THE NATIONAL BUDGET

New Zealand Herald, Volume LXXVI, Issue 23413, 1 August 1939, Page 13

THE NATIONAL BUDGET

Sir, —We have made our experiment with rainbow theories and bubble finance. The terms of the London loans are a plain intimation that we must return to realities. To meet all obligations, including ' the new debt repayments, something better is required than the harassing and apparently ineffective licensing of imports. It merely reduces the supply of goods. The only effective method is to reduce the demand by making saving more attractive than •spending. That suggests transferring the London debts to New Zealand by the raising of internal loans on terms designed to ensure their subscription. That means higher rates of interest. No further reliance can be placed upon such fictions as artificial interest rates. The export surplus can be augmented, at least for several years, by the Government's purchasing overseas securities from New Zealand holders in the open market — the only feasible way of transferring that form of foreign exchange to the use of the State. That would involve official recognition of the depreciation of New Zealand currency', which would be the discarding of another fictitious pretence.' As soon as the balance of trade lias been restored, the exchange will correct itself, and the way will then be open for refinancing the repayable debt instalments. The expected heavier taxation will contribute to the reduction of imports if the proceeds are reserved for debt service: if they are used to expand State services, it will only increase the country's difficulties. What becomes of the standard of living under the new conditions? If the people of New Zealand are determined tovhave more leisure than any other country enjoys, they may have dancing on the village green, but either the calces or the ale will be wanting. The reduction of imported goods is a fact which cannot be denied. Are we to go without or shall we endeavour to supply the deficiency by our own efforts? In other words, is the fiction of the 40hour week to be preserved at the expense of a general decline in the standard of living, or are the people of New Zealand to be allowed to restore their prosperity by making full use of their strength' and of the machines which now stand idle for three hours out of four? . It is surprising that neither comment nor explanation was offered in Parliament when Mr. Nash's arrangements were announced, but we should learn from the financial statement if the Government has decided to face the situation honestly and courageously, grappling firmly with the difficulties which will be only aggravated by delay. Observer.