THE OTAGO DAILY TIMES FRIDAY, September 27, 1940. THE COMPULSORY LOAN

Otago Daily Times, Issue 24414, 27 September 1940, Page 6

THE OTAGO DAILY TIMES FRIDAY, September 27, 1940. THE COMPULSORY LOAN

The circumstances in which the Government has launched its compulsory loan constitute an affront to Parliament. Admittedly, the emergency war regulations confer on the Government powers so widereaching .as to enable it to place a loan on the market without direct approval, previously obtained, from Parliament. There is practically nothing that, under the war-time regulations, it cannot do without legislative sanction, except only that there must be an appropriation by the House of Representatives of the moneys that are to be expended by it. Yet Parliament remains constitutionally the mouthpiece of the people of the Dominion, and the Government owes it to Parliament and to the people whom it represents that a loan project, involving a novel procedure, should be discussed and endorsed by Parliament before it is put into operation. The fact that the interrupted session is to be resumed on Tuesday next makes the slight that has been placed on Parliament the more apparent and the more flagrant. It is not the compulsion that is being exerted on taxpayers to contribute to this loan that is. its novel feature, for there is precedent in the Dominion for requiring people to subscribe to a loan. But where compulsion was employed in the past it was for a loan that was to be applied exclusively to war purposes. The principle that every member of the community should contribute to a loan for the prosecution of a war in the interests of the nation is readily defensible. Whether that principle is or is not to be rigidly applied in the case of the loan which is about to be issued, there is the unusual condition attached to the loan that for the first three years of its currency it will take the form of a capital levy, since no interest will be paid upon it for that period, and that the interest for the remainder of its currency will be below the market rate. In this respect the loan is of a character so exceptional that the issue of it might reasonably have been deferred until after Parliament had had an opportunity of considering it. There is another aspect from which the issue may be viewed. While it is estimated that- the loan will produce a minimum subscription of £8,000,000, the amount of it that will be applicable to war purposes will, Mr Nash says, be approximately £5,000,000. This latter sum exceeds the amount mentioned in the Budget as that which it would be necessary to borrow in New Zealand in the course of the year for war purposes. The Minister’s belief then was that it would be necessary to borrow £3,630,000. If, however, the expenditure for war purposes becomes £5,000,000, there remains a balance, of compulsory loan money, the amount of which may conveniently be said to be £3,000,000. How is this to be utilised? Mr Nash has said that the proceeds of the loan “will be used solely for equipping and maintaining our armed forces in the Dominion or overseas and for other war purposes.” But he has omitted to make perfectly clear whether this statement is to be held to be applicable to the £8,000,000, the estimated yield of the loan, or to the £5,000,000, the amount estimated to be required this year for war purposes. If it is only to the £5,000,000 that the undertaking given by the Minister refers, it may possibly be inferred from his remarks that the sum of £3,000,000, a portion of the loan, will be available for expenditure upon domestic objects. There is a plain need for a definite declaration by him on this point. If it is a sound assumption that the difference will be utilised to meet domestic requirements, Mr Nash’s statement will have been of a highly equivocal nature.