THE BORROWING PROBLEM.

Dominion, Volume 5, Issue 1264, 20 October 1911, Page 4

THE BORROWING PROBLEM.

The Prime Minister has been eo very unfortunate during the past few weeks in his attempts to answer many of the criticisms of his opponents in the House that it seems only fair to say that on Wednesday last he supplied quite a clever gloss to his speech in Dcvonport last year. The substance of his Dcvonport statement was that if borrowing ceased the country would fall into ruin, and the people would flee in tens of thousands to other lands. As wc pointed out at tho time, this was a very extraordinary thing to come from the leader of a party that has had twenty years of undisturbed opportunity to provide rock foundations for the country's prosperity, that has boasted for twenty years of the indestructible character of tho country's financial and economic position, that denied that the financial crisis in America four years ago could possibly affect New Zealand, and that at the present moment assails with bitter outcries anybody who ventures to suggest that there is a weak spot anywhere in our national life. It was a queer estimate of the position produced by twenty years of "Liberalism." Wo are not going to deal in detail with that aspect of the matter to-day, however. What Sib Joseph AVard now says is that ho meant that to interrupt the finances of development would mean disaster. Borrowing, he said, could not be suddenly stopped. Yet he is constantly saying that never in the previous history of the colony were its prospects brighter; that land settlement and the acquisition of Native land have gone on vigorously, that trado and commerce are increasing, that the avenues for employment arc largo and expanding, and so forth and so on. Yet he wishes the public to bclicvo all that and to believe at the same time that we must borrow or meet with the calamity which ho depicted at Dcvonport. That is an impeccably accurate summary of the Prijie Minister's arguments. Now, wc think the public ought to be reminded of what was said by the Liberal Government's Colonial Treasurer in his Budget in 1893. He said, as to borrowing:—

To borrow or not' to borrow—that is tho question. There aro some who advocate a reversion to the old system of obtaining loan-money from the London market in order to enable public works to 1m carried on to what is termed "a payable point." A great d«al is involved in this twin. .anil.<lanlit.ln» thn erner!.

enco of most of us has boon that this paying point is a receding goal. It is, however, patent to all that, with tho work of colonisation actively going on, and tho development of the interior—a part of our policy which has been and must be vigorously pursued—public works must- continue to form an important item in tho future expenditure- of this colony. There is a groat deal to bo said against' the raising of moro revenue by taxation thnn is ordinarily required to carry on tho services of tho country, and 1 am free to confess that it is. not desirable to draw more from tho pockets of the taxpayers than they arc at present contributing. On tho contrary, the policy of tho Government, as I have already 'indicated, shows that wo beliovo that relief should bo afforded to tho taxpayers, We must, however, either obtain money by taxation or by borrowing, until the timo arrives when tho expenditure upon public works will 1» less necessary than it ij at present. In tho meantime I am of opinion that tho best interests of the colony are being better consulted by our steadfastly adhering to the- policy of self-denial, and by maintaining the strong financial position which we now hold, than by further large and heavy reductions in taxation, and in substitution thereof, adopting a borrowing policy. Tho Government believe that borrowing is not necessary, and have decided to conduct tho business of the country without having recourse to it.

This statesmanlike utterance —the voice of the true Liberalism of Ballance, who had just died—is damning criticism of the Ward Government's policy at the present moment, and of Sir Joseph Ward's Devonport speech and of his gloss upon it. It argues that self-reliance and self-denial are fine things, provenly fino things; that high taxation is an essential evil, but a lesser evil than borrowing; and that intensely urgent developmental needs need not argue London loans. Sir Joseph Ward to-day repudiates the whole gospel. But, he may say that things are different, that matters have changed, that special needs have arisen, that what applied to a slow, nerveless, almost motionless colony does not apply to a booming young Dominion in the full tide 01 development. "Well, wc may quote a few othor words of the same 1893 Budget:—

I havo no hesitation in staling that nover in tho previous history of tho colony were its prospects brighter. Land settlement has progressed vigorously. The acquirement of Native land has gone on actively. Our past-oral and agricultural interests have as-snmed large dimensions, and have attained to a degree of importance second to none. Trade and commerce are active and increasing. Tho bulk of our exports are larger than ever. The avenues for the employment of welldirected labour are laTgo and expanding.

And so on. That is to eay, the Colonial Treasurer of 1893 drew a picture which is exactly like the picture Sir Joseph Ward draws to-day. And he drew from it the conclusion that borrowing should cease, that mere good government plvs economy could furnish all the needs, tho intense needs, of development. Sir, Joseph Ward paints an equally glowing picture of the present state of things, and he concludes that wc yet must borrow as wc have been borrowing or calamity will overtake us. Perhaps Sir Joseph Ward can controvert the financial successor of Ballance. Perhaps he win show that he was a silly fellow obsessed by Ballance's ideas. But he will not. For the Colonial Treasurer whom wo have quoted as laying down financial principles that destroy Sir Joseph Ward's increasingly desperate and increasingly muddled rhetoric in this year of grace 1911 was— Mr. Joseph AVard.