THE H.B. TRIBUNE SATURDAY, AUGUST 2, 1930 CAPABLE CRITICISM

Hawke's Bay Tribune, Volume XX, Issue 191, 2 August 1930, Page 4

THE H.B. TRIBUNE SATURDAY, AUGUST 2, 1930 CAPABLE CRITICISM

As was to be expected, the fuller press reports of Mr. Downie Stewart's speech on the Budget that are now available show that it was delivered in a spirit of entire fairness and in language of marked restraint, while at the same time embodying in few words a great deal of shrewd criticism. “I entirely concur in the efforts of the Minister of Finance to balance his Budget,” he began, “but that still leaves open the question of how the present gap has arisen and whether he has taken the best means to fill it.” From that he went on to point out, as he did a year ago, that the deficit which was disclosed four months after ho himself left office- and of which so great use was then made in order to justify more taxation —was purely temporary and accidental, arising as it did mainly from a quite incidental failure of Customs collections to fulfil the estimate. Proof of the correctness of the contention then advanced, that this particular item of revenue would quickly recover itself, is to be found in Mr. Forbes's own Budget. That shows that the Customs receipts for the year 192930 not only exceeded those of the previous year by little short of a million sterling, but also exceeded Sir Joseph Ward’s estimate, including his new extra primage duty, by half a million. This, of course, shows that for the purposes then in view the extra duty was not required and merely went to provide funds for expenditure that was not then in contemplation. In this connection it is to be borne in mind that there was.no question of making good the previous year’s deficit, which was borne by the ample reserve fund of accumulated surpluses from still earlier years. The ex-Minister of Finance then went on to sa,y, with complete truth, that what puzzled the taxpayer was why it was necessary last year “to increase taxation so enormously on the plea that it was to prevent a repetition of the deficit—in fact, to multiply new taxation by three or four times the deficit.” This again, is. seen by a reference to the tables appended to Mr. Forbes’s Budget, which show that the revenue for last financial year exceeded by no less than If million that of the previous year, while the expenditure figures show an increase of over a million. Mr. Stewart, however, at once explains that these increased outgoings were largely accounted for by bigger payments in respect of pensions and interest on new borrowings and higher rates on renewals of old loans. At the same time he very pertinently points out that a large proportion, as yet unstated,

of the newly borrowed millions has been spent on railway construction and other works without any adequate investigation as to whether these will ever prove selfsupporting, let alone profitable. Mr. Stewart does not wish to deprive Mr. Forbes of credit for having come forward and placed the present position frankly before the people. But, at the same time, he very naturally complains that, while most of the factors in the case were fully known to the Government shortly after it took office, no preliminary warning was given. In fact, even so lately as at the time of the Parnell byelection last May Ministers were travelling about the country giving assurance that everything was going swimmingly. For instance, the fact that losses arising from the working of the railways would this year have to be made up out of taxation had been staring the Government in the face from the outset. Yet no definite indication of the true position was given until it came “as a bolt from the blue” after Mr. Forbes himself had taken office as Prime Minister and Minister of Finance.

Summarising his objections to the policy that has been and, so far as practicable, is apparently still to be pursued by the United Government, Mr. Stewart said: (1) It has largely expanded loan expenditure; (2) it has done this at a time when (owing to the check on immigration) the population is not increasing rapidly, which would help to spread the burden; (3) its action in largely expanding the loan expenditure on railways at a time when tha railways are rapidly becoming a heavy burden on the taxpayer is unwise and unsound; (4) it has increased borrowing at a time when interest rates are rising. In this last connection it was stated that by 1928 the Reform Government had so far progressed in its policy of restricted borrowing that the increase for that year in the public debt was down to 5j million. If we compare the gross borrowing for Reform’s last year with that of the first complete year of the United regime the figures are 7 million as against 11J million. Then last financial year the expenditure out of capital accounts, almost entirely made up of loan moneys, exceeded 12J million—"a staggering loan expenditure for a population of lj million.” All this rapid and unwarranted outflow of spending—much of it of an unproductive nature — has, of course, created an altogether false sense of prosperity and security, now to be followed by decidedly lean years, of which no timely warning was given, and for which no preparation has been made.