THE BUDGET

Evening Star, Issue 20862, 4 August 1931, Page 11

THE BUDGET

TO THE EDITOK. Sir, —Tho Prime Minister, Mr G. Forbes, is reported to have concluded his address on tho Budget by saying: “ I havo now reached the end of what 1 venture to predict will prove to be in years to como a document of great historic interest.” Never were truer words spoken, for the Budget is brimful of interest to all in t'. r country. Those who havo tho ability to read and understand it will see how serious'tho state of tho country’s finances has been. The first point that must strike your renders was the fact that, although our exports increased in volume ns compared with the year ended March 31, 1930, tho amount received decreased by no less than £9,500,000, and £17,(>00,000 compared with March, 1929. It will immediately be seen that the Government was placed in a most remarkable and unenviable position. It had not only to deal with the effect of this huge drop in value of our exports, but it had also to take on tho biggest problem that any Government can bo saddled with—i.e.j a country wiioso lands and fixed capital arc false in relation to international values; in other words, exchange values—a legacy left behind through the maladministration and errors of the Reform Party. One is struck with the optimism of the Prime Minister in regard to the future, an optimism that appears to bo justified when an analysis is made of his Budget. Speaking of wage reductions, he quotes tho Government Statistician’s figures, which show that from May, 1929, to 1930 tho “all groups” index declined from 60.9 per cent, to 48 per cent, above July, 1914, a fall of about 8 per cent. In the same period tho food group index fell from 47.5 to 24.8 above July, 1914, a fall during tho period of over 15 per cent. This, it must bo admitted, is gratifying to all, seeing that money wages hud to bo reduced. Another gratifying result is tho lowering of interest rates; although small, this will be of great benefit and assistance to local bodies who havo huge numbers of unemployed to deal with, seeing that they have extended powers under tho Local Bodies' Loan Act of 1926; and, further, the Government having extended the Local Bodies’ Empowering Act, there appears to be no reason why local bodies should not take full advantage of those powers and absorb tho unemployed on work of a real productive nature. Another point of great interest to industry and to the welfare of tho country is that tho Prime Minister considers it time steps were taken to repeal war regulations still governing banking and currency in the dominion, placing this vital factor in our economic life upon a permanent and secure basis. Readers who understand tho evil effects of those regulations upon trade will welcome tho time of their repeal. The question of taxation is of great importance, for here in its last analysis lies the secret of our welfare. The Prime Minister suggests certain increases in Customs duties, also an increase in primage duties. These duties can and will give an assistance to local industries in ninny directions if taken full advantage of, and do not necessarily mean an increase in cost to tlie community. The Prime Minister also suggests increased income tax and increased surtax. Tho two combined can bring about a stimulation of trade. It will be understood that a tax. can destroy industry if applied in certain directions, as' proved by Reform’s policy, and further taxation can stimulate industry. Only time will prove whether the optimism of the Prime Minister is justified. One fact that stands out is that prices must be brought down to tho power of the people to purchase, for the i)resent time is abnormal in our history. What appears to tho layman in finance and economics to ho inevitable is not likely at this juncture

to eventuate. Taking the report as published, tho Prime Minister is to bo congratulated on his endeavour to bring about something akin to financial stability.—l am, etc., C. M. Aloss. August 3.