THE PUBLIC DEBT.

New Zealand Herald, Volume LXV, Issue 20074, 11 October 1928, Page 10

THE PUBLIC DEBT.

Much will be heard during tho next few weeks of the increase in the public debt from critics of the Government, since so many of them imagine that the mere quotation of millions is sufficient proof that the Government has been at fault. A typical illustration of this method of attack appears in the opening speech by the Labour candidate for Roskill. To obtain a sufficiently enormous figure, Mr. Richards compared the debt in. 1027 with that in 3 918, indicating an increase of £95,000,000 in nine years. If there was any purpose in selecting the period, it was to create the impression, by relying upon the popular association of 1918 with the end of the war, that the whole of that increase was ordinary borrowing for civil purposes. Actually, heavy borrowing for war purposes had to be continued Jong after Mjjrch, 1918, so that the amount of war debt outstanding in 1927 was greater by £27,378,000 than in 1918. Hence, the increase in ordinary debt in the period was actually £07,633,000. It is unnecessary to catalogue the whole allocation of that amount, but tho principal purposes to which it has been applied have beenßailways, telegraphs and electricity development £29,067,000: State advances £ 16, lot,000; discharged soldiers' settlement, £9,515,000; and highways, roads and bridges, £6,762,000. Anyone may say that the Government has borrowed too much; such a charge is meaningless unless the critic is prepared to name development works or investments which tho Government should not have undertaken. Incidentally, it may safely be said that if the Government had yielded to the pressure of the Labour Party during the post-war period, the increase in debt would have been at least doubled. Perhaps tho best test of the character of the public debt is the relation between the amount that is directly productive and the balance that is a direct charge on taxation. In 1926-27 the interest charge was £10,594,000; of that £4,777,000 was recovered in earnings from the various investments, and £3,500,000 represented war debt, so that only £2,600,000 remained to be found in taxation, including the annual cost of public buildings, roads and other services.