FINANCIAL OUTLOOK

Hawera Star, Volume L, 20 June 1930, Page 5

FINANCIAL OUTLOOK

j DOMINION’S INDEBTEDNESS EXPENDITURE DEPLORED BANK CHAIRMAN WANTS ECONOMY. (Special to “The Star.”) WELLI NGTON, J an© 20. I “New Zealand, unfortunately, is to an extent lollowiug in the footsteps of Australia, whore acute depression, is being experienced,” stated Sir George L'diot, chairman of directors: of the Bank' of New Zealand, at the annual meeting to-day. ‘ ‘Expenditure, public and piivate, is on an unwarranted scale, and a few years, of low export prices lor primary products, coupled with) overimport, ati on, and passible difficulty in raising loans from outside sources, would bring about conditions somewliat similar to those now being experienced m Australia. It does not acquire any prophet to foretell that unless expendarore, public and private, but ©specially the former, is substantially reduced, tlie future financial credit of the country must be prejudicially affected. “Til© immediate adoption of a pdiicy of retrenchment would, no doubt, .entail; a certain amount of hardship in the community, but delay in the adoption .of such a" policy would inevitably lead to greater hardship for greater numbers. “In the last 20 years the public debt of New Zealand has increased from £74,890,64b to £264.191,983, or from £72 6s 10 d per head of the then population to £179 12-s lOd per head of the present. It- must not be- forgotten that in the period under review, tlie greatest war in the history of civilisation ran its bilighting course leaving an aftermath of unprecedented public debt on every country of the British Empire. It should also be remembered 1 that a considerable amount of our public debt is revenue-producing, if not quite selfsupporting. Our railways, Post and Telegraph Department, advances to settlers and workers, hydroelectric and other Government undertakings all contribute revenue to- meet at least a por tion of interest charges on tlie loans a vised for tliese purposes . “Of the local body loans issued, including Government loans to local bodies, 59 per cent, was raised locally and tlie balance abroad:. It speaks volumes for Hie' faith New Zealanders have in the future of their own land that- a relatively small population in a comparatively newly settled country .should invest over £34,000,000 in these bonds. “The indebtedness is allocated as follows:—• Counties £8,882,000 Boroughs 29,278,000 Harbour Boards 10,336,000 Electric Light Boards 10,175,000 Other 5,278,000 “According to the New Zealand Year Book, the total amount of interest payable on local body loans as at March 31, 1928, was £3,158,359, of which £1,239,840 was payable outside- the Dominion, and that amount ha-s since increased.

LOCAL BODY INDEBTEDNESS. '•Tliese figures do not include about £7,455,000 borrowed from tlie Government by various local authorities.

“In addition to the public debt, local body indebtedness is increasing at a greater rate per capita than population. According to the Local Authorities Hand Book of 1929, debts contracted as at March 31, 1928, amounted to 66.4 millions sterling, or £45 13s 8d per head of the then population of 1,453,517, as compared with £lO Is lOd iii 1898, when the population was 771,-i 568. “No- doubt the greater proportion oi the local body expenditure is justifiable from one aspect or another; some of it, however, might with advantage have been postponed, tor however desirable particular amenities may be, the old prove)'!), ‘cut your coat according to your cloth,’ is Worthy of remembrance. Furthermore, an increasingly expanding expenditure is getting Out of step with: the wealth, of the country per head of population. “It is a lamentable fact that, as in Australia:, we in New Zealand are losing all sense of proportion where public expenditure is concerned; and even in private life what was considered extravagance a few years ago is now taken as a matter of course. “Rates and taxes in New Zealand are steadily increasing; beyond a certain level, however, they cannot go without bringing about calamitous results to the taxpayer as well as to the tax-gatherer. “Australia 'has been compelled, owing to her financial exigencies, to increase very materially her Customs duties. It is to be hoped that New Zetland will not- be forced to- follow tier example except perhaps on foreign goods of a luxury nature-. , '‘‘For the past six years the United. Kingdom has- purchased- 76 per cent, of ■our total exports, a fact whicth should not be lost sight of. It ,i;s true.she dees not reciprocate by giving any- Customs advantages, but buys New Zealand foodstuffs land iaw materials on • the world’s open markets; nevertheless , the fact remains she do-as buy the great bulk of our produce., and any great rise in our Customs tariff might have ■serious consequences to us. “Since the days of Bright and! Goibde.ii tlie ideal of free trade lias held the imagination of the. British people, hut changing times and changing conditions demand readjustment of ideas ; tradition cannot- always with advantage be maintained. THE OUTLOOK FOR NEW ZEALAND. “It would be easy to close one-’s eyes to Hie indications that point to continuing; low prices ior our exported •products, but only harm will be done by an ostrich-like refusal to face the position. “We are not the only people who are. feeling tlie pinch. All around us similar conditions are being experienced. Indeed-, we are. in 'better trim than many other countries-. In the tropics, sugar, tea. coffee, rice., tin, rubber, cotton, jut©; in the more temperate zones, Wool, butter, beef, mutton, lamb, wheat; in manufacturing countries, steel, iron, textiles, are substantially in excess of the demand. ‘We might with advantage take an example from other countries. In several of the South American States, where prices for exported goods are showing big reduction, important public works have been stopped and a policy of retrenchment adopted. In Australia retrenchment is the order of the day. “In New Zealand, if low prices for primary products continue for any length'of time, land values, now excessively high, must lie prejudicially affected ;a reduced standard! -of living would then become not merely advisable but obligatory, since salaries .and wages would of necessity be lowered. Nevertheless, if individually and edileetively the community will strive con-

scion tiG'uslv to adjust itself to altered conditions by endeavouring to adopt mol 1 © scientific methqidiSj to pay more attention to detail, to increase output and work a little harder, overhead expenses will be lessened, and. what is lost, in price may lie gained hy increased and less costly production—and in time the pendulum will swing the oilier way. ‘‘New Zealand has many advantages; fertility of soil congenial climate, a healthy population of pure British stock, are all assets of incalculable, value. It. remains far us to utilise these avantages to the full, and in so doing we can. whatever happens, face the future with confidence.”