THE H.B. TRIBUNE. THURSDAY, FEBRUARY 17, 1921. FINANCE MINISTER ON FINANCE.

Hawke's Bay Tribune, Volume XI, Issue 54, 17 February 1921, Page 4

THE H.B. TRIBUNE. THURSDAY, FEBRUARY 17, 1921. FINANCE MINISTER ON FINANCE.

We duubt .very much whether our readers would be able to gather irom the telegraphed report of Mr. Massey’s speech at Christchurch on Monday last any very clear and connected idea of the country’s financial position as set out by him. The necessity for hurried condensation does not make for the completeness and continuity that are necessary for such understanding, and we have ourselves postponed comment until receipt of the extended newspaper reports which reached us last night. We now adopt for the purpose the excellent summary which appears in the Christchurch “Sun,” and would first give some of the figures as there set out. In the first place, the tally of what may be called abnormal annual outgoings arising out of the war and the conditions created by it is thus set out: (1) interest and sinking fund on War Loans — about £5,500,000 per annum. Most of these loans were held in JNew Zealand. This was a good tiling. Mearly Ml this money had now been raised. (2) Pensions to soldiers and their dependents, and permanent increases in other pensions, owing to the higher cost of living—nearly £3,U00,000 per annum. (3) Increases in salaries and bonuses to public servants (about 40,000 m number) due to like causes—£2,ooo, 000. (4) Subsidies on wheat and butter—£l,ooo,ooo. (5) Headings under public accounts.

No amount is set against combination item numbered 5 above, but as the grand aggregate is put down at 12J millions, it lias apparently been estimated at a million. To get rid of tabulated figures we may as well at this stage give, too, what Mr. Massey described as the country’s balance-sheet, setting out its assets and liabilities: PRODUCTIVE ASSETS. Cash Investments. £ Sinking funds accrued ...... 8,087,564. Investments of cash balances I of the Public Account 9,925,510 Bank of N.Z. shares 875,000 Reserve Fund securities ... 2,000,000 N.Z. Consols investments 475,985 State Advances investments 14,478,068 Advances made by Treasury 296,520. £36,138,647 • Expenditure on Services. £ -I Railways 42,400,326 Public buildings 8,240,990 Telegraph extension 4,243,657 Purchase of native lands ... 2,304,645 Lighthouses, harbours, etc. 1,156,513 Land for settlement 9,663,362 Land for settlement (discharged soldiers) 2,522,414 Discharged soldier settlement 13,223,627 Electric supply, etc 660,501 Nauru and Ocean Islands ... 560,000 £84,976,035 Total productive assets and services 121,114,682 Indirectly—productive assets i (expenditure on roads, immigration, lands improvement, drainage, 1 mines, irrigation, etc.) 18,834,761

Grand total £139,949,443 Public debt (aprox.) ... 200,000,000 This statement, said Mr. Massey, | showed a balance of about 60 millions I on the wrong side, but against thia imust be set the value of the Crown lands, which, though hard to estimate. 1 was enormous. Behind them, too, as i a support to the national credit, were the taxable private lands and wealth of the population. It has first to be noted that, although the items of annual expenditure scheduled above are labelled as “abnormal,” the great bulk of them may be so called only because they are the outcome of an abnormal period in the history of the country. For the most part they will find their place for 1 very many years to come in our annual expenditure accounts. Interest arndj sinking fund on war loans must go on* tor some generations; war pensions will be a very slowly disappearing quantity; while there is sure to be some difficulty | m effecting reversion to the old rates for other pensions and for public ser-; vice salaries. In fact, the only specified item possible of early elimination, is that of subsidies to producers, and| even with regard to these Mr. Massey admits that he cannot yet see his way to their immediate and eiFtire abolition. It may therefore be said that the very much greater proportion of these socalled “abnormal” outgoings have become practically normal for the future, and will have to be provided for in very many successive Budgets. As against this Mr. Massey is able to point to an aggregate of possible economies in expenditure and newly discovered items of revenue running ro some half million at the very most, in which, we cannot help thinking, are included some very doubtful items. It may be just as well, therefore, for the taxpayers of the country to reconcile themselves to accepting nearly the whole of this 12| millions as being a permanent annual charge upon them. As to the Minister’s schedule of assets, it cannot be said that he naa missed anything that could possibly be brought under the category. In tact, he has treated the country’s expenditure on “services” as representing present value. This may, perhaps, be passed by in a general way. But it has to be recognised that a very great deal of that expenditure is productive only in a very indirect sense, and that, so far as relieving taxpayers is concerned, the “assets” representing it have to be left out of the count altogether. The Minister seems to be getting very fond of setting up the bogey of national bankruptcy merely with a view to triumphantly knocking it down again as unworthy of consideration. As a matter of fact, no sensible man has any such spectre on his mind. XV hat is troubling him most just now is to see a sane way, first of all, to meet the critical time through which we are at the moment passing, and then to proceed to the steady development of our i esources so that the load of taxation, of which we cannot possibly rid ourselves. can be the more easily borne. Mr. Massey has no difficulty in assuming the role of optimist. Indeed, it Is natural to him, and we may all be thankful for it. But it is a part that may be very easily spoiled by being .overdone, and we cannot help thinking that he is trending that way

just now. The comparatively lean days that ar© just now upon us might serve as a very useful lesson to us that pros- 1 perity is not altogether a matter of course, and that we are dependent for it to a very large extent upon the outside world and its conditions. From it we might learn, too, the absolute necessity for individual as well as national economy, and for the building up of substantial reserves against possible troublous days But these potential salutary lessons are very much like to be negatived if our chief State finan. cier, in order to maintain his character of optimist, gives us the impression that “everything in the garden is lovely,” and that but little effort is needed to keep it in that condition. The people just now are more in a mood than they have been for a long time to submit to guidance towards economy, and that is what is wanted, with, perhaps, a measure of compulsion for the more extravagant. That the Treasury may find itself able to extract from the people all the loans and the taxation it wants for its own requirements does not mean that the country is making progress. Indeed, excessive taxation is a sure block to sound progress, and its reductibn is one of the first essentials towards the development that can alone lighten our load.