The Times FRIDAY, JANUARY 29, 1937. Extravagant Expenditure

Manawatu Times, Volume 62, Issue 24, 29 January 1937, Page 6

The Times FRIDAY, JANUARY 29, 1937. Extravagant Expenditure

Though New Zealand is at present undoubtedly benefiting ,by the revival of trade which is common to almost all countries in the world, it does not follow that such a welcome change should justify recklessness in Government expenditure. Naturally in times of prosperity governments, like individuals, are inclined to forget that boom periods may be followed by depressions. and make no allowance in their budgets for the lean years. Jlr. J. M. Keynes, the noted economist, believes that the day will come when a system will be evolved that will prevent, a recurrence of slumps, but that day is not yet, and until it comes it is the obvious duty of governments to see that provision is made for “the rainy day.”

Is there anything in the policy of the present Government of this Dominion to indicate that it believes bad times will ever come again? If the pace set in irablic expenditure is to be a guide, the answer mpst, be definitely in the negative. And the Associated Chambers of Commerce of New Zealand have called attention to the dangers that will arise from a disregard of this fact-

The Government believes in increasing the purchasing power of the community, and it regards heavier State expenditure as one of the ways of achieving this end. In 1929-30 the peak of prosperity was reached, and to regain that height is the aim of Ministers. Their commitments are much greater than those of the prosperous years mentioned. It is pointed out that the estimated Government expenditure for the current financial year will exceed the actual expenditure of 1929-30 by £5,584,000, or 23 per cent. The estimated yield from taxation is 33«} per cent, greater, and is now stated at £l9 3s a head, compared with £l3 3s 7d in 1929-30. Much of the increased expenditure is what may be described as “permanent,” such as the large additions to the Public Service since the present Government came into office. The people can carry in the meantime the burdens imposed on them, but there is no guarantee that the prices coming in for our exports of primary products will remkin at the present level. Take wool as an example. The returns are excellent and the demand keen. Spinners and manufacturers in Bradford and other centres are buying largely and piling up reserves. That fact in itself constitutes an element of uncertainty for future trading. What has to be borne in mind is that the present prosperity may be only temporary, and the Government should be guided in its policy accordingly.

One of the aims repeatedly declared by the Hon. Walter Nash is to find greater marketing avenues. He expressed confidence that success could be achieved in this way. Professor Belshaw, dean of the faculty of commerce at Auckland University College, who has been abroad lately, does not hold out much hope in this direction. There is no use looking to the United States, for the political influence of the farming community there is too strong to permit absorption in that country of much of New Zealand’s butter and meat.

Now that conditions have improved wool prospects are better, for America cannot produce enough for herself in normal times; but with other primary exports the prospects of this Dominion are not encouraging.

It has been noted that nearly every European country is making efforts to stimulate agricultural production. Professor Belshaw has observed this development, and points out that most of them are applying a policy of restriction of imports. The conclusions are obvious. There is no need to adopt a pessimistic outlook, but realities have to be faced. New Zealand is dependent perhaps more than any other country upon external trade, so that economic conditions overseas, particularly in Britain, determine the measure of our prosperity. That is* the cardinal point that Ministers have to consider in framing their budgets, and that in the ultimate will determine the amount that the taxpayer can contribute .to the national excheemen