THE New Zealand Herald. AND DAILY SOUTHERN CROSS. WEDNESDAY, AUGUST 16, 1922. ECONOMY AND THE BUDGET.

New Zealand Herald, Volume LIX, Issue 18170, 16 August 1922, Page 8

THE New Zealand Herald. AND DAILY SOUTHERN CROSS. WEDNESDAY, AUGUST 16, 1922. ECONOMY AND THE BUDGET.

Economy should be the watchword of any Financial Statement produced at a time when the affairs of the Dominion are in their, present condition. The Prime Minister gives full recognition to this in the wording of the Budget which he presented to Parliament last night. His appreciation of the principle, unfortunately, is not borne out by the figures employed to illustrate what has been accomplished and what is in hand. Mr. Massey claims that the achievements of the past financial year, with those in process and contemplated for the current year, represent a definite saving of £5,190,000, of which £4,725,000 is on Consolidated Fund payments. If this whole sum were the aggregate of actual tangible items, if it were made up of instances [where the application of the pruning knife had produced a definite effect upon given outgoings, it would not be sufficient to meet shrinkages in revenue proved or to be apprehended. The estimated total from income tax for the current year, for instance, is £4,100,000. Last year income tax produced £6,002,900, the year before £8,248,900. Balanced against this alone, £5,190,000 does not appear so impressive. Again, in arriving at his total, the Minister takes the estimated expenditure for last year, deducts from it the actual net expenditure, and employs the result to make an important portion of his total saving. It is well to show that he did not spend as much as ho might have done. But seriously to claim that such a sum squares with the kind of economy which the country is demanding is to destroy confidence in the actuality of the whole retrenchment policy. For expenditure to fall inside the estimate is nothing new. Again, the saving claimed to have been effected by utilising accumulated surpluses for capital purposes does not rest on a sound appreciation of principle. Some saving there is, no doubt. But to assume, as the Statement does, that the whole of the interest on these sums, calculated as if they had been borrowed, has been saved is to assume that the money, if not applied to this purpose, would have lain dead and unproductive. The contrary is known to be the case. Such a consideration of details the Prime Minister's claim to have effected actual economies totalling over £5,000,000.

One tost, and that a very simple j one, may be applied to determine the value to the public purse of the Government'B policy of retrenchment. The estimated expenditure for the current financial year is £23,188,215. Last year the total sum expended was £28,466,838. An elementary calculation shows that, assuming that the Minister knows with reasonable accuracy ho# much money he will need, there will be appropriated from the Consolidated Fund £278,623 less than last year. Taking the comparison a stage further back, for the year 1920-21 £28,068,730 was expended, or £119,485 less than it is anticipated will be required for all services this year. There is, of course, one special item, £565,000, to cover the expenses of the general election. With due allowance made for it, the estimated expenditure is still far from reflecting an actual saving of over £5,000,000. If the Prime Minister could claim without qualification that he was checking all increase in the outgoings, it would be something, though far less than what a country oppressed by an intolerable burden of taxation asks. But he cannot show even that. By comparison with only the nearest year can any reduction be shown, after Which a comparative increase is indicated. This is the best which can be promised at a time when the revenue is diminishing with a rapidity which is in striking contrast to the slow and grudging reduction effected in expenditure. The estimated revenue for the current year is £26,250,000. Last year there was collected £28,127,007, in 1920-21 £34,260,962. With the expectation of receiving £8,000,000 less than in 1920-21 the Minister is asking authority to spend £119,485 more than in that year. The recent recommendation of the Taxation Commission, that revenue should first be estimated and expenditure subsequently adjusted so as to fit in with it, that, in short, the Government should cut its coat according to the cloth, appears to have come too late to affect this year's Budget. No reflection is contained in the document of an even more important observation by the commission, that the present burden of taxation exceeded the proper taxable capacity of the Dominion. No hint is given of any lightening of the load. Income tax and land tax will, it is estimated, produce much less than in the two previous years. The land tax is not being reduced, the total from income tax shows plainly that collection at the present rate is contemplated. Analysis of the figures has shown that Mr. Massey's proclaimed saving of £5,160,000 is illusory. Its lack of practical value is even more plainly demonstrated by its failure to give any relief from the crushing burden of taxation which is hampering industry, stifling enterprise, and aggravating unemployment. It is no use offering a starving man a 'cookery book to read. Similarly there is no value in tickling the ears of the country by describing economies which are not able to produce the one . result needed, assistance in escaping from I the slough of depression in which it is at present caught. The alleged saving has not been effectual in preventing the Minister from allocating nearly £2,000,000 of the accumulated surpluses to balance his Budget, thus diminishing by this extent the country's reserve fund. No reduction in the rate of taxation is promised. The lessened returns from it are due entirely to the shrinkage ** *-sxable values. In. no

other instance is there any indication of the total of taxation being less. Everywhere else more is to be exacted. The two great State services, the Kailways and the Post and Telegraph Department, are expected to add a larger quota to the national income. The conclusion of the Statement strikes a note of optimism and embodies a call to the country for vigorous effort, so that prosperity may be restored and the march of progress resumed. Optimism is a good thing, but it is well to have it based on solid foundations. ITie face value of Mr. Massey's peroration, unfortunately, is discounted by a critical examination of what precedes it- His exhortation to thrift and industry is so admirable that it is all the more depressing to find so little actual achievement which might enable him to strengthen his precept by example. The financial rehabilitation of the country is a task to which all may contribute, as he says. His recognition of this is so marked that the country is entitled to demand from the Government which he leads much more positive evidence of diligence in deed, much less of passive waiting for the mists ',o clear away, than are disclosed in the Financial Statement.