WELLINGTON NEWS

Hokitika Guardian, 15 September 1931, Page 7

WELLINGTON NEWS

BUDGETS PUBLIC AND PRIVATE

(Special Correspondent)

Wellington, September 12

Budgets and budgeting have become quite familiar to all people in all countries, and they have acquired considerable interest and importance. If Governments are in difficulties in balancing their budgets, and most Governments are, the same can be said for joint stock companies, private firms and private individuals. We are all striving to live within our restricted incomes, but some unfortunates have no incomes whatever but what charity allows them. These are admittedly strenuous times, but it would be a mistake to believe that man’s ingenuity and courage is not equal to overcoming the stress of the present depression. If the slump is doing nothing else it is at least teaching the whole world many sharp and useful lessons. Governments as well as the people are being forced to observe the things of life from a new view point. There is much that we have to learn, and much to learn, and we are passing through that schooling process now, and the world will be all the better for it, for the prosperity that must follow* as surely as the day follows night, will be built oil a solid foundation.

At the moment the balancllg of the National Budget is causing concern to many Governments, who must now realise that - many of their methods of the past were calculated to land them in trouble. Governments have cherished the idea that they could set aside w'ith impunity the inexorable laws of economics, and bit by bit, and sometimes by big bits they have borrowed and squandered in the idle belief that the legislatures were omnipotent and could do anything they pleased. The future of budgeting will be on a different method, and the functions of government will be more restricted to the legitimate work of maintaining law and order and not interfering with the legitimate business of the people.

The perfect budget has yet to be evolved, but the budgetary system of 'Sweden is said to he as hear perfection as possible. Certainly with so eminent an economist as Professor Gustav C'assel it is not surprising that 'the Swedish system is a model of excellence. Mr Sten Widlund, Statistician of the Swedish National Debt Office, claims that the strong financial position of Sweden is largely tile result of the appreciation of its borrowing policy. All loan money “has been invested in productive enterprises, the profit oil which covers the payment of interest, so that the National debt is not a burden on the ratepayers.” This necessarily means that all such enterprises are conducted on business principles, free f.rojj* .B9J&}S a J control. The Swedish budgetary system Mr Widlund states, “does not reckon with borrowing in order to cover a deficit in the Budget. The Swedish Budget is apparently drawn up on simple lines. Current revenue and current expenditure are made to balance, and if calculations prove faulty any deficit is covered automatically by a transfer from the Exchequer Reserve Fund. This fund \is composed chiefly from surpluses from previous budgets. A strict distinction is made in the Budget between revenue and expenditure derived from or covered by borrowing, which is termed “the loan budget,” and other revenue and expenditure called “the taxation budget.’’ Loan monies are used not- to pay interest on previous loans, but to finance State undertakings, such as the Post Office, Telegraph Service, State Railways, State Waterfall works, etc. They are also available by way of loans at interest to assist certain private enterprises. By making all these services pay their way it lias been found possible to account completely for the National debt in capital assets.. In the immediate future borrowing by Governments is certain to be on a very small scale, for the lenders will be reluctant to encourage any profligacy on the part of borrowers. National Treasurers will in the future considet it meritorious not only to balance Budgets but to balance them so as to relieve taxpayers. In the past Governments have been busy piling up debts, but in the future they will be anxiously busy to pay off debts.