The Daily News TUESDAY, FEBRUARY 17, 1931. THE LONG VIEW.

Taranaki Daily News, 17 February 1931, Page 6

The Daily News TUESDAY, FEBRUARY 17, 1931. THE LONG VIEW.

When we said yesterday that the Prime Minister had taken a broad view of his responsibilities in the fact of the economic depression we chose the description very deliberately. It would have been gratifying to have been sble to say that he had also talren a long vie.w, but his plans for the balancing of the Budget and the establishment of a new economic standard leave room for doubt as to whether he is looking very far ahead. To express that doubt, it may be said quite sincerely, is not to attempt to disparage Mr. Forbes, who shown commendable courage, nor to criticise him in. any partisan fashion, but simply to sqggest that Ministers alid Parliament when the opportunity comes next month should give, the most carefql consideration to the possible consequences of the action proposed by the Prime Minister. Speaking broadly, the proposal to reduce wages and salaries is the first step in the reduction of costs of production, a process that is essential m the necessary economic reorganisation. The immediate purpose of the cut in Civil Service pay is. to meet in part the anticipated loss of public revenue. But the rest of the loss is to fie met partly by what Mr. Forbes calls “reductions in other expenditure and financial adjustments” gnd partly by increases in direct and indirect taxation. Are these reductions and adjustments wise and sufficient? The State is to continue to pay wages and salaries amounting to £13,500,000 a year, which indicates that the services performed by the State are not to be very seriously curtailed. But if a new standard of revenue and expenditure is to be set for individuals, will not the State have to conform to it also? Must there not be, in addition to the 10 per cent, saving on wages, a further reduction of the public outlay? When individuals are receiving smaller incomes and spending less than they do now the Government's revenue from direct and indirect taxation will also be less, and the question to be .considered is how this will affect the future. It may be possible for Mr. Forbes to balance his Budget next year by the means he proposes to adopt,, but it is surely reasonable to say that he should look beyond next year. The same suggestion must be applied to increased taxantion. Twelve months hence, when income tax is again due, it

will be paid on the basis of a lower standard of income than that ruling at present, and for that reason the Government might be justified in taxing incomes below the present exemption level of £3OO a year. But if the rate of tax on larger incomes is substantially increased the burden will continue to be a grave handicap upon industry and commerce and will prevent that’ expansion of enterprise which should be an important factor in the success of economic reconstruction. Inevitably linked up with the question of taxation is that of unemployment. Mr. Forbes budgets for an increase of £600,000 next year in the cost of unemployment. Does this mean that he contemplates nothing better than the maintenance of an army of pick and shovel workers making unnecessary road deviations or forming sports grounds? It should be part of the plan of rehabilitation to employ most 6fi these men in really productive work, and this can only be effected through the lightening of the present burdens. Commerce and industry of all kinds must be permitted to retain sufficient of their resources to enable them to cooperate with the Government in really developmental enterprises. It is an easy step from the consideration of unemployment to that of public works policy. This department of State activity will be complicated next year by the need for restoration in Hawke’s Bay, which will have to be financed by the Government, in part at any rate, out of loan money. Apart from this, how much can the country afford to borrow foF public works? Mr. Forbes has to meet debt charges that will be higher next year by £200,000 than they are this year, and one of his proposals is to use reparations receipts for this purpose. That, of course, will merely mean that New Zealand will be so much longer paying off its war debt- Temporary ease will be obtained in one Way, but the ultimate liability will remain. It must be borne in mind that possibilities of saving to an extent not yet estimated are envisaged by the Prime Minister. The proposed board of directors will be expected to improve the position of the railways, and Mr. Forfies suggests steps in the direction of curtailing the cost of education and of local government. If Mr. Atmore were a worker instead of a talker education already might be costirig less, for it may be thq,t administrative cost could be curtailed, and it is certain a great saving could be made if pupils were rightly classified and taught what would be most useful to them. The Dominion’s 700 local bodies are not all necessary, and could be effected that would mean big savings. These and other matters demand thq very closest scrutiny from men of vision if a new economic basis is to be found and made permanent.