PUBLIC WORKS.

Greymouth Evening Star, 21 September 1938, Page 14

PUBLIC WORKS.

[to the editor.] Sir—l should like to point out the position that obtains at the Present time in regard to the method of financing the huge expenditure made on public works. (1) Credits are being raised through the Reserve Bankof New Zealand by the Government a the security that the bank has tor these loans is the amount of approximately £65,000,000 which is standing to the credit of numerous depositors in the Post Office Savings Bank. (2) If this expenditure proceeds at the present rate for a further two years the Post Office Savings Banks funds will be severely jeopardised, or the solvency of the bank threatened, (°' The only method of staving off such a disaster is to place the debt incurred on 'long-term loans which will increase the national debt of New Zealand. (4) If the Government resort to a further expansion of the note issue-to meet withdrawals from the Savings Bank (the great amount ot which would be sent abroad) it will mean further inflation and depreciation of the New Zealand pound. (5) To restore the purchasing power of the pound it will mean that these notes will be given credit eventually by the Reserve Bank and that in its tui n must also be found by public subscription and would be an addition to the National Debt. (6) There is not any possibility whatever at the present time of the public subscribing to the loans if they were placed on the market owing to lack of confidence of investors in both the Labour Government and New Zealand’s credit. The continuous flight of capital abroad confirms this. (7) Should the Government resort to compulsion to bolster up a weak position it is not at all likely that they would be successful in their efforts, as a very large amount of liquid capital has left New Zealand. They would certainly not be able to raise anything like £40,000,000, which should be a conservative estimate of their requirements to meet the situation. (8) Such a disaster as the insolvency of the Post Office Savings Bank would have no parallel in the history* of the Dominion and would mean that thousands of people would be clambering for their money which had been squandered by a band of incompetent Socialists. Such destitution and poverty beggars description, and would be pathetic to an extreme degree. In regard to a question that was put to Mr E. B. E. Taylor last evening, about compelling the public to subscribe to war loans in 1916 and 1917, this did take place, but the inducement that the Government of the day offered was inscribed stock and bonds issued at 4i per cent, free of income tax, which was the most lucrative investment to a taxpayer who was paying on the higher layers of taxation. Purchase of these securities to such a man returned him anything from 7 to 10 per cent. There is just one other point I should like to mention in regard to taxation. If the Government does not decrease the rate of company taxation which rqns from 8/- to 12/- in the pound there is not the slightest doubt that there will be a wholesale closing down of operations in the Winter of 1939, which will throw thousands out of employment, thereby being a double blow to the Government, as they will cease to receive revenue from this source and will have large numbers of people workless on their hands. I wish to congratulate Mr Taylor, on his very fine effort last evening in the ’Town Hall, and wish him every success in this election campaign.—Yours, etc., “PATRIOT.”