NOT SO DISMAL

Sun (Auckland), Volume IV, Issue 986, 31 May 1930, Page 1

NOT SO DISMAL

MR. HOLLAND OPTIMISTIC ABOUT FINANCES NEW ZEALAND’S POSITION Press Association ' WAIM ATE, Today. *'l am not sure that the Prime Minister has not done the Dominion the greatest dis-service imaginable/' said Mr. H. E. Holland, Leader of the Labour Party, referring at a public meeting here to the Hon. G. W. Forbes's statement concerning New Zealand’s financial position. He added that he was not prepared for a moment to agree that the position was as dark and dismal as Mr. Forbes had painted it. Mr. Holland said he had not had time to go fully into the details, but the extremely gloomy nature of that pronouncement was so markedly in contrast with the glowing promises of little more than a year ago. Some time back, said Mr. Holland, the then Minister of Labour, the Hon. W. A. Veitch, was found declaring that confidence in the economic stability of the Dominion might be shaken if the figures relating to unemployment were permitted to be published, but if anything were wanted to weaken the confidence of creditors it had certainly been supplied by Mr. Forbes. It seemed almost astounding that within two months of having proclaimed a surplus of £150,000. and with only one complete month’s figures on which to base his calculations, the Prime Minister should precipitately announce a deficit of £3,000,000 to be achieved during the present financial year. To say the least, it would set inquiries going as to how the surplus of March 31 was built up. Mr. Forbes had prefaced his statement with reference to a drop of £8,100,000 in the value of New Zealand’s exports for 1929-30, as compared with the previous year, but he did not mention that both 1927-2 S and 1928- were abnormal years, in each of which the value of New Zealand exports exceeded the average by between £7,000,000 and £8,000,000. In 1929- the value of New Zealand exports was slightly over £49,000,000, and that value had been exceeded in only four of the 10 preceding years. In each of the other six years the total was well below that figure. LITTLE BELOW AVERAGE The average yearly value of exports for the 10 years 1920-1929 was just under £49,500,000. a difference of £448,000 compared with last year. Bearing in mind the fluctuating nature of export values, there was nothing to be alarmed about when a fall of less than £500.000 in a yealy average occurred, and more especially when the capacity of the Dominion to rise above really adverse situations; was taken into account. It had to be remembered that at least 115,000 bales of wool had been held back from sale owing to the unsatisfactory prices ruling. At a moderate estimate of £ll 10s a bale, this meant a value of £1,322,000. Added to the exports, this would leave the position last year nearly £1,000,000 better than the yearly average. It was not true that there was now a shortage of money in New Zealand, nor had there been a shortage in 1929, for in that year New Zealand surplus funds were seeking investment in Australia. The Christchurch City Council, in response to its advertisements, received offers from all over the Dominion to take up its debentures at 54 per cent., and easily got all the money it wanted, running into several thousands of pounds: This position continued until the Government placed its loan on the market offering 5£ per cent. The immediate effect of the Government’s action was to send up the rate of interest, and cities had to pay 5* per cent., while smaller local bodies i-td to pay higher rates. The banks followed'the Government’s example and increased their overdraft rates. Air. Holland contended that if a city council could get a comparatively low rate of 5i per cent., the Government could have borrowed on more favourable terms . Referring to the loss on the railways, Air. Holland said the objective of the railway system was wholly similar to that of the roading system—the getting of the products to an effective market —and while it was a good thing if this could be done and a balancesheet profit disclosed in doing it, still there was no more reason to feel dismayed over the loss on the railways than on main highways. If the were conveyed to economic markets, the country reaped benefit. CREDIT TO RAILWAYS

However, if it should be laid down that the railway system must be treated wholly as a commercial venture, then the railways should be credited with values created by their construction and operation, in which case the bal-ance-sheet would show a greatly altered result. Everyone would agree that there was need for co-ordination in the motor and railway services, but this could only be done by drastic changes that would make motor vehicles act as feeders to, instead of competitors with, the railways.

Mr. Holland said the references to education expenditure were extremely disquieting, and ‘‘hands off the education vote” would express public sentiment in this connection. The Government’s attitude in regard to hospital subsidies would call for the closest watchfulness on the part of the Labour Party. There was a danger of the responsibility that belonged of right to the \vh9le Dominion being thrown on local ratepayers. From the viewpoint of the public servants the Government’s new policy was not encouraging. There was no indication that the promises made would be lived up to. On the other hand, there was a fairly strong hint that both the pruning knife and the guillotine would function in place of the salary improvements promised last year. If retrenchment were really necessary one legitimate source of saving would be found in the cutting down of the naval and military estimates. Generally speaking, both Reformers and Liberals had opposed every effort in this direction in the past. The suspension of military camps was good as far as it went, but what was wanted was the abolition of the useless and costly compulsory military training system. The Singapore naval base represented another waste of £125.000 a year, an 1 this could be saved to New Zealand by the Government intimating to th-e British Government its willingness that the construction of the base should be discontinued. Mrt Forbes need not be surprised if his Government’s ttitu . • was tab n tor a renunciation of Sir Ward’s policy, and his statement regarded as a smi ke screen to covei carefully-planm d evacm tion ol position taken up by the United Party in 1928.