NATIONAL DEBT

Nelson Evening Mail, Volume XLV, Issue XLV, 20 August 1910, Page 5

NATIONAL DEBT

A BOLD PROGRAMME. puulic WORKS of the future. (By Telegraph.) (I'roin Our Parliamentary Reporter.) WKLLIXU TON, 'this Day. A romprt In-n.-ivi 1 statement was nuule hv ill..- Mir.i.-t'.-r fur Fin.aiu-e (Sir Joseph Wa.il) in the i("ii,e of I representatives la.st ni;4lit. re.-pectiiiK his sinking I'iiiul sell.me. Wlien tile Rulilie Debt Kxl.ilHli.iii Hill eame up I'im- its ■.-•eeollii Joseph also uiacle .a very iiitei'e.-'ti.ii'u; .-t i: .nil nL of tlie future public works pi.li -v In be i-arrieil out in this country. In t'ho cuiivc of his .-pooch Sir Joseph Ward said thnt it' the public debtis <if liri.aiu ort.be United States were to- include the money invested hi railways, it would run imo'verv nia.ny more mil.rio-iis .-t-''rliu.'j:. We in Now Zealand had to im- : i:;i" in oar public debt the money e.\-P'.-n-ied on our railways, because they .ire State-owned, and the money to pay i...- iln ii- coiistriH ticii had bee-n borrowed, lnil the a.--ot. ren:-ained wide by side w'lh the liability. 1 iornnvine; for otate advivnees to set-tiers .and workers anid for p:u.-!ro in'.; land in order to promote clos--.-1 -■■ ■-tlemeiit ini'-.t be continued for some vca i.- to come, but the lolal we should rc(|ii;:-e for these purposes- should not amnii.iii to a. u'reat dea-1. There wa.s a lim't to the .amount, a. i-oii-n.try could :ib--.;b for 1 hi si- purposes. The moiiiey bii-mw ..J for these pin poses would, ill mam- ca-i:s. be \\-rt\ over and over ayaiu. 'I ii : < w;u- bein-4- do-n.e ii" one importantd"!'ar( ineirl to t.he tune <>f several hundreds of thou-ands st.erlinu' annually .and this praetiice would grow for a. certainty. FOR PUIi.UC WORKS. Tbr Trim.e .Minister .-aid he proposi'd 'n ontiiine what he believed would be tin- amount within which the country woal.l st"p borrowing for public ,vorks. ll was dc-irable. when conisidering an auloin.atic system of re])avin.g our loa.iv--. t i : nvest igato the probable aiiKJun.t by whi- h our ii!.dcbleflne---s wo-uld be in-i:c-:-..'d be fre.-h loan- for new works. It wa.s u--l a matter of only borrowing two or three millions a vear for the 'next two or three yeais. and here h,e wished to !■ mind ]neinbcr< tha.t the l'»ill provided t'm-t any increase in the public debt w ■' 'd be aeci.in]ianii-d by an automa.tic increase in. the .--inking funds prevision, and Mniilariy. if there was a decrease in or; debt, the Milking fund payments; world .i-uticnai icaliv decrease. But we w iiiied to have ;i.n idea as to- when wo w.n;i 1 be likeiy to .stop borrowing for ; u!:!ic wurks. ninl bow much wo wo-uld r.-ijiiirc to borrow before that time ea-nie. This mill,] i:,:t be staled with exactitude, but he bad none into the matter vci\- (-arofiiHv when ho stated thnt an mm.nut of £'?0.000.000 (twenty million stei-liytgh spread over 15 years, would bo riajuireii. he felt he was well within the mark. This 20 mill.ion- wo-übl cover the eo-t of future railways, roads, bridges. )■ it'ic buildings and various undertaking.-. Mr. .Ma-fey: From the present dale on V RAILWAY RUILDIXO. S:,- Joseph Ward: ' \ es ; make i-t a deal less tiuin that, but ] am allowing a k'leral esti mati'." He wei'.n <m to sn-y lh. : if the whole of the railways .already aiii'mrised for con-1 ruct ion were iinis'luMl it would i-eipiire £2.243.000 to do it. He read :i ]i.<t ~f lines aireadv authorised. and ihe e-lima.ted cost of their coii->--tnie-ti'a (which are given in another cu-l-loim.) The J'rime Minister went on to say iliat he would ;iki give an estimate of i ho cost, of the railways which he tie :e,'h't should some tinu- bo bui.lt. but uhich were not yet authorised, 'these suggested lines and their estimated cost we e as follows:—Ho had put those on r..: .:d be.ai.