The New Zealand Times. TUESDAY, OCTOBER 27, 1914. FRENZIED FINANCE

New Zealand Times, Volume XXXIX, Issue 8874, 27 October 1914, Page 4

The New Zealand Times. TUESDAY, OCTOBER 27, 1914. FRENZIED FINANCE

It is not . surprising to learn from Auckland that the Hon. James Allen has keen publicly expressing complete confidence in the public finances. In other words, the Hon. James Allen, with characteristic vanity, has been publicly admiring and glorifying himself as a financier. This, however, is nothing new. The people are becoming accustomed to this vainglorious pose by the Hon. James Allen of complete confidence in himself. What concerns them infinitely more than the Minister for Finance’s estimation of himself and his financial operations is the question whether this optiinistio confidence is warranted. Has the country, apart from the boasting of the Hon. James Allen, sufficient reason to entertain complete confidence in tho public finances ? If the public accounts for the last three years are carefully examined, and if they are compared with the Budgets that were presented during the administration of the Liberals, we are satisfied that the answer will he emphatically in the negative. The finances of New Zealand may ho fairly compared with those of a great joint stock company. That being bo, is tho Hon. James Allen prepared to recognise the significance centred in the fact that tho administrative expenditure has increased in two years by nearly two millions sterling annually? Is this any ground for complete confidence? When wo say tho administrative expenditure, has increased, w© axe not referring to public works expenditure or advances' to settlers, or the purchase of land for settlement. We mean the actual cost of governing the country. This is nearly two millions greater than it was three years ago, when Messrs Massey and Allen were denouncing the administrative expenditure of the Liberals as excessive, and when the self-styled “Reformers” were clamouring for office in order that they might institute greater economy. What has become of that greater economy? Like the Liberal surpluses, which for so many years substantially augmented the fund available for public works, it has already become a memory of the past. And yet in Auckland Mr Alien had no hesitation whatever in saying, so far as tho finances were concerned, that there can be no comparison between the conditions to-day and the conditions when tho Government took office. He is quite right. There can be no comparison. So far as tho cost of governing the country is concerned, we are nearly two millions sterling annually worse off than we were when the self-styled “Reformers’’ came into office. And this two millions sterling, approximately speaking, must he made good by substantially-increased taxation or considerably greater borrowing. "

The substantially-increased taxation will come in good time. It would have come at once only that this is election year, and the Tories do not dare to disclose their taxation policy before the elections, lest they might unduly alarm the masses of the people. But when the elections are over, fresh taxation burdens will be imposed, but certainly not on the capitalists and the great territorial magnates of the country. These privileged classes will both escape their fair proportion, as they have hitherto done. The masses of the people will he condemned to carry the increased burden through the medium of the Customs. That is, of course, assuming that Mr Massey and his party are successful at the general elections. If they are not successful, we shall see what we shall see. In the meantime, therefore, the enormous leakage of nearly two millions sterling which has set in since the self-styled “Reformers" came into power must be made good by additional borrowing. That is partly why, in the last two years, the Government has borrowed to tho extent of fifteen millions sterling. That is also partly why there are further loan proposals before Parliament at the present moment amounting to £12,450,000. Again, we say Mr Allen is quite right. There is no comparison whatever between these conditions and the sounder and more prudent borrowing conditions that Messrs Massey and Allen found when they came into office. But before Mr Allen appeared to have any expectation of coming into office, ho did not scruple to alarm tho country with the oft-reiterated assertion that the borrowing of the Liberal Government was reckless and extravagant. Was it reckless and extravagant? In tho twenty-one years between 1891 and 1912, the Liberals increased the public debt by £45,523,663, which was an average ol very little more than two millions a year. How does this compare with Mr Allen’s borrowing of £13,450,000 in one year alone? And yet in Mr Allen’s first Budget speech,

when ho was entering upon tho control of our finances with characteristic assurance and overweening confidence, he ventured to say: —■ It is my plain duty to warn honourable members and the people of New Zealand that the continued

borrowing of large sums of money ... is not a safe method of finance. There arc four courses open; to raise more money by taxation, or to decrease expenditure out of the Consolidated Fund in order to have more ordinary revenue.available for public works, or to increase the amount of borrowed money, or. lastly to bring within reasonable limits the expenditure of borrowed money. If the continued borrowing of large sums of money is not a safe method of finance, why is Mr Allen plunging headlong on shell a reckless’policy now ? His proposals for this year alone amount to twelve and a half millions sterling. This is equal to the average of six years’ borrowing of the Liberals. Has Mr Allen, after 'his two years’ abortive attempts towards superior finance, forgotten all about the three other courses open to a prudent financier? Why not, as he suggested then, raise more money by taxation in order to live within his’ moans? Why not decrease expenditure from the Consolidated Fund with the same object in view? As a matter of fact, Mr Allen has actually increased this latter expenditure by nearly two millions sterling annually. Lastly, to’ quote Mr Allen’s own words, why not bring within reasonable limits the expenditure of borrowed money? Alas, this course, however prudent and honest, is not regarded as expedient by the highlymoral “lieformers” at the present moment. This happens to be election year. Therefore, though Mr Allen may entertain complete confidence in the public finances, his confidence is the breezy optimism of the reckless trader plunging towards insolvency, who airily demands from his; banker a further heavy increase in his overdraft with the gay assurance that “everything is all right.” Is everything all right with Mr Allen’s finances? There are great votes for, roads and railways, hut what about the balances of last year’s votes that were not expended? What about the millions that were formerly available for advances to settlers, workers, and local bodies at a low rate of interest? What about the vast expenditure of the Liberals on the purchase of lands for closer settlement? These supplies all came out of their moderate borrowing. As wo have said, the Liberals increased the public debt in twenty-ono years by £45,523,563, which was at the 1 rate of rather more than two millions’ a year. But how was the money spent? For the most part, it was spent or invested in reproductive or profit-earning directions for the development of the country and in assisting the people towards prosperity. Her© are some of the items:— Railway construction .£11,574,970 Advances to settlers 7,767,881 Lands for settlement 6,318,688 Loans to local bodies 4,779.000 Public buildings 3,843.912 Beads and bridges 2,134,676 Defence 1,731,9.52 Advances to workers 1.435.034 Purchase of native lands .... 1,169.217 Is Mr Allen prepared to say that, comparatively speaking, he can show results like these for his vast borrowing in the short space of less than three years? Until he can do so, he would be wise not to challenge further comparison between the public finances of the glorious past and those of the dismal and depressing present.