REHABILITATION PROBLEMS

Hokitika Guardian, 1 September 1931, Page 6

REHABILITATION PROBLEMS

SUGGESTIONS ADVANCED. I ADDITIONAL ECONOMIES OR TAXATION. Christchurch "‘Times” Correspondent. WELLINGTON, August 30. Members of the Inter-party Financial Committee expect the coining week to be one of painstaking compilation of facts and opinions bearing oil ai. tb e phases of the economic difficulties ! affecting the State and the individual, | Banking evidence, which is to be oh- ' tallied on Monday, "is anticipated with ! great interest. One of the earliest decisions of the committee, to early out tne jnvestiga -> tion at first hand and to bear experts itself,’ instead of leaving it to a separate body to propound a scheme for financial rehabilitation, has bad most important consequences. It is enabling expert opinion to be subjected to crossexamination from all angles. Definitely differing lines of thought are to be j found around the table, and the Respective advocates are getting a valuable opportunity of submitting their views I to the witnesses. It is one of the i'eaj tures of tlie committee that every I member of it utilises this right of questioning witnesses, and that fact explains why Mr W. I). Hunt, a wellknown Wellington business man, was under cross-examination last week for several hours. Mr Begg, of Dunedin, who, as part of his evidence presented 1 a currency theory involving mild inflaj tion, found his hearers so greatly iuj forested that it became evident lit could not conclude his statement al | that sitting, and his examination by j members will take place at w later dato. i | Drastic Suggestions. 1 While one section of tile committee | is known to hold the opinion that there are taxable resources which have not I been adequately tapped and should be I drawn upon, rather than sitting out ion a programme of drastic additional ! economies, the case for economy has , been very strongly put. It is underi stood that in the evidence So l'ar preS sen ted suggestions have been made ■that as costs must still be heavily • reduced, further reductions in wages ol 10 per cent., or even 20 per cent., are necessary and that the pensions bill, which amounts to over £3,000,000 per 1 annum, should suffer a percentage reduction in line with tli© fall in the | cost of living, the rise in which led to | increases in the pensions scale. ! It also has been suggested to the committee that legislation should enforce a substantial reduction in rates of interest within New Zealand, while ! one member of the committee, com- : men ting on the proposals for currency : inflation, which have been included in the evidence, estimates the proposed amount of inflation at 30 per cent. The j exchange question, which will bo more to the for© during the coming week, when bankers and economists are to : give evidence, has already been the i subject of suggestions, on e of which iis that tiie New Zealand producer ; should be given the advantage now I enjoyed by his Australian competitor l of 38 per cent prcnfnihf on his over--j seas credits, instead, of the- present 10 per cent, which other authorities con- | sider unduly high, having regard to the | exchange position when divested of j Australian influences. A Narrow Margin. A particularly valuable sidelight on the possibility of reducing interest was provided last week, when evidence was submitted regarding tiie interest rates of the State Advances Department. Un--1 dw its different Branches its loans to I clients aggregate £45,000,000 and if ' tiie advocates of reduced interest could achieve success in connection with this, the largest lending institution in the Dominion, it would be a tremendous victory, but facts show that the ideal is impossible of attainment. ■* It lias been demonstrated, to the committee that the Department's margin to meet expenses and make a profit is only Is 8d lier cent, and that any reduction in the interest- charged would create a deficiency which trie taxpayer would be called on to meet. Any reduction in interest could not influence the rate paid for the capital of the Department, which - lias largely been borrowed from overseas. Suggestions current earlier in the investigation that the committee would soon break’ up because of its divergent views do not receive credence to-day. Those who held this opinion most firmly are now reduced to tbe belief that at the deliberative stage differences will become so acute that the Labour delegation will “hove off,” but this is not supported by anything to be gleaned from" members of the Labour Party, who anticipate that their representatives will remain light through the deliberative stage, though they may not agree to all the suggestions the committee may make to the House.

National Government. When the committee commences the task of recommending methods of maintaining a balanced Budget in face of the prospect of next year’s' finance being even more difficult than to-day’s, the cleavage lines will become prominent. On one side will be strong advocates of further drastic curtailment in State expenditure, involving the admission that many social services must he pruned and other important phases of expenditure, hitherto recognised as essential, cut’ down in line with the limited national income. The opposite

view is that there still are-untouched taxable resources and that no funner reductions affecting persons of limited income are needed. Ndi political partydesires to make hard decisions of this kind, particularly prior to a general election, because it is an undoubted weakness' of tne democratic system that the electors ar e more prone to consider material benefit to themselves in supporting any particular candidate than to appreciate the less attractive policy of sacrifice in the national interest. Evidence is piling up before the (Uter-partv committee showing vividly 1 how the Dominion’s primary fiiclustnes are being conducted under hopelessly discouraging financial conditions. The consequence must he that a majority of the committee will favour a policy of reducing the burden of local rates and keeping national taxation to a bare minimum by making further reductions in State expenditure. As a pre-election policy this would he a gen. erous political gift to any party oppos- ) sing it, therefore some measure of political insurance seems likely to emerge as a result of the present financial investigation. Friday’s discussion in (the House whether there should be a postponement of the general election was important as disclosing that the leader of the Opposition., though not specifically committing his party to such a plan, is prepared with an open mind to meet all the possibilities if a sound scheme for financial rehabilitation emerges from the committee’s investigation. Mr Coates’s ist/tenienit has heeti subjected to much lobby inter- ’ pretation. It is suggested that notv.ing short of a National Government could .carry out the rehabilitation plan, •and British politics have given a powerful lead in the direction of responsible leaders carrying a majority of . their followers with them to the point of putting a plan into action, then dissolving partnership. This may eventuate in New Zealand politics or,'as a compromise arrangement, the official opposition may guarantee the Government its support in the necessary measures. Whether these can be passed within the short remaining life of the present Parliament is doubtful, .as the period ends on November 28. It might he possible to .secure an extension until March and then hold s the general election, but all these points must remain in obscurity unti the inter-party committee considers the silnation in the light of the facts ascertained in the , investigation and prescribes, remedies for public and private financial, clifficul- i ties. |