The Dominion MONDAY, MARCH 21, 1921. THE NATIONAL FINANCES

Dominion, Volume 14, Issue 150, 21 March 1921, Page 4

The Dominion MONDAY, MARCH 21, 1921. THE NATIONAL FINANCES

At an immediate view, the figures of the national finances for the first eleven months of the year 1919-20 afford solid ground for satisfaction and more than justify the Liuanco Minister’s observation that the financial position of the Dominion is quite sound. As Mr. Massey has himself stated in very plain terms, however, there is nothing in these figures to. encourage shallow optimism—on tho contrary, in/their total effect they clearly demonstrate the need for strict; economy. The remarkable expansion of revenue w'hich lias much more than balanced the heavy increase in expenditure during tho current financial year is, of course, a satisfactory proof of buoyant solvency, but it is or ought to be quite obvious that indefinitely continued progress on these lines is not to be expected. The present outlook in trade and industry, particularly primary industry, lends all possible emphasis to the contention that the time has come to apply the bVake in affairs of national finahce. With Uiese reservations, however, the position now disclosed is one of which tho country and the Finance Minister have no reason to complain. Mr. Massey . has been if anything unduly modest in indicating the extent to which the national accounts for the past eleven months balance on the right side. His ‘•'anticipation” that there will be a surplus on March 31 next is particularly safe. The only question open is in regard to the amount of the surplus. At tho end of last month, the balance of revenue over expenditure stood at £2,670,146, and this with something like half of the income tax for the year still outstanding. Although calls on revenue in the closing month of the financial year are apt to be heavy, there is every indication that the surplus will be of very substantial proportions. In the closing month of 1919-20 the revenue collected exceeded expenditure by nearly two millions sterling. Although the position this year may be Affected oy the delayed payment of a proportion of the income tax, it seems not at all unlikely, in view of the present level of Customs revenue, that this ijionth may show at least as good a balance as March, 1920. In-that case two millions sterling, or more, will be added to the revenue surplus of £2,670,146 shown for the eleven months to tho end of February last. It must at once lie added, however, that the Finance Minister is thoroughly justified in laying as much emphasis as he does on the extent to which the favourable state of affairs meantime disclosed is due to a temporary and quite abnormal increase in Customs revenue.

For the eleven months, Customs revenue increased by £3,655,641 over that of the corresponding period of the previous year, when the amount collected was £4,206,090. This phenomenal increase will provide much the greater part of the total revenue surplus for the year, and the extent to which importers are now overstocked makes it highly prolix able that Customs receipts must decline in the financial year about to open. At the same time, while returns from direct taxation during 1921-22 ought to be fairly well maintained (owing, largely, to the fact that income tax is levied on the incomes of the preceding financial year) a period has been closely approached in which these returns also must be expected to drop more or less seriously. When account is taken also, of the rate at which national expenditure is still mounting, the imperative need of economy becomes self-evident. An increase for the eleven months as compared with the corresponding period of the previous year of £1,336,220 in Railways expenditure, and another of £844,893 in Post and Telegraph expenditure are conspicuous items in a total increase of Departmental expenditure to which it has become absolutely essential to set definite limits. Adding debt and pension charges to Departmental expenditure, the total increase in expenditure for the eleven months as compared with the same period of 19(920 is more than four millions sterling. . The fact that some of J.hese charges on a revenue which must contract to some extent in the near future are beyond control, makes it all the more necessary that economies should be instituted where they arc possible. From the financial standpoint as in other respects, the Dominion has borne up gallantly under the strain of war and postwar conditions, but the time quite obviously has arrived when means must be found nf relieving the strain. Strict economy in national administration is demanded, not only in view of the prospective decline ill revenue, but in order that the country may bp given some relief from a burden of taxation which at present is doin£ not a little to check and stifle productive enterprise, and so to narrow the sources from which future revenue must be drawn. As compared with most other countries, the Dominion is, of course, enviably placed where its national finances are concerned. In an era of admitted or disguised deficits, its Budget is and has been much more than balanced, much of its national debt is offset by productive assets, and it has practically nothing corresponding to the floating debt which in many other countries is doing so much to extend the vicious circle of inflation. With so much to the good, however, it is none the less indispensable that means should be found of setting limite to a growth of expenditure which cannot indefinitely be covered by a. revenue drawn from taxation and the charges for State services. It is satisfactory that the observations made by the Finance. Minister -in his interim statement and on other recent occasions indicate that he perceives clearly the. necessity both of enforcing administrative' economies and of doing something in the near future to lighten taxation burdens.