LONDON FUNDS

Otago Daily Times, Issue 23333, 27 October 1937, Page 10

LONDON FUNDS

ALLEGATIONS BY OPPOSITION SHORTAGE OF £8,000,000 EXPLANATION BY MR NASH (From Our Parliamentary Reporter) WELLINGTON. Oct. 26. The suggestions by Opposition members that this year's figures show a shortage of £8,000,000 the London funds were answered' by the Minister of Finance (Mr W Nash) in his reply to the Budget debate in the House of Representatives to-night The Minister said that some members of the Opposition had framed their allegations in such a way as to damage the credit of the country overseas. " The point which was probably the most important made during the debate." said Mr Nash, " was that raised by the Leader of the Opposition (Mr A. Hamilton) and subsequently by the member for Central Otago (Mr W A Bodkin) when they alleged that the figures disclosed a shortage in the London funds There is no greater benefit in our 'parliamentary system than that an Opposition should point out weaknesses in the Government's policy and administration, but it should do so in a way that will not injure the credit of the country abroad. The Leader of the Opposition inquired quite legitimately and not in an alarmist manner about £8,000.000 of the London funds which was not accounted for in the figures. I have a note here, and I can at least account for £6.600,000 of that amount. The figures show that £4,400,000 was required for the conversion and redemption of the public debt, and the redemption of local body debt accounted for a further £BOO,OOO. Then it is estimated that the additional expendi ture overseas by New Zealand tourists as a result of the Coronation celebrations in England necessitated the use of at least £500,000. Personally I think the figure was higher. "Another point concerns the new procedure for the marketing of dairy produce, under which £900,000 does not come into the accounts until the produce is actually sold and the money is recovered by the Reserve Bank.* "The points I have mentioned account for £6,600,000 out of the £8,000,000," the Minister continued. "There are other factors which determine the balancing of the London funds, and included in these is interest paid to people overseas on private investments in New Zealand. It is estimated by the Government Statistician that payments in this respect would run to about £1,000,000. That is an estimate of which some notice must be taken." NO FLIGHT OF CAPITAL

There was no such thing as a flight of capital from New Zealand, Mr Nash added. It was possible that some funds might be going overseas, but they were not appreciable. For one thing, New Zealand was still a splendid country in which to invest money, and it might even be argued that the people who earned their living in New Zealand could be expected to invest their surplus funds within the Dominion. If the people saw that they could obtain h per cent, more by investing in Australia, however, they were perfectly at liberty to do so. OVERSEAS BORROWING After discussing the taxation position and pointing out that only £1,800,000 had been obtained from increases in the actual rates of land and income tax, Mr Nash referred to the question of overseas borrowing. "The Leadei of the Opposition suggested that it would be fairer to compare the present conditions with those of a year which was not a slump year," the Minister said. "That is a reasonable suggestion, and I will go back and take the years from 1925 to 1929, which were generally regarded as boom years. They were not as good as the last two years have been, because the present Government was not in power then. During those boom years, however, the Government of the day borrowed overseas £36,532,100. We have not borrowed any money overseas. . " Former Administrations raised' less by way of taxation, but went and borrowed outside New Zealand. I hope we shall never have to use the overseas resources again," Mr Nash continued. " I cannot promise that we will not have to do so. In any case, the conversion operation will mean that we shall have to go on the London market, but so fai as the need for new money is concerned I hope the necessity will never arise."