BURDENS ON THE BUDGET

New Zealand Herald, Volume LXX, Issue 21399, 25 January 1933, Page 8

BURDENS ON THE BUDGET

Since artificial exchange rates have been made the keystone of the Government's policy, it is only to be expected that Ministerial advocates of the device will endeavour to minimise the adverse effects of its operation. Some figures illustrative of its reactions on the Budget were presented to the caucus of the Coalition parties yesterday, and if only those quoted in a telegram from Wellington were mentioned, they are interesting chiefly as evidence of the whittling-down process. The Secretary of the Treasury estimated last March that tho immediate effect on the Budget would be £3,500,000 ; his figures were reduced in a semi-official revision published on Saturday to £3,150,000. The total has been further reduced to just over £2,000,000, to which has been added £1,000,000 for the indemnification of the banks. One item has been dropped —the loss of £400,000 of income tax through the disturbance of trade. The omission is not unreasonable in a short view, since income tax will not be appreciably affected until the Budget of 1934-35. But if a short view is to be taken, the Government must count the immediate effects on the Budget of 1932-33, which is open for two months to adverse reactions, and on the Budget of 3 93334, which will be exposed for its full period to those reactions. Estimates supported by adequate explanation of their calculation should be given in both cases. Whether £1,000,000 a year will cover the losses of the banks cannot be decided until details of the guarantee have been disclosed. Moreover, allowance has still to be made for the promised reductions in customs duties, doubly imperative since the change of policy has jeopardised the credit given to New Zealand's pledges at Ottawa, and beyond that there are the hints of rebates of local rates and railway freights, both of which will be charges upon the Budget. In the normal course, the full sum of these direct and indh-ect burdens need not be disclosed until the Financial Statement for 1933-34 is delivered several months hence. But the Government should know by now ■whether the total comes close to £5,000,000 in a full year, and if it is as candid as it professes to be confident, it will state the facts fully and plainly.