The Southland Times. PUBLISHED EVERY MORNING, Luceo Non Uro. TUESDAY, OCTOBER 3, 1922. BORROWING AND SPENDING.

Southland Times, Issue 19654, 3 October 1922, Page 4

The Southland Times. PUBLISHED EVERY MORNING, Luceo Non Uro. TUESDAY, OCTOBER 3, 1922. BORROWING AND SPENDING.

With Sir Edwin Mitchelson’s warning against the dangers of continued heavy borrowing, as given in a speech in the Legislative Council last week, most people will agree, but. it is one thing to say that if we continue to borrow at the present rate we will land in trouble and another to show how we can stop borrowing. Because the state’s activities cover so wide a scope in this country, borrowing must always be extremely heavy and our debt must appear to be large. In England the money required for railways, is provided by investors in the form of capital subscribed by shareholders in private companies. but in New Zealand the state owns its railways and borrows the money to build and equip them and so adds to its debt. The state owns also numerous other large industrial undertakings which it must finance, and as these enterprises must be developed and extended to meet the requirements of the country, continuous borrowing is inevitable. A large part of New Zealand’s debt is really capital employefl in industry, and it is the business of the Government, as it would be that of a private company, to keep abreast of progress by the expenditure of fresh capital During the last few years the Government has very properly taxed its resources to the utmost in order to avoid curtailment of the expenditure on public works, with a consequent reduction in employment. In times of depression it is the duty of the Government to use every means in its power to prevent unemployment and distress, and in Britain, where times have been worse than in New Zealand, the Government has given an excellent lead in this respect. As explained by Dr. Macnamara at Nottingham, the British Government is furnishing another £10,000,000 to help municipalities to find work for the unemployed. It is making loans to the extent of £20,000,000 to help traders to recover foreign markets and guaranteebig loans to the extent of £25,000,000 for the electrification of railways, docks and other works. The New Zealand Government is borrowing large sums of money for somewhat .similar purposes, and provided the expenditure is so coni, rolled as to be productive there is nothing in the mere increase of the debt to regret or to be alarmed about. The danger is, of course, that lack of efficiency in supervision and management may make it impossible to earn adequate interest on the money expended, and that is where the heaviest responsibility rests upon the administration. Any reduction in borrowing must result at once in the stoppage or restriction of work essential to the country's development—construction of new roads, railway lines and bridges or the opening up of new land for settlement. These works can be carried out only with borrowed money, for there is no surplus revenue for the purpose. At the moment, indeed, the Minister of Finance is taking some risk in reducing taxation when his revenue appears to be hardly equal to his expenditure, but the reduction of taxation has become just as imperative a necessity as a vigorous public works policy to give employment to the largest possible number of men. The commerce and industry of the country are being strangled by oppressive taxation, and wilile the reductions announced in the land and income tax are all that the Minister of Finance can afford they are not nearly so substantial as is necessary to enable private individuals and companies to surmount the difficulties with which they are confronted. It will take the Minister of Finance all his rime to “squeeze through” the next two or three years, and for new works the country will have to depend on borrowed money. In the circumstances the sound policy is to borrow as much as the market will stand and to take care that the millions are spent-jn such a way as to produce profits, direct or indirect. It is not so much the borrowing as the expenditure of the money that causes concern and in this respect the Government of the day should always be kept under the most searching criticism.