PUBLIC INDEBTEDNESS

Dominion, Volume 21, Issue 130, 1 March 1928, Page 8

PUBLIC INDEBTEDNESS

ERRONEOUS COMPARISON SOURCE OF PROFIT INCLUDED Dominion Special Service. Dunedin, February 29. A misconception frequently noted with reference to New Zealand's public debt was corrected by the Minister of Finance (Hon. \V. D. Stewart) in the course of his address here to-night. “Critics turn to our official year book and sav the gross public debt of Australia is £167 IGs. Bd. per head, and of New Zealand £l7O 19s. sd. per head,” said iMr. Stewart. “The inference they draw from this is natural, namely, that New Zealand is more heavily indebted than Australia. But any such comparison as this is entirely erroneous unless an examination is made of the nature of the public debt and how far it is dead weight debt and how far there are assets held against it. For example, New Zealand’s debt includes over £30,000,000 raised for the purposes of State Advances, which has no counterpart in the total for Australia, where Savings Bank funds and other resources are used for advances. “This item of over £30,000,000 is a genuine investment, which not only pays interest and sinking fund, but has earned a profit at present amounting to nearly £1,500.000 “This profit is arrived at after allowing for all losses on realisation and for income tax and management expenses, including the superannuation subsidy to its own employees. Since the commencement of operations in the year 1895 the total losses on realisation were £54,000, being a loss of 0.095 per cent, or Is. Ils. per £lOO of the total sum advanced on mortgage. When it is remembered that there has been advanced a total of £56,200,000 since the inception of the scheme, £22,000,000 of which has been repaid, it will be seen that this is a very remarkable record. In fact, this one item of over £30,000,000 is not only not a burden on the taxpayer. but it is a source of profit. “Then again, we have over £18,000,000 of investments, including reserve funds, Bank of New Zealand shares, and other items, the chief of which is the accumulated surplus in the Public Debt Redemption Fund of over £13,500.000. I am not speaking of railways, telegraphs and other public works, which amount to over £72.000,000, because critics sav, with some justice, that the value of these must be discounted owing to the growing competition of motor traffic, etc. “My point is that where we have actual investments of many m’llions. such as the State Adva’nces and other items which have no counterpart in Australia, it is fallacious and misleading to compare gross public debt without any examination of whether these debts are a burden on the taxpayer or not.”