THE FINANCE BILL

Otago Daily Times, Issue 23894, 23 August 1939, Page 8

THE FINANCE BILL

The House of Representatives will this week give its consideration to the Finance Bill, of which the main purpose is to give legislative effect to such of those proposals outlined in the Budget as will not be covered by alterations in the scale of Customs duties. Chief among the proposals that are the subject of legislation in the Finance Bill are those which relate to fresh borrowing. They would at any time and in any circumstances justify expressions of concern on the part of the taxpayers. The fact that they are submitted under the economic conditions of which the Dominion is now having an unfortunate experience and that they are submitted by a Government that has professed a strong dislike for a policy of borrowing requires that they should be closely analysed. In some respects the moneys that are to be borrowed are to be reproductively applied. They are to be expended upon public utilities in the same way as were expended borrowings of the past which supporters of the Government indignantly condemned in the course of the Budget debate. Actually, the Bill makes provision for raising loans of a greater magnitude than the Budget led the public to expect. In this document a programme was outlined which would necessitate an expenditure of £23,917,000, but the Prime Minister anticipated that a sum of £4,855,000 would be provided from revenue, leaving a balance of £19,062,000 to be secured from loans. The Finance Bill, however, provides for borrowings to the extent of £22,700,000. It is possible that the Government has formed the conclusion that the revenue account will not be sufficiently buoyant to stand the strain that would be put upon it if the plan of finance indicated in the Budget were not substantially revised. The loan of £3,200,000 that is proposed for the construction of main highways will involve an annual charge that will fall upon the motoring public, but the principal sum borrowed will represent an addition to the State indebtedness. The loan of £1,000,000 for the provision of electric power works will be reproductive. The same may be said of the loan of £3,500,000 for housing purposes provided that the State is in a position to collect regularly its rents from the occupants of its houses.. Presumably it will be able to do so, but the community has so far been kept completely in the dark with reference to the position of the housing account. The major part, however, of the borrowings that are to be authorised is a sum of £15,000,000 for public works, and of this a considerable proportion will definitely be non-productive. The expenditure of so much of it as is to be applied to defence purposes, estimated at £2,200,000, must be regarded as a regrettable necessity, and there is certain other expenditure that will be represented by tangible assets. But, even if we ignore altogether that expenditure which will be wholly uneconomic, the question arises whether a programme of the dimensions of that which is proposed is justifiable or wise in present circumstances. The warnings which the Government has received in recent weeks —from the Reserve Bank as well as from overseas —should have impressed it with a sense of the need of a curtailment of internal expenditure until, at least, such time as a marked improvement has been effected in the general economic situation.