Borrowing Policy of Government Assailed

Sun (Auckland), Volume IV, Issue 1039, 1 August 1930, Page 1

Borrowing Policy of Government Assailed

PUBLIC DEBT INCREASE CAPITAL EXPENDITURE THE SUN’S Parliamentary Reporter WELLINGTON, Thursday. Tho claim that there was far more of fundamental importance in the borrowing policy of the Government than in anything else as far as the interests of New Zealand were concerned, was ' made by the Hon. W. Downie Stewart (Reform —Dunedin West) in his Budget debate speech thin evening. The financial policy of the Coates Government had been steadily to reduce external borrowing, with a view to reaching a point where New Zealand would be self-contained as far as finance was concerned and marked progress had been made in that direction. He had said before that the danger of the drift in Australian finance should be a warning to New Zealand, but he had spoken guardedly about it because it was not wise to offend a sister Dominion by criticising policy matters.

The policy adopted by the Reform Party had been largely responsible for its defeat, but the figures of the last year of the Reform administration and those for tho first year under the United showed the true state of affairs. By 1928 the increase in the public debt had been reduced to £ 5,500,000, and tho estimate for the next year was slightly less. Under the United Government the figure was £ 7,000.000. Mr. C. A. Wilkinson (Independent— Egmont): They cleaned up the arrears in State Advances. This year the net increase was £8,500,000, Mr. Stewart continued. Tho gross borrowing of Reform’s last year had been £7.000,000, as against £11,500,000 in the United’s first year. The expenditure out of capital accounts this year exceeded £12,500,000. POST-WAR BORROWING It had been said that the Reform Government had borrowed very heavily iCf'cr the war. but it had to be rena. mbered that during the war the Public Works had got into arrears, and that immigration had been in full swing during the years of the Reform administration. "Whatever else might be said about immigration, it had helped to spread the burden of the public debt, and now relief in that direction depended on the natural increase. In 1928 the expenditure out of capital account was £6,825,000, and under the Budget before the House It was £8,081,000. A large part of the increase was for railway construction. Th.e United Party had stopped two railway construction works and had started another, and he believed tho Alinister of Railways approved of one that had been stopped, and had said of the one that had been started that it would only duplicate the motor route on the coast and would not open up land for settlement. The Minister of Internal Affairs, the Hon. P. A. de la Perrelle: The expenditure is due to a lot of Reform commitments. RAILWAY FINANCES The United Party had largely increased tho loan expenditure, Mr. Stewart continued, and had done it when expansion was unwise. The crux of the present position was railway finance, and that had not crystallised into an acute problem until the end of last year, when the railway accounts were made separate. In 1926 they were furnished with a reserve of more than £1,500,000. but the increase in road competition had not given the railways sufficient time to get on a firm footing before the reserve was expended. The late Sir Joseph Ward had stated that the loss was liable to grow, but the Government was expending more money instead of attempting to reduce the loss.