WAR EXPENSES

New Zealand Herald, Volume LXXVII, Issue 23602, 11 March 1940, Page 8

WAR EXPENSES

NEW ZEALAND'S PART MILLIONS REQUIRED NEXT YEAR'S ESTIMATE ADDITIONAL TAXATION Ati intimation that a further £1.010.000 will ho required to moot the estimated costs of the Now Zealand armed forces up to March 31 was made by the Minister of Finance, the Hon. W. Nash, in a broadcast address last night. Ho expressed the hope that the money would be obtained in the foim of gifts and interest-free loans. He also announced that the estimated cost of the Dominion's war effort for the coming year would be £13,000,000, portion of which would have to be raised by additional taxation. The Minister said that to date New Zealand had been concentrating on the preparation and accumulation of economies and manpower for any eventuality. Greater sacrifices might be necessai-y in the future, for there was no reason to believe that the war would bo speedily or easily terminated, but rather that it would be prolonged and bitter. The majority of the people in New Zealand had not really been called upon so far to make any great sacrifices, except to meet modest taxation specially for war purposes.

Another £1,610,000 This Month A total of £1.600.000 for war exponsos had boon produced from taxation. said Mr. Nash. 'I ho total included the unused balances voted to the services for the current financial year amounting to £2,290.000, and extra taxation totalling £2,400.000. For the first six months to March 31, the cost of the armed forces would be £7,350,000, including £3,650,000 for the Army, £2,730.000 for the Air Force and £970,000 for the Navy. An additional sum of £1,048,000 was received by the Government by way of gifts and interest-free loans. Thus to meet the estimated costs of the forces, a further £1,610,000 would be required.

"For the next financial year, costs will be difficult to estimate, depending on the nature and duration of the war," continued Mr. Nash. "It is reasonable to estimate that the expenses to be financed in or from New Zealand will amount to £13,000,000, while expenses overseas, including full equipment, guns and munitions, will total over £20,000,000. Thus the estimated costs of the forces for the year will be £33,000,000. Of this. £1.500,000 will be for the Navy, £25,000.000 for the Army overseas and in New Zealand, and £6,000.000 for, the Air Force.

Loan for Overseas Needs The Minister said overseas requirements would be obtained from the United Kingdom on a loan basis. There would be special taxation producing £3,500.000, leaving approximately £9.500.000 to be obtained by taxation, borrowing and other means. Savings would be made where possible, without interfering with the production of the country. "I am satisfied any extra taxation or anv request the Government is obliged to make for loan money or economy will be well within the capacity of the country, without acting .adversely on its production or causing hardship to any person or section of the community," said Mr. Nash. "No matter what the cost it has got to be met, and the only thing to achieve equality is for everyone to pay his share. The Government's Aims "The Government will maintain a 'pav as you go ! policy," he continued. "The Government aims to finance as much as possible of its current war expenses from current revenue." He advocated keeping down the burden of debt to avoid inflation, while maintaining industry at its highest possible level. Some measure of borrowing, he said would probably be necessary, and in certain circumstances the raising of an internal loan might be desirable and beneficial. The extent of recourse to the Reserve Bank could not be determined under any hard and fast- rule, and the use of Reserve Bank credit was not. necessarily worse than raising a loan by public subscription. Paying tribute to the efficiency of the Public Works Department for its contribution to the Dominion's war effort ; Mr. Nash admitted there was a need 'for tapering off expenditure, and said it had already begun. The Government aimed to confine its future expenditure as far as possible to essential works and those of a useful and reproductive character. He also referred to the problem of transferring as many men as possible to industry and agriculture.

Social Security System •'The Government will not listen to the counsels of those who would limit the social security system by passing on sacrifices to those least able to boar them." said Mr. Nash. "I am satisfied the majority of the people would resist any breaking down of the security and freedom obtained as a result of recent progressive legislation." Modern war. the Minister continued, demanded mobilisation of the entire resources of a nation. It behoved those left at home to work in the interests of the men who went away to fight. The war could only be paid for by the production of goods and services, but the money had to be collected through taxation* borrowing and savings. Mr. Nash appealed to people to volunteer their savings to help fight the war, and concluded: "I have sufficient confidence in the people of Now Zealand to believe that they will not flinch from any sacrifice necessary to ensure a just peace."