TREASURY BILLS

Southland Times, Issue 22956, 31 July 1936, Page 7

TREASURY BILLS

BORROWING POWERS CRITICIZED EXPLANATION ASKED (From Our Parliamentary Reporter.) Wellington, July 30. The danger of the Government taking power to borrow on Treasury Bills to the full extent of the year’s estimated revenue or expenditure was stressed by the Rt. Hon. J. G. Coates (Nat., Kaipara) during the committee stages of the Finance Bill in the House of Representatives to-night. Mr Coates asked the Minister of Finance (the Hon W. Nash) for a full explanation of the Government’s intentions about the clause by which the Government is entitled to borrow Treasury Bills to the extent of the full estimated expenditure in any one year. “The Reserve Bank Amendment Act raised the limit which the bank can advance on Treasury Bills from half the estimated revenue to the full estimated revenue,” Mr Nash said. “This clause mends the Public Revenues Act, so that the Government can borrow to the full extent of its estimated expenditure, instead of half that amount. The clause only reconciles one position with the other.” “Is it necessary that they should be reconciled?” asked Mr Coates. “They hardly appear the same. The Reserve Bank can discount Treasury Bills, but we come to the point when we must ask whether it is wise that any Government, by this means, should be able to anticipate 100 per cent, of its estimated revenue. I think the whole thing should be considered on a revenue basis, and not on that of expenditure.’ A Dangerous Principle.

It could be supposed, Mr Coates continued, that the normal expenditure in one year would be approximately £25,000,000. For the purpose of getting an advance the Government could place its estimate of expenditure at £30,000,000 and then borrow the whole of that amount. It was not only unwise, but dangerous, and if the principle was put into operation, the country might find itself in a difficult position within a very short time. Mr Nash: The same principle applies in England. Mr Coates: They administer it more wisely there. Mr J. Hargest (Nat., Awarua) complained that the clause _ gave dictatorial powers to the Minister, In the last Government, and in previous Governments, there had been a tendency for the Ministry to take more and more power away from Parliament, but the clause under discussion took away the power of Parliament in its most important function—the care and trusteeship of the public purse. The Opposition called for a division on the clause, which was retained by 36 votes to 17.