King Country Chronicle. Tuesday, March 15, 1932. THE ECONOMY KNIFE.

King Country Chronicle, Volume XXVI, Issue 3443, 15 March 1932, Page 4

King Country Chronicle. Tuesday, March 15, 1932. THE ECONOMY KNIFE.

The people of the Dominion have had some very hard facts to face during the last twelve months, but the report of the National Expenditure Commission laid before the House last Friday is the most unpleasant. document that New Zealand has had to deal with for many years. The recommendations of the Commission affect every section of the community, and in the effort to balance the national Budget scarcely one has escaped. It is only to be expected that the report will be severely criticised, but it is to be hoped that in this criticism credit will be given the Commission for its honesty of purpose in an attempt to apply sound principles in the most equitable and reasonable manner. Twelve months ago it was hoped that a gentle policy of economy all round would enable this Dominion to solve its financial' problems, but the outlook has gone from bad to worse, and there is no alternative left but to introduce more drastic measures of economy. The plain fact of this matter is that the country cannot meet its obligations without making rigid economies, painful as they may be for all. If the people are not prepared to do this, then the Government cannot honour its obligations, and the reputation and credit of this Dominion, which is held in high repute throughout the world, will suffer a blow from which it will take many years to recover. If we face the position squarely in the present crisis, the sooner will we get back to better and more stable conditions. The duty of the Commission was to formulate plans so that the State could meet its commitments both in regard to payment of interest, and the wages of its employees and pensions. This necessarily means a general curtailment of public expenditure of every kind. The Education Department will suffer heavily if the recommendations of the Commission are put into operation. The savings under all the headings of the Commission's report as they affect education amount to £360,000. This sum in conjunction with the salary cuts would mean a total saving of £760,000. Some of the services to be eliminated are highly desirable, but the simple fact remains that the country cannot afford to find over £3,000,000 a year for these services. It would seem a retrograde step, however, to cut out Education Boards and have the whole of the Department's activities controlled from Wellington. These Boards have a knowledge of local conditions, and the members give

their services without any payment beyond travelling expenses. The elimination of these Boards means an increase of Government officials who have no knowledge of local wants. The saving to be effected in this way is scarcely worth while. The public has no great faith in central Government administration.

It will be a matter of regret if the widows' and old age pensions are to be cut down. These are social services that few people will begrudge, for both are humane in principle. The cut in the civil service is anDther measure that will entail many hardships on those receiving the lower rates of pay. We still consider that these rates should be on a Hiding scale. The report states that ;he Commission has considered this natter, but points out that a graduited scale would involve many momalies, and further points out hat those in receipt of high salaries ire caught by the income tax. A able is given showing that the man n receipt of £3OO a year pays '2 os. 2d. in income tax, while the lan receiving £IOOO a year pays 84 3s. 4d. With the total cuts of 0 per cent, and the income tax deuction, the £IOOO man still receives 725 a year, a good salary when the

reduced cost of living is taken into consideration. No recommendation is made regarding superannuation pensions, but the same principle might be adopted in these pensions. There are several retired Civil Servants in receipt of £IOOO a year, and with the present financial crisis these large pensions might well be revised, especially in view of the statement by the Commission "that the Dominion as a whole cannot hope to adhere to the existing level of money incomes, irrespective of the value of money, and some general basis of adjustment applicable to all classes of income must be found." In dealing with the rate of interest the Commission touches on one of the most vital as well as one of the most difficult problems for solution. It is suggested that the public debt and local bodies' loans should be converted into two loans with a fixed rate of interest. The Commission has not yet come to a decision on the question of interest on debentures, mortgages, deposits, and dividends from preference shares, but a report on these will be given later. The problem of the small investors is involved in that of a reduced rate of interest. There are many who have placed their life's savings in -public bodies' and Government loans and other investments. In a large number of cases the small .income from these sources is their sole means of livelihood, and they will not have enough to purchase the bare necessities of life if their interest is reduced. That a reduction in interest rates is desirable and even necessary, however, leaves little room for doubt, but the whole thing is bristling with barbs. The same applies to the proposed reduction in rents. It is well known that as a general rule rentals have shown a big decline during the last twelve months, and some premises are scarcely paying expenses. Rentals and interest rates are the two greatest problems facing the Government to-day, but as the report states, "the burden imposed by mortgage charges based on inflated values is impossible." No New Zealand Parliament ever had to face a more difficult task, or one fraught with such i grave issues than it will have in dealing with this report. It means the breaking of many contracts, for the ten per cent, cut is a breach of contract. The sanctity of the wages contract is just as sacred as a mortgage contract, but both have to be jettisoned to put this country on its feet again. It is to be hoped that this aspect will be realised by members of Parliament and the people of this Dominion.