LABOUR FINANCE

Poverty Bay Herald, Volume LXIII, Issue 19099, 21 August 1936, Page 6

LABOUR FINANCE

COST OF PENSIONS MINISTER’S METHODS MR, STEWART ON BUDGET “I am at a loss to understand the Minister’s statement that lie had to raise, taxation to pay increased pensions,” said the Hon. W. Downie Stewart, exMinister of Finance in the Coalition Government, speaking at the animal meeting of the Dunedin Chamber of Commerce, in criticism of the Budget, “His increase of revenue on account of general buoyancy was £2,660.585, and other items of revenue brought up the total increase to over £3,000.000. Increased pensions only cost £1,710,380. What be has really done is to transfer the charges from the unemployment fund and the public works votes to the Consolidated Fluid, ill fact, ordinary increased revenue has been.- used to relieve these funds to an amount not wholly but largely equivalent, to the increased taxation of £l.B millions. J cannot agree, therefore, that he had to increase taxation for increased pensions.’’ Continuing, Mr. Stewart, said one ol the chief aims of the Government was to force down interest rates, assuming that any Government securities issued to the Reserve Bank would bear a rate of interest well below the market, rate. If the hank retained these securities they would he worth less than their face value owing to the lower interest they carried. ’

“I do not. know if it would he the policy of the hank to unload these securities on to other hanks or financial inst/itutions.” continued Mr. Stewart, “but if so they would require to he sold at a discount. If they were retained hv the hank 1 assume they would he written down to their market, value, and this writing down out of profits would lessen the return of net profits for the hank. In a recent interview the Minister correctly states that the creation of capital wealth can come from savings, taxation or bank credit, and that savings are obviously the best source. This statement is confirmed hv one of tho chief exports on finance in Australia, who recently gave evidence before their banking commission. This expert stated that borrowing from the public is generally the only safe borrowing course that a Government can pursue.”