PUBLIC FINANCE

Hokitika Guardian, 9 February 1921, Page 3

PUBLIC FINANCE

AIR MASSEY AT PUKEKOHE

(Christchurch “Sun.”) Mr Massey had a little talk to lus own constituents in Pukekobe last week on the subject of finance, and appears to lie well pleased with himself and the financial outlook generally. \\ e agree with him on one point: that the country is sound and should have no difficulty in meeting its engagements. That does not alter the fact, however, that lus management of the public finances involves an excessive drain on the private wealth of the community. Ihe Government mops up vast sums ot money that should he available for industrial and mercantile enterprise, and spends in it unproductive channels, making the high cost of the public administration an important factor in t.ic high cost of living. Mr Massey denies that he has increased taxation. We are not aware that any of his more responsible critics ever accused him of doing so: their complaint is that he has not reduced it. Over two years have elapsed since tlu* War came to an end, and the community is still being taxed on the scale that was deemed necessary in the days when we had about 100,000 men under arms. But instead of being in a position to afford the community some much-needed relief, Mr Massey proposes to increase taxation and brought down a Bill last year to increase the maximum rate of income tax to 8s 9d in the £. No country in the world except, possibly, Germany, has found it necessary to levy such a crushing impost, on the earning power of corporations that, are necessary to the financial and economic organisations of the community. The effect of t-iis taxation is that in order to return current interest to share-holders and make proper provision for depreciation and reserves, large companies, which are indispensable to efficient and economicproduction" and distribution, are set the task of earning something like 30 per cent, annually on their capital. In order to harass them in their activities, Mr Massey provides a profiteering tribunal to trip them up on odd sales that appear to carry too large a profit, and the result is that an unsympathetic magistrate imposes fines up to £IOOO.

That Mr Massey is still a novice in finance is betrayed by his observations concerning the Customs revenue. o\\inu to abnormal imports, ho says, he

is getting two years’ Customs revenue this year instead of one, and he anticipates a great reduction next year, so he intends to create a reserve against it! The truth is that Mr Massey has collected in Customs revenue this year, money that he would have collected in 1918 and 1919 if the British manufacturer had been able to execute orders given him. These orders accumulated and delivery of the goods has been crowded into the fiscal year which ends on March 31st next. But there is no reason whatever for supposing that Ue Customs, revenue for »the fiscal year ending March 31st. 1922, will not, lie normal, and unless Mr Massey lias let his expenditure run riot, there should he no need for the “reserve” lie is talking about. Wo suspect this talk of a “reserve” is merely another way ot explaining a surplus of dimensions which, as usual, indicate our Treasury’s utter incapacity to estimate revenue and expenditure with any degree of accuracy. It is satisfactory to note that the £15,()()(),01)0 of surplus money, which was accumulated during the War by charging too much to loans and too little against revenue, and was subsequtntly spent in buying farms tor soldiers, is turning out a good investment. The repayments should obviate some ol the necessity for further borrowing for public purposes, and might very well he transferred to the Public Works Account.

The only crumb of comfort Mr Massey had to offer at Pukekohe was a prediction that when the public accounts for the year are presented, it would he shown that there had been a saving in some of the departmental expenditure. We suggest to the Prime Minister that he could save some more money hv abolishing the repatriation hoards and the profiteering tribunals, which have survived their usefulness; that he should merge the Tourist Department into the Railways’ Department, which is quite capable of doing the work at a fraction of the cost; make drastic reductions in the personnel of the Agricultural Department, and curl) the propensities of the Public Service for travelling about in motorcars. The fact that taxation has risen from £5 10s per head in 1911 to tin per head speaks for itself. particularly when in addition to this extraordinary increase in the cost of public administration. the Government’s trading departments have also made such substantial increases in all thejr charges.