NEW ZEALAND FINANCES.

New Zealand Herald, Volume LXVII, Issue 20669, 15 September 1930, Page 8

NEW ZEALAND FINANCES.

A claim that the finances of the Dominion are on a perfectly sound footing has been made by the act-ing-Prime Minister, ostensibly with the endorsement of Sir Otto Niemeyer and Professor Gregory, who, he declares, have convinced him that " they regard the matter in tho same light." In the circumstances, the assertion is not convincing. The authorities to whom Mr. Ransom appeals have not been asked to report upon the state of the public finances, but to make recommendations upon precisely limited technical questions. It is therefore extremely doubtful whether their names should have been used as support for the Government's claim. Mr. Ransom did not say what, opportunities they had had for studying the situation, whether the observations to which he refers were deliberate opinions upon facts presented for their judgment, or whether they were only casual remarks iqion the good reputation of New Zealand in London. A stranger listening to or reading a report of Mr. Ransom's speech might be persuaded that the finances are on " a perfectly sound footing," but independent investigation of its statements would certainly lead to a different conclusion. For instance, Mr. Ransom said that less than half (lie deficit of £3,000,000 had been covered by additional taxation. The Budget shows that the Government denianded .1/2,000,000 of additional taxation —£ 1,660,000 from general sources and .£300,000 from the petrol tax. The greatest weakness in the position, however, is that whereas the Government undertook to balance the Budget " from the outset," it did so only by greatly increasing the amount demanded from the Railway Departnient-r-by strokes of the policy .pen. It has now virtually abolished the system of independent accounts for the railways : if its decision is applied retrospectively, the railway results being incorporated in the Budget, the real position is that for two years in succession there lias been a deficit of over 11,n00.000. They have been covered partly by drawing on tlio credit balance in the Consolidated Fund, mainly by increasing the deficit in the Bail ways Account to over £•2,00(1,001). The process is described in detail in the report of the general manager, who has shown that tho Budget has been superficially balanced by appropriating a largo part of the department's working capital and the whole of its reserves. Having drained the resources of the Railways Department, tho Government had to make a huge increase in taxation to pay interest on railways loans. It, has done nothing to restore tho reserves essential to the operation of tho railways. Australia's position is certainly worse than New Zealand's, since the Dominion has suffered only two years' mismanagement of its public finances, but Australia has tho advantage that it is now facing the facts, presented fully and authoritatively. If Mr. Ransom had his way, the unpleasant, indeed alarming. fads of New Zealand's position would be concealed bv arguments as meretricious as the devices used by the Government in its pretence of balancing the Budget.