REPLY TO SIR JOSEPH

Sun (Auckland), Volume II, Issue 498, 30 October 1928, Page 6

REPLY TO SIR JOSEPH

MR. STEWART AT DUNEDIN “EXTRAVAGANT ASSERTIONS” LOANS AND PUBLIC DEBT Association UUNKUI.\. .Monday The Minister of Finance, the wi W. Downie Stewart, addressed a gathering o£ electors in Knikorai th evening. Speaking of sir Joslt" '' - lrd s . reply to his criticism of f" borrowing proposals. -Mr. Stewart that untortunately. Sir Joseph no attempt to answer his critirl^ e which raised specific and rc.monS’ objections to liis scheme. He J22* replied by a series of seruons, in which his tacts were a' stance* and eharscs sit Air. Stewart said he would rcnlv i him briefly. Sir Joseph said. •ffJ! •value have we received for £ 30,000 added to public debt in the last thrt years?” The answer was that tiufn? increase in the debt for the last tht. years was not £30,000,000 ht £ J3.a00.00u, because, though the Gov eminent borrowed £29,650.000 it ' £6,070,000 oft the war debt and othtitems When he asked what vatoi had been received, the answer w easy. •

HOW MONEY WENT The money was expended as foi lows: Productive purposes.—Public Works, railways and telephones, £ 10,000 000 nydro-elec trie supply. £3,300.W Statu advances to settlers and workers, «£9,625,000; other public works £ 325,000, making a total <v‘ £ 23,150,000. Ql Indirectly productive purposes.— Public works, roads. irrigation A: 3,950,000; other public Tvorkt £ 180,000; total, £ 4,130,000. Financially unproductive purposes —Public works. public buildinrs £1,000,000; Schools, £1,370,000. From the total of £29,650,000 was to be deducted war debt repayment £4,660,000. and ordinary debt repay, ment, £1,410,000, a total of £6,070,0e»J. so that the total net increase in public debt was £23,550,000. It would be

noted that the Increase in the indirectly productive and financially unproductive debt was practically offse; by debt repayments, continued the Minister, so that in effect the net increase during the past three years wac almost entirely represented by productive works. What item in this lis did Sir Joseph object to? He said if he were in power “wastage and the extravagant system of raising loans would vanish.” EXPENSE THROUGH WAR If this meant anything, all these valuable undertakings, such as hydroelectric schemes and railways ana loans to farmers and workers, would 1

disappear. This was strange, as they were exactly the class of works Sir Joseph said he was going to carry on. only he borrowed far more, and did not even then provide any money for half the items mentioned which wer* absolute necessities. Sir Joseph Ward asked what had the country to show for the many millions borrowed since 1918, remarked the Minister. Sir Joseph said they had borrowed mort in 10 years than he proposed to borrow, but he carefully suppressed the fact that the war expenditure did no: cease in 1918.

They had still large sums to raise for payment to the troops and repatriation, and Sir Joseph knew or ought to have known that in 1918-19 and 1919-20 approximately £34,000,00' was borrowed for war purposes, and £11,000,000 for discharged soldiers, making a total of £45,000,000 for these purposes. If he took a fair period for comparison, namely, from 1920 to 1928, eight years, lie would find the

net increase In the debt was £50,250,000, or an average of, say, £ 6,000,000 a year increase. This was moderate compared to his programme.

Moreover, the net increase was falling each year, as In the last three years it fell from £11,000,000 to £5,500,000. When Sir Joseph asked what the country had to show for these loans he would find that over £22,000,000 was expended on railways telegraphs and telephones, £6,500,00*' for hydro-electric supply, and about £ 5,000,000 on other public works o: a productive nature, while £16.500,00< 1 was provided for State advances. In addition, over £7,500,000 was spent or roads and irrigation etc., and £5,700.00' on public buildings and schools, but these last two amounts were offset by debt repayment during the period, leaving the net increase in the debt for the period represented by asset s of productive character. STATE ADVANCES In fact, all these were exactly the same class of public works which Sir Joseph proposed to borrow for. only he was going to lend money at less than cost, which was not good business for a Government or an individual. How could he say, asked Mr. Stewart, that the State lending was “virtually suspended” when the Reform Governraen' lent through the State Advances £43.000,000 in its 3 6 years of office, from 1895 to 1912, a period oi 17 years, the Liberal Government lent only £15,800.750, or about one-third of the amount lent by Reform? lr fact, during the last three years the State Advances had lent out over £15,000,000. which was as much as the Liberals lent in 17 years. What did Sir Joseph mean by their extravagant system of raising loans* Finally, if all their financial methods were wateful and extravagant, why

did the “Financial News” of London last year say, “There is no Dominion which has been more scrupulously careful over her finances than New Zealand”?