NEW ZEALAND FINANCE.

New Zealand Herald, Volume XLV, Issue 13702, 19 March 1908, Page 6

NEW ZEALAND FINANCE.

A TRENCHANT CRITICISM

"AN UNDESIRABLE POSITION."

['BY TKLKGRAI'H — OWN COKRKSPONDKNT.]

Wellington , Wednesday. Mr. .John - Dothie, ex-M.P for Wellington, who is acknowledged to be one of the first financial critics in New Zealand, has written to the Wellington Dominion on the country's finances in the following terms: —" In a. recent issue you courteously afforded me space to draw attention to the. terms in which the Prime Minister had been pleased to speak of certain wild or imaginary allusions by the, press or by members of the Opposition to the public finance. 1 then denied that the country's finance was in such a. condition that, any criticism could affect it, far less produce the 'financial disaster' he predicted, but'despite the attitude of the Prime Minister and the gravity of such a. statement as uttered by him in reference to financial criticism, I hold thai his financial administration calls for critical examination in several features, an examination which by bis attitude he apparently seeks to escape. Now, J am not about to undertake such a task, but 1 propose to comment briefly upon certain urgent and prominent points. "As a basis, 1 turr to the public debt, which by the table of March, 1907, was then shown to be £64,179,040. Of this £47,757,279, usually spoken of as funded, only falls due in 1929, 1944, and 1945, and of the balance, if we assume that the amounts maturing in the remainder of 1907 have been renewed, we have a total of £11,369,987 to be paid within the term of the five years, 1908-12. Against this there is no sinking fund, and so all will have to be renewed. Surely this is an undesirable position. During the last 10 years we have added £19,215,616 to our public debt, and the present commitments point to an increased future ratio. The position really amounts to this, that Now Zealand in future, under the Prime Minister's system, needs to renew or borrow at least four millions; annually! The position is disquieting, since it is possible that the Dominion with such needs and in any crisis could not always borrow so largely, and under such circumstances we might have to pay still higher rates' of interest. That this is so is borne out by the fact that of the debt shown to be duo in 1908-12 £-6,222,815 carries four per cent, or over, and only £4,015,067 is at Z'j per cent, or under, and where the lower rate is paid it is largely on moneys borrowed from the Savings Bank, the Government Life Insurance, or Trust Office. "Leaving the debt obligations for the moment, let me turn to the question of interest, and ask why, in view of the market rates ruling for the last 15 years, we are paying on any debt contracted within that term a higher rate than 3g per cent.? In 1895, with much elation, the Treasurer started the three per cent, series, due in 1945, and on this there has since been at least two issues, but all were issued at an unsatisfactory discount and cost. In the presence of the market rate of these three per cents., the Treasurer has chosen to have resort to this four per cent, short debt (with in some cases a London option), which being unquoted further complicates and prejudices the market, yet all the time money could as now have, been got at 3A percent, and at par. Probably he will soon have to resort to this rate and to a fresh 50-year issue, and some such step ought to be speedily taken.. This question, owing to the tactics of the Prime Minister and the practical supercession of the Public Accounts Committee, has been too much lost- sight of, and the effect is that the financial administration and the position developed is becoming intolerable."