-M- he wanted togi\e the total expenditure over a period of yeai-s on railways, roads a.nd bridges which tl: : - country might io,iK-truct' out of b.>: lowed ji-.miey. lie had gone int-o details b-.eaii-e o-therwi.so critics would say it was inipo.-.-ib!e [<> a-rrivo at the "■>'' 'tni-t. 'l'he total ami Mint for railway | le eon-iole i.n I lie, future would have to d'.-ide on. eame to £22.034.285. This included both authorised lines and siiggost]''i lines. 'Phis, amount was divided bci tw. "ii the two I-lands thus;— I ■"'■'"'ill island £13.19/.OGO j /on'th Island £8.887.485 I!" had give,,, these details, to cintr-blo lim. mbers to .-,-,. whether he was wi.thin the mark in what ho .-.a.id. I-'roni this t- :■•! of 22 n'illien. there had to be dedu 1:011s made o n account of two ai'ter-n::\-c routes having been i n sonic, ea.ses ni.-lurled whereas eiilv 0r,,,, would 3'eiiuire I-' be constrneted. OX ROADS. ! Sir Jo-e.ph Ward then wc-u.t < ;ii to fur- | |-h. r i.fir to tin, p, .-,. : ii,,,i i,t applied ','"' I'abbe wi.ik s i'.\-|)cnditui- 0 on roads. I'l-.mg the next live vi,-i.i-.--. he said it ;•■''- >■ ioa'plat-.-d tha.t £1.750.000 would b" ---pe;,! ,11 road.-. There t 1.758,000 !•:. ooii .-oua.ro mile-, of eou.ntrv in thi.s eninpiit.-i.ta-ii. wlnich was averaged a,t l. 1 , in., -sot road to the square miJe. Sevo-n ami a-ha-lt million, acres , ; f native la.nds '""ai-ined. to bo opened up a.nd 4.', m.ilI: m acres < ,| (.)-,,wn lands were, .still not '''"■'■ ' ; '' - l' ,; r new roads in t lie future. : ; ! , ,!,(1 '■■''■''! of £500.000 per voar -.. .e-0.000 «■;,, a fair otimati" of 'what u ';'ld b-> r.i|uired in live Years. \ext ''■ I- !-r:n': to the telephone, "sir Joseph ■- :: ' 1 ~)l> c-,tiiiia(ed expenditure for the, m\! five year- w a.s £744.00. This included ihe e-ta b!,i.-!i,l.out ~f „vw iretaUie ■•■•■ ■•■mi'manL 111 Auckland. Wellington. r^" ! ;l-ia n " Vll - ; '"' l ]Vli " , - <I 'M at .1 -cost of --.. .000. a.no (he expenditure of £40.000 on tue -ns'.mlala.n of wireless telegra.phv. .\r.-v next year h.e exported that the ma mm .-pent o„ public buildings would be red need to £IOO.OOO per year. TOO MUCH OX BUILDIXGS. t I; '' v "'s convinced thai jhis countrv ■ii- li-'ii ; -jiendiiig too much o n public >""■■ loiu-s. l'h s v .w Xew Zeaiand's to- '.' !>--ia-oving w.Mi.!,i be £1.457.000. For '*.' m next live via:.- for railwav-s. roJids. ■:■■' ' ",:dg,., w.- would reipiire Yo borrow '- Mli!l; " ,i : i" '' year. A.t hi,- enxl of '■} >' ' :| -' :i .should conic down, to a. mil-|!-;|,!"!',.Vl-H; • | - 1 "1 as £500.000 I,cir roar '•■■}■■•■' '''on. be derivable from revenue I ::;: . ■.'"" '■' ! "' ; ' 1 OiU-h vca,r -to the 1 l,l: ' "" ''tan. It was riduulous to sav tliat the country >hould cease bnrrowiii"v. ... ut it was ku ;w-n that the countrv had , ,'■■ lolu.w a publie works j.ol.ie-v in tl. e dire, lion he had indicated. '•::• Joseph Mated that the amount to In- put into tne sinking Unid* account in , ! : ' ' "'t ure sno-.dd he a. rmrcenta.ge on ; ''-'■>■■ hut til,, iiavment < t f an amount i t-'V" 1 , "'otnd mean Ihe wiping out of the 1 v -'" •■•• nub!:,- debt in 75 viars. Tln« sum rc'imrid-. £140.000 per" voar. would :'; ~l| o out of the con-olidi.ted revenue. Of j '■■;. £-12.Ml reiiro-oiit-d the sinking I turns at jiivs,.||! ,-,:,!,| t|,,. p„l,!ic Trus- ! ''■ "i , oi'ii.-etio,, with th ( , war loans \ •■"!..' ihe ! v an- 1., 10,,, l bodies. There ! we- also the mm,i of £32.820 interest ac- ; ' ' "■" u on t.he aeeun:ula.tion.s of such. i >M 'hat I he new amount to bo a.efua.llv l" 11 - 1 out of Hi,. eoH-olida-ted fun.l „- ;1N ; ocN- £11.392. If Xew Zealand's public Id,-'.; went npi„ .Ci.Jj.ooo.ooo. and h- did - "■■' th'iuk it w.mlfl. ma.ke the- amount!. whali would then have to b.- ; paid per V : ' ?»<o the sinking futi,-| .so a.s to wioo i! "Hi at the end of 75 vears would bo ; ].er vear. which was only £l-o.oot' more tha.ll wo ai-e payoig tu-dny. l! was n-,t propo-ed to " invest, this

