CLOSE-HAULED.

Evening Star, Issue 21090, 30 April 1932, Page 12

CLOSE-HAULED.

The urgency of tho situation at the Treasury may be gauged only too plainly by Ministerial statements in this week’s discussion in Parliament and by one or two other facts. To-day is the last day. of April, and already the monthly pay sheets of tho Public Service have been readjusted so as to give effect to the second 10 per cent, cut. This was done in anticipation of the National ’''xpeuditure Adjustment Bill passing in time and becoming I. . It has duly passed tho House of Representatives, but (at tho time of writing) has not been before tho Legislative Council. This is indeed cutting matters fine. In order to obtain funds with which to carry on the Minister of Finance has obtained credits from the Bank of New Zealand to the extent of £2,500,000, the security for the advance being discharged soldiers’ settlement mortgages. These, amounting to £10,500,000, would have be sacrificed if it were sought to sell them under present market conditions; They represent, one suppo. es, the remnant of investments made in those easier days; when New Zealand showed

Budget surpluses instead of deficits, which reminds one that the one-time frequent question as to what had become of the accumulated surpluses has not now been heard for many a long day. Despite the heavy writing down of the value of almost all classes of securities, it is probable that the Minister of Finance now regrets that further provision of the kind was not made against a rainy day. Mr Downie Stewart made further acknowledgment to the Associated Banks for their assistance to the Government at a critical time, not alone in this matter (in which the National Bank of New Zealand may also assist), but in a variety of ways, some of which he enumerated. In this way the Minister explained his earlier statement that the banks were “ the country’s only line of defence.” This was in answer to criticism on the tardiness of the banks in reducing voluntarily their fixed charges in sympathy with a reduction of similar charges obligatory under the new legislation. It is now announced that the second J per cent, reduction will be made operative by the banks earlier than appeared probable from the previous announcement.

Another banking matter which has greatly agitated the exporting section of the community has again been ventilated. This is the exchange pool in London. It is to bo maintained for another two months, and may then be dissolved. How the rate may then move, if unpegged, is for experts to say, but Mr Stewart made it quite plain that in the meantime the Government has urgent need for the pool’s facilities to enable it to meet its obligations in London. The disbursements there represent fixed charges quite beyond the scope of the Bill which makes such inroads on local fixed charges. The list of economies which Mr Stewart tabulates as accomplished makes the total savings appear at about ten millions since retrenchment began, of which over four millions is being effected in the current year. • But revenue and the possibilities of revenue have so diminished that the Minister foresees a two million deficit eleven months hence. This, however, he regards as a “manageable deficit.” It has been understood, and is now admitted, that the Government was considering a form of taxation new to New Zealand, in the shape of a sales tax. This, however, the community has been spared, for the present .at least. Ministers, as well as public servants and taxpayers generally, recognise that all these “adjustments,” both in the form of retrenchment and fresh taxes, have the defects of their qualities. They tend to disorganise business already severely affected enough by general conditions, and have a cumulative depressing effect just at a time when the fight against depression must be most strenuous. Certain defections from the Government Party on crucial divisions on the Bill have indicated that realisation of this has outweighed fundamental principles, and perhaps also that the new legislation fails in the matter of equality of sacrifice. This should be the aim of all Governments, and we believe it to have been the aim of the present Government. But has it ever been achieved by any Government, however earnest on the point?