The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” FRIDAY, SEPTEMBER 29, 1939. BRITAIN’S WAR BUDGET

Gisborne Herald, Volume LXVI, Issue 20055, 29 September 1939, Page 6

The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” FRIDAY, SEPTEMBER 29, 1939. BRITAIN’S WAR BUDGET

The war Budget presented to the House of Commons this week provides striking evidence of the magnitude of the task confronting the Mother Country as a result of the war. The Chancellor’s statement that the total governmental expenditure in the current year would amount to approximately £2,000,000,000 is itself an indication of the drastic alteration that has taken place in the national finances. Last year, notwithstanding the abnormal outlay on defence, the Budget expenditure did not amount to half the present estimate, while the peak expenditure during the Great War was only £2,696,000,000. For the first year of the last war the Budget expenditure totalled only £560,000,000, .ox - approximately one-quarter of the requirement of the present year. These comparisons are sufficient to reinforce Sir John Simon’s statement that modern war will be infinitely more costly than those of the past. In such circumstances, it is inevitable that the people of all classes should be called upon to make great .sacrifices. As was the case in New Zealand, the first additional burdens are indicated by substantial increases in taxation. A

comparison between the measures adopted in the respective countries is of interest, chiefly, perhaps, because it shows what an enormous burden falls upon the people of the Motherland when it comes to the prosecution of war.

In the Budget of last April, Britain provided no less than £630,000,000 for defence purposes and immediately on the outbreak of war authority was taken for the expenditure of an additional £500,000,000, making a total of £1,130,000,00, or no less than £25 per head of the population for the first year of the war. Compared with these figures, those of New Zealand pale into insignificance, because the estimated expenditure by the Dominion this year is only £9,750,000, or about £6 per head. It is clear, therefore, that New Zealand, with its higher living standards, has little ground to complain about the cost of the war, since its people will be paying a rate less than one-fourth of that of the people at Home. The first instalment of the war bill is similar in both countries, increases having been superimposed on existing taxes. Here again, however, New Zealand can count itself fortunate by comparison, because the new taxation, based on a full year’s collection, is equal to only about £2 7s per head, whereas that of Great Britain amounts to £5 per head. It must be remembered, of course, that the taxable capacity of Britain had not been so severely strained as that of New Zealand, a point that is Illustrated by the fact that even with the new taxes the taxation per capita in the Dominion is still considerably higher than that of Great Britain.

This fact directs attention to the comment of Sir John Simon that “severe as the Budget is, it does not bring us even remotely within the range of the limit of our national financial strength.” In contrast with New Zealand, Britain is fortunate in that she has conserved her resources for just such an emergency as that which has now arisen. There is interest for New Zealand, also, in the Chancellor’s statement that the war would be financed by taxation and loan. “Unless the cost of the war is financed from taxation and savings,” he said, “it can be financed only by methods which are distinctly inflationary, and this, of course, we must avoid.” This remark is very much in line with that made by Mr. Nash a fortnight ago, but the later suggestion that Reserve Bank credit would be used by New Zealand is calculated to raise some doubts as to the wisdom of the proposed policy. Such a procedure must lead to what Mr. Nash termed “inflation of currency with its harmful results,” or to again quote Sir John Simon it is a method which is “distinctly inflationary, and this, of course, we must avoid.” New Zealand, like Britain, must finance the war out of taxation and savings, even though this may mean a rigid curtailment of unproductive work and other expenditure which must be subordinated to the major objective of winning the war. Here, also, the Chancellor has given a lead which might well be followed by the New Zealand Government He gave an assurance that all unnecessary expenditure in Government departments would be stringently curtailed, and he appealed, at the same time, for the avoidance of waste in any form by the public. Precisely the same considerations apply in New Zealand, and it goes without saying that the private individual will tighten his belt more readily and more willingly if he is assured in advance that reasonable steps have been taken to avoid waste or extravagance by the State Pself. That the Goveranment will have to economise is apparent, because the Minister has explained that revenue 1 from such sources as customs duties,

petrol tax, sales tax and other taxes will be considerably reduced, whereas the financial proposals submitted to Parliament this week make no provision to recoup the Exchequer for these losses. The public, however, will face any economies in Stale services with even greater fortitude than that with which they will meet the additional imposts which are necessarily placed upon their shoulders. The attitude of the public to whatever sacrifices may be involved might well be summed up in Sir John Simon’s declaration: “If the price of victory be high, it is a price worth paying. It is the price of our liberty and all that makes life worth living.”