The Evening Star WEDNESDAY, AUGUST 6, 1930. WHERE SAVINGS CEASE.

Evening Star, Issue 20555, 6 August 1930, Page 8

The Evening Star WEDNESDAY, AUGUST 6, 1930. WHERE SAVINGS CEASE.

The summary 6f the public accounts for the first quarter of the current financial year was made public yesterday. It can now bo seen what grounds the Erime Minister had for his estimate of a three million deficiency if tho other three-quarters were allowed to run on the same basis of taxation and expenditure. As compared with the same period of 1929, the revenue collected in April, May, and Juno fell off £650,000, while expenditure was reduced by only £IOO,OOO. A deficiency of £550,000 in the first quarter, with the likelihood of decreasing buoyancy in conditions as tho year advances, was Mr Forbes’s warrant for tho drastic overhauls contained in the Budget now under discussion. Perhaps tho disappointing side of the quarterly statement is the smallness of tho savings effected by the departments. Tho imposition of new taxation is a lar swifter process than the institution of economies in such an unwieldy body os the Public Service, however, and the promise has been given that tho remainder of tho year will disclose larger decreases in the expenditure. Nevertheless, the fact remains (as we pointed ’out before) that the Prime Minister has budgeted for a total expenditure of about the same dimensions as was spent last year. This aspect was placed before him last night by representatives of principal producing interests who had met earlier in tho day to discuss tho taxation proposals. Mr Poison, as president of the Farmers' Union, gave that discussion a start by affirming that the attempt to screw IpUf ft milUpiq jftOTft lagt (

year from the taxpayer in times of reduced incomes would be crippling, and lie advocated trying to make expenditure conform with tho reduced proceeds of taxation on tho former basis. This, of course, is tho ideal method when times become difficult. It means budgeting on smaller totals on both sides, a thing which expert critics maintain should be reverted to iu New Zealand in view of the way in which the figures have jumped of recent years —a movement in no way corresponding to tho slow growtli of the population, even after allowance has been made for currency inflation or iu other words the decreased purchasing power of money. Among those who approached tho Prime Minister last night with the long list of resolutions passed by the conference were two outstanding men of affairs in the North Island —Mr •lull, of Napier, and Mr Jessep, of Gisborne. The latter insisted that costs would have to come down in other departments on the same lines as they had been cut down on defence and as they have begun to do in tho railways.

The Prime Minister’s answer was very brief, hut very s illuminating. Mr Forbes said; “Can you indicate m what direction? We are down to tho question of dismissals of men or reduction of salaries.” In plain English, tho Cabinet fully recognises tho need to reduce tho cost of government, has been busy on tho fringe of tho matter, and has now worked its way into tho solid texture, whore it has called a halt. The task of retrenchment is ever a thankless one. The outflanking movement by trying to bring revenue up instead of bringing expenditure dow T n is being reluctantly accepted by the country, but with many reservations. From outside organisations of very various kinds tho question given increasing prominence is: Why cannot substantial economies be made? Tho Prime Minister now answers that there is only one field left, and ho has given the impression that ho doubts his right or his ability to enter it. As to the question of right, one must perforce inquire for what purpose do Governments exist. Mr Jessep’s rather adroit reply to Mr Forbes’s invitation to indicate in what direction tho reduction of staff or of salaries, or of both, in tho Public Service should go was that “ the details were a question for the Government.” But tho resolution must ho made before details can bo gene into, and it is hero that tho Government appears to falter For, as Mr Jesse<p pointed out. curtailments of services involve dismissals, a\id dismissals mean temporary increase in the volume of the dominion’s unemployment which Mr Forbes is zealously seeking to decrease. Ho is faced with much tho samo kind of difficulty in respect of loan money expenditure. A great deal of it is going on railway construction in both islands, but principally in tho North. It enables him to give badly-needed employment, and the justification on paper for increasing the country’s capital liability yet further is that this is reproductive expenditure. How many people now honestly believe that? They have seen tho railway figures, and have watched transport’s fixing of its habits elsewhere; and few observers indeed can reconcile tho increase. of railway construction mileage with tho closing of old-established branch linos because of tho compulsion of tho purse. It has become a very difficult matter jvow for tho Government to find any .avenue for reproductive expenditure. It would be more honest for the terra to bo dropped, and the term developmental expenditure substituted in determining whether the dominion can or should further incur debt. Every million pounds added to tho existing debt means an addition to the costs of production, and politicians themselves, as well as those who in this connection approach them complaining of the burden of taxation, join in affirming the prime need for reducing costs of production if conditions for tho absorption of surplus lab Bur are to be restored. Tho tall orders for tho adoption of bold courses submitted to Mr Forbes last night included the restriction of the scope of tho Arbitration system in industry; but this is merely in keeping with tho fixed attitude of the primary producers’ organisations on tins subject.