DOMINION BUDGET

New Zealand Herald, Volume LXXVI, Issue 23432, 23 August 1939, Page 10

DOMINION BUDGET

COMMENT iN LONDON " SPECIAL SIGNIFICANCE INTERESTS OF INVESTORS A ~W [FROM OUB OWN CORESPONDENT] LONDON*} August 3 "The New Zealand Budget lias a special significance for British investors in the present circumstances," said the Financial Times in commenting upon Mr. Savage's Budget speech. "It will be scrutinised first of all for any suggestion that the lessons of recent experience have been assimilated. A "Tliero is an explicit recognition, which will bo welcomed, that . tlia public works programme is not economically sound. It is declared to have reached its peak in New Zealand, but, the avowed alternativo of transferring the workers concerned into ''industries will entail its own drawbacks unless the industries themselves are economically sound.

"Artificial over-stimulation of manufactures in countries which normally are primary producers is- one of the manifestations of the economic nationalism which has done so much to disorganise ordinary trade channels. Apart from any effect on British exporters and the New Zealand import trade organisation, taxpayers in the Dominion will realise that any necessary support for unprofitable manufactures will fall upon them." Limit Scope of Social Programmes The Financial Times added that the increase in taxes, while they migljt seem small in comparison with those in Britain, were proportionately substantial. "Full recognition has been, and is being, accorded to the Dominion for its Empire spirit and its labours for defence, but the financial position with which it is now confronted emphasises the necessity for cutting the coat according to the cloth," the paper' said. rf The Times said:—"The formal strength of the • Budgetary position in New Zealand lias contrasted sharply with the deterioration of the exchango position throughout the recent period of pressure on London £uv>ds.' Lajffc year, for the third year in succession, the ordinary Budget wars closed jntb. a surplus, increased expenditure .-Being financed without additional taxation out of the buoyancy of the revenue. This phase has now come to an end, as indeed it was bound to do sooner or later if only by reason of the greatly enlarged programme of defence expenditure to which the Dominion is committed." After reviewing the salient features of the Budget, the Times concluded: "One way and another, it -would seem that the New Zealand Government is coming to realise that it must limit the scale of its social programmes to the amount which it can afford. Mr. Savage's speech should help' to reinforce the favourable response of New Zealand stocks to the announcement of the new conversion loan." Anxiety Over Government Spending The Daily Mail said the increased taxes gave the impression that the Government meant business in restoring its finances, but added tliat'thcre was little indication of any curtailment' of spending. "This question of Govern- .. ment spending is at the moment one most closely watched bj those rio ' f have invested capital in New Zealand, and is likely to have an increasingly important bearing upon the future of the country's credit," said the Mail. The City editor of the Daily Telegraph comments: - "The important point in this Budget is that the.Dominion is taxing itself to make the • Budget balance and is spending part of the money on defence. This endeavour is one that puts a different complexion on New Zealand's financial ideas, and note "will he taken of the appreciation expressed of the help that has been given in London. "A new chapter is opened in the finances of the Dominion and the salient features of the hew issue becoms more attractive in consequence."