i = mone}' in the wa\- of liquid securities, but it would be Tent to the people as mortgage on land and dwellings -and mortgages to local bodies. In 20 years time this country would no longer be a borrowing country. Every million loan borrowexfin the meantime would cany a sinking fund of £23 CO per year, which would~make certain its repayment at the end of 75 years. When in 15 or 20 years this conntry had completed its railways and 'great public works, policies, it was nonsense to assume that New Zealand would have to go on 'borrowing as itwas borrowing now. He had introduced the sinking fund system already in connection with, the Land for Settlement System and the war loans system, and he believed that when the Government wjas carrying out a policy such a? this country was, it was necessary to establish sinking funds. It also meant that New Zealand would henceforth oc-" cupy an even better •position in the eyes of the financial world. This country had to pay its debts sometime, and now was a good time to start. The system lie was proposing was a cheap and easy one. and. it would be self-acting and would always maintain its balance. He submitted the Bill to .the House with every confidence. MR. MASSEY'S CRITICISM. Mr. W. F. Massey said it was absolutely imposible to go on borrowing four millions annually year after year. He was very glad to hear .the suggestion tha was very glad to hear the suggestion that we should, after a while, taper off and finally cease borrowing. lie was afraid that time would not he till the Prime Minister retired from politics. Our system of sinking funds, as applied in the past was not of such a kind to inspire confidence. When loan matured, the Prime Minister either converted or rebut he did not redeem. He did not pay off the loan. Mr. Massey went on to say that he agreed with, a financial expert of high repute who had expressed to him the opinion that the Prime Minister's sinking funds proposals were 'financial thimble rigging.' 7 If we -could stop borrowing and could set apart say £160.000 to £200.000 annually to provide a sinking fund for the existing debt, it- would be a very right- and proper thing to do, but, unfortunately, we would not for a long time bo in 'a position to cease borrowing. Mr. Massey twitted the Prime Minister with having changed his opinion since iau4. when he said to provide a sinking fund for our debt would mean an enormously increased borrowing policv from London, or elsewhere. Sir Joseph Ward : I have submitted Quite a new proposal. Mr. Massey (smilingly) : "Yes. a much more comprehensive proposal." He went on to say that in a scheme like this, extending over 75 vears ,there must be wnr-e breaks .and no allowance for these had been made in the Prune Minister's calculations. What he meant was this : Supposing a settler borrowed £2OCO under the Guarantee Fund Scheme and paid the loan back, could the money be reinvested elsewhere without any de-lav whatever?- There must be some litt'N delay, and that was what he meant bv breaks. There woidd be hundreds o"f such cases. Though he favoured sinkingfunds, the more he looked into this pi<2 posal the more he saw grave difhi-ul-eSiao^Q/,-A^- V Wenfc on to sav in 1893-94 there was £160.000 to the credit ot the sinking fund of a particular loan. The Government required money and -t n order to get it this £l£o.^. J the pubbc debt of our -countrv was increased by£ 160,000. The Prime Miaistar: You don't show what the saving was for the balance of tne loan. \ou jiever do. Mr. Massey maintained tha* the position as stated bv him was correct He warned the House also that the scheme might be put under weigh and afterwards be discontinued long before the /o years were up. What one Parliament could do another Parliament could undo Messrs T. E. Taylor and J. Hanan aL-o spoke on ta* Bill, after which th- debate was adjourned till Thursday.