THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, MAY 3, 1922. THE BRITISH BUDGET.

New Zealand Herald, Volume LIX, Issue 18080, 3 May 1922, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, MAY 3, 1922. THE BRITISH BUDGET.

Without departing from the established principles of British financial methods, the Chancellor of the Exchequer has been able to present a Budget containing substantial remissions of taxation that will directly benefit all classes of the population, and in their cumulative effect promise to give to trade and industry the stimulus that is needed at a time when enterprise hesitates between depression and confidence. The principal concessions have already been forecasted with an accuracy that is not surprising, since it is the British practice to foster an intelligent interest in the administration of the public finances by nublishing, immediately the results are available, such complete information that competent- Btadente can form reliable estimates of .future prospects. Apart from these material benefits, the Budget removes anxiety upon the question of war pensions, in regard to which proposals have been put forward that would involve a serious departure from accepted principles. Instead of meeting these obligations out of current revenue it was suggested that the amount should be capitalised each year, the annual liability of approximately £90,000,000 being added to the floating debt. Allowing for the interest charges, it was estimated that the Exchequer would be relieved to the extent of £85,000,000. There are so many objections to borrowing for the payment of pensions that only in the last resort would such a remedy seem warranted. The manifold difficulties of the situation have been overcome by methods that bear their own commendation. The first task of the Government was to reduce taxation. With the assistance of the comprehensive survey of the whole field of ! expenditure by the Geddes committee, it was able to introduce economies promising a substantial surplus, and in the circumstances it has decided to devote the whole of that fund to the remission of taxation, postponing any further attempt to reduce the national debt. _ Past achievements alone justify this decision, for within little more than two years upwards of £380,000,000 of debt have been redeemed and the present Budget includes provision for the first payment of interest on the war-debt to America. Such a record disarms any criticism of a policy that in no way prejudices the national credit. With only the information given in the cables published to-day, it is difficult to express the Budget estimates in terms of the Geddls report and the developments from that investigation. The outstanding fact is that the anticipated expenditure is less by £169,000,000 than, the expenditure in the previous year, a figure that is, with the nominal surplus, subject to modification by supplementary' estimates. The Geddes recommendations referred to the original estimates «.f last year's Budget, which were afterwards increased by £107,000,000, though the actual outgoings were only £40,000,000 in excess of the April forecast. Moreover, they were confined to the ordinary supply services, which are not distinguished in the cable. The objective of £100,000,000 was set before the committee as an extreme view of the opportunities for savings, and its reports proposed economies amounting to £86,844,000, to which it proposed the balance of £13,200,000 should be added by further reductions of naval and military expenditure. Fifteen millions of the com[mittee's savings were not specified, ' and these the Government set aside, arguing that if the committee could not discover them they were not likely to occur to the mind of anyone else. It rejected the proposal to reduce teachers' salaries and to raise the school admission age, estimated to yield £12,000,000, but decided that teachers should contribute 5 per cent, of their salaries to the superannua-

tion fund, and to reduce the Labour Department expenditure by £8,000,000, a figure to which the committee had not made any relative recommendation. Adjustments under other headings, and an allowance of £11,000,000 for the naval reductions due to Washington, brought tho total of the Government proposals to £64,000,000, of which it was expected £64,000,000 would be realised in the current financial year. Tho Government departments had themselves proposed reductions amounting to £75,000,000, and applying these two figures to the revised estimates for ordinary Supply Services, £665,000,000, tho Chancellor forecasted an expenditure of £484,000,000 implying a saving of £181,000,000. The cabled figures seem to indicate that even with the savings in tho Consolidated Fund services, clue to the suspension of the sinking fund provisions, this forecast will barely be achieved. The Budget represents a positive effort to escape from the confusion into which public expenditure was everywhere thrown by tho war and by tho economic difficulties of the succeeding period. It is a recognition of the fact that to continue taxation at a level beyond the capacity of the nation destroys prosperity and makes the maintenance of industrial activity impossible. Last year the excess profits duty was abolished ; this year important reductions have been made in both direct and indirect taxation, not the least important of which is the first step toward the restoration of prewar charges for post and telegraph and telephone services. The remissions will undoubtedy strain tho Government's resources, for the forecasted surplus cannot possibly be realised unless further economies are effected or revenue exceeds anticipations. British taxpayers are, however, working under such grave handicaps that no Government sensible of its responsibilities could deny them the assistance that will bo afforded by this Budget, especially since the greater prosperity that will be promoted by such ; measures will tend to augment rather than further to diminish the taxable capacity of the nation. To the New Zealand observer, perplexed by similar problems of national and individual responsibility, the Chancellor's speech is both disturbing and encouraging. To-day the British taxpayer is not only informed of the ! Government's financial policy for the ! year, of which only one month has j elapsed, but knows approximately •it his contribution to the Treasury j will be. In New Zealand we do not ! know even whether last year's ! accounts balanced, and, unless there is a radical departure from custom, months will elapse before the proposals for the financial year are announced. Our difficulties are probably less grievous than those under which Britain is struggling, but they are comparable. National expenditure has escaped the rigid investigation that prudence demands. State services are allowed to drain the national resources, excessive taxaj tion is imperilling the prosperity of the country. Can there be any doubt J that commerce and industry would respond to every measure of practical encouragement offered by the Government as readily as Britain has | welcomed this Budget The New I Zealand Government may hesitate to apply similar reforms, but it will presently be compelled by facts that cannot be denied to follow the example that has been set. What | has been done promptly and boldly ; n Britain must be done in New Zealand, and to the extent that it is a | forecast of our own Budget the j Chancellor's speech contains eni couragement for this country.