The Waipa Post. TUESDAY, JUNE 29, 1920. Published on Tuesdays, Thursdays, and Saturdays. FINANCES AND PRODUCTION.

Waipa Post, Volume XVII, Issue 961, 29 June 1920, Page 4

The Waipa Post. TUESDAY, JUNE 29, 1920. Published on Tuesdays, Thursdays, and Saturdays. FINANCES AND PRODUCTION.

THE problems of national finance are stressed in the Governor’s message to Parliament, and it is clear that the solution of the difficulties is not readily discovered, and it will call for very earnest consideration when the business of the session is seriously taken in hand. The inevitable afterwar taxation to meet * the recurring charges on a public debt which in four short years increased to a startling degree and out of all proportion to the development which took place within the Dominion is a heavy burden. The large size of the figures has given rise to much discussion, both of Government expenditure generally and of the special problem of the debt charge. It is, however, an important point to remember that the charges on the domestic debt are essentially different in character from charges in respect of a debt held abroad. When interest is paid on foreign debt the country is poorer by the amount of that interest. Goods and services have to be sent abroad to cover it, which otherwise would contribute to the incoming wealth of the country. But when interest is paid on a debt held at home no goods or services are directly lost to the country as a whole. With the major part of our war indebtedness held within the Dominion the country does not suffer to the degree of sending large interest and sinking fund charges away, and thus impoverishing the country. What virtually happens is that command over resources is taken from the taxpayers in the form of taxes and handed back to the domestic holders of Government stock in the form of interest. If the holdings of this stock were distributed over the country in exactly the same proportion as tax-liability everybody’s payment of taxes to provide interest would be exactly equal / to his own receipt of interest.- The whole transaction would consist in the transference of so much money, as it were, from every citizen’s right-hand pocket to his left-hand pocket. But in reality the proportion is not equal, and some—many —people have to pay taxes to provide charges much in excess of the interest they receive; others receive interest much in excess of the taxes 'they pay. Hence the collection and dispersion of the funds annually received to meet charges on even the domestic debt involves a large transference of money between the different sections of the community. But they do not involve any direct cost to the country as a whole, and in the process of their redemption the money will not he .lost to the country.

The main problem for the moment is the means by which the revenues of the country may be safeguarded and finances arranged whereby the large accumulation of developmental work may be speedily undertaken. It has been repeatedly urged that the only way this can be attained is by production, and even more production, and it becomes more and more plain that concentrated effort to increase the volume of trade is the dominant need of the time. It is urgently important that the Dominion’s productive powers should be fully used, subject, of course, to the condition that adequate leisure and freedom from strain are preserved for the workpeople. The Government, in the solution of the debt problems, cannot well ignore the industrial relationships, and if it can enlist the sympathy and help of the Labour Unions as well as the investing sections of the community in one supreme effort many of the existing financial problems will quickly disappear. For want of coal we are told we can have no cement; for want of cement buildings to increase the number and variety of factories, bridges to open up more country for production, and homes to accommodate the people are all seriously impeded. The hold up of shipping, years ago, has been a Contributing factor to the accumulation in the stores, so

that the wealth which the country has earned and needs is not available as quickly as it should be. Industrial troubles have only aggravated the problems of finance, and they will do so in the future unless the Government can devise some means for the reconciliation of the interests of the various groups of industry which, in every-day times, stand as Labour and Capital. By increased production speedier development may be hoped for. To increase the national wealth is a duty to the State, and, moreover, it is the means which will assuredly serve the selfish interests of the taxpayer by relieving in a large degree the heavy charges which the war has imposed upon the country’s finances. For the future the policy of raising the national loans within the Dominion should not be departed from. Little difficulty was experienced during the days ,of the war in raising large sums within the country, and it should be less difficult to provide for present needs in the days of peace. A debt held within the Dominion will not jeopardise the future as would similar debts held overseas. So far, therefore, as may be reasonable the Governmement should strive to finance of the public works of the country in the country. As a matter of principle—associated, as has been suggested, with the subsidiary treatment of industrial questions—the best security in the future and the real prosperity at the present time are best found in confining the national debt to bond-holders within our own land, so that the country as a whole will not be the poorer by the recurring charges upon a debt held overseas.