WAR FINANCE

Gisborne Herald, Volume LXVI, Issue 20110, 2 December 1939, Page 10

WAR FINANCE

AUSTRALIA’S SCHEME BALANCED PROGRAMME TAXATION & BORROWING MINISTER’S OUTLINE (Pur Press Association.) WELLINGTON, this day. The following information was received by the Australian Trade Commissioner yesterday by cablegram from the Prime Minister of Australia, Mr. R. G. Menzies:— “The Hon. P. C. Spender, ActingTreasurer for the Commonwealth, presented the financial statement in the House of Representatives yesterday. “He stated: ‘lt is the policy of the Government to finance Australia’s war effort by a balanced programme of taxation, borrowing from the public and borrowing from the banking system. The balance between these three methods would change from time to time according to the economic circumstances. For the time being the Government has decided that- the balance will be weighted towards borrowing with the assistance of the banking system, rather than towards taxation, so as to bring all the available resources into full Lise. “ ‘ln view of the increases in taxation imposed in September last, the uncertainty resulting from the outbreak of war, and the recent decline in employment, the Government is of ( he opinion that to increase taxation at present would merely delay the recovery of Australia’s economy and consequently interfere with the full prosecution of the war programme. There would be no increase in taxation for defence beyond the increase of £8,000,000 announced in September last and a further increase in customs duties of £150,000, the details of which would be announced later in the day.'

Change in Emphasis

"Mr. Spender declared that as the economic recovery, which has already begun, gets under way the Government will transfer the emphasis of its financial policy from borrowing from the (banking system, firstly, to borrowing from the public, and, secondly, to taxation. It is probable that the change in emphasis will come before the end of the financial year. Part of the borrowing plan is the issue of savings certificates.

“The attitude towards plans for next year’s Budget is substantially different. The Government will bring down early in 1940 a comprehensive schema of war taxation. If this is done and other controls of exchange, prices and capital investments are maintained, it is possible that Australia will avoid the evils of excessive credit expansion. The Government has looked ahead and formulated a financial policy which will fit into a co-ordinated plan capable of being adapted to the changing circumstances.

“The real burden of the war effort must be borne now. It cannot be shifted by ingenious devices to the future. It is foolish to believe that the war will not entail substantial sacrifices all round. No one can predict the course of the war, but Australia is determined to see it through to the finish, no matter what sacrifices are entailed. Sacrifices are insignificant compared with the disaster of the loss of liberty if victory is not ours. Details of the revised estimates for 1939-1940 are as follows, showing the comparisons with the September budget:— Revised Estimates “Defence and War Expenditure. —An outstanding feature is the greatlyincreased estimate for defence and war services. The defence expenditure was estimated at £33,137,000. The revised estimate for defence and war services is £62,014,000, of which £46,181,000 will be provided from the loan fund and includes capital war expenditure of £15,583,000 and pre-war capital defence works of £20,383,000. “Expenditure, other than defence and war.—Reductions effected amount to £1,617,000. The total estimated expenditure from revenue is £101,452,000.

“Revenue. —Customs revenue is estimated to fall by £2,920,000 compared with the September budget. Income tax is now estimated at £1,140,000 more than in the Budget. Gold excise is expected to yield £900,000 in tiro current year. Other adjustments made provide for increased yields totalling £280,000. The estimated total receipts for the year are £101,490,000. “New Taxation.—Under the budget and supplementary measures £8,000,000 in new taxation has already been levied for this year only. A further increase is now proposed in. Customs duties to yield £150,000, details of which will-'be given later. For the reasons already given, no further taxation will be brought down this financial year, but comprehensive and balanced taxation plans are now being prepared for the next financial year.' “Loan Expenditure.—The September estimate of £23,072,000 is now increased to £48,931,000, including £40,181,000 for defence and war services, £2,000,000 for the PostmasterGeneral’s Department and £750,000 for farmers’ debt adjustment.’’