Prime Minister Reviews War Finance

Northern Advocate, 17 December 1942, Page 6

Prime Minister Reviews War Finance

(P.A.) WELLINGTON, This Day. How much has New Zealand's war effort cost? From what sources has the money beer raised? What proportions of it have come from the taxpayers. from loans, and from Reserve Bank credit?

A statement designed to answer these questions in general terms was made today by the Prime Minister as Acting Minister for Finance. Mr. Fraser remarked that the introduction of the economic stabilisation programme was a suitable occasion on which to review war finance, so that the results of the policy followed by the Government will be more clearly apparent.

The net receipts for war purposes in the three financial years ended on March 31. 1942. exceeded 90 millions. In the period of three full war years ended on September 30 last, the total had risen to 130 millions. More than 50 per cent, of all these receipts had been raised by taxation. This, Mr. Fraser remarked, compared favourably with the corresponding figure in other countries with which New Zealand was allied. Source of the Balance ' Flow was the balance of the money raised? The overwhelming bulk of it. the Prime Minister said, had come from loans and savings. In the three full war years the advances by the Reserve Bank to the State, including advances for the marketing of primary produce and for housing, increased by only £5,000,000. In addition to finding the money ! required to finance a rapidly increasing war expenditure in New Zealand, the cost of maintaining New Zealand’s forces overseas under the Memorandum of Security arrangement made I with the British Government had been met to the extent of £11,412.677 sterling. Besides paying these external expenses the Government had met promptly all its. obligations in respect of pre-war debt, with the result that on March 31. 1942. the New Zealand public debt domiciled in London was less by the amount of £3.000.000 sterling than it was on March 31. 1939. I Increased Personal Savings The people of the Dominion, while providing the large sum required for | war purposes from taxation and loans, had increased their personal savings in a remarkable manner. When the war began the total of deposits standing to their credit in the Post Office Savings Bank was £56.500.000. Three years later—alter three full war years—the total stood at £75.800.000. a figure never before reached in the history of this country. "The policy of the Government." said Mr Fraser, “has been to finance its expenditure out ef taxation and the genuine savings of the people and to avoid having recourse to the inflationary methods of credit creation. This is in line with what is universally recognised as the best way of meeting the increasing needs of a war situation that calls for the mobilisation of all resources. By this method, a large volume of spending power that would otherwise be used by individuals to compete for resources needed for war purposes has been transferred to the Government. This has made easier the task of administering the system of price regulation, rationing and other controls that are necessarily set up in order to ensure not only that the nation makes its maximum contribution to the war effort, but that the standard of welfare and morale of the people are maintained by a justdistribution of goods and services for civilian requirements. “A policy of economic stabilisation that will maximise the war effort and at the same time maintain an equitable distribution of the things essential for civilian life is only possible," Mr Fraser concluded, “if the Government does its part by financing its expenditure out of the incomes and savings of the people and not by an inflationary policy of credit creation. The success of the stabilisation programme now initiated largely depends on a continuance of the practical methods of war finance which have helmed to make stabilisation possible.”