The Dominion WEDNESDAY, JULY 5, 1916. WAR FINANCE MEASURES

Dominion, Volume 9, Issue 2815, 5 July 1916, Page 4

The Dominion WEDNESDAY, JULY 5, 1916. WAR FINANCE MEASURES

We discussed yesterday some of tho provisions of the Financc (Jill, notably those relating to the taxation of war profits, excess rents, and interest charges above-6 per ccnt. Tho Rill, however, contains other provisions of a striking nature which go to show that the Government is grappling with the question of war finance in a very bold and enterprising fashion. Authority iB taken for a £12,000,000 war loan and a £1,000,000 public works loan. With the former no one can quarrel.. It is a necessity, and all are prepared to faoo the cost of the war, whatever it may amount to, in a loyal and willing spirit. The public works loan is a disappointment. It was hoped that a further loan for this purpose would not be required this year. In the Budget last month the Finance Minister pointed to the impossibility of approaching the London market for a public ■works loan, and'he did not think it would bo prudent to float a loan in New Zealand for public works purposes. Ho then added: "I estimate that there is sufficient money now available for public works to enable us to carry on"at a reduced rate of expenditure for some time, but to guard against unforeseen contingencies the House will be asked to grant authority for raising during the year half, a million from the Post Office funds. It must be understood, however, that this authority will be merely a precautionary measure." It is disappointing now to find that instead of this half-million loan, which was merely a precautionary measure, authority is now sought for a million loan. There are some remarkable emergency provisions regarding the war loan. The Minister is to be empowered under, the Finaiico Bill to raise tho money at any rate of interest that ho may prescribe, and he is given very unusual powers in the matter of financing by way of Treasury bills. In tho circumstances which govern financial conditions generally at tho present time tho necessity for these practically unlimited powers' riiay be justified, and we must.await Sir Joseph Ward's explanation of the reasons for tho course now proposed before attempting to offer any criticism. It is no doubt necessary that the Government should be given a very free hand just now in. tho financing of the, country's war obligations.

It is rather startling at a first glance to find in a later clause of the Bill that authority is also taken to raiso or ronew any loans, or to issue any clobentures at any rate of interest irrespective of the fact that the Acts authorising the raising of the loans or tho issue of tho debentures may havo prescribed a maximum rate of interest of a lesser amount. This section gives very unnsual powers to tho Government, and throws a great on tho Finance Minister, but it is not difficult to conceivc circumstances under which it would bo quite impossible to renew loans or debentures falling due during tho war period at the maximum rato fixed in peace timos. There is one very vicious sub-section in this part of tho Act which we trust as a matter of equity and public policy will be amended. Clause -34' provides that the Government may pay tho purchase price or compensation I'or the taking of land in debentures instead of in cash. It is made optional in most cases whether the owner or vendor shall accept payment' in debentures, but in the case of land compulsorily acquired the owner of tho land can be compelled to accept debentures bearing a rate of interest' to bo fixed by tho purchaser—that is, tho Government. The injustice of this proposal is apparent. A man may have a piece of land which he has worked as a farm, and which tho State lakes from him at a valuation, say, of £10,000. It may be . very prejudicial to his interest to lose his land, tut tho State has the power to take it, and docs so. The State then pays him in debentures carrying interest at <i)r or 5 per cent. —tho latter is tho maximum rate fixed by tho Bill—and tho man is turned off his farm, thrown out of employment, and his capital is loeked up so that ho cannot uso it freely to start anew. Ho may pledge or pawn, or possibly may oven be able to sell, his debentures, but so far as the State is .concerned it proposes to confiscate his land and lock up his capital as well. No one nowadays attempts to challenge tho right of the State to acquire tho land of the individual, but it is a grossly unjust thing to take a man's land and refuse to pay him tho value of it in such a form as will enable him to uso tho purchase money to start anew. Tho State's action in effeet is to buy a man's land and compel him to bccomo a pensioner on the. proceeds, instead of encouraging him to use his capital and personal.effort in.some fresh 'field of enterprise. 1 This is not only unjust, hut bad policy. In some cases, more especially in those

of men advanced in years, payment In debentures might be quite acceptable to the owner of land acquired by the State; but the matter should lio optional, and it is to be hoped that the Minister will sec his way to amend _ this particular subsection of his Bill in this direction.