WELLINGTON NEWS

Hokitika Guardian, 30 April 1927, Page 1

WELLINGTON NEWS

CHEAPER MONEY. (Special to “ Guardian.”) WELLIXGTON, April 27. With the reduction of the discount rate of the Hank of England and tlie consequent cheapening of money in the United Kingdom there will naturally arise the question,-what effect this will have on the monetary position in New Zealand? Obviously the effect must be good because our finance and commerce are closely influenced by British conditions. Cheaper money will give a stimulus to the industries of the Homeland. Manufacturers will he able to slightly cheapen their products and command a wider export trade. There will lie more employment, which means that greater nhinher will havo money to spend. It is in the direction of increased spending power that benefits will accrue. Wtli increased power the customers for our products, particularly meat, butter and cheese must increase. it must, however, take some time for New Zealand to feel the benefit of this, and therefore there is not much scope for extreme optimism in this respect just at present. Even if there follows a bigger demand il will not necessarily mean higher prices. U would be safer for us to accept the position as it is likely to he for some time to come, and regulate the cost of production to fir the prices. The The farmers have been repeatedly urged to increase production, hut what inducement is there for doing so. At the present prices for primary products, and the present cost of production, ilie- profit is exceedingly small and the producer is content ii he ian hold his bead above water. Before ho can increase bis production at present prices the current costs of production must be reduced. It is this aspect ol the matter that no one seems inclined tu tackle. In costs of production tlmre are many tilings involved. ’I be operations oi the Arbitration Court. the customs tariff, public expenditure, torrowing on tlie part of the State and (be municipalities and a few other things affect the costs of production. Perhaps ilio Arbitration Court award wages based on sentiment and not on economics, and the customs tnrill which falls most severely on the producer because lie is tumble to pass it on, are the chief items in the costs ol production. Xo leader, either political or commercial, has appeared to give the country a lead. It is obviously futile telling the farmer to produce more, when it is practically unprofitable for him to do so. FINANCE AND TRADE.

The .Minister of Finance Che flon. AY. D. Stewart) announces a surplus for the year ended March .'list last ol £537,000. which contrasts with L’l .100.000. the surplus in the previous year. The revenue amounted to approximately C2-1.0-Ifi.ono against €25,-3-3,000 in the preceding year, a decrease nf I.’ I I'.OtlO. and the expenditure totalled C2-I.:l >.'1,000 against t‘2-1.-570.000. an increase of €733,000. In the financial year 102:1-21 the expenditure totalled C 20.901.000, so that in tlie course of three years the expenditure increased by €3,359,000, or an nvo rage of Cl. 100,000 per antiurn. which is rather serious. Of the year s surplus of £587.000, the sum of £3l >. 000 has been applied to debt reduction, leaving C’272,000 to he carried forward. This system of carrying forward amounts is not regarded as sound public finance. Each year should stand on its own. That is the rule with the British Treasury. "Whatever the surplus for the year the whole amount is applied to the reduction of debt ; il there is a deficit that is made up in the following year hy increasing taxation. The defied i„ carried forward hut the whole ol the surplus is invariably applied to the reduction of debt. The growth of expenditure will no doubt give rise to some comment, hut the recurring surplus indicates that taxation is higher than it ought to be. It is time that there was some reduction in taxation. The British financial year closes on March Mst, the same as the New Zealand financial yen*. yci the Hri tsi Ii Budget lias been delivered, whereas we have only just, got the provisional figures of our revenue and expenditure. Even in Australia the figures of the public finance are known a lew (lavs after the close ol the yoal „„ June doth. With the publication of the New Zealand figures we may expo, | to bear, almost at once, of a loan beiiio floated in London, and the details furnished by tlie Minister of Finance will be included in tile loan prospectus. Now that Ibe London market shows an easing tendency the loan should prove successful.