The Evening Star SATURDAY, JULY 25, 1925. THE BUDGET.

Evening Star, Issue 19002, 25 July 1925, Page 6

The Evening Star SATURDAY, JULY 25, 1925. THE BUDGET.

The Budget has been brought down within a month of Parliament meeting, which is well up to the routine timetable of our Administration. This time it is presented by a now Minister of Finance, but Mr Nosworthy has followed most strictly on the lines of his predecessor, and there is a total lack of innovation. The New Zealand Parliament meets so long after the close of the financial year that the publication of the figures for the past period is merely the retelling of a talc already told by the Government ‘Gazette’ somff weeks earlier. And on this occasion there was such a complexity about the ‘ Gazette’s ’ announcement that Mr Coates was compelled to refute false deductions, and emphasise in plain language the main features of the results. At the risk of wearying readers we repeat the bald result of 1924-25. The revenue was £28,043,000 and the expenditure was £27,399,200, leaving a surplus of £1,243,800. At this time last year Mr Massey had estimated the revenue at £27,857,020 and the expenditure at £27,505,060. Now Mr Nosworthy estimates the revenue at £29,600,000 and the expenditure at £29,024,616. It may bo mentioned that estimates of expenditure usually work out nearer to the mark than those of revenue, most Treasurers preferring to bo on the conservative side, and to underestimate the latter so that the call for reduction of taxation shall not have in support of it an argument of the Minister’s own providing. It will bo noted that the current year’s expenditure is expected to bo £1,625,416 greater than last year’s, which in turn was £1,251,195 greater than that of the year before, when retrenchment had enabled the outgoings to bo kept down to £155,755 below the expenditure of 1922-23. However, in the opinion of the Treasury the revenue is buoyant, the Minister looking for receipts totalling £29,600,000, which would allow him a margin of £575,334 for taxation reductions «,ud concessions, and for further expenditure to ho detailed on the Supplementary Estimates at the end of the session. A year ago the Treasurer’s corresponding margin was £1,352,560. At that time Mr Massey expected his taxation remissions to amount to £1,000,000, but according to last night’s Statement they totalled about £883,000. The country is not | now being led to expect an equal lightening of the tax-gatherer’s band j this year. The hope is held out of in- . come tax reductions, giving a minimum ] of reduction to the small man and furthering flattening steepness of the graduated scale, so that the biggest man pays about 4d in the £1 less. It may be noted that no mention is made of any intention to alter the system of company taxation which some professed to sec hinted at in the demand for particulars of all dividends required from individuals in the last income tax returns, this being for the Commissioner’s information and not for assessment purposes. The abolition of the mortgage duty of 5s per £IOO is also promised. No “ election-year bribery tan he charged against the Government per medium of the Budget, even the small increase proposed in pensions being relatively negligible—an addition of £IIO,OOO, ,ou top of last year’s augmentation of £140,000. This will make the total disbursements in this direction over two and a-half millions a year—a considerable sum for this comparatively small and relatively wealthy community. The Government proposes to transfer from tiie Consolidated to the Public Works Fund a million pounds out of last year’s surplus. On the current year’s Estimates it is difficult to see how the commendable practice of applying some surplus revenue to capital expenditure can be continued on an equal scale. The absorptive capacity for cash shown by the Public Works Department is evidently causing the Treasurer some anxiety. Its programme is ambitious, and, as Mr Nosworthy states, “ the prospects of borrowing in London on easy terms in the near

future are not good, . . and I wish to emphasise again the danger of outside borrowing on a large scale while there are signs that the excess of exports over imports is not sufficient to cover our charges for interest payable overseas.” This advice has already come to us from the other end of the world, and it has been prompted by ft similar fear on the accustomed lender’s part, Britain not having the accumulations of capital for investment abroad because her excess of exports over imports is dwindling to what threatens to bo disappearing point. If fresh capital cannot bo secured from the usual source abroad, and if recourse to another foreign source is unpalatable, the alternative appears to bo the raising of loans locally. Probably Mr Nosworthy’s remarks were drafted before the news came of the unexpectedly favorable reception of the proportion of the Australian loan offered on the London market. London’s response may have been a special effort put forth to meet special circumstances in the determination not to lose the old prestige. But whether or no London’s strength remains unimpaired, wo have to conserve our own strength. Over-importation has again been apparent, and it typifies extravagance. If this is curbed the natural result would be the building up of a favorable balance of trade that would ensure our being able to pay the interest on money borrowed abroad it that could be secured on favorable terms. Or, if the terms were unfavorable for outside borrowing, power would havo accumulated within the dominion through the excess of exports over imports tp. enable a local loan to bo met with a minimum of inconvenience and disturbance of normal business. It appears to bo plain that the community cannot safely spend up to the hilt and at the same time carry on big developmental works. Additional demands for the latter evidently continue to come from the electorates. Locally one might instance the Upper Clutha Valley railway proposition. Air Nosworthy says that in the brief time he has held the portfolio of finance ho has had heavy demands for increased expenditure. The gratification of these would in his opinion make the position doubly worse unless people exercise restraint on their own purse strings, for borrowed money adds to our charges, and this is apt to be overlooked in the requests for increased expenditure. The immediate results of capital expenditure are apparent in the development and improvements effected, but a spending power is

created that tends to engender public and private extravagance.’’ The moral appears to bo that the community cannot have both public works and imported luxuries at once without landing itself in trouble.-