised by the end of the current financial year. “ I do not suggest that this is a complete programme of what is required to be done, as I am convinced that the most important part of the policy of this country for a considerable time "to come (along with energetic development) must he retrenchment and economy. If we profit by, the lessons of the last two years the depression from which we have suffered will not be an unmixed evil. Every possible effort on the part of the Government, Parliament, and people should be used in the direction of reducing the cost of production, of reducing taxation, and consequently keeping the public expenditure within_ the public income. There will be no satisfaction until this is accomplished, end there should be no slackening-off.”