THE PUBLIC FINANCES.

Otago Daily Times, Issue 21040, 31 May 1930, Page 14

THE PUBLIC FINANCES.

MR FORBES’S JEREMIAD. PREJUDICIAL TO DOMINION’S CREDIT. LABOUR LEADER’S SEVERE CRITICISM. (Per United Press Association.) WAIMATE, May 30. Mr H. E. Holland, Loader of the Labour Party, addressed a largely attended meeting here to-night, and in. the .course of his address made reference to 'the statement regarding the financial position made yesterday by the Prime Minister (Mr G. W. Forbes). - Mr Holland said he had not had time to go fully into the details, but in view of the extremely gloomy nature of that pronouncement, which was so markedly in contrast with the glowing promises of little more than a year ago, he was not sure that the Prime Minister had not done the Dominion the greatest disservice imaginable. Some time back Mr Veitch was found declaring that confidence in the economic stability of the Dominion might be shaken if the figures relating to unemployment were permitted to be published; but if anything were wanted to weaken the confidence of creditors it had certainly been supplied by the Leader of the Government. However, proceeded Mr Holland, ho was not prepared for a moment to agree that the position was as dark and dismal as Mr Forbes had painted it. It seemed almost astounding that within two months of having proclaimed a surplus of £150,000 and with only one complete month's figures on which to base his calculations, the Prime Minister should precipitately announce . a deficit of £3,000,000 to be achieved during the present financial year. To_ say the least, it would set inquiries going as to how the surplus of March 31 was created. Mr Forbes had prefaced his statement with a reference to a drop of £8,100,000 in the value of New Zealand’s exports for 1929-30 as compared with the previous year; but he did not mention that both 1927-28 and 1928-29 were abnormal years, in each of which the value of our exports exceeded the average by between £7,000,000 and £8,000,000. In 192930 the value, of the Dominion’s exports was slightly in excess of £49,000,000, and that value had been exceeded in only four of the 10 preceding years. In each of the other six years the value was well below that figure. . The average yearly, value of the exports for the 10 years, 1920-1929 was just under £49,500,000, a difference of £448,000 in comparison with last year. Bearing in mind the fluctuating nature of export values, there was nothing to be alarmed about when a fall of leas-than £500,000 in the yearly average occurred, and more especially when the capacity of the Dominion’ to rise above a really adverse situation was taken into account.

It had to be remembered that at least 115,000 bales of wool had been held back from sale owing to the unsatisfactory prices ruling. At the moderate estimate ■ of £ll 10s per bale, this meant a value of £1,322,000 added to the exports, which would leave the'position last year nearly £1,000,000 better than the yearly average. It was not true that there was now a shortage of money in New Zealand, nor had there had been a shortage in 1929, for' in that year surplus funds from New Zealand were seeking inyeetment in Australia. The Christchurch City Council, in response to its advertisements, had received offers from all over the Dominion to ’take up its debentures at 5i per cent, and easily got all the money it wanted, running into several thousand pounds. This position continued until the Govern-,, raent placed its loan on the market, offering 54 per cent. The. immediate effect of the Government's action was to send up the rate of- interest, and cities had to pay 5J per cent., while smaller local bodies had to pay higher rates. The banks followed the Government’s example, and increased the overdraft rates. He contended that if a city council could,get, money at the comparatively low rate of 5J per cent, the Government could have borrowed on even more favourable terms. Referring to the loss on the railways, Mr Holland said the 'objective of the railway system was wholly similar to that of the reading system—the getting of the products to an effective market, and, while it was a good thing if this could be done, and a balance sheet profit disclosed in doing it, or that any loss should be mini*, mised-—still there was no more reason to fee] dismayed over a loss on the railways than on the main highways. If the goods were conveyed to economic markets the country reaped the' benefit to that extent. However, if it should be laid down that the railway system must be treated wholly as a commercial venture, then the railways should be credited with the values created by their construction and operation, in which case the balance sheet would show a greatly, altered result. Everyone ; would agree that there \yas need for co-ordinating the motor and railway services, but this could onjy be done by drastic changes that would' make the motor vehicles act as feeders to, instead of competitors with, the railways. The present competitive system represented an enormous economic wastage. Mr Holland went bn to say that the references to the expenditure on education. were extremely. ' disquieting, and “ hands off the education vote ’° would express the public sentiment in this connection, The Government’s attitude in I regard to hospital subsidies would call'( forth the closest watchfulness on the part t of the Labour Party. There was danger | of a responsibility which belonged of right [ to the whole Dominion being thrown on the local ratepayers, 1 From the viewpoint of the public servants the Government’s new policy was not encouraging. There was no indication that the promises made would be lived up to. 'On the other hand there was a fairly strong hint that both the pruning knife and the guillotine would function in place of the salary improvements promised last year.

If retrenchment were really necessary, one legitimate source of saving would be found in the cutting down of the naval and military estimates. Generally speatr ing, both Reformers and Liberals had opposed every effort in this direction in the past. The suspension of the military camps was good as far as it went, but ■what was wanted was the abolition of the useless and costly compulsory, military training system. The Singapore base represented another waste of £125,000 a year,- and this could be saved New Zeaiandby the Government intimating to the British Government its willingness that the construction of the base should be discontinued.

In conclusion, Mr Holland said that Mr For bee need not be surprised if his Government's attitude, was taken for a renunciation of Sir Joseph Ward’s policy, and his statement regarded as a .smoke screen to cover a carefully-planned evacuation of the position taken up bv the United Party in 1928.

“METHOD IN HIS MADNESS.” PREPARING PUBLIC FOR INCREASED TAXATION. (Pee United' Press Association.) AUCKLAND, May 30.. “Mr Forbes is to be complimented on taking the public into his confidence, but there is method in his madness. 1 ' said Mr Robinson, secretary of the Auckland Farmers 1 Union. The Prime Minister appeared to be trying to paint the case as black as possible, so that the public would be prepared for a further increase in taxation. Professor Belshaw, professor of economics, commented that great dependence on Customs revenue as a source of taxation was particularly unfortunate at a time like this. A long-range view of national finances should be taken; it was not a year-to-year problem. The railway losses could be reduced if motor competitors were made to pay a fair share of road maintenance, and if unpayable branch lines were -closed. If local districts opposed their closing they should be prepared to make a special contribution to meet the loss.