N.Z. BORROWING

Grey River Argus, 10 November 1931, Page 6

N.Z. BORROWING

RAID ON RESERVES Treasury Bills Mounting (Special to “Argus.”) WELLINGTON, November 9. There is a wide field of public finances deal’ with in the Finance Bill No. 4. which was brought down for , the second reading in the House today. Mr Downic Stewart said hat the first part of the measure gave extra borrowing powers to the Government agains- financial requirements in the next financial year. He recalled that during the emergency session, Ithis year, authority had been given to abolish borrowing powers relating to education and railways. Notwithstanding these responsibilities being placed upon the Consolidated Fund, the amount provided ’.this year was lower than for some years past. During the past six years, the borrowing authorities of the Government had averaged £6.250.000. but on account of the programme of public works having been curtailed, three millions sterling was considered sufficient. The programme for the current financial year, the Minister added, was provided for by a lolPfi raised in London on June Bth last, and by local issues. The £3.000,000 which it was now proposed to take the authority to borrow would provide for the next financial year’s expenditure, which would be dealt with i n the estimates at the ordinary session in June next. During the last session, authority to borrow on. Treasury bills had been increased from £4.000,000 to £6.000,000. The practice of the Government was to borrow on these bills when there was insufficient revenue coming i n to meet current expenditure, and to repay the amount when the revenue,was collected. “In the past,”

Mr Stewart added, “when we had large balances ‘.to carry forward in the Consolidated Fund, the necessity for Treasury bills did not arise, so acutely as at present, but, with a steady diminution of the accumulated surpluses a nd the heavy depletion of cash ' caused by a deficiency in revenue. H has become necessary .to rely upon this temporary financial accommodation.” Under the system adopted by the British Government, the Government was empowered to issue bills each year up to the full extent of the estimated expenditure for the year. While it was not suggested that such ample powers could be taken in New Zealand, sofne extra provision yas necessary, in the meantime, against. the main portion of the State’s revenue. Land and income tax would not come in until late in the year, but ihe expenditure made steady calls upon the funds throughout ithe year. !• was proposed therefore, to obtain power to borrow up to one-third of the estimated revenue for the year

Referring to the clause relating to the income tax upon mining and sheelite companies, the Minister said he had held this provision over, but, on investigation, had found that no hardship was likely to be incurred by the Land and Income Tax Bill, and had consequently allowed this matter to remain. The provisions in the measure which dealt, with unemployment, allowed the Board and local authorities to use money from the Unemployment Fund for n ecessar v and valuable work on private property. Hitherto restrictions of the Art prevented this. Mr M. J. Savage said that this Bill continued a class of legislation. that was wholly undesirable. He asked the Minister where he proposed to get the £3,000.000 from—was it in Now Zealand, or was it in London •? He wqs empowered to borrow that amount for public works, and it would be important to know where he would go for it. There was n growing movement in Ihe direction of borrowing on Treas--1 ury bills, and it appeared to be reI markable that this form of borrowing had

just about doubled since the year 1926. Referring to the intention of the Government to resort still further to the Reserve Fund securities for general revenue purposes Mr Savage said that he wondered what the Minister of Argiculture thought of the proposal. He had a distinct recollection of that Minister’s anxiety at ‘the tendency of the United Government to use Reserve Funds. It seemed that ihp present proposal was the last “clean up” of the proposed transfer to the Consolidated Fund of certain moneys from the Discharged Soldiers’ Settlement Account. It was simply another clean-up. The same applied to the clause abolishing the Depreciated Fund established in connection with the Discharged Soldiers’ Settlement Loans. The Minister proposed to take what was to all intentions and purposes, the reserve fund, so that he would not have to impose the necessary taxation. There had to be a reckoning day, and if .they were not at a dead end now, they soon would bp. It seemed that the Government intended to use the las* of the reserves.