AUSTRALIAN FINANCES

Taranaki Daily News, 2 December 1939, Page 9

AUSTRALIAN FINANCES

TAXATION : BORROWING MONEY FOR WAR EFFORT Wellington, Last Night. The following information was received by the Australian Trades Commissioner to-day by cable from the Prime Minister of Australia, Mr. R. G. Menzies:— "The Hon. P. C. Spender, actingTreasurer for the Commonwealth, presented his financial statement in the House of Representatives yesterday. He stated it is the policy of the Government to finance Australia's effort by a balanced programme of taxation, borrowing from the public and borrowing from the banking system. The balance between these three methods would change from time to time according to economic circumstances. "For the time being the Government has decided the balance will be weighted towards borrowing with the assistance of the banking system rather 'than towards taxation, so as to bring all available resources into full use. In view of the increases in taxation imposed in September last, the uncertainty resulting from the outbreak of the war and the recent decline in employment, the Government is of the opinion that to increase taxation at present would merely delay the recovery of Australia's economy and consequently interfere with the full prosecution of the war programme. There would be no increase in taxation for defence beyond the increase of £8,000,000 announced in September last and a further increase in Customs duties of £150,000, details of which would be announced later in the day. Economic Recovery. "Mr. Spender declared that as the economic recovery which has already begun gets under way the Government will transfer the emphasis of its financial policy from borrowing from the banking system, firstly to borrowing from the public and secondly to taxation. It is probable that thc change in emphasis will come before the end of the financial year. Part of the borrowing plan is the issue of savings certificates. "The attitude towards plans for next year's Budget is substantially different. The Government will bring down early in 1940 a comprehensive scheme of war taxation. If this is done and other controls of exchange, prices and capital investments maintained, it is possible that Australia will avoid the evils of excessive credit expansion. The Government has looked ahead and formulated a financial policy whicH will fit into a coordinated plan capable of being adapted to changing circumstances. "The real burden of the war effort must be borne now. It cannot be shifted by ingenious devices to the future. It is foolish to believe that the war will not entail substantial sacrifices all round. No one can predict the course of the war, but Australia is determined to see it through to the finish, no matter what sacrifices are entailed. Sacrifices are insignificant comparec1 with the disaster of the loss of liberty if victory is not ours. Revised Estimates. "Details of the , revised estimates for 1939-1940, sbowing comparlsons with the September Budget, are as follows:— "Defence and war expenditure: The outstanding feature is the greatly increased estimate for defence and war services.- Defence expenditure was estimated at £33,137,000, but the revised estimate for defence and war services is £62,014,000, of which £46,181,000 will be provided from the loan fund and includes capital war expenditure of £15,583.00(1 and pre-war capital defence works of £20,383,000. "Expenditure other than defence and war: ReduCtions effected amount to £1.617.000. The total estimated expenditure from revenue is £101,452.000. "Revenue: Customs revenue is estimated to fall by £2,920,000, compared with the September Budget. Income tax is now estimated at £1,140,000 more than in the Budget. The gold excise is expected to yield £900,000 in the ^ current year. Other adjustments made provide for increased yields totalling £280,000. The estimated total receipts for the year are £101.490.000. "New taxation: Under the Budget and supplementnry measures £8,000,000 in new taxation has already been levied for this year. The only further increase now proposed. is Customs duties to yield £150.000. details of which will be given later. For the reasons already givcn no further taxation will be brought down this financial year, but; comprehensive and balanced taxation plans are now being prepared for the next financial year. "Loan expenditure: The September estimate of £23.072.000 is now increased to £48.931.000, including £46.181.000 for defence and war services. £2.000,000 for the Postmaster-General's department and £750,000 for farmers' debt adjustment,"