THE FINANCES

Southland Times, Issue 21097, 31 May 1930, Page 8

THE FINANCES

‘-/RECENT review

I COMMENT BY MR H. E. HOLLAND

'‘CONFIDENCE OF CREDITORS WEAKENED'’ ■ i . (Per United Press Association.) * Waimate, May 30. Mr H. E. Holland, Leader of the Labour Party, addressed a largely attended meeting here to-night and in the course of his address made reference to the Hon. G. W. Forbes’s statement regarding the financial position. He said he had not had time to go fully into the details, but in view of the extremely gloomy nature of that pronouncement, which was so markedly in contrast ■with the glowing promises of little more than a year ago, he was not sure the Prime Minister had not done the Dominion the greatest dis service imaginable. Sometime back the Hon. W. A. Veitch was found declaring that confidence in the economic stability of the Dominion might be shaken if the figures relating to unemployment were permitted to be published, but if anything were wanted to weaken the confidence of creditors, it had certainly been supplied by the leader of the Government. However, he was not prepared for a moment to agree that the position was as dark and dismal as Mr Forbes had painted it. It seemed almost astounding that within two months of having proclaimed a surplus of £150.000, and with only one complete month’s figures on which to base his calculations, the Prime Minister should precipitately announce a deficit, of three millions to be achieved during the. present financial year. To say the least it would set inquiries going as to how the surplus of March 31 was built up. Mr Forbes had prefaced his statement with reference to a drop of £8,100,000 in the value of New Zealand exports . for 1929-30 as compared with . the previous year, but he did not mention that both 1927-28 and 1928-29 were abnormal years, in each of which the value of our exports exceeded the average by between seven' and eight millions. In 192930, the value of New Zealand exports was slightly over fortynine millions and that value had 1 been exceeded in only four of the ten preceding years. In each of the other six years, the value was well below that figure. The average yearly value of exports for the .ten years 1920-1929 .was just under fortynine and a half millions, a difference of £448,000 in comparison with last year. Bearing in mind the fluctuating nature of exports values, there was nothing to be alarmed about when a fall of less than half a million in yearly average occurred, and more especially when the capacity of the Dominion to rise above really adverse situations was taken into account. It had to be remembered that at least. 115,000 bales of wool had been held back from sale owing to the unsatisfactory prices ruling. At a moderate estimate of £ll 10/- for a bale, this meant a value of £1,322,000 added to exports. This would leave the position last year nearly a million better than the yearly average. It was not true that there was now a shortage of money in New Zealand, nor had there been a shortage in 1929 for in that year the New Zealand surplus funds were seeking investment in Australia. The Christchurch City Council in response to its advertisements received offers from all over the Dominion to take up its debentures at s:} per cent., and easily got all the money it wanted, running into several thousand pounds. The position continued until the Government placed its. loan on the market offering 54. The immediate effect of the Government’s action was to send up the rate of interest and the cities had to pay 51 while the smaller local bodies had to pay higher rates. Banks followed the Government’s example and increased the overdraft rates. He contended that if the City Council could get the comparatively low rate of 54, the Government could have borrowed on even more favourable terms.

The Railways. Referring to the loss on railways, Mr Holland said the objective of the railway system was wholly similar to that of the reading system, the getting of the products to an effective market, and while it was a good thing if this could be done and a balance-sheet profit disclosed in doing it, or that any loss should be minimized, still there was no more reason to feel dismayed over the loss on railways than on main highways. If the goods were conveyed to economic markets, the country reaped the benefit to that extent. However, if it should be laid down that the railway -system must be treated wholly as a commercial venture, then the railways should be credited with values created by their construction and operation in which case the balance-sheet would show a greatly altered result.

Everyone would agree that there was need for co-ordinating the motor and railway services, but this could only be done by drastic changes that would make motor vehicles act as feeders to, instead of competitors with railways. The present competitive system represented an enormous economic wastage. Mr Holland proceeded to make references to the education expenditure which, he said, was extremely disquieting and "Hands off the education vote’’ would express public sentiment in this connection.

The Government’s attitude in regard to hospital subsidies would call forth the closest watchfulness on the part of the Labour Party. There was a danger of the responsibility that belonged by right to the whole Dominion being thrown on‘local ratepayers. From the viewpoint of public servants the Government’s new policy was not encouraging. There was no indication that the promises made would be lived up to. On the other hand, there was a fairly strong hint that both the pruning knife and guillotine would function in place of the salary improvements promised last year. If retrenchment were really necessary, one legitimate source of saving would be found in the cutting down of the naval and military estimates. Generally speaking, both Reformers and Liberals had opposed every effort in this direction in the past. The suspension of military camps was good as far it went, but what was wanted was abolition of the useless and costly compulsory military training system. The Singapore Base represented another waste of £125,000 a year, and this could be saved to New Zealand by the Government intimating to the British Government it was willing that the contraction of the base should be discontinued. In concluding, Mr Holland said that Mr Forbes need not be surprised if his Government’s attitude was taken for a renunciation of Sir Joseph Ward’s policy, and his statement regarded as a smoke screen to cover a carefully planned, evacuation of the position taken up by the United Party in 1928.

COMMENT IN AUCKLAND. Auckland, May 30. “Mr Forbes is to be complimented on taking the public into his confidence, but there’s method in his madness,” said Mr Robinson, secretary of the Auckland Farmers’ Union. The Prime Minister appeared to be trying to paint the case as black as possible so that the public might be prepared for a further increase in taxation. Dr Belshaw, Professor of Economics, commented that a' great dependence on Customs revenue as a source of taxation was particularly unfortunate at a time like this. A long-range view of national finances should be taken as it was not a year to . year problem. Railway losses could be reduced if motor competitors were made to pay a fair share of road maintenance and all the unpayable branch lines closed. If local districts opposed the closing they should be prepared to make a special contribution to meet the loss.