The New Zealand Times. WEDNESDAY, OCTOBER 11, 1911. THE BUDGET APPLIED

New Zealand Times, Volume XXXIII, Issue 7928, 11 October 1911, Page 6

The New Zealand Times. WEDNESDAY, OCTOBER 11, 1911. THE BUDGET APPLIED

The Estimates having been passed some of the policy measures announced in the Budget are now before Parliament. The measures calling for special notice are the Bills for .the relief of widows with children insufficiently provided for, for giving the assistance promised to old men and women with children on their hands (two or more) under the age of sixteen; for raising of the graduated tax on estates over the value of £IOO,OOO unimproved value by; 25 per cent, for the purpose of bringing about more rapid subdivision; and for creating a State monopoly of note issue. The Bills dealing with these matters were introduced yesterday afternoon and put through their first stages, the Prime Minister explaining their provisions.

Of those measures the Widows’ Pensions Bill proposes to the annual expenditure under the Old Age Pension Act hy some £55,000, as explained in the Budget. It is estimated that there are about 3000 widows requiring assistance. This it is proposed to extend to the extent of from 5s 6d to 11s 6d a week. It is a provision

ound'necessary probably by experience . f charitable aid administration and •s the details of such matters aro now on a good footing of organisation we may assume that the estimate is on the safe side. The proposal is a generous substitution of regular practice for what has been a matter hitherto of casual aid. The same may bo said of the proposal to assist old men and women with responsibilities who arc« under the age-limit of the Pension Act. The age-limit is lowered in the case of women ‘thus encumbered to fifty-five years and of men to sixty, while the amount of the pension is increased by oO per cent. That the extra payment is not likely to be over £IO,OOO a year will come as an agreeable surprise to the general public. The assistance contemplated is sure to give considerable relief where most needed. That this additional liability of £65,000 a year under both headings can bo faced in conjunction with a scheme for making certain concessions of charges in other directions is a proof of the soundness of the finance. On both of these proposals the Government is to bo most heartily commended.

In tho matter of the State note issue the Prime .Minister added some interesting particulars to those announced in the Budget. The limit is three millions and the proportion of gold to be retained in reserve is 25 per cent., the balance being available for uses to bo fixed later by regulation. In the Budget Sir Joseph was careful to say that tho new policy “is not in any way a recognition of paper money in lieu of the present methods of currency and exchange.”' Therefore he has added to tho Bill before tho House a clause providing that in case at any time the three million limit of tho note issue may for any reason have to be exceeded, then every pound received in gold must be held in reserve against notes. Moreover, to prevent undue stress in times of stringency it is provided that the notes can only be redeemed on presentation at the head office in Wellington. It is an obvious precaution. Further, the Bill is not to come into forco till January of 1913. Mr Massey proposed during the discussion that the Bill should be sent to the Public Accounts Committee, but the suggestion could not be accepted, even after he had proposed to limit the committee’s time of consideration of tho measure to a week. Sir Joseph urged against it that at this period of the session, with so much work to bo got through of pressing character, he could not devote the necessary time to the committee. Moreover, as tho Bill would only bo taken to second reading this session, there would be time to hare it studied by all the experts in the country and to have their suggestions considered before, proceeding with the measure next session. It is a reasonable attitude, for there are many things to he said about this Bill. We do not anticipate any demand for rejection of the measure, nor, since its consideration in detail will devolve upon another Parliament, do wo look for prolonged discussion. at the second reading this year. Wo do, however, look forward to the committee stage next year bringing quite a substantial, crop of amendments. One point upon which opinion will most certainly be divided in connection with this-Bill is the manner of investing the gold reserve. The proposal is that 25 per cent, of the gold shall be held at the Treasury for redemption. That is to say. if a million is received for notes from the banks £250,000 will be kept in sovereigns. This margin conforms to banking practice, and is probably ample. The question arises what shall be done with the remaining £750,000. Obviously it must ho invested, arid in all probability would bo utilised for mortgage purposes, yielding at 4 per cent. £3OOO a year, or at 4J per cent. £3-500. At present tho banks on a note circulation of a million would pay the State a tax of £3500 yearly, and this sum is collected without cost, whereas to secure a similar revenue under the now system the State has to meet all the charges—by no means light—incidental to printing, issuing and redeeming the notes and managing tho invested reserve. 1 Thus, pending further information on the subject, it is a little difficult to understand where the gain is to be found either by the State or the community in this new departure. The Prime Minister will, of course, make this clear at the second reading. The Bill is one of those which can only be fully discussed after all of the facts relative to the existing position and the future plan have been presented.