NATIONAL DEBT

Hawke's Bay Tribune, Volume XVIII, Issue 137, 24 May 1928, Page 6

NATIONAL DEBT

BORROWING POLICY GOVERNMENT ATTACKED. MR. IV. J. POLSON’S VIEWS. (Per Press Association). Hamilton, May g 3. Mr W J Polson. Dominion president of tlie Farmers’ Union, attacked the Government borrowing policy when addressing the provincial Farmers’ Union conference this afternoon, He said that during the period since the war we had been increasing the national debt—that is the public debt—at the rate of nearly £1,000,000 a month. The interest rate, was also increasing. The gross national debt on March 31. 1921. was £206,324,000. The amount borrowed since was £44,680,000. bringing the debt to £245,8-50,000 in 1927. Mr. Polson also detailed the local body debt, which, less the amount borrowed by local bodies from the Government, had in 1927 reached the extraordinary total of £64.000,000. It was quite obvious renewals of these loans must mean an increase in the rate of interest.

In spite of the recently made boast about the success of the last New Zealand loan. Mr. Polson described it as a fuss about 4d. because the net yield to the investors was £4 19/8, whereas in the case of the Commonwealth’s last loan, more recently floated than New Zealand’s, the net yield to investors was £5, a difference of 4d. The banking authorities had showed that in the last few years all issues participated in the general improvement, New Zealand among them.

“In the next four (?) years the Government is maturing £87,475,000 worth of loans which have to lie renewed,” continued Mr. Polson ‘‘This means an increased interest charge. Renewals in the next four years alone are over £40,000.000 (?) In addition, new loans estimated bv the Government mean another £1,000.000 interest in the next.five years In a speech in reply to me. the Hon. W. Downie Stewart admitted that exports must pay for imports and should show a sufficient surplus to

pay also for interest on oversea loans. This is just my point. “Now he claims credit for the import of capital without debit for borrowing. This is most extraordinary book-keeping for tile Minister of Finance. He forgets that he borrowed 12/6 worth and must pay back £l, and suggests that he borrowed £1 and need only pay back 12/6. Taking these figures into account, we find the borrowing rate of the country enormously increased since the war. “In the reply of Mr. James on behalf of the Government to my Masterton speech, it is stated that I ignored the fact that import values are loaded with 10 per cent. The loading is intended to cover in part the cost of transport, freight, insurance, etc. Mr. James is apparently under the impression that we get our transport done for nothing. To eliminate it would falsify the figures, and as a matter of fact 10 per cent, is not nearly enough to cover the charges. In the 1924-25. Year Book the Government Statistician gives the estimated balance-sheet of debits and credits of New Zealand. He estimates freight, insurance and exchange at 20 per cent, of imports. The aggregate of imports from 1921 to 1927 was £317,000,000. This gives £28.817,000 as the added amount for freight over the period. If the basis adopted bv the Government in this trade balance statement is correct, then the sum of £29,000,000 must be added to imports to get the balance of freight charges tor the period. This would make niv figures all the more formidable. It would be interesting to know why these statements from the Year Rook were dropped after two years.”