MR. STEWART IN FORM

Sun (Auckland), Volume IV, Issue 962, 3 May 1930, Page 8

MR. STEWART IN FORM

SIR JOSEPH WARD CURBED BY LONDON MARKET “A SALUTARY RESTRAINT” “In curbing Sir Joseph Ward's financial policy, the London money market had placed a salutary -check on his. borrowing—a restraint which we were unable to persuade the people of New Zealand to enforce." It was with satisfaction that the Hon. W. Downie Stewart, Minister of Finance in the Reform Administration, made this comment before electors of Parnell in St. Mark’s Hall, Remuera, last evening. Mi*. Stewart gave a large part of Ills address to a quiet but searching examination of the borrowing policy t> f his successor. He made full use of. the predicament of a “neighbouring State,’" which had fallen on evil times consequent upon its heavy external borrowings. Regarding the financial statement issued recently by Sir Joseph Ward, Mr. Stewart said that at the moment he would not discuss that in detail. Although it was a more compreli sive Statement than usually made at that juncture, certain factors had not been available, and it was only fair that criticism should be withheld until the complete return had been stated. He would, however, speak in general terms. ‘Conversion of the £29,000,000 loan, considering the difficult condition of the money market, had frankly been satisfactory. Sir Joseph Ward had said in his recent statement that his Government was unfortunate in falling heir to a deficit of £500,000. “That is typical of the United Party, and it is not lair," Mr. Stewart ? said. It would have been right to-say that * substantial part, £156,000, was due to loan negotiations after Reform left office. Mr. Coates and his Cabinet could not foresee - that. In public utterances .on the deficit, Sir Joseph nnd hia colleagues had referred to Uie “bequest,” without any explanation of the United Party’s share. “PUTTING IN THE KNIFE" “I had no opportunity of curtailing, expenditure had necessity been obvious toward the close of the financial year that the present Government •hared with us," Mr. Stewart continued. “The last four months was tho only opportunity of putting the pruning knife in, and we had been turned out by then.’ The speaker pointed out that during his three years In charge of the portfolio he had-shown a surplus. Sir Joseph Ward was taking a political advantage which, considering the treatment Mr. Coates had allowed, was not fair. “If the year had ended with a surplus, would Sir Joseph have said it was his or mine?” Mr. Stew-art asked. An Elector: Joe Ward’s. Although tho revenue for the year fcad increased by £1,750,000 through extra taxation and increased imports, the surplus was only £150,000, and expenditure had increased by over £1,000,000. When it was recalled that the United Party said its borrowing policy would not involve the taxpayers in one penny of additional taxation, it was rather startling to see the results •Jfter the Unitfed Party’s first complete year in office. 4 TAPERED BORROWING In dealing with, the effect of the year’s borrowings, Mr. Stewart said the object he had had as Minister of Finance had been steadily to reduce external borrowing. The Reform Government had made heavy reductions in such borrowing. Quoting the net figures, Mr. Stewart said that in the first year he had been able to reduce the amount, it was brought down from £11,000,000 to about £7,0000,000 ©r £7,500,000. In the next year the reduction was to £5,500,000, and in the year Reform had gono out of office It had been planned to make a further reduction —a small one, certainly —to £5,400,000. The Reform Party had •very hope that, if it continued in Dfflce for a few years further, the position would have been reached where the annual borrowing for reproductive works would not have exceeded the amount the country was paying off the dead-weight debt. When Sir Joseph Ward had put his policy before the electors and. the House, he stated he would raise £6,000,000 or £7,000,000 annually for State Advances, £10,000,000, spread over ten years, for railway construction. and unstated amounts for land settlement, hydro-electricity development and other public works. Thus, the amount of borrowed money would be far and away above what the Reform. Government had proposed. Reform, believed at the time that such borrowing would only reach a position where New Zealand, like one of its neighbours, would not be able to borrow further on the open market. TWO MILLIONS ADDED The present Government, in four months of control at the end of the 1928-29 financial year, had ended up by adding £2,000,000 more than the Reform Government had intended to do. In other words, the net increase in external borrowing was over £7,000,000. It had to bo remembered that the loan transactions in that financial year really covered two years, as, ©n the advice of the London authorities, the loan requirements were made before the next financial year commenced. Mr. Stewart said, in passing, that he believed the London advice ■was sound. Therefore, while the loan would appear in the Blue Books as taking place in 1928-29, actually it should be debited to the year just ended. With that loan of £7,000,000 and a local loan of £4,000,000, the borrowing ■wa,.s £11,000,000 for the year, but Sir Joseph Ward had also paid off £2,500,000 of deadweight debt, leaving the net increase at £8,500,000.

In Mr. Stewart's opinion, that increase in the debt was too large for the Dominion, but it was not so large as it would have been had the curb been applied by the money market.

Mr. Stewart thought the borrowing wquld have run Into £14,000,000 or £15,000,000 had Sir Joseph Ward not got his £7,000,000 in London on the condition that he did not com© back ©n the market during 1929-30. “While some of you may think it unfortunate that the Government is not able to borrow all it wants to, I personally think it is a piece of good fortune," said Mr. Stewart. He thought It a wise policy, even in times when the money markets were free and open, not to take all that thos© markets could offer, but the least the country could do with. The Hon. W. P. Reeves, a former Liberal Minister, had ircqvently expressed that view.