Nelson Evening Mail FRIDAY, AUGUST 2, 1929 BALANCING THE BUDGET

Nelson Evening Mail, Volume LXIII, 2 August 1929, Page 4

Nelson Evening Mail FRIDAY, AUGUST 2, 1929 BALANCING THE BUDGET

•Yes, it is quite true that I undertook to raise money for land loans and lend it out at 4f per cent, without adding a penny to taxation. But I find New Zealand is not able to dictate to the financial world the rate of interest at which money can be raised. It is also correct that I undertook to remove or greatly relievo unemployment, but it is still rife. Those supporters of mine who said there would be no unemployment this winter if the United Party were in power were, perhaps, unduly optimistic. Yes, I did attack the late Government for its profligacy and demanded that the excessive borrowing should cease, but I am borrowing and spending at a still greater rate. True, I did declare that taxation had become burdensome and that a reduction was imperative it' the, country were to be expedited cm its way to prosperity, but I must balance the. Budget, and taxation must be increased. Thank you for reminding me—there was also in my election platform a proposition for raising £70,000,000 in from eight to ten years, but there was no necessity for me to refer to that in my Financial Statement, as the balancing of the Budget is '■■: matter which cannot wait for the fulfilment of the moro far-reaching proposals.' Besides we've been handicapped by the doings of my predecessor as

Minister of Finance. Still, we are proceeding with the completion of Trunk

railway lines, and providing all tlio money' needed for loans to develop farms and build homes for workers." Tlie above quotation is not from Sir Joseph Ward's Budget, which was presented to Parliament last night, but it gives a fair idea of the contents of that lengthy statement when it is compared with the glittering electioneering promises which were mainly instrumental in placing the United Party on the Treasury benches. We have no desire to add to the difficulties which face the veteran leader and his Party—a party numerically in a minority in the House—but it woiild be idle to ignore the fact that the Prime Minister promised to perform miracles and that the age of miracles is past. Those loyal supporters who, hoping against hope, waited fen- the Budget to reveal the wonderful solution of the country's problems must bo very disappointed. Although the much-desired taxation reduction which economists and thoughtful electors were united in agreeing was essential—just as Sir Joseph was before the election—is not only not to be made, but is to bo substituted by an increase, the Minister has chosen as tho chief source of additional revenue one that is assured of the support of tho Socialist Labour Party. A' super-tax, amounting by graduation to 100 per cent., is to be imposed on all farming lands of an unimproved value in excess of £12,500, while tho mortgage exemption is to be reduced. Moreover, incomo from farms of unimproved value of £12,500 or over is .to be subject to income tax. Land tax or income tax will be payable, whichever is the greater. This proposal is not likely to meet with any serious opposition either in tho House or the country, or even if it does, tho Government may confidently rely upon the votes of Labour members to place it upon tho Statute Book. The other method of raising more revenue to ''balance tho Budget"—the outstanding object of tho Minister to which every other consideration is subordinated—is to double the present one per cent, primage duty on imports. This increase will bo spread over the whole community, and the hope expressed is that it will be so widespread that its effect will not bo felt unduly. Already, however, there are signs that this proposal will meet with strong opposition. If Reform and Labour unite to oppose the doubled impost, as is indicated, Sir Joseph will bo deprived of one of his projected sources of revenue, and must devise other means if ho is to avoid a big ■ deficit. Meantime, the outstanding fact is that despite pledges, taxation is to be increased to jmake up tiie deficit in our finances. The much-discussed question of "Taxation or Economy?" in which the supporters of economy have had all tho advantage in solid argument has been answered by tho Government: "More taxation." Yet the huge increase in taxation in recent years—it has more than doubled per head since 1914—has been one of the most crippling influences on industry and one of the greatest contributing factors to that unemployment for which the Budget declares the Government's policy is to provide a "permanent euro and pave tho way for decreases in the rates of taxation."

The Budget appears to indicate that the Government has forgotten its main election pledges. It is not likely that the electors are equally forgetful. For that reason we believe that the few indications of optimism in the Financial Statement and the reiteration of promises, undertakings and "cardinal points of polipy" will be received with a good deal of scepticism. Nevertheless, even if the Government has been unable to carry out its obviously extravagant promises and gives no satisfactory indication of being able to do so, there is no immediate occasion for grave concern. The country is sound and possesses great recuperative powers as it has shown before to-day. But it is inevitable that the huge increase in expenditure on State administration must b.e curtailed. The cost of Government is too high, and the United Party, or its successor in office, must ultimately grapple with that hindrance to national recovery. For leasons that are given Sir Joseph is unable to state how much extra revenue he will obtain from the new sources of taxation, but he estimates to have £262,000 available for supplementary estimates and contingencies. Economy in administration would greatly assist him in justifying his estimate.