NATIONAL FINANCE.

Wairarapa Age, 24 May 1928, Page 5

NATIONAL FINANCE.

BORROWING AGAIN ATTACKED BY MB. POLSON. LOANS AND IMPORT VALUES. HAMILTON, May 23. Mr W. J. Polson, Dominion President of the Farmers’ Union, vigorously attacked the Government borrowing policy when addressing the Provincial Farmers’ Conference this afternoon. He said: “During the period since the war we have been increasing national debt, that is public debt, at the rate of nearly a million a month.” The interest rate also was increasing. The gross national debt on March 31, 1921, was £206,324,000. The amount borrowed since was £44,680,000, bringing the debt to £245,850,000 in 1927. Mr. Polson also detailed the local body debt, which, he added, less the amount borrowed by local bodies from the Government, in 1927 had reached the extraordinary total of £64,000,000. It was quite obvious that renewals of these loans must mean an increased rate of interest, in spite of the recent boast about the success of the last New Zealand loan. This loan, Mr. Polson described as “a fuss about 4d,” because the net yield to the investor was £4 19s. Bd., whereas in the case of the Commonwealth ’s last loan, more recently floated than New Zealand’s, the net yield to investors was £5, a difference of 4d. Banking authorities showed that in the last few years all issues had participated in a general improvement, New Zealand among them. “In the next four years, the Government has maturing £87,475,000 worth of loans, which have to be renewed,” said Mr. Polson. “This means an increased interest charge on renewals alone in tho next four years of over £400,000, in addition to new loans estimated by the Government to nfean another million in interest in the next five years. In a speech in reply to me, Mr. Downie Stewart admitted that imports must pay for exports, and should show a sufficient surplus to pay also for oversea loans. This is just my point. Now he claims credit for an import of capital without a debit for borrowing. This is most extraordinary book-keeping for a Minister of Finance. He forgets that he borrowed 12s. 6d. worth and must pay back £l, and suggests that he borrowed £1 and need only pay back 12s. 6d. Taking these, figures into account, we find that the borrowing rate of the country has enormously increased since the war. In the reply of Mr. James, on behalf of the Government, to my Masterton speech, it is stated that I ignored the fact that import values are loaded with 10 per cent. The loading is intended to cover in part the cost of transport, freight, insurance, etc. Mr James is apparently under the impression that we get our transport done for nothing. To eliminate it would be to falsify the figures, and as a fact 10 per cent, is not nearly enough to cover the charges. In the 1924-25 ‘Year Book’ the Government Statistician gives an estimated balance sheet of debits and credits for New Zealand. He estimates freight, insurance and exchange at 20 per cent, of imports. The aggregate of imports from 1921 to 1927 was £317,000,000. This gives £28,817,000 as the added amount for freight over the period. If the basis adopted by the Government in this trade balance statement is correct, then the sum of £29,000,000 must be added to imports to get the balance of freight charges for the period. This would make my figures all the more formidable. It would J>e interesting to know why these statements from the ‘Year Book’ were dropped after two years.”—(P.A.)