FINANCE AND THE GOVERNMENT.

Hokitika Guardian, 4 February 1922, Page 1

FINANCE AND THE GOVERNMENT.

(Mercantile Gazette)

The very grave words used by Mr Massey last Sveeld in the House as to the financial position of the country emphasises what has been said from time to time upon the same subject in the columns of this paper. When Mr Massey with a, few curt words dismissed the deputation of farmers which called upon him very early in the session and jtold them not to look at Clings so pessimistically, ps our credit in London was never better, we were of opinion that he had not himself realised 1 the frqe position, nor had 1 }io properly investigated the country’s finance. But i\Jr Massey had been compelled by the march of events to look closely into his Treasury, . and! has now made up his mind that t}ie Dominion cannot eonlinue spending at the rate it lias been find that petfenchniept is absolutely necessary to avert disaster.

f The war, is, of course, primarily responsible for dislocating finance ' all over the world, and as on© of the belligerents, New Zealand could no more escape from its aftermath than could England herself, but admitting this, we could have escaped much more easily than we have done bad onr Government exercised some foresight and "" Vossed ordinary commercial knowledge, because it must be remembered the o-nr has not been all loss to us. During the years of strife money poured into New Zealand like water. Onr pros peri tv was not. due to currency inflation. hut rested upon mi)lions of jnopey obtained from the British Treasury by tlie 1 sfije of our produce. The eopnfrv during those years was wefiJthv . beyond the dreams of avarice, and bore with equanimity the war taxation and tjie Joans forced upon the people by Sir Joseph Ward and the Coalition Government, and the shocking waste of our mopey by the Defenre Department j brought about hv improvisation and j non-experience. We could have stood fhis without any undue taxation owing to thq golden stream which flowed into New Zealand.

The war business could Imre been washed up and done with, but what has oretty well hilled the country is the expenditure caused by the settled policy of the Government, declaring during the war, that no member of the Civil Service, from the Comomissioner of Taxes down to the youngest, cadet in the Telegraph Office, nor a. single worker in the country, was to be permitted to make any sacrifiee while Britain was at war. If rump steak, and fried potatoes increased in price, so must the wages of those who ordered them, he, pari passu, agumented. Every one was taught this, and at the instance of the Government, legislation was introduced compelling the Arbitration Court, upon proof that the cost of living had moved up, to automatically make a corresponding increase in all workers’ pay. That brought about the famous circus performance when wages and commodities chased each’ other around the ring as each successive increase by the Coprt brought about, as if was bound to do, a further soaring of prices. Mr Massey himself, has stated that, the Government had to pay millions per yeafi extra, wages to their employees ini order to prevent them from sobering hardship during the years of war. The l other matter which has compelled the | Government to maintain the present destroying taxation is that they have j spent twenty millions sterling in help-j ing our returned soldiers. No one oh- 4 jocks' to the mop who went to the war. j voluntarily or compulsorily, being li-l lierally looked after when they return- j ed. but common business prudepeo j should have guarded the interests of j the Dominion n« >velj as those of tho i soldiers. Jn tjieir desire to demonstrate to the soldiers that the Government intended to be their best friend, the Dominion hap been brought into such a financial moss that the most rigid economies will now be demanded if equilibrium is to bo restored. For a small oountry like New Zealand to find twenty millions for any section of the community, soldiers or otherwise, is a risky financial experiment that should

not have been entered upon until the present and future economical position had beon assured. But, in the hysteria of the soldiers’ return, the adulation of Mr Massey in England. and the trumpeting that this country was the richest, per capita, in the world, the Government lost its head and rushed into an expenditure which was out of proportion to its means, and the result is that Mr Massey is now faced, with problems which require the greatest expert financial solution. One of the matters which requires immediate attention is the Railways, which are involving us in a loss of £4OOO per day. Wo have every confidence in Mr MeVilly’s ability as general manager to pull this loss down if he had unfettered discretion to do what he considers necessary, (nit unhappily politica). considerations prevent his taking such steps as would: effect this purpose. In his report to the Minister some time since, he said plainly enough that his department was saddled wjtli lipe.s that were bpijt not sd much because they .were .necessary, as for assisting the political parties in power. Me Massey raised the wages of the railway personnel extravagantly, and in- | creased the fares to meet the extracharge, with the result that except on one or tyo lipes passengers and freights liave deserted the lines. Now, jnstead of maffi.pg a cut in wnges and at the najTie time reducing thei fares and freights, the Government appears to contemplate a further diminution in services which will effort little real economy >apd will most certainly encourage further motor competition and aggravate the Joss. Mr 'Massey’s economies are so far ns they extend, quite right ,nor can the members of the Civil ,

Service object ,to tbe sacrifice tlisy ; ai - e called upon to make as they retain their pre-war rates and are only jlosjpg a portion ftf #ie jtwp bonuses they received as war additions.

W© rpgret that ip fogs 'jbeespfije necessary jtp fljsk thesg people fp accept apy losses of income, but it is impossible for the Dominion to gig on as it is. ’• We thipk, too that Sly Massey. has only just touched the flange of what is icpmiug. Expenditure must be cut down by BW© than # the economies contemplated by the Premier will not nearly suffice to meet the position. His revenue is falling, and will continue tp go down. 3\fr JVfassey thinks he will collect £4,000,000 for in-

come tax in 1923; a, less optimistic temperament would cut the figures in half, as no ope now but the banks is making any profit, nor is there any , great desire on the part of traders to continue risking their capital in business, when mortgage rates are 7\ per cent., in order to pay nearly half their earnings into the Treasury. It must | also not be forgotten that the whole | community now, on account of the lowI ering of salaries and of wages have a purchasing power which has diminished as against former years, and this will tell very he.avily upon both wholesale and retail traders. In the meantime six millions have to be found by the banks on February 28 next for income tax, but in terns of crossrbred wool, it is necessary to find 600,000 bales of this staple to pay the tax. Is it any wonder that monopolising so much of the products of the conn try for Government spending, the Dominion is rapidly heading to disaster?