RISING DEBT BURDEN

Sun (Auckland), Volume III, Issue 735, 7 August 1929, Page 6

RISING DEBT BURDEN

CAN COUNTRY STAND BIG BORROWING? MR. DOWNIE STEWART’S FEARS (2 HE SUN'S Parliamentary Reporter) PARLIAMENT BLDG., Tuesday. The Public Debt and the new Government’s attitude toward it was the subject of criticism by the Hon. W. Downie Stewart, ex-Min-ister of Finance, during the course of h'is finance debate speech tonight. He claimed that the country could not stand the Government’s huge borrowing policy. ]yjß. STEWART said that apart from the question of balancing the Budget, by far the most important issue wa§ the growth of the Public Debt, if the Prime Minister’s plans were given effect to. The policy of the late Government was to taper off the borrowing. Mad Reform eontimied in office the net increase in debt to March 31 last for last year would have been about £400,000; The first effect of the change of the Government was that that policy was immediately reversed, and instead of showing a net increase for the year of less than five and ahalf millions, the actual net increase was about seven and a-half millions, although the new Government had only been in office ior four months.. In the Budget it was shown that, after deducting loan moneys which were raised in anticipation of ihis year’s requirements, and which were properly attributable to this year, the gross increase in debt was £10,650,250, from which must be deducted debt repayments of £3,234.124, leaving a nett increase of seven and a-half millions. But that was mild with what the future held when the full loan programme of tne Government developed expenditure on railway construction by. 60 .per cent. over the amount spent last year. Last year It was shown that ruilw iv constructions cost over £1,066.000 lit was going to spend £ 1,000,000 for electricity and presumably that and other items were included in liis £7,000,000 loan. In addition, air Joseph had stated he was going to borrow up *. to L 0,000,000 for land settlement, and it he spent £1,000,000 of this, we wun'd have an expenditure of £ 5,000,000 and he had still to provide for State Advances. If he spent £4,750,000 on State Advances in six months, this would mean another £ 9,000,000 for the year, but as part of this expenditure was the catching up of arrears, let it be assumed that he was able to reduce expenditure under this heading to £7,000,00. This would mean an ag-gr-egate loan expenditure for the year ot over £15.000,000. “Assuming the policy of debt repayment is maintained.” said ilr fetewart, “we may deduct from this say £3.500,000. leaving a net increas*m the debt of at least £13,000,000. I repeat what I have so often said, that in my opinion this is far too high a rate of loan expenditure for this Dominion. I need not repeat what the 1 rime Minister has so often said, that m his opinion this Dominion was borrowing far too much annually. His argument is that it is better- to get public works completed and revenueearning as quickly as possible.' Surely he does not argue that all railways, road; irrigation schemes and other public works, including hydro-electric schemes, should go full steam ahead at the same time? It is sufficient for ail practical purposes to concentrate on one or two of these, and to keen bounds XPendltUre " ithin reasonable , .IT have always maintained that our mgh credit in London is due to the - 'll that ," e have not plunged ahead with .our borrowing in the same way as certain other' countries.” . * St^ rt said that the Prime Minister had repeatedly been asked to Persisted in telling the electors that he was borrowing at four and a-half per cent.," when the llSdget showed explicitly that the cost o*’ the loan to the State, allowing for redemption and expenses, was over fiviper cent.