UNITED PARTY FINANCE.

New Zealand Herald, Volume LXV, Issue 20080, 18 October 1928, Page 12

UNITED PARTY FINANCE.

The central plunk of the United Party's platform is its proposal to borrow £70,000,000 within nine or ten years for advances to settlers and workers, and for the completion of all nniin trunk railways within four years, together with further millions to complete hydro-dectvic undertakings within a similar period The party protests that by borrowing £13,000,000 in the last two years for all purposes the Government has exceeded the limits of sanity arid safety, but it advocates borrowing at the rate of £8,000,000 or £10.000,000 a year for railway construction anil Statu advances only, leaving provision also to be made for electricity schemes, reading, telegraphs and telephones, public buildings, irrigation, and other public works, including the completion of the programme for the improvement of existing railways. Its £70,000,000 programme has been worked out to the point of deciding how much the money will cost and at what rate £60,000,000 can be made available for State advances. Successive loans are to bo issued in per cent, bonds at 95, and the proceeds are to be advanced to sottiers and workers at 4? per cent. An emphatic assurance has been given that the scheme will bo selfsupporting—it will not cost the tax payers one penny by way of either direct or indirect taxation. Leaving other considerations out of account, it may be suggested that oven if the London market were prepared to lend £00,000,000 on the terms proposed, the actual cost, of the money would make the proposed 4f per

cent, rate impossible. Flotation expenses exceed 2 per cent., so that allowing for redemption of the discount and expenses over a period of 33 years, a conservative basis, the actual cost lo the State would be £4 IBs 8d per cent.—the last New Zealand loan cost £5 3s 5d per cent. The annual cost of £60,000,000 would therefore be at least £2,960,000. The proceeds actually available for investment in advances would be £55,800,000, and as allowance must be made for the cost of administration—3s 4d per cent, last year—the revenue in interest would be only £2,557,000. Hence, instead of being self-supporting, tlie scheme as outlined would involve a loss of over £400,000 a year—equivalent to more than one-third of the present yield of income tax, and over.the full period of 32i years proposed as the basis for advances, a loss to be borne by taxpayers of £13,000,000. In respect of its central at least, the United Party is promising more than it can perform.