The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, JUNE 18, 1930. THE FINANCIAL ISSUE.

Hokitika Guardian, 18 June 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. WEDNESDAY, JUNE 18, 1930. THE FINANCIAL ISSUE.

The financial issue as it affects the national accounts, is the most serious, ns it is the most difficult question on the political horizon. It is being accepted generally that for the relief of the present financial stringency, an additional Joan will be indispensibie. Ibis opinion appears to be based on the fact that a survey fails to reveal any easy way out of the situation, which lias been created by the sudden collapse of the. railways, the mounting costs of debt service and the depression in imports and consequently in Customs' revenue. Though ».he Prune Minister has announced that “cuts” are being made in every possible direction, it is freely admitted by the financial authorities of the Government. says a correspondent, that- am dramatic economies are possible. In his review of the situation the Hon G. W. Forbes said the estimated shortage was £3.000,001). Despite tire fact that this ha,s been taken as an overstatement. deliberately intended to

prepare the -people for the coming year, ic appears that it is rather short of the Government’s needs. Lqst year, relief works expenditure, of which no eogni.-an.'o was taken by Hr Forbes, cost the country about £1.400.000, and even if the report of tin* Committee <m Unemployment is translated into legislation on the terms of their recommendations, the outeome is uncertain and it is possible that a considerable mini will he expended upon relief works this year, especially as it is impos-

ibio to. set ii]: |ho necessary machinery

ior the operation of Lite sustenance fun.! until thiiv-(|unrlors of the year is gone. The net util levem.e short age is then*.ore l.kelv to lie ne .rer (.4,000,,a)0 Until £3,vUO,(XHL 'I hough the pruning knife is now being used upon all Depnr* meats subject to annual vote, and tlioiign a policy of the str.ch-

est eeonumy is endorsed in relation m siibsicl.es and' Government grams, it is quite .impossible for Lite Government to edent me ne.essary sav.ng in ■.Vciiingiojt. Indeed, to do so would 1 disorganise State seiv.ees and render tiie position even moie difficult. Tito only quarter where there is the possi bility of making a drastic cut is in the defence expenditure, and even there the savings are expected to he | inadequate. Last year, for the period which euued at A.arch 3ist. last, the .np.oriatio.-.s to the Dominion totalled •i.4y,J.th ,Uul). That rep resell led an increase of .t-l.OC'O,•!)(!(> over liikli 1925 and 1929. Importations are now e..peeled . 10 tail to the extent of £4,51X1,091), j which will bring them down to the i9i'3 level, while the revenue will drop from anout £9,•!):)(>,UJ!) to £8,()..(),009. W'liat . is also evident is that with a shrinking trade in imports, the question of revenue is difficult. The easiest and most certain return could be obtained from tea and sugar which, with a small tax, would yield £soujooo between them, hut a tax 011 food is considered to be a political impossibility. Other items on which the tariff might be raised would be problematic in return, and to revise ‘the tariff would open up a larger question than the Government is prepared to face. The easiest way to gain some substantial revenue would be a further increase in the primage duty, and this is being taken into consideration. In other directions also the position is difficult. Besides the fact that Customs revenue is an uncertain question, there must be faced the further fact that it would need a substantial increase in income tax—about 35 or 40 per cent.—to yield anything like the necessary revenue needed. On top of this, there is no chance of adding to the Consol ida led Fund by gathering m various small sur-

pluses, as Sir Joseph Ward did last year, for the excellent reason that there are no surpluses to gather. The largest item, and one upon which the Government must look with longing eyes, is the Hoad Fund, which would furnish in the region of £1,000,000, but at present that money is vested in a statutory body, the Highways Board, which may spend it as it chooses, and >is not subject to Government control. In addition, any such move would be greeted with hostility by the motorists, who would regard it as a breach of faith. Nevertheless, it is obvious from the Prime Minister’s statement that the reign of the Highways Board as at present constituted is short, and one of the reasons at the uacK of his statement may be the fact that a raid on tne road fund is anti eipatedi Some increased taxation is thus inevitable, but even after it is imposed the revenue will be insufficient. It is to be anticipated that the committee which is to be appointed to overhaul the Railway Department will be able to make savings of about £500,000 if its anticipated recommendation relative to new freight arrangements—and notably the cessation of iree services—is adopted. The easiest way out for the Government will be to raise an additional loan, in the hope chat the rising prices of produce next year will restore the revenue. This was done during the 1908-9 depression, and it is likely to be clone again this year.