THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JULY 26, 1930. PROMISE AND PERFORMANCE.

New Zealand Herald, Volume LXVII, Issue 20626, 26 July 1930, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JULY 26, 1930. PROMISE AND PERFORMANCE.

The Financial Statement has produced a sufficiently marked impression on the public because of its contents, and because of their effect on almost every member of the community. Even though the present is so absorbing, the past should not bo forgotten entirely. The financial situation now can usefully be compared with that prevailing when the United Government came into office, and the change may well be considered in. relation to the promises the party made when appealing for votes. Apologists for the United Government can be expected to allege that its unequalled orgy of taxation is due to financial legacies from its predecessors; in fact, that excuse has already been heard. It has been used before so frequently to excuse incompetence that it has worn threadbare. Applied to management of the Treasury it is more than threadbare. It is, and always has been, audacious in its lack of foundation. Reform finance was not above criticism. The ITkrald never hesitated to criticise when the occasion warranted. Rut compared with what the country has seen since the management by Mr. Downie Stewart appears almost perfection. When the hist complete year of Reform administration closed, the national accounts contained an unexpended balance of £3,302,000 of accumulated surpluses, and this after substantial amounts had been used for debt redemption and others transferred to the Public Works Account. After one complete and one partial year of United control that amount has been reduced by £016,000, notwithstanding a further surplus of £150,000. True there has also been a deficit—but not of £9-16,000. When certain adjustments have been made to allow for changes in the accounts, the revenue in Mr. Downie Stewart's last year —on which he balanced his Budget—was £22,3-12,263, compared with £25,1 C 0,933 collected last year, and £25,120,000 estimated for the current year. In two years the United Party has increased the income by nearly £2.000,000, and still has doubts about obtaining a balance.

The growth of income under United control is easily classified. Tn his last complete year of office Mr. Downie Stewart, who was accused of exacting too much from the country, collected £17,145,000 in taxation, and on that was able to balance his accounts. In 1929-29, the transition year, the taxation revenue was £17,832,000, and there was a deficit. Last year the United Government collected £19,171,000 in taxation. It exacted over £2,000,000 more from the taxpayer than was collected in 1927-28, and sounded the trumpets over a surplus of £150,000. This year, from the depleted resources of the country, it proposes on its own estimate to take £19,682,000. The expenditure, naturally, has marched correspondingly, from £22,163,000 in 1927-28 to £25,021,000 last year, and an estimated £25,120,000, including the allowance for supplementary votes, this year. Thi3 has been done by a party which, in its election programme, promised a revision of taxation with a view to granting tlie taxpayer relief. Another point in the programme was that the loan policy, featured so largely, would be carried out "without one penny additional taxation." How far tins promise has been redeemed is revealed when the accounts are examined. The cost of debt service since 1927 28 has increased by £1.253.037, and the interest alone by £960,501. That represents a subsi ant ial slice of the added burden the taxpayer must bear lliis year. A certain amount is due to I lie conversion of loans falling due, but the bulk accrues because £16,000,000 in round figures has been added to the public debt in the past two years. There is no legacy from the Reform Administration about this. It is the beginning of that borrowing policy which would not result in one penny of additional taxation, direct or indirect. It has been responsible for a very large part of the £2,000,000 increase in the annual taxation bill since the destinies of the country were committed to the United Party. It shows the kind of performance that has followed the election promise. The payment on the. debt is (he chief of those fixed charges which the Prime Minister says are not amenable to measures of economy. They arc only fixed in that they cannot be reduced. That, they are capable of increase lias been amply proved by this Government.

The manner in which both revenue and expenditure have been grossly inflated by the United Government in spite of its election promises has been shown. That feature has been characteristic of its brief existence. The revenue budgeted for this year, however, shows a small reduction, some £50,000, compared with the amount actually collected last year. Yet I lie account contains £1,6(50,000 of new taxation. Faced with a fall in income because of depressed prices for produce, a condition he admitted at the beginning of bis statement, the Prime Minister and his advisers resorted to ruthless levies to make up the leeway. That is the way the Government assists the country in its difficulties. Even admitting that expenditure at the level lo which the United Party has brought it was inevitable, have possible alternatives been considered at all, before resort has been made to the brutally obvious course of an allround increase in taxation? Departmental economy, it is pleaded, is a slow process, and the Budget must be balanced this year. Perhaps so, but apart from what has been done, with the defence system—and that has been wrecking rather than retrenchment— there is very little evidence in the Budget of any serious attempt at economy. Supposing the Government had determined on such a course, and wanted to tide over until results accrued, were there no resources Lo be called

upon in an emergency 1 There are the unexpended Treasury balances, depleted a little, but still amounting to £2,356,000. They are the proceeds of taxation, collected, presumably, for the purposes of ordinary revenue. Because the money was not used for revenue in the year of collection, must it be for ever isolated from that purpose 1 ? To use the surplus of one year to meet the needs of another is surely common sense. The trading departments also have immense reserves of accumulated profits, iis follows: — State Fire, £587,118; Accident, £210,130 ; Government Life, £200,000 ; Public Trust, £427,340; a total of £1,434,500. There is a theory that these profits must not he used to relieve (lie taxpayer's burden. Yet if any department shows a loss, there is no hesitation in drawing on taxation funds to make up the deficiency, as the example of the Kailway Department proves. Instead of seeking an alternative, the policy is taxation, and still more taxation. It has been the salient feature of the United Party's term in office, despite the country's needs, and regardless of promises made to the country.