"DANGERS AHEAD"

Hawke's Bay Herald-Tribune, Issue 125, 12 June 1937, Page 10

"DANGERS AHEAD"

The Government Spending Programme , GROWTH OF TAXATION The publication of the abstract of the national accounts cncludes d,etaiis — not available until now- — of the rovenue .from unemployment taxation, and enahles figures to be. arrived. at as to total taxation a head in New Zealand, which again exceeds that for Australia, and by a substantilly-in- • creased margin (says a statement" by tlie Associated Chambers of Commerce of New Zealand). Comparative Jigures are as f ollow:—

«:Estimated. The iinancial year ended tip New Zealand on March 31, but it does not end in Australia until June 30. The estiniate of £15 6/11 Australian taxation for the current year has been worked out for us by the Taxpayers 7 Association of Queensland, from official figures and with tho assistauce of the Treasury. " Eemisslons v. Incfeases. It will be seen that wkereas taxatxqn rovenue in Australia— owing to. tlie policy of tax reductions and remissiona which has been followed — is expeeted to f all by 3/- a head, or .96 per cent., of the amount the previous year, taxa- ^ tioc a-evenuo in New Zealand— owiug to 'dncreases in, and new forms of, taxation — actually xose hy £3 9/5 a ' * head, or 20.67 pcr cent. of the amounfc the previous year. Altliough. tho aver-> age family taxation bill in New Zealand is now £79 0/8, no hint that any easing of taxation may be expeeted has been given by the aeting-Prime Minister, who, on the contrary, has stressed the still further e'xpenddture that will require to he met .during the current iinancial year. ' Of course, there are those who glibly afgue that, as regards taxable capacity, there is really no limit to the wealth " and resources of the community. But what is the economist's definitioa . oi wealth? It is ' ' something having an. exchange value." The Government Statistieian approxxmates the national wealth at the impressive figure of £880,000,000, but it has to be remem-i bered that this ineludes expression in. cerms of currency of roads and "build-i ings, wharves and bridges. These scarcely have an exchange value; they are not "liquid" and cannot be mado available for expenditure. One writer on the subjeet points out- . that a large portion of the national wealth consijsts of the savings of those persons who spent less than they received and accumulated tho surplus in tho form of real and personal property, securities, and valuables of oue sotf or another. He gods on to say: "It in important to remember that the entire stock of wealth expressed in terms df money in any country never amounts. to more,than the equivalent of a few. years' production or national incomOj, and that serious inroads can he intQ;*itt." u' C'onsumption of Capital. It' is these inroads that are being made to-day. Government extravagance and taxation are dissipating the returns from enterprise, which would other-i wise be saved and would go into fur-i ther enterprise. Capital is being con-' iiscated and consumed by means of taxation and increase.d costs. The Gov« ernment, through taxation. holds the major interest in many business and industrial concerns, and takes the major part of profits without its undertaking any of the risks of enterprise. The present spending programme of the Government is not the xesult of any discovery and utilisation of sourCes of wealth hitherto unused. The Minister of Finance, in his Budget statemeat last year, said "the fact that the moneys required for this iinancial year for an cxpanded programme of public works are available without any loan issue to the public is in itself evidence that the iinancial resources of the Dominion have not been utilised to the fullest extent," but it appears that all the Government has done has been to give another mortgage to the Re-t senve Bank, and/or to Government dopartments, in respect of funds it ifl using for Public Works and housing. The Reserve Bank returns tell their own tale of the millions of pounds which are being advanced to tho Government — money which actually repre- • sents balanees which the trading banks have to maintain by law with the Reserve Bank. All that is being done is to utilise reserves — which will be great- * jy needed in times of future economic stress — and to mortgage the future for the sake of spending to-day at a level which the national earning power and income do not warrant. As even overseas ohservers have pointed out, the dangers in the present social spending programme will ariss whon the present high level of produce prices falls. In the meantime, the Tewards and resources of enterprise and industry are being dissipated by high taxation.

Australia. Now Zealand £ s d £ s d 1933-34 ., 13 12.11 13 18 7 1934-35 .. 14 4 1 15 18 7 .1935-36 . . 15 9 11 16 5 9 . 1936-37 . . *15 6 11 19 15 2