Nelson Evening Mail WEDNESDAY, AUGUST 22, 1945 MORE MONEY WANTED, NOT LESS

Nelson Evening Mail, Volume 80, 22 August 1945, Page 4

Nelson Evening Mail WEDNESDAY, AUGUST 22, 1945 MORE MONEY WANTED, NOT LESS

WHEN analysing the Budget twelve days ago we said that, even i£ Japan surrendered suddenly and soon, this would probably not make much difference to our war expenditure for the current financial year, more than a third of which has already gone by. Since then Japan’s defeat has come, the Second World War is over and the New Zealand Government has reacted to the new situation not by reducing taxation and war expenses, not even by stabilising the latter, but by increasing them by nearly £34,000,000, or well over 30 per cent. To say the least that was not what the people generally expected when Mr Nash, on the adjournment of Parliament last week, promised to submit revised estimates for New Zealand’s war expenditure fluring the remainder of the financial year. On the face of it, as Mr Holland pointed out in his Budget speech last night, the requires more money to carry on a war that’s over than it did to help fight the' war while it was still on. An examination of that -interpretation shows that more of the postwar financial commitments are now to be faced than was envisaged in the original Budget. Our servicemen have to be brought home and transport for them will cost more than was previously set down. The time for giving them the promised and richly-deserved deferred pay and gratuities these two items between them accounting for £23,000,000 of the additional expenditure, although all of this will not necessarily come to charge during the present financial year. A million pounds has been added to the rehabilitation item, bringing it to £3,000,000 and that sum will be needed in the changed circumstances. An increase of £2,000,000 has been made in the estimate under the mysterious heading ‘'ancillary,” the content of which ought to be fully explained. The cost of sending the 55,000 men as part of a Commonwealth force to the Far East will not now have to be borne. That is the biggest single relief brought to our war expenditure by Japan’s surrender. Rather than make corresponding readjustments in the amount of money to be taken from the people during the next seven months the Government has elected to substitute other commitments arising - out of the end of the war with the idea of liquidating as many of these obligations as possible so that the slate can be reasonably clean for the start of next financial year. In this course lies a certain amount

of wisdom since the cost has to be met sobner or later, but a - strange omission in the revised statement is any reference to where the extra £34,000,000 is to come from. How is it to be raised? By extra taxation (which is unlikely), by loan, or by resort of bank credit? Or does the Government hope to get a substantial slice of it from buoyant revenue over-topping the estimates, some of which may be little more than guesses? The'* Minister of Supply (Mr Sullivan) said last night that provision may be made this financial year for a subsequent lightening of the tax load. But the Government wanted to find out where it stood first. Any concessions could appear in the annual Income Tax Bill or the National Security tax might possibly be lessened. The people will prefer to wait and see. They are having brought home to them the fact that war has still to be paid for after it has been won and the rocketing Budget total shows how unwilling Mr Nash is to make even token tax reductions. He wants to see the people’s money keep flowing into the State coffers at the abnormal wartime rate and promises them pre-election relief in 1946, if not before. The most serious effect of this continuing burden, which is to be kept fastened on the taxpayer’s back, is that it will impede the transition from war to peace. The changeover cannot begin too soon. For that purpose all the economic resiliency which can be released needs to be used to allow the mainspring of reconstruction to begin to function. Heavy tax loads have the opposite effect on industry, where an extra incentive to increased effort is now required to replace the motive force of patriotism which energised the home front during total'war to a greater extent than might be imagined. To get into peacetime gear with the minimum of delay the brakes need to be taken off the economic motor as soon as possible and, by waiting until 1946, the transition may be correspondingly hampered. The Government’s original Budget .was not remarkable for its forwardlooking view of reconstruction and it would seem that expansionist schemes such as those being prepared by the O.N.D. have not gone very far past the preliminary stages. Yet the changed conditions are demanding the blueprints. To get an expanding economy in motion would provide increasing opportunities for placing our returned servicemen in occupations of their choice. Mr Nash is still thinking in terms of a war that has to be paid for. That is all right in its way, since big financial obligations remain, but would not the post-war economic machine gather increasing momentum if some of the encumbrances were taken off now?