BUDGET DEFICIT

Southland Times, Issue 21836, 13 October 1932, Page 6

BUDGET DEFICIT

GREATER THAN ADMITTED.

MR H. E. HOLLAND’S CONTENTION.

(From Our Parliamentary Reporter.)

Wellington, October 12. The contention that the Budget deficit was greater than the Government admitted was made in the House of Representatives to-night by the Leader of the Opposition, who also criticized the hypothication of reserves for the purpose of raising money from the banks. Mr Holland said that the Budget deficit which he estimated of £3,635,644, did not include the huge deficit in connection with superannuation subsidies. The Governemtn proposed to raise money by mortgaging to the banks public securities represented in discharged soldiers’ settlement lands and in this way was securing advances totalling £1,494,825 which it was writing into its balance-sheet as income. Thus it was presenting a deficit of £2,140,819 instead of the correct figure of £3,635,644. The procedure adopted was that of using public securities to meet a current liability. The bank issued money to the Government on the basis of these securities which were backed by public credit and would charge interest on money so issued. To put it another way, before the Government could utilize its own credit resources to meet the current liability, it had to pay a percentage tribute to the bank. Was it not possible for the Government to have utilized its own credit resources to back its own issue of money without paying tribute to the bank? Furthermore, if the deficit could be made good out of reserves, those reserves could have been utilized long since to provide remunerative work for the unemployed and the creation of additional values for the state. It was estimated that it was proposed to raise another £2,500,000 this year from reserves and it could be supposed that another unnecessary profit would be paid to the banks.