The Daily News. TUESDAY, NOVEMBER 18, 1919. DOMINION FINANCE.

Taranaki Daily News, 18 November 1919, Page 4

The Daily News. TUESDAY, NOVEMBER 18, 1919. DOMINION FINANCE.

Speaking at Papakura last week, the Premier stated that the country was sound financially, and was also particularly prosperous. This assertion is indisputable. The question is, however, whether these desirable conditions may not be endangered by unsound policy. Thefe has never yet arisen in New Zealand such a time when prudence is imperative as is the case now. Taking Mr. Massey's figures, as given to the House last session, the country's debt before the war was under £100,000,000. and the war expenditure would add more than another hundred million thereto. Interest on the •war expenditure, calculated at 5f per cent., would necessitate raising five and a half millions a year over and above what was required before the war, besides the money required for war pensions and interest on loans to be raised. New Zealand, though prosperous, is only a small and sparsely populated country, in which the large war expenditure has added a debt of £92 per head. As this money is mostly represented by loans, it may be thought by some that there is no need to bother about its payment, as It will concern posterity rather than the present. That view is dangerously erroneous. The Dominion must continue i to borrow, and every million ac-

ternally or externally, may have an upward effect on the price at which it is obtained. Meanwhile every inincrease in interest has to be shouldered by the people, as well as the heavy taxation wherewith to carry on the business of the country. How the burden has grown is illustrated by the revenue derived from land and incomes. For the year 1913-14 these sources produced a total of £1,321,742. During the five years of war, ending March 31, 1919 they produced £16,884,266 in excess of the pre-war figures, practically the whole of this burden being borne by people with incomes exceeding £3OO a year. As further evidence of the prosperity of the country, there was accumulated by the National Government annual surpluses which eventually totalled over fifteen millions every penny of which, and some two millions six hundred thousand besides, came from the increased taxation levied upon land and incomes. There is very little consolation,and no practical good whatever, in making eomparisions between the Dominion and the Motherland, or any of the other Dominions as to the indebtedness per head of the population. It is only fair to mention, however, that in no other British State to-day are the people of limited incomes so much exempt from direct taxation as _is New Zealand. The main point to be kept in view is that there is a limit both to borrowing and taxation. The Dominion is still only partially developed, and the proceess of further steps in that direction will involve more millions. Then there is industrial development, which is only second in importance. The more the available money is brought into the Government coffers for national purposes, the less there will be I for fostering private industrial concerns, including those connected with the land, for it is not to be expected that the Government will be able to find a tithe of the money that will be required to adequately develop the country and forward its industries. It is this dual demand which has to be kept in view, and bearing in mind the fact that money is almost unprocurable on the outside markets, except at a comparatively high rate of interest, the need for the utmost prudence in public expenditure becomes evident. There is no justification for pessimism. as things are at present, and to all appearances the outlook is good. At the same time, knowing the world-wide disturbance of the hioney market, and remembering how slight a cause will create a panic, it would be wise to be cautious and to exercise restraint in expenditure that is not absolutely essential. All the same, money must be borrowed for development, and, judiciously used, it will Drove an exeelleut investment. What is also needed is that the community shall bend its back to the task of greater production, for therein lies the secret of progress and prosperity.