THE OTAGO DAILY TIMES FRIDAY, September 17, 1937. THE PUBLIC CREDIT

Otago Daily Times, Issue 23299, 17 September 1937, Page 8

THE OTAGO DAILY TIMES FRIDAY, September 17, 1937. THE PUBLIC CREDIT

A statement that was made by a Government supporter in the House of Representatives this week supplied a fresh version of the sense in which the electors are expected to understand the claim of the Labour Party that it is using the public credit to create national assets. We are told by this member that public credit was used, to the extent of £6,000,000, through the agency of the Reserve Bank to finance the State commandeer of dairy produce. What has actually happened is that the State has paid, and is paying, for the dairy produce for export by means of an overdraft from the Reserve Bank at 14 per cent. If it is on similar terms that the public credit is being utilised, to the extent of £5,000,000, to enable the Government to carry out its housing programme, there does not seem to be any valid reason why the taxpayers should be required to remain in the dark concerning the method by which the enterprise is being financed. But there are other points respecting which an explanation is desirable. In terms that might have been more happily chosen, the Minister of Finance interjected the other night that someone had been lying to the Leader of the Opposition when he had been told that Mr Nash had said that the deficit of £650,000 on the first year's operation of the guaranteed price plan would be a charge on the Consolidated Fundthat is to say, would be met out of the proceeds of taxation—and not on the dairy industry. What are the taxpayers to understand from that? To this deficit of £650,000 will have to be added the deficit, whatever it may be, on the current year's operations. Mr Nash estimates that the amount of it will be £2,000.000. If this is an underestimate, it may well be that there will be an accumulated deficit of £3,000,000 at the close of this year's operations on the dairy marketing account. It is important that the taxpayers should be afforded some indication of the way in which this is to-be met. And it is pertinent to remember that Mr Nash has said that the loss, already incurred, of £650,000 has "gone, and gone justly, to the dairy farmer." He has described it as the Government's contribution to the dairying industry. In other words, it is the contribution by the people of the country to the industry—a contribution supplementing that already made to the industry by the depreciation in the currency of the Dominion. A contribution by the people to any particular object is normally, however, a charge on the Consolidated Fund and, therefore, a charge on the proceeds of taxation. If it is not this, what is it? It cannot be seriously pretended that the deficits in the early years of the operation of the dairy marketing scheme are to be extinguished by surpluses in future years. Mr Nash himself must realise that if there should be a surplus on the operation of the scheme the producers will demand that they shall enjoy the benefit of it and that it will be impossible for the Government to resist the demand. The position of the dairy marketing account is one, therefore, of great interest and of direct concern to the general taxpayer. Nor is he likely to be deluded by the airy talk by Ministers and their supporters of the use of the public credit. He cannot avoid the apprehension that the loss on the dairy marketing account must fall on the taxpaying public.