Budget Deficiencies

Press, Volume LXXIX, Issue 23965, 4 June 1943, Page 4

Budget Deficiencies

As a solution of the financial problem before him this year, the Budget produced by Mr Nash has its clear merits, which are stated or implied above. It stakes everything on the heaviest loan demand ever presented to the New Zealand public, but does so with the clearest and best of reasons and there can be little doubt that Mr Nash will be justified by success. But in some respects, and they are important ones, the Budget is sadly disappointing. It discloses no wise enterprise in financial policy or in policies to be financed, except as references to the parallel advance of housing and hydro-electric programmes are to be welcomed. It was to be hoped that Mr Nash would follow the example of his Canadian colleague and introduce a measure of pay-as-you-go tax reform. The present lag-system is cumbrous and inefficient in ordinary times; to-day, when nothing can be more valuable fiscally than rapid and effective collection from current sources, its disadvantages are damning. But Mr Nash did not, it seems, meet' Dr. Ruml, or else was too conservative to profit by the meeting. Second, it is to be regretted that Mr Nash has chosen neither to lower the income tax exemption level nor to introduce some form of compulsory savings. There is, however, a brief but unmistakable hint in the Financial Statement that, if the loan is not filled, other measures will follow. Hints are worth less than decisions in time. Third, though an advance in the hospitals benefit rate was certain and necessary, it is a pity that it was unaccompanied by any sign that it is to be regarded merely as a step preceding total reform of hospitals finance and control. Fourth, industry, which receives several genuine and deserved tributes in the Financial Statement, will look in vain for any indication that the Minister has considered how to safeguard its strength. A plan, for example, to reserve some part of the high taxation and excess profits taxation on industry, as is done in England, for post-war plant renewals and conversion might have been proposed. Alternatively, a differential tax rate on profits to be “ ploughed back ” would have been usefuL Finally, although Mr Nash summarised what has been done in accordance with Part I of the Rehabilitation Act, he gave no indication that plans of reconstruction under Part II are being developed. Admittedly, the Budget opens no relevant item; but the Financial Statement’'is; or can be, the vehicle of economic, qpolicy statements.: The silence which broods over Part II ought to be broken.