The Hokitika Guardian TUESDAY, JULY 4th, 1022. SERIOUS FINANCIAL POSITION

Hokitika Guardian, 4 July 1922, Page 2

The Hokitika Guardian TUESDAY, JULY 4th, 1022. SERIOUS FINANCIAL POSITION

I Thk Prime Minister continues to stress the financial j»osition. In the House last Friday when the question of the Civil Service “cut” in salaries was under consideration, as a result ot Mr Holland’s amendment to the ImpiestSupply Bill, Mr Massey made a very important statement in regard to the finances of the country. He reviewed the position in considerable detail, and in regard to every phase the serious import of the situation was stressed. It is not a pleasant story .nor is it a new one. The Government halted far too long in practical notion to stem the tide of falling revenue. When money | was plentiful as a result of war conditions and the resultant trade boom, the i Government was reckless in its expenditure—particularly so in regard to the public service. The service was augmented considerably, new departments and sub departments were created and officered regardless of expense. When the slump was jin sight,.the Government preached eco- | nomy without practicing it. It is only i now slowly carrying out measures which should have been taken long ago to rcj trieve the position—to make reveiiuo t a,t least balance expenditure. Its i • most sustained effort was in the direction of increasing revenue by extra taxation, piling on the burdens, insti.l of curtailing extravagant, outgoings. Now ' the Government is face to face with a serious issue for despito the increased I incidence of taxtinn revenue is falling,

Mi Musst'v tnld (be House the other

night Hint the total decrease J»r the twelve months as compared with the preceding period was £«,W.Y■»■!. He tail teen injonneij bv the bead of the Taxation Depaitment that, he most export a further drop of 02,000 000 in t!.« Income Tux for the current osr, “Tnal is an awkward position is. face. ’ said Mr Massey. ‘‘l think it will be admitted by everyone that the figures .show the necessity for extreme cuulii n and care in connexion with the fim.ncial affairs of this country. If we do not go carefully we are going to get into veiy serious trouble. 1 am going to do my bit. I had the heads of all tlie Departments of State assembled in my room a few days ago, and I told them that we were passing through a very serious stage ot the aftermath of the war that this was going to l>e the worst yet, and that if we got through this year without anything very serious happening, w> would get into better times. But we have to drive very close to the corner. Imu optimistic enough to believe that we can get tluo. gh tlie present year and be able at th e end of the year to show, not ’■ surplus —i will not promise anything like a surplus in the present year- but a very ei editable record. There are many points that even members of HoHouse forgot, or do not think of, in connexion with the finances of the ruiiTilrv. AVc lev I following : l„|i, v o| economy and retrenchmeni. You will get all the details in 'he Financial Statement. A point to he remembered is that alongside the decreases in expenditure and there nave been important decreases —there arj an tomatie increases. Wo have been l>orrowing money and there is extra interest to be paid. We have had to pay li per cent for borrowed money, and the sinking fund increases the annual clung to about 7 per cent. Supposing we borrowed £80.000,000 last year—and we borrowed rather more than that—the annual charge is £.'>60,000. That is un addition to annual expenditure. Me have had to borrow very heavily in order to clear up the arrears of the war, hut w<. have passed that stage now. and we shall have to go much more cautiously and caroiully. Then there are scale increases in salaries. The system of scale increases has been going on all the time. People have said that we ought to stop it, but I do not know that that would be a fair thing to do. We could stop it as a last resort, but I do not. think it would be quite fair. The scale increases are about £275,000 par annum.” There were, the Prime Minister continued, three courses o]>on to the Government. It might reduce the number of its employees, it might imereas* taxation, or it might make the cut. He did not see how it was possible to increase taxation. Moreover,' it was wrong to turn people out for whom there was employment in the State Departments. The only thing left to do was to mak« the cut. The country could not go on indefinitely, as at present. or the time would come when it would l>e impossible for the Treasurer to find the money to pay those who were now in the employ of the State. Replying to ail interjection, Mr Massey said that the Public Servants were not receiving a penny more than he would have liked to pay them, but they were getting more than the State could afford The leader of the Opposition suggested that the only incomes to be touched should be those in excess of £320 per annum. Mr Massey said that that would not give him the amount lie required. There were certain factors in the increase of public expenditure that, most people were apt to forget. The cost of materials purchased by Government Departments for constructive works bad advanced enormously 1 during and since the war—in some eases j as much as 300 per cent. Asked whether there would be- a second cut, the Prime Minister said that so far as be was able to judge, there would be, j but he believed that the decrease in the cost of living would not allow him, without being unfair, to maUe a cut such as had been made in January last. He could give no further details at the moment.