Dominion War Finance

Timaru Herald, Volume CXLVIII, Issue 21647, 7 May 1940, Page 4

Dominion War Finance

IN a statement made at Auckland the Prime * Minister said he expected Parliament to meet early next month, but for the present no date had been fixed. When questioned as to the Government’s legislative intentions Mr Fraser said that “legislation would inevitably be dominated by the war situation and all matters affecting the war would be discussed, including many questions affecting economic and financial conditions.” There is no surprising revelation in this. The war situation must dominate the deliberations of Parliament, but it may be added that the war situation Jias been developing for months and the country’s interests would have been better served if the Government had summoned Parliament much earlier this year. Mr Fraser then went on to give a little information concerning war finance for the 1940-41 financial year. War expenditure is expected to reach £33,000,000, and of this sum £13,000,000 will be required for expenditure within the Dominion. The other £20,000,000, as the Minister of Finance disclosed recently, will be provided by a loan from the British Government. As £3,500,000 is already available, there remains £9,500,000 to be gathered in one way or another from the people. Mr Fraser said that some of the means of raising money “may include some additional taxation.” There is really no reason why he should be so cautious on this point. New taxation will have to be levied. In fact the only ways open to the Government for financing war expenditure are: new taxation, capital levies, voluntary loans, or severe reduction in public expenditure. It has been mentioned previously, and Mr Fraser repeated it at Auckland, that there is to be a tapering off in Public Works expenditure, and he added that the same principle would be applied to other expenditure the reduction of which would have “no detrimental effect.” As far as Public Works expenditure is concerned the Government has a large field in which to work for the benefit of the taxpayers who will have to carry their substantial share of the burden of war. Excluding an allocation of £2,200,000 for defence purposes, Public Works expenditure last year was estimated at £21,700,000, of which £19,000,000 was to be provided by loan moneys. The Government admitted nearly a year ago that the limit had been reached for expenditure of this kind, but under compulsion of circumstances there must be a “tapering off” now". The conduct of the war will be, as Mr Fraser has declared, the dominating factor in Government policy, but severe readjustments of Government spending will be necessary to make it so. ’