THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, APRIL 23, 1936 A DEFENCE BUDGET

New Zealand Herald, Volume LXXIII, Issue 22401, 23 April 1936, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, APRIL 23, 1936 A DEFENCE BUDGET

The Budget brought down by Mr. Neville Chamberlain in tho House of Commons on Tuesday marks, or more correctly emphasises, a new turn in British affairs and policy. Tho Manchester Guardian says it is clearly the first of a series of crisis Budgets. Whether one of a series or not, it certainly is a crisis Budget. The crisi's is in foreign affairs. The first Budget of the previous crisis was brought down by Mr. Philip Snowden—as he then was —in September, 1931. It was a supplementary statement, following the ordinary Budget of th j Labour Government, introduced in the previous April as serenely as th >ugh the world had not been on the brink of an economic and financial cataclysm. The crisis Budget of 1031 contained measures as stern and drastic as the world had •seen aimed in. the twin directions of reducing expenditure and raising increased revenue. They brought widespread hardship, ahnost the whole community being affected in some degree. The sacrifices were borne cheerfully because the people believed they were necessary. The measures talcen proved effective. The Budget was balanced soundly and honestly, The threat to the national credit passed away, the City of London regained its place in the world of international finance. These things done, the Government entered on the much mo.re pleasant task of removing some of the mast irksome of the burdens placed on the people irii the crisis. Cuts have been restored, there have been remissions of taxation, a little here and a little there. The British public was being allowed to feel that the long and heavy pull was over, that the luxury of relaxation after effort could be enjoyed. That was possible until the Budget of 1936 appeared on Tuesday.

A cable message says the dominant note in the Budget was what might have been but for the international clouds. A foretaste of what would come had already been given. In accordance with the British system the main estimates for 1936-37 had been published before the end of the previous financial year. It was known that the total defence vote would be £158,200,000, against an original provision of £124,200,000 and a revised estimate of £137,400,000 in the previous year. Nor was it expected that the demands of the fighting 'services would end at that. Supplementary estimates, of which the forecasts varied from £20,000,000 to £41,000,000 were known to be inevitable. As it turns out, Mr. Chamberlain has given £20,000,000 as the extra provision, outside the main estimates, for defence expenditure—with a hint that this may, not be enough. He said £10,000,000 would be required for the Air Force, and the other two -services might between them need rather more. Taking £20,000,000 as the figure, £54,000,000 more than the original and nearly £41,000,000 more than the revised estimates of last year is indicated as the minimum demand of defence on the annual revenue. This is the main factor in producing a Budget of £797,897,000, a figure perilously near the £800,000,000 that was forecast when the defence estimates were published over a month ago. The Chancellor makes no direct provision for the redemption of debt. He is taking authority to borrow for the statutory requirements, if need be. With all the devices normally at his command tho Chancellor faces a deficit of £21,291.000 at the end of the year—practically the amount of the supplementary provision for defence. This makes plain the price demanded of the British public in 1936-37 by a precarious international situation, and the lack of response to Britain's gestures in tho cause of disarmament. To meet the position in part Mr. Chamberlain proposes to draw on the Road Fund for £5,500,000 in aid of ordinary revenue. Tightening of the law to prevent tax evasions is expected to yield several millions. In passing, it is significant that this has become necessary in Britain. Obedient payment of taxes lawfully imposed has long been a characteristic of the British public, in sharp contrast with the practice in other countries, especially France, where evasion is common. The high British standard has sagged under the impact of extraordinary levies. With all these measures exhausted it has become necessary to go back on the process of giving relief out of a prospective surplus. Instead, it has become necessary to increase the burden to cover a threatened deficit. While the man of low or moderate income is given a little relief from income tax, the standard rate goes up from 4s 6d to 4s 9d in the pound. The duty on tea is to be increased by twopence. Between these two imposts, scarcely anyone will fail to realise what the burden of armaments in a disturbed world means to the individual. The Chancellor described the necessity for doing these things as a bitter disappointment. He also hinted that in the near future the Government might depart from its long-sustained orthodoxy and resort to borrowing for the needs of the Army, Navy and Air Force. From these two factors can be estimated what the breakdown of plans for disarmament and collective security has meant to Britain financially. The effect is graved deep upon the Budget of 1936, which can properly be called a defence Budget.