WELLINGTON NEWS

Hokitika Guardian, 21 September 1927, Page 3

WELLINGTON NEWS

DOMINION FINANCE. (Special to “ Guardian ”.) WELLINGTON, Sept. 10. Mr B. E. Murphy, Professor of Economics at the Victoria University College, delivered a lecture last week to the members of the Accountant Students’ Society, his subject being “Dominion Finance—Balance to Massey,” and a very searching analysis of the borrowing policy of successive Governments, it proved to be. The Professor's conclusions were no different to those expressed ljy Chief Justice Detliridge in the Commonwealth Arbitration Court, who is reported to have remarked : “I am disinclined to think v.e are a nation of spendthrifts and are going to he pulled up by a heavy reckoning very soon.” We. are suffering from war psychology which made us accustomed to big figures and to large expenditure, ft broke down oar previous standards of caution and bred extravagant hecdlessncss of the fu-

ture. So far as finance in New /Zealand was concerned there bad been no essential difference in the policy of any party that bad. been in power since 15)21, is the opinion of flic Professor. On March 31st. 1326. the gross Government debt was £238.11 millions, and the gross local body debt- £60.80 millions, making a total of £290.7 millions. From this must bo < led no ted the duplication caused by Government advances to local bodies, and the true

aggregate as £290.6 millions. Since March of last- year it had been raised to something like £3OO millions. One third had been added to the capital liabilities since the war. The amount of the debt bold in New Zealand is of course no real burden fo the community as it only meant a redistribution of

wealth; tho real burden is Hie deb due to persons abroad. On March 31st 1920 the amount of the debt, bob abroad was £148.5 millions. The ost b

milled public wealth was £282.0 millions and the estimated private wealll £774.5 millions making; the iota!

£1065.5 millions. Thus the proportion of debt held abroad to the national wealth was 16 per .tent. Tho proportion between the aggregate wealth and the total debt was 32 per cent. Professor Murphy points on! how. ever, that while debts wen a fixed fact, assets were an estimate and

might be tinged with (lie optimistic inherent inhuman naluro. The railways wore set down at £53.7 millions, but. who was to say what, the railways "ere worth? The capital a.specl was fictitious, the only thing thai, really mattered was the income. The assets were worth file capitalised value of tho annual productivity, which must be obvious to everyone. Forests and Stale and that was another conjecture, lands wore valued at £72.6 millions. Immigration expenditure of £2.9 millions is set down as an asset, and, as the Professor remarks, it was just like classing last, year’s golf subscription as an asset. Private lands wore valued at £6OO millions, but land in Ibis country was subject, to fluctuations. To sum up. idle Government debt (1920) was £238.9 millions and the assets £247.7 millions: the local laxly debt £60.2 millions and the assets £03.4 milli otis. The Government and tho local bodies are practically mortgaged up to the eyes. Bub it. was not the debt lint the annual -burden on the taxpayers that, mattered, 'll to total interest on the Government debt was £10.6 millions per annum, and of this £4.8 millions were recovered by reproductive activities. This left a dead weight of 55 per cent, and deducting tho war debt it dead weight of 32 per cent. It was foolish to overlook tho war debt for it Wits a dead loss and must be taken into consideration when the making of further debts was contemplated. “The growth of the debt (declared Professor Murphy) was in part accounted for by a depreciation of money, and the ‘big figure ha'bit.’ caused by the war. This habit created the desire to get things done, which really meant spending a great deal of money. People wanted everything for nothing even to providing Ivce tooth brushes for children. The Hon.

A. D. .McLeod had stated that the country wanted hydro-electric- power to develop industries, hut when the power had been obtained ho looked round for the industries. There was a craze for over development in advance. of demand.” The public generally approved of borrowing, for apparently it was much better to live on the savings of the people of England than our own. r l he path of extravagance. was easy and pleasant, and thrift and economy hard and unpleasant. Thus people took the line of least resistance. But “with interest, rates rising, export prices falling, the borrowing habit too firmly ingrained to yield anything except sheer inability to get the money, and the* had effect of easy money on our national phvchologv and self-respect, prospects for the future are not favourable.’ is the opinion of the Professor.