DOMINION FINANCES

Wanganui Chronicle, Volume 83, Issue 29, 4 February 1939, Page 10

DOMINION FINANCES

•'DRIFT OF LAST THREE

YEARS" ATTACK BY MR. COATES AUCKLAND, Feb. 2. "Reckless mismanagement of the couditry’s finances has been responsible for the present position in New Zealand," said the M.P. for Kaipara, Mr. Coates, in a statement on the Government’s trade control scheme. After the drift of the last three years, said Mr. Coates, drastic action was certainly necessary, but that did not relieve the Government of its responsibility for having allowed the drift to occur. Mr. Coates made it clear that i.n commenting on the trade control scheme he was not necessarily voicing the official views of the National Party. As a former Minister of Finance and the immediate predecessor in that office of Mr. Nash, he was concerned at the financial bungling that had taken place in the attempt to prove the efficacy of Socialist theories and he also thought it essential to point out that the Labour Government had no one but itself to blame for its present difficulties. "It is ony fair," said Mr. Coates, "that I should redirect public attention to a statement, on national finances which I issued on relinquishing office in November, 1935. In that statement, with the backing of Treasury figures, I showed how Labour was taking over the reigns of Government with the finances of the country in first-class order, how all accounts and departmental balances were in credit, and how the budgetary position justified not only my earlier estimates, but also a general feeling of confidence in the future. Change in Three Years. "Now let us see how things have changed in. three years. The finances of the country are no longer sound; departmental balances, it seems, have been dissipated; the budgetary position is shaky, and nothing that the Government is doing can justify confidence in the future. After four or five years of unparalleled trade depression, the finances of the country were sound. Now, after three years of prosperity, they are in chaos." The most glaring example of the Government's profligacy, said Mr. Coates, was to be found in the drain on the Dominion's sterling balances, and in the general weakening of the position of the Reserve Bank. The extent of the deterioration was shown in comparative figures *for note issue, sterling exchange and proportion ot reserve to notes and other demand liabilities. These figures, taken iron Reserve Bank reports in the week of the 1935 general election and for the corresponding dates in succeeding years, were as follows: —

From Bad to Worse. "The figures tell I heir own story," Mr. Coates continued. "The drift has been going from bad to worse. Toward the middle of last year Mr. Nash could have introduced a measure of exchange control similar to tha. which the Coalition Government found necessary as a temporary safeguard for the Dominion’s finances. The whole thing could have been handled through the banks and within six months the position would have returned to normal, but now we arc at the mercy of theorists, perhaps indefinitely. "It is not necessary for me Io take up the cudgels on behalf of the importers," said Mr. Coates. "They are a section of the community and they should be able to fight their own battles. What I am concerned about is the alarming weakness in the general financial position. "To my mind New Zealand is on the verge of inflation, if inflation has not arrived already. The budgetary position, too, is far from bei<ng sound. In budgeting for a small surplus this financial year Mr. Nash allowed for a small natural decrease in Customs revenue. According to reliable estimates imports, under the trade control scheme, are likely lo be cut tn the full year by 331-3 per cent, but, as many of the goods effected are dutiable at the highest rates, thp reduction in Customs revenue is likely to be as great as 50 per cent. Some of those reductions will probably be reflected i.n the revenue figures for the final quarter of the present financial year. They will certainly be reflected in full next year, apart from Customs revenue, sales tax and in-

come tax will also show a decline and the framing of next year's budget, will probably give Mr. Nash all the headaches that he deserves. "Government expenditure has increased enormously during the last three years, and there are further heavy commitments ahead. At the same time prices will rise and any attempt by the Government to stop them from rising will put more firms out of business and more employees out of work. Matter for Parliament. "The importers are protesting at present, but soon every other section of the community will be joining in the protest. The whole position is a matter t which definitely concerns Parliament —not just a few embryo dictators in one party, but all the 80 representatives of the people. If Mr. Nash had been open in the matter he would have advised the Prime Minister to summon Parliament so that all the facts could be examined. Instead of that he takes into his own inept hands powers of life and death over the trade and finance of the country. "What astonished me," Mr. Coates concluded, "is that private members of the Government Party have not seen how the authority of Parliament is being flouted, but that will not excuse them for the part they have played in endangering the whole financial structure of New Zealand."

Notes. Sterling Exchange. Proport ion. 1935 .. 9,123,706 17,458.57 i 99.126 19.36 . . 11,797,876 16. ,93,794 76.141 1937 . . 13,263.032 16,552,344 74,943 1938 . 14,496,272 5,029,137 33.723