The New Zealand Times. TUESDAY, OCTOBER 12, 1920. THE PUBLIC DEBT

New Zealand Times, Volume XLVI, Issue 10718, 12 October 1920, Page 4

The New Zealand Times. TUESDAY, OCTOBER 12, 1920. THE PUBLIC DEBT

Another instalment of the Budget came -with the Loan Bill. Of course, the instalment ought to have been in the Budget speech. But as there has been delay only, not omission—in this as •well as other instalments which have been discussed —one need not look too closely into the matter. After all, the Budget has arrived, and. in comparison with that actuality, nothing dealing with its absolute non-appearance really matters. Criticism remains pointed against the Finance Minister for his delay, but it is .fair to allow a set-off: (1) In the unfamiliarity with finance on the part of a Minister who has never handled the financial portfolio; j and (3) in the special difficulties of an unprecedented financial situation. When the incidental delay looked like the failure of pessimism to deal with the Bituation, at all, there was reason for severity of criticism. v There is still some reason on that account, supported as it is by appeals to outside help in matters invariably dealt with solely by Ministerial responsibility. But now that the Ministerial duty has been met, and. now that, after the delay, there ( axe_,signa. of .Ministerial grip, it is only fair to allow for the exceptional difficulties of the situation, which have neither deprived the Minister of courage nor left him without resource. Mr Massey's maistery of the question of taxation, and of the character and surroundings of the public debt, entitles him to claim considerable immunity ! from the criticism of delay. The delay is largely due to his own determination to. stagger under too many loads; As to that, he deserves sharp criticism, even in his own personal interest. The delay is over, and the country has the complete Budget.- That is one good thing. Another good thing is that it is, so far as our colossal liabilities are concerned, a hopeful Budget. Fate having decided that Mr Massey is to lead in the work of reconstruction, it is well to be able to realise that*Mr Massey has become equipped with some of the cheerful, optimistic spirit in which- Sir Joseph Ward always handled the finances of the country, and which events always justified. Instead of falling prone before the crushing Juggernaut of two hundred and one millions of debt, he stands firm, with a set-off of twenty millions, which he insists—and rightly insists—are assets, not liabilities? The spirit is ideal, and the practical result includes the hopeful position of the accumulations saved from revenuej and invested as assetis. The value of the ; assets largely, of course, depends on the success of the large repatriation policy. If that fails, things will have to bo squared which it is now right to postpone. At present we are bound to look on tlio policy with hope, and the general punctuality with which the incidental obligations aro being met justifies hope. Prices may fall, it is true. That, however, is an open question. The right course is to hope for the best, while preparing for the worst. This policy the Minister has adopted, and the skilful use 'he makes of certain millions—the last two surpluses, for example—plus tho ! large surplus certain to mature by March 31st of next year, indicates that ho is ready for the worst. If the worst does not happen, and prosperity rules, the strength of our finance, the Minister properly believes, will achieve a deliverance by enough to substantially reduce taxation. Wo cannot pay Mr Massey a higher compliment" than to repeat that he is meeting the special difficulties of the time in a spirit and a manner both of the Wardian type which has done so much for the country. His twenty million sot-off represents a fine stroke of business, requiring boldness of conception and careful attention to detail. Whether it bo completely successful or otherwise, its author is entitled to full credit for it as the best method of opposing converging and up-heaping difficulties. It gives us «. little malicious pleasure to see the firmness with which Mr Massey leans on tie 'Sinking Fund. But when we have recalled how he and his friends onco ridiculed the idea that j any Sinking Fund could ever exist, to ,

say nothing of its chance of eventually meeting the national debt, we need, of course, eay nothing more, except that thi6 conversion is fortunate in coming at the moment of the doubling of the national debt. As the least of the effects of the Great War is the conversion of the "Reform" leader and his party—which, we presume, follows him —to the sane and sound view of the Sinking Fund, which, in the heat of party acerbity, they once so bitterly denounced. This does not prevent him objecting to_ paying Sinking Fund charges on moneys invested as profitpaying assets. That is logical, and, at the same time, a relief to the Treasury, and in this particular instance it is possible. But without this triple combination, the extension of the relief would be unsound. Moreover, in transactions involving the investment of our own surplus revenues it is unwise to depart from the conditions applied to borrowed moneys, unless the investments fail to meet the charges, in which case it may be necessary to help by manipulating both Sinking Fund and interest. The possibility offers an avenue of help in case of a setback in the working out of the settlement and repatriation schemes. Until such need occurs, it will bo well to let interest and Sinking Funds take their appointed course in this connection. For the present, it is enough to accept with cordiality the hopeful and sensible policy which gives us a set-off of twenty millions against the whole public debt.