THE OTAGO DAILY TIMES FRIDAY, SEPTEMBER 14, 1934. THE BUDGET DEBATE

Otago Daily Times, Issue 22367, 14 September 1934, Page 8

THE OTAGO DAILY TIMES FRIDAY, SEPTEMBER 14, 1934. THE BUDGET DEBATE

The Minister of Finance wound up the Budget debate yesterday with a temperate and generally logical speech which should serve to enhance his public reputation. There was, as we have previously observed, little in the criticism of the Budget on the part of the members of the Opposition that called for reply from him. They are evidently chagrined that the Minister hopes to be able to balance this year’s Budget. It would have been politically satisfactory to them if “ the downward rush,” as Mr Coates put it, had not been arrested. As it has been arrested, arid as there are prospects—increasing prospects—that the revenue for the current year will more than suffice to cover the expenditure, they have thought fit to blame the Government for not having decided to spend more heavily. It is an easy thing for those upon whom no responsibility rests to argue that the Government should have been more liberal in the restoration of cuts. No one would, perhaps, have been more pleased than the Minister of Finance if it had been possible for him, consistently with his recognition for the need of balancing his Budget, to propose the payment of increased allowances to pensioners. The prudent plan is, however, to make absolutely sure of his revenue in the first place. And there should be com-

mendation, rather than censure, of him for his refusal to be stampeded into expenditure which, he believes, is not yet justified by the state of the public finances. The Minister's reply to Mr Wilkinson’s criticism of the coinage transaction seems to us to have been sufficiently convincing. It was, he says, not open to the Government to make the arrangement with the Royal Mint that would, as the Auditor-general suggests, have been productive of a large profit to the Dominion. It would certainly have been surprising if the Government, greatly in need of funds as it was, had neglected the opportunity of securing a profit of £1,000,000 upon the transaction. There was, however, Mr Coates has assured the House, no possibility of any such profit being made. The Minister was not able to dispose so effectually of Mr Downie Stewart's criticism of the high exchange rate. His contention that there was never a “natural” rate, since the trading banks had always fixed the rate in the past, loses its validity in the fact that the rate fixed by the banks was always regulated by the law of supply and demand. And when he argued that the increase in the rate to the artificial level did not produce a fall in imports he wholly disregarded the statistical data on the subject. The rate was raised in January, 1933. The imports in that year dropped by nearly two millions as compared with the preceding year, while the exports increased in value by nearly five and a-half millions. The increase in the exchange rate was immediately reflected in a drop in imports.