FINANCIAL POLICY.

New Zealand Herald, Volume LXVI, Issue 20341, 23 August 1929, Page 13

FINANCIAL POLICY.

PRIME MINISTER'S DEFENCE.

UNAVOIDABLE EXPENDITURE.

STOPPING HIGHWAYS GRANT.

AMPLE FUNDS AVAILABLE.

[by teleg n a rji .—press association.] WELLINGTON, Thursday.

A reply to criticism of the Budget was made by tho Primo Minister, Sir Joseph Ward, in tho Houso this afternoon. Dealing with the roferenco by tlio Leader of the Opposition, Mr. Coates, vo the inclusion in last year's accounts of £156,000 interest on loan conversion transactions, the Primo Minister stated ho had niado this payment on the advice of the High Commissioner, who had been requested by tho brokers to arrange for this step at such an early date. Sir Joseph Wiwj read extracts from cables to ond from the High Commissioner 011 tho subject and stated he had 110 other course open to him except tho 0110 ho had adopted. Ho had already referred to tho effect abroad of a deficit in Now Zealand and it was bis duty to take no risk whatever that llicro should bo a repetition this year. Ordinary Rcvenuo Inadequate. Mr. Coates had slated that there was a heavy increase in revenue for'tho first quarter, but Sir Joseph Ward pointed out that since his party had taken office there bad been an unavoidable increase in expenditure of £1,570,000 and 110 had satisfied himself that the whole of this amount could not be obtained from • irdinarv sourcos. What would tho Reform Administration have done? Would it. have permitted a second deficit to f; co the country? Experienco had shown that tho revenue figures for the first quartor wero a very unreliable guido to tlio outcome of the year's operations, but even had that increase been maintained thcro would still liavo been a shortage of £600,000. Sir Joseph Ward stated lie had been criticised for taking half tho Public Trust Department's revenue. This had been done under provisions of tho statute, which had been observed without any injustice to the Public Trust Department. Ho was satisfied the time had come for somo of this department's profits to bo allotted to the Consolidated Fund. Highways Board Finance. In regard to tho highways grant, Sir Joseph stated ample funds were available for all work that had to be carried out during the year and it had not been necessary to make tho annual grant of £35,000 out of tlio Consolidated Lund. It would liav-j been ridiculous to havo allocated more than was necessary in 0110 direction, while there was urgent necessity for funds in other directions. Because the grant had not been made this year it did not mean that tho same courso would necessarily be followed on futuvo occasions. There could be 110 doubt that tho Government was justified in saving the Consolidated Fund in this way. Should it happen 011 somo future occasion that tho monoy available for highways purposes was insufficient, the question of voting additional amounts out of the Consolidated Fund would then have to be considered iu the light of the general financial condition at the time. The £200,000, in the first place, was a gift to tlio motorists. They should be ready to contribute to tho rcvenuo of the country. The Government was not animated by any other motive than a desiro to do What, was in the best interests of the country. Post and Telegraph Revenue. Tho Prime Minister stated he had been astonished by tho reference of the Leader of the Opposition to tho Post and Telegraph Department's profits. Mr. Coates had stated that some- of these, profits at least could have been treated as revenue. The Post Office Act provided that these profits should be used for the replacement of telephones and services that wero wearing out, and they had been largely drawn upon for this purpose. It was improper to suggest that this money should be taken for any other purpose. Tho Post Office was now entirely separated from the Treasury, and, while under control of the Government in regard to appointments, etc., it was carrying on its business independently. It was only reasonable under these circumstances that the Post Office should pay customs duty ori anything it imported and should provido a subsidy for mail services, and it was also entitled to keep its whole revenue for its own needs. As a matter of fact, after providing for interest and depreciation, the profits this year amounted only to £39,000, and J. hat sum would not have dono much to assist in wiping out tlio deficit. No New Liabilities. Sir Joseph Ward said Air. Stewart had stated that a large portion of the deficit had obviously been due to transactions after Mr. Stewart hail relinquished office. Actually, Sir Joseph Ward stated, he had reduced* Mr. Stewart's estimated expenditure for that portion of the, year by £90,000. What justification had there been for this statement? Mr. Stewart: 1 referred to tho interest item and I said I could not be blamed for that, nor could anyone else. Sir Joseph Ward: That explanation is quite satisfactory. I shall deal no further with the subject. The Prime Minister denied the suggestion by Mr. Stewart that, he was imposing additional taxation for new liabilities. No new proposals had been included. "Stand or Fall by Budget."

With reefrence to the suggestion that he had manipulated the deficit, Sir Joseph Ward said the member who had made the suggestion had his permission to visit the department and question the staff and if it could bo ascertained that he harl mentioned anything of the kind to anyone ho was prepared to resign his office.

The Prime Minister said tho Government, would stand or fall by tho Budget, which had been framed on lines its candidates had outlined at the general election. He asked tho Houso to give tho question fair consideration and said if that wero dono 110 had no doubt that the Government's proposals would bo endorsed.