FINANCES OF THE DOMINION

Hokitika Guardian, 17 September 1930, Page 2

FINANCES OF THE DOMINION

< ■ 4 IN SOUND POSITION. $ SIR OTTO NIEMEYER ; • SATISFIED. WELLINGTON, September 13. The Acting-Prime Minister (the Hon E./A. Ransom) made an important statement in regard to the finances of the Dominion last evening. He also stated the confidence of Sir Otto Niemeyer and- Professor Gregory in regard to the soundness of New Zealand’s financial position. The report, of these financial authorities will not he prepared until their return to England. •

Mr E. A. Ransom, responding to the toast of “The Visitors” at the annuai meeting of the Commercial Travellers and Warehousemen’s Association last evening, said that.gathering was being held in a time of 'serious economic difficulties, but that fact should not discourage US. His Excellency the Gov-ernor-General had already encouraged tis to believe that this fair country was. so blest that we could meet the difficulties with, .optimism, .courage, and assurance; and that, notwithstanding the serious- prospects before.us, we had every, expectancy of overcoming them to the advantage not only of this Dominion, but, in some minor degree, to the advantage of the Empire. Mr Ransom said he proposed to give a few figures to show the progress of the Dominion at the moment, and to state how it was proposed to meet the difficiiltis as far as possible. Factory production, he said, was already playing an important part in the progress of the Dominion, but it was felt that it was not yet playing a sufficiently important part. | ; ASSISTING INDUSTRIES. In that connection the Government was entitled to take into consideration the direction in which assistance could be given to. the industries of the Dominion. From time to time they were • asked if it were not possible financially to subsidise some of our industries. Some of these were being subsidised, biit to his mind that was not the safest on-soundest principle "on which; to work because any industry which had to lean upon a subsidy did not, as a rule find it possible to get away, from that financial assistance. To'his mind, it J was a sounder principle to place as industry}' if possible in a . good position in-.which.it could compete with similar ij^gatr ! ]'e i S;in';okfch T er pjirts'pfythe Empire oil,la \fafry.and sound;, footiiig. Therefore tHey had to consider, what was essenj/iAI to- efiabie fresh 1 Industries to he established in the. Dominion ■ which could in any numner manufacture some of nur. raw products. There was re< cently brought under his notice the question of encouraging a new. industry being established in this country hut which it was said was prevented from coming here owing to our system of company taxation. The question of -company taxation had nut yet been solved, but lie recognised that .something should be done in that matter as it meant the manufacture of some of the raw primary products of the country. ,

MORE LAND SETTLEMENT* In connection with our primary pro-: ducts, the exports for the year ended June, 1930, amounted in value to £47,588,000, as compared tvith the export of the previous year of £56,244,000 a reduction of over £8,000,000. That was not due to any falling off in volume of production. In fact the volume was increasing. As a Minister of the Crown who had travelled throughout New Zealand, lie realised that this young country was not half or quarter developed. Large additional areas of land could be brought into profitable ■ product'*)!) Here he saw a solution; or a partial solution, of the serious unemployment problem which New Zealand had to face. Jt was regrettable that some 5000 people were without constant employment) at present. That was not satisfactory. However, only partially developed-,, as the country • was, they were confident that by a wise system of government that difficulty could be overcome,' .It was hoped that our products would soon get on a stable market. TRADE BALANCE. As to th etrade balance, in 1930 the excess of imports was £1,239,000, and in 1929 the excess of exports was £9,736,00. There was a difference under these two heads of nearly £11,009,000. That was a serious position, and accounted very largely for the economic condition of the country at the present moment. The 1929-39 season, however proved a record in the production of the dairy industry and fruit.

Coming to the question of public finance) he would like to state briefly what the Government endeavoured to do during a difficult period. It was recognised' that the basic cause of the present depression was the falling prices of our primary products. Over 90 per cent of the exports from the Dominion were primary products. These falling prices were beyond our control. With these conditions confronting us, at the commencement of the financial year the Government was faced with a prospective deficit of £3,000,000, That was a very serious

position for a new Government. He was sure the business men present would agree with him that the Prime Minister did the right thing in deciding that that £3,000,000 prospective deficit had to be met, and that we must balance our Budget. The position must be faced, not from a party, but from a national point of view. The interests of the Dominion were of paramount importance. Since; that statement was made Sir Otto Niemeyer of the Bank of England visited Australia. ’ The action taken by the Commonwealth showed that our action in regard to facing our difficulties was the right thing to do, because the Australian Governments were now setting out to do what our Government set out to do before they asked for the advice of so eminent an authority as Sir Otto Niemeyer. Now, coming to the question of how the Government had attempted to face the difficulty of making up the tiire.-. millions. The Government realised that the country could not afford to- inane up so large a deficit by taxation. The first thing it did was to ascertain how far the Departments of State could reduce expenditure so as not to put a heavier burden upon the taxpayers than they could possibly help .Then there was the serious question of unemployment. The Government felt that the position was fairly faced in that not less than half the amount mentioned had to be placed ort ;, the shorn-. ders of the general taxpayers;'

REVENUE AND EXPENDITURE

The result for the last fivq months were as follows: —Revenue, £7,094,0UU a decrease of £536,000 as': compared with the corresponding period of last year. The Customs revenue was -showing the decline anticipated in the Budget. The imports for the five months showed a decrease of £2,000,000. Coming to the question of extra taxation, that was one of the most diffi':ult. positions the Government had to face An effort had been made to spread ; the taxation as equitably as pos sible. The Acting-Prime Minister expressed regret that some cJf the larger financial institutions of the Dominion which were asked to carry what the Government believed to be a fair proportion of the extra charge, were apparently endeavouring to place that chirge upon the shoulders of others less tble to bear it than themselves. He sincerely hoped they would realise then responsibility in this connection. The expenditure for the- past .five months was £9,588,000, a decrease of £601,000, as compared with the corresponding period of last year.

SIR OTTO NIEMEYER. | The Government appreciated the fact, that at such a serious time in the history of the Dominion they were able to avail themselves of the advice of so important a financial authority as Sir Otto Niettieyei'j and his associate Professor Gregory. “And may I tell you here, 0 said the Acting-Prime Minister “that we do not regard our position in anything like the same category as the position of Australia at the pre» sent time. Not that I wish in any sense to depreciate what is being done in Australia; but we recognise that the finances of the Dominion are on a perfectly sound footitig. My conversations with these gentlemen have convinced me that they regard the matter in a similar light; that the credit of the Dominion has never stood higher in the British Empire or the Old Country than it stands to-day. They realise that this country will at all times l’ecognise its full liabilities and its obligations, and will meet them in a proper financial way. Mr Ransom then referred to what he termed the high rates of exchange, and expressed the hope that Sir Otto Niemeyer would help us in that matter. Sir Otto Niemeyer would defer the preparation of the report until his return to England, and legislation it would be submitted to Parliament next session.