WELLINGTON NEWS

Hokitika Guardian, 7 March 1928, Page 3

WELLINGTON NEWS

on> PUBLIC INDEBTEDNESS. (Special to “ Guardian WELLINGTON, .March 5. ices lt ‘ Don. W. Downie Stewart, Min)ost ‘•"'U'r lor Finance, invariably delivers the 1111 oxc i“llent speech on current politlie Deal tonics, and it, must be confessed :( . s _ tlutt 1m places matters in a clear mi- although on occasions ho tests „f °ae's intelligence. On the question of public indebtedness he was not nltoiod Roller f r ank, but then he was striv- „(■ i"g to make out the best case for the | 1,, Government. “Critics,” he said, I ate ' Mini to our Official Tear Book and j M say that the public debt of Australia ( ( ; ( , is £167 16s Sd per head, and that of ll( i New Zealand LI7O 19s fid per head. la ] The inference they draw from tin’s is I | |( , natural, namely, that New Zealand is s more h<*avil,v indebted than Austral- I ii. *"i.” This is necessarily the natural conclusion, and the way the figures! I) are given in the Year Book make it so. Our creditors look at our total I I indebtedness without regard to any I adjustments. We are responsible for j £‘l7o 19s fid per head just as Australia is responsible for £167 10s Rd per I head. We cannot escape this respon()f sibility. and the error lies in mixing I ,!• up our indebtedness. State investments should be given separately so I j_ that the creditors may discriminate I I, between actual and nominal debt. At I i | t . the same time it is interesting to > I, note that the taxpayer is not in any , I_ way saddled for the State Advances , debt. New Zealand’s debt includes , ,1 over thirty millions raised for the pur- ( poses of State advances, which is tin- I ~ qnestionahly in the nature of a State investment, and what is 1 of greater interest is that this investment not -i :> only pays interest and sinking fund, I J hut has also earned a profit of nearly I one million five hundred thousand a ■ pounds. It looks to he a genuine i investment, for the profit is arrived

at after allowing for alt losses o realisation and for income tax an management expenses including th superannuation subsidy to its own on , ployees. Thus, in accordance wit the practice of our best and most sue cessful companies, and the State dc serves to he complimented. Mr Stow art says: “My point is that where w have actual investments of many mil lions such as the State Advances am other items which have no countei part in Australia it. is fallacious am misleading to compart* gross puhlii debt without any examination ol whether these debts arc a burden or the taxpayers or not.” This is quite a correct and fair statement of the position, hut how is the outside creditor to discriminate wit.li the accounts so mixed up Ho sees loans floated each year and the aggregate interest increased, and naturally concludes that the taxpayer is burdened with the interest. It is to he hoped that some method will he adopted to separate an actual State investment of this character from the rest of the accounts so that the foreign creditor may get a correct view of the position. It is very interesting to note that the total advances on mortgages amounted to £56.2(59,000 since the inception of the scheme, £’22,000,000 of which has been repaid, and it will he agreed that this is a very remarkable record for the Department. Tt would he right to say that the success of the Advances Department is due largely to the fact that its advances have been made on low land values. It does not follow that its success will bo continued because at the present time their is a disposition to ad\aiice on inflated values, and the disaster which overtook the Soldier Settlement scheme may yet he the experience of the Advances Department, although it is to be hoped that it will esca|» such a fate. When the most conservative of our lending companies find themselves saddled with property <>• obliged to foreclose on moii gages it i is difficult to believe that a State Department can escape such an ordeal. However, the information furnished by the Minister for Finance regarding the State Advances is very interesting and the results are decidedly creil- j