WARNING TO EIRE

Otago Daily Times, Issue 23593, 1 September 1938, Page 19

WARNING TO EIRE

FUTURE BUDGETS THREATENED (From Our Own Correspondent) LONDON, Aug. 8. A warning to the Eire Government to tighten up their finances, examine the deadweight debt which threatens to create a serious position for future Budgets, and to be more guarded in the future expansion of borrowing is made in the 680-page report of the Commission of Inquiry into Eire's banking, currency and credit. The report is the result of four years wofk by 21 experts. The inquiry cost £8740. The commission recommends that: The link between the Irish pound and sterling, at the existing parity, be maintained; a Socialist proposal to amalgamate the existing commercial banks into one unit, publicly owned and controlled, be rejected; the Currency Commission now existing be constituted as a central banking organisation, with all the essential powers and functions; no increase in the existing volume of dead-weight debt should be> permitted, the volume should be reduced as quickly as possible, and there should be an annual limit of £5,000,000 on borrowing. A "general sinking fund" to be established with an annual contribution from revenue of £500,000, strict control be exercised over all borrowing by local authorities; and all Government proposals to be examined for their possible monetary and financial reactions are also recommended. , - The proposal of the Irish Trades Union Congress that existing commercial banks should be amalgamated into one unit, publicly owned and controlled, is rejected by the commission. Every banking institution, it is suggested, should maintain a deposit of £SOOO with the High Court for the first three years, and £IO,OOO afterwards. Experts signing the majority report view with concern the increase in the deadweight debt, which has arisen from £10,339,911 in 1924 to £37,262,691 in 1937. "This is one of the most serious matters we are called upon to review," they say. National income has decreased, while the general load of taxes has increased. The report states: "There is a widespread impression that the burden of State debt in this country is moderate, or even trivial, compared with that in most other countries. Denmark, one of Eire's chief competitors in the British markets, has a State debt of £l6 per head. Eire, with a smaller population, has a greater debt of more than £24 per head. " We think the matter has reached a stage when a serious effort is required to make a systematic survey of the whole field of budgetary expenditure with a view to effecting reductions which will bring the aggregate more into consonance with the economic capacity of the country. , " The Government is warned not to be prejudiced by an easy tolerance of supplementary estimates. Throughout its history Eire has resorted too freely to the use of these estimates."