SIR JOSEPH'S MISTAKES.

New Zealand Herald, Volume LX, Issue 18354, 21 March 1923, Page 8

SIR JOSEPH'S MISTAKES.

In recent speeches Sir Joseph Ward has devoted attention to the Herald's criticism of some of his observations :jpon financial matters, and by the animation of his utterances, indicated his acceptance of the suggestion that proof of his fallibility would undermine his reputation as a master of finance. There are two points of importance, which may be taken in order. At Tauranga Sir Joseph Ward quoted in comparison with Australian rates of taxation the amounts of taxation for various incomes which "we pay," and the impression that he was referring to current taxation was emphasised by his reference to the maximum rate as 7s 2d—incidentally, the rate is actually 7s 4d, though even as recently as his Matamata meeting, Sir Joseph had not discovered his error on this point. On the latter occasion, he insisted that his figures were correct"they were prepared by one of the most capable men in New Zealand, and were based on the last payments made." Unfortunately for Sir Joseph's reputation, they are not correct. Tax payers who make no claim to extraordinary ability, but are content to read the schedules of the taxing Acts, and perhaps to consult the tables issued by the Government, will not have any doubt of this. The scale, of taxation quoted by Sir

Joseph Ward was proposed in the Act of 1920, but before it came into operation a rebate of 5 per cent, was authorised, and so far as the last payments are concerned the scale was further reduced by the abolition of the super-tax of 20 per cent. The rates quoted by Sir Joseph Ward were thus higher bj one-sixth than those in force. He might reasonably have disposed of the matter by admitting a mistake, but his insistence that his figures were correct is at least injudicious. The other matter is Sir Joseph's scheme of financing public works. It was advanced as a means of avoiding borrowing. "Instead of borrowing money on the London market or on the New Zealand market, let us issue New Zealand stock at 5 per cent. ... It has the advantage that we do not require to borrow large sums upon which we must lose interest." The Herald pointed out that this would still be borrowing, and borrowing in a way that would increase the capital cost of the works so financed, since the contractors would allow in their tenders for the cost of dis counting their stock-payments, and thus increase the interest bill. Sir Joseph Ward now admits that this scheme is borrowing, and that the country would have to bear the cost of the discounting. Where then is the advantage over the present system? It is probable that English syndicates, for instance, might take railway or electricity contracts on these terms, and negotiate the stock on good terms, but if "hundreds of men" were attracted by the scheme, as Sir Joseph suggests, there would be hundreds of amateur financiers trying to realise Government stock as quickly as possible, and the inevitable result would be a general depreciation of its value. That this is a real danger is evident from the experience of the Auckland Tramways Company. It accepted a large block of debentures in payment for its tramway undertaking, and over three years elapsed before it was able to realise them, even then at a heavy discount. Had this company been engaged on a railway contract, and forced its stock on to the market to obtain cash for wages and materials, what would have been the value of those debentures? But why does Sir Joseph Ward advance such a scheme? It would not be adopted unless he was Finance Minister, 30 there is a clear implication that he has lost confidence in his own ability, and considers that any rail way contractor could negotiate a loan on better terms than he could secure himself. Perhaps the most significant commentary on this wonderful bond scheme is its reception by Sir Joseph's most enthusiastic supporters. They are daily striving to excel all previous records in adulation of his past achievements, but not one of them has had a word of praise for this great project. When those whose support of Sir Joseph Ward is based upon unquestioning faith remain silent upon the essential feature of his policy, the electors of Tauranga will draw their own conclusions as to the real quality of the policy and the actual value of the claims that are made for its author.