THE BORROWING PROGRAMME

Dominion, Volume 8, Issue 2292, 28 October 1914, Page 4

THE BORROWING PROGRAMME

Even the keenest critics of the Government must have been impressed by tho able epeech delivered by the Minister of Finance in moving the second reading of the Loan Bill In the House of Representatives last evening. In a masterly survey of the present financial position, Mr. Allen was able to show that tho country entered' the present crisis in the best possible condition to weather its difficulties, and he backed an optimisticforecast of the developments of the immediate future with an array of facts and figures which the critics of the Government will find it.difficult to dispose of satisfactorily. He showed that the Publio AVorks' Fund was in credit on October 22 to the amount of £92,700, apart from sums in tho hands of officers of the Department for expenditure, and on top of this was able to state that the balances of the Advances Department were in such a strong position that apart from any fresh supplies of loan money no difficulty was anticipated in carrying on piiblic works to the end of the financial year by transfers from one_ account to the other. Taken in conjunction with the fact that the restrictions upon the ordinary lending operations of the Advances Department have recently been sensibly relaxed, this is a very f ratifying state of affairs. The linister is hopeful that satisfactory arrangements can be made for the renewal of the unconverted balance of £3,200,000 of the Waed five-mil-lion loan, arid _ this obstacle _ once cleared he considers that it will be possible to raise money for current j requirements on reasonable terms by the issue of bills in London. With the assistance of the Imperial Government the war loan of £2,000,000 has already been arranged and £50,000 from this source ha 3 been made available for the requirements of the Publio Works Fund.

The three-million loan for which tho Bill before Parliament ' makes provision includes a special loan of for back-blocks development, which is to be raised over a term of not less than three years. Tho amount proposed to be borrowed this year under the Bill is therefore approximately £2,300,000, including an ordinary Publio Works loan of £2,000,000. This may appear' a somewhat lavish provision, but apart from the vital necessity of pursuing a vigorous public works policy at the present time, the Minister was able to advance some very cogent arguments in support of the borrowing programme which tho Government has laid down'. An item of over £700,000 for public buildings is admittedly heavy, out it is swollen by a vote of £80,000 on account of the Parliamentary. Buildings, and the total building vote is less objectionable than it would otherwise have been on account of. tho fact that the- building trade appears to have suffered more than_ most others from the disturbed conditions due to the war. Heavy expense is also entailed in making provision for telegraph and telephone extension. An important factor to bo' borne ininind is that tho revenue balance available for transfer to the Public Works Fund this year has been reduced by the direct cost of tho smallpox epidemic and the strike and the loss of revenue which they occasioned. In the matter of- the proceeds from land sold for cash and on the deferred payment system, tha Government has adopted a sounder svstom of financo than its predecessors, These sums, resulting as they do from tho sale of a, capital-asset, are no longer treated as revenue, but are paid into the Land Settlement Account to be_ devoted to the purchase of additional land, and whilo tho available balance for transfer to the Public Works Fund is reduced in the process, the amount required to he borrowed for the purchase of land for settlement is reduced correspondingly. Still another point made by the Minister was that while in the past it had been the practice to provide in. each financial year ways and means for the prosecution

of public works only, up to the end of October, or even ehort of that period, and to trust afterwards to transfer from revenue, the policy of tho Government was to mako the Public Works Fund independent of these supplementary resources for a, longer period, and ultimately up to the end of the financial year. It is obvious that in a period of financial etringency supplies from the ConeolidatedFund might be cut off and the Public Works Fund would then stand in danger of being depleted.' It would therefore appear that tho Public Works loan proposed for this year is largely necessitated by exceptional circumstances, while in part it represents a simplification of the State accounts and will be compensated by a reduction of responsibilities in other directions. Besides justifying the present programme of the Government Mr. Allen instituted some- interesting comparisons between the record of tho Government and that of its opponents and predecessors in office. He pointed out that while tho last Wakd loan cost £4 Us. sd. per cent., and tho Myers loan £a Is. Id. p_er cent., the first loan raised by himself cost £i ss. 4d. per cent. Tho Myers loan was renewed at a cost of £4 3s. 3d. per cent., and the last loan raised by tho present Government cost only £4 Is. 3d. per cent. Meeting tho cry that the Government had failed to reduce borrowing, Mr. Allen cited the following figures showing the total borrowing- of tho present Government from July 12, 1912 to September 13, 1914, and that of the Ward and Mackenzie Governments for a similar period from April 1, 1910, to July 9, 1912:— . Ward and Massey Mackenzie GoYt. Goyts. £ £ Loans for ourrent expenses 9,078,680 10,051,950 Redemptions, etc. ... 5,558,200 1i,4G4,525 Totals vEU,G36,880 £1G,49G,775 Tho, Government has thus reduced the amount of borrowing for tho period indicatcd_ by nearly two millions, and considering tho difficulties it haa had to face and overcome the achievement must bo reckoned distinctly creditable and an earnest of yet better thiijgs to come.