The Daily News TUESDAY, APRIL 5, 1927. BRITAIN’S HUGE DEFICIT.

Taranaki Daily News, 5 April 1927, Page 6

The Daily News TUESDAY, APRIL 5, 1927. BRITAIN’S HUGE DEFICIT.

When Mr. Churchill (Chancellor of the British Exchequer) framed his Budget last year he led the country to expect a surplus of over four millions sterling. Not only have his estimates of revenue fallen far below expectations, but the expenditure has seriously increased, with the result that, instead of a four million surplus, there is a deficit of well over thirty-six and a half millions. The falling off in income tax receipts by twenty-one millions and excise duty by eight millions, appears to account for a large proportion of the deficit, but the increase of nearly twenty-one millions and three-quarters in the expenditure, over estimates needs a full explanation. Evidently unless this enormous increase can be satisfactorily accounted for there can b - no escape from the charge that, far from fulfilling hopes of economy, Mr. Churchill has allowed the burdens of the taxpayers to unreasonably increase. No doubt the dislocation of the Home Government’s finances was mainly caused by the disastrous coal strike, and this view is emphasised by the fact that the huge decrease in income-tax receipts, the halving of the returns from the excess profits tax, together with the falling off in excise duties, constitute monumental evidence to the collapse of British industries. The unfortunate position has to be faced, and the resource of the Chancellor will be taxed to the utmost in finding a way out of the deplorable deficit without injuring the trade and finances of the country. That there must be drastic economies made goes without saying. In this respect some pertinent observations recently made by Lord Inchcape have a bearing upon the point. He asserted that, in his view, a great many of the Government Departments were overstaffed, and that the officials, in order to keep their jobs, had constantly to be making suggestions to their Parliamentary chiefs, who had no technical knowledge. The staffs in the various departments—naval, military, and civil —needed overhauling badly, and a reduction made to something like pre-war level, so as to admit of taxation being lowered. If this came about, together with a spirit of co-operation between employers and employed, the country would speedily get back to prosperity, but if the commerce of the country continued to be bled as it was now, capital for enterprises would not be forthcoming, the revenue from direct taxation would diminish, and there would be difficulty in balancing the Budget. It was, added Lord Inchcape, precisely the same with local taxation. Unless this was reduced, many industrial undertakings would be forced to close down. No doubt it will be thought by some that Lord Inchcape is unduly pessimistic, yet if his arguments are considered in the right light they bear the impress of experience and commonsense. Moreover, they apply not only to Britain, but to all parts of the Empire. There are two outstanding fundamentals in this difficult problem, one being drastic economy, and the other effective organisation. The former is the duty, in the main, of the Government, while the latter is in the hands of the captains of industry. The retiring president of the Federation of British Industries (Sir Max Musprat), in reviewing the events of the past year, contended that organisation of production in the Old World was imperative, as the war had impoverished the Old and enriched the New World, while it had reduced the purchasing power in the Old World, and increased the productive power in the New. Organisation was, therefore, necessary to reduce costs and to avoid excessive competition, though he issued a warning that unless this process was exercised step by step it would be likely to retard the attainment of the main objective. There is no reason to fear that British Government and people will not rise to the occasion and reinstate the finances. Happily there are indications of an improved outlook in industrial affairs, but there has never been a time when a united effort to bring about a more satisfactory state of affairs has been so urgent as at the present juncture.

AUSTRALIAN STATE ELECTIONS. For some years the anomaly has existed in Australia of Labour Ministries in five out of the six State Parliaments, with an anti-Lahour Federal Government kept in office by the same electorate. At the moment three State elections are under way. In one, South Australia, the Labour Ministry has been definitely defeated. In Western Australia Labour may succeed in holding office by a narrow majority. In Victoria, wheie an anti-Labour Government is appealing to the country, Labour has never yet succeeded ra obtaining a Parliamentary majority, and there seems little prospect of this happening during the present contest. In New South Wales the Labour party clings to office though its power has practically disappeared, and the retention of office is in itself one of the broken pledges for which the Lang Ministry has become noted. It appears as though the longsuffering taxpayer in the Australian States is beginning to realise that the socialistic experiments of Labour Ministries are made at his expense and for the benefit of only a favoured few. When wages are forced up by political action and with a total disregard of the effect of such action upon trade and industry, the taxpayer has to foot the bill, and he is finding the burden a heavy one. A return to saner political measures will do much towards removing, the depression which Australia has been suffering from for the past few years.