THE BURDEN OF DEBT.

New Zealand Herald, Volume LXVIII, Issue 20827, 20 March 1931, Page 10

THE BURDEN OF DEBT.

"A continued programme of expenditure of borrowed money on services that are not likely to prove productive "will probably in the end result in a serious condition in the public finances of the Dominion. . . . The economic aspect of prospective railway extension must be seriously considered." These are not extracts from a report by a Royal Commission or remarks by an external critic of public administration. The two sentences contain the essence of a passage in the Public Works Statement presented to the House of Representatives last session by the Hon. W. B. Taverner. Some of the results of prodigality in borrowing may be found by examination of the debt charges borne by the Consolidated Fund. In 1925-26, the net amount paid for interest and amortisation of debt was £9,342,165; in 1928-29 it was £10,110,740, an increase equivalent to £256,000 a year. The estimated amount for the year now nearly ended was £11,010,539, representing an increase much greater in two years than in the previous three years, and averaging nearly £450,000 a year. There is no doubt that the public finances are in a serious condition, and that this situation lias been largely created by a policy which in two years has added £900,000 to the debt charges borne by the Consolidated Fund with a further heavy increase in prospect in the next Budget. Nor do these, formidable figures fully reveal the gravity of the position. Thero are certain items, of revenue which may fairly be considered as offsetting debt charges—interest derived from investments of public moneys, contributions from the railways and the post office toward interest on their capital liability and interest earned by the Public Debt Redemption Fund. These four items amounted in 1928-29 to £4,018,000, after deduction of the railway subsidy, so that the debt charges covered by taxation were just ov'er £6,000,000. When this year's accounts are completed, taking the railways contribution at the Prime Minister's latest figure, the balancing items of revenue will be less than*£3,ooo,ooo ; in the coming year they will certainly be further reduced. Hence it is conservative to say that in two years the burden of debt imposed on taxpayers has been increased by £2,000,000 or onethird. And the Government's response to this situation is not only to impose mote taxation, but to enter into a contract for the prosecution of the South Island railway, which will certainly add to the annual charges of deadweight debt.