WELLINGTON NEWS

Hokitika Guardian, 10 March 1932, Page 6

WELLINGTON NEWS

ECONOMIC AND POLITICAL -POLICIES. (Special Correspondent) WELLINGTON, -March 8. One gr-ealt and -definite lesson that emerges from the slump is that business men, statesmen and politicians must prepare -themselves to jettison old policies, and start with new ones. The laws of -economies are unchanging and the world must return to a strict observance of economic laws. It may be ivery hard to get rid of old policies, old slogans and old fetishes, but get rid of them 'we must, if we are to again enjoy prosperity. Britain -has set an excellent example in this respect. Britain has been a free trade -country for a century or more, and yet in the short space of five months that policy has eoeu thro tin overboard. International free trade is the ideal, but Britain could not stand alone in -a world of high protection. She has come into line with the Other nations and has thus forced the protection countries to leconsider their position. To that extent, and to that extent only, can protection in Britain be justified. It may be asked what policy changes can New Zealand make?. That appears a big question, but it is not as big u s it looks. Our trouble to-day is thatwe have to pay a huge -sum annually. This year -the Government has to find £14,080,000 for interest clue overseas by the Government and the local bodies The latter require £2,000,000 and the Government needs £12,000,000, but of this latter amount £4,000,000 is nonrecurring, for it represents the £4,000,000 of Treasury Bills raised in London last year and Ivhich has to be repaid this year. This i s our greatest trouble, and added to -subsidies, bounties and doles the burden is unbearable. We lhave been borrowing on a rather lavish -scale during the past ten or fi.even years. From April 1, 1920, to March 31, 1930. the total loans raised was £100,190,431, but during the same period public debt repayments amounted to £27,183,328, so that -the net debt over the ten years amounted to £73,--007,103, .or an average of -£7,000,000 a, year. During the greater part of those ten years, -export prices were high, so that a very high expenditure within the Dominion w-a-s inevitable. Money was no object, and money -was foolishly and’ extravagantly spent by the community and the Government. 8o long as money was easly -obtained t'he Government borrowed, and practically every loan wias for ft, reproductive’’ works, .and their non-productive character is now verv obvious.

For years we have had the cry of “tapering off” borrowing. Those who care to refer to the last Financial Statement presented to Parliament by the late -John. Bo 1 lance will find those engaging words there. Now we have no c chance of tapering. There is an abrupt end to it. lor neither Austral.a nor New Zealand can borrow in London. Their credits are impaired, -shaken, and do not stand as high as Nyassaland, w ioh colony was able to float a loan in London the other day for £2,000,000. bearing interest at 41 per cent., and the lioaui was fiver-subscribed in an ..hour. As a “wag” expresses it, New Zealand just -now is unable to raise m London the price of a pint of beer The -London market is likely to be closed to us for some time ; therefore it becomes necessary to recast our policies. There is no doubt a good deal of (he borrowed money has gone into commercial 'ventures. The State is nulw y porter, coalman, hydro-electric power man, pawnbroker, house agent, tiuibci man, and whatnot. All the- Commercial ventures of -the Government have co.-.t more than they would have • cost any commercial man, -and they cost tiioie

to operate. , What is to he done? Accordilit; to one authority, the Government should endeavour to get out ot its eoinmoi cial undertakings, /and soli them as opportunity otters, including the railways. With respect to the Advances Department he suggests liquidation. The Department will never get back the money it advanced, because it over-lent on intiated values. The loss talks an the taxpayer. Without borrowed money the iGovernment cannot carry on at present; therefore a drastic change ill policy is inevitable.