£7,000,000 LOAN.

Press, Volume LXIII, Issue 19174, 3 December 1927, Page 14

£7,000,000 LOAN.

I PROPOSAL CRITICISED. | MINISTER IN REPLY. ! fpurss IS3OCIITIOK TELEOTiAM.) WELLINGTON, Betemb-er 2. In the House of Representatives today, The Hon. Mr Downie tetewart moved the second reading of the Finance Bill. Mr H. E. Holland asked how far the Government was prepared to go in carrying out the principle laid down in Clause 26, under which the Government entered into business to purchase wheat from Australia. That seemed to be one of those Socialistic transactions in which the Government indulged from time to time. He was not objecting to it, but he wondered how far the Government was prepared to go in that direction. Mr Forbes commented upon the fact, that the Bill authorised the raising of loans amounting to £7,000,000, It was true it would not all bo expended in one year, but tho amount of money being raised must cause apprehension to serious thinking people. a ]j this expenditure necessary.'' \\ere al tho railways under construction deeded? -These works should be put under the most critical examination, and unless they could stand up to a paying test, they should not be gone on with no matter whether they were in the North Island or the South Island. Sir John Luke said he was not a pessimist. lie had every faith in the future of the country, but in view of the fact that we were proposing to borrow a further ~£7.000,000. he issued a warning that this heavy borrowing could not go on unless we simultaneously increased the production of the country. Mr W. D. Lysnar objected to the expenditure on irrigation works while there was so much land lying idle. He urged settlement of those lands iirst before spending large sums on irrigation. He approved of the vote for the Singapore Base as insurance. He urged that the Arapuni hvdro-electric works should be suspended as being too costly, and that the Government should take up the take Waikaremoana scheme, t Policy Denounced. Sir Joseph Ward denounced what he characterised as the excessive borrowing policy of the Government. Mr Stewart said they were only taking authority to borrow. Sir Joseph Ward said if they did not want to spend money, on what grounds were they taking authority to borrow money? They did not want taxation. Proposals were being brought down in a piecemeal manner with increases all round, while the alleged reductions wera highly problematical. He would prefer to see them before he believed them. If it were not for a possible rise in the price of wool'and dairyproduce, Parliament would haive seriously to consider how it could steer the barque of State away from the shoals towards which it was drifting. The financial position of the country was such that it could not fail to cause everyone the greatest aiixiety.

A Wrong Assumption. Mr Stewart, replying to criticism after the dinner adjournment, said' it was not to bo assumed that because authority was sought to borrow £7,000,000 in the aggvegate that all that money would be borrowed this year or next. So long as people expected the Government to expand in the way of huge electrical undertakings, which in other countries were privately owned, and so long as the Government was expected to complete other extensive public works, then it was imperative that money should be borrowed. The Government endeavoured to spend it on works that were reasonably reproductive. Loans expended on mental hospitals and similar •services could not bo expected to return interest equal to the amount of the loan, but that was unavoidable. However, if the public decided that it no longer desired these public services, it would be comparatively an easy matter to realise on these assets and to reduce the public debt by approximately two-thirds. But would members who had been critical of the Government's borrowing policy he satisfied if certain uncompleted works were left, unfinished? Would that be desirable economically ? State Advances. Discussing the position of the State Advances Office, Mr Stewart said complaint was continually made that not sufficient was borrowed for this Department, yet some people were as continually pointing out that the public debt had in recent years increased by £18,000,000. That might be true, but these critics forgot to mention that £8,750.000 of that sum was borrowed for the State Advances Department, which was self-contained, self-support-ing, and placed no burden on the taxpayers. So far from increasing the burden of the people by £OOO,OOO annually, the increase in the national debt increased- it by only £IOO,OOO. Railways. On the subject of whether there should be borrowing for the railways, he admitted that' railway construction was a matter open to criticism, because many people thought the railways were out of date, and in some cases it would be better to close them down rather than pav the heavy charges upon them Transport was undoubtedly an increasing problem, and the Prime Minister was now holding an investigation in order to see what the prospects were before we made too heavy losses on the railways. "Hie whole policy of railway extension and construction was one that should be carefully looked into. He quite, agreed that our borrowing was mounting up, and that expenditure of borrowed money should be most carefully supervised, but any attempt to curtail borrowing too severely or stop it abruptly woukl have a very detrimental effect. The Bill was road a second time on the Toices.

Bill Passed. In Committee on the Bill, clause 18, authorising the amalgamation of schemes under the State Supply or Energy Act. was struck out, on the motion of the Minister for Public Works, who said there was just little danger about it, and it was not urgent for this year. Clause 30 was challenged by Mr «T. A. Lee (Auckland East). The clause validated an expenditure of £6OO by the Wellington Harbour Board on a full-page supplement in the London "Times," and Mr Lee wanted to know what good Wellington or any of the other cities derived from such ail advertisement. If the advertisement had been inserted in , London's Labour paper, the "Daily Herald," he doubted if any validating clause would hare been proposed. Sir John Luke said this form of publicity was of great volt" 1 to Wellington, and he was surprised that the Harbour Board, which .was a trading body, should have to come to the House for a validating Act at all. Mr P. Fraser said local members were not consulted about this clause, and be proposed" in future to oppose similar clauses where local representatives were ignored by local bodies. The clause Was passed. ' The Bill was reported with minor amendments, read a third time, and passed.