The Daily News. WEDNESDAY, DECEMBER 22, 1920. DEPARTMENTAL EXPENDITURE.

Taranaki Daily News, 22 December 1920, Page 4

The Daily News. WEDNESDAY, DECEMBER 22, 1920. DEPARTMENTAL EXPENDITURE.

Although members of the Government are persistent in preaching the necessity for economy, the growth in departmental expenditure during the last five'years may well cause anxiety among those who have to, provide the funds by way of taxes and duties. It is not only the weight of taxation itself that has to be considered. It has to be remembered that taxes, rates and rent form part of the overhead charges in all business concerns, and are passed on to the public by way of increased cost of commodities. It is probable that few people realise the enormous growth of departmental expenditure. Starting with the year 1916, when the expenditure was £7,799,952 (which was nearly £75,000 less than in the preceding year), there was an increase in 1917 of £163,462, and the soaring process has continued ever since. The increase in 1918 was £488,063; in 1919, £l,003,271; in 1920, £2,938,114; and the estimate for the current year shows an increase of £3,589,492. Some of this large increase is due to the war, and to the increase of wages consequent on the high cost of living, but there is a strong feeling that no real effort has been made by Ministers to grapple with the problem by having a searching investigation into the staffing and general expenditure of the various departments, which have been left far too much in the control of heads. Had the country not been exceptionally prosperous the people could not have stood this extremely heavy burden, which already is entliling considerable self-sacrifice on the part of the taxpayers and the community generally. The figures speak for themselves, and show that a vigorous application of the pruning knife is imperative if we are to pay our way and not unduly oppress the taxpayers. Times are not always going to be as they have been of late years. Signs of contraction are indeed already visible, and it is for the Government to practise, as well as preach, economy. It has to be borne in mind that there can be no improvement in our economic conditions without economy on the part of the consumer and greater industry on the pert of the worker, and the latter includes all workers and producers. The country is looking to the Government to give a lead in reducing expenditure. At the Economic Conference, held in Brussels in September last, some very weighty words on the subject of Government extravagance fell from Mr. Brand, an English representative. They are just as applicable to New Zealand as to European countries. Having emphasised the fact that, as a consequence of the war, the inadequacy of capital and productive power is at the root of the troubles of Europe, and having insisted upon the necessity of increasing both capital and productive power, Mr. Brand laid down the broad principle that the wealth of a nation must precede the wealth of its Government. He said : '•First, then, this question must be put. Since there is not enough capital to go round, Which is to have it, Governments or private industry ? The more capital is absorbed by Governments, the less is available for private industry. It is only too clear that industry in all countries is suffering severely from want of capital. The rates of interest demanded are constantly rising, and since not enough money can be obtained from the public, the pressure on the banks for credit becomes more and more severe. Which is likely to use capital more productively, Government or private industry? If the answer is in favor of private industry—that is, to use the words of a statesman of my country, Mr. Gladstone, in favor of allowing money to fructify in the pockets of the people—then, except in tlie cases of clearest necessity, it is imperative that Government should restrict their expenditure within the smallest dimensions."

The need for emphasising the evil influence exerted by extravagant Government expenditure upon the whole economic position of a country is the greater because, unfortunately, Governments have been foremost in meeting the situation by expanding credit. Up to a certain point, and on grounds of emergency, the use of State credit was no doubt indispensable in financing the war, | but Mr. Brand again put his finger on the spot when he emphasised the supreme necessity for distinguishing between capital . and labor, ft is capital, not credit, which is the real limiting factor in ; he matter of production, and that ■loint was strikingly demonstrated by Mr. Brand. Before the war, and previous to the great destruction of capital and expansion in credit, Europe's production of rea* goods was infinitely greater than to-day, in spite of the fact that in the meantime credit and currency have been doubled and quadrupled. "It cannot bo." said Mr. Brand, "a. lack of credit that lies at the root of the trouble. The real evil lies in the constantly advancing prices, which are always rendering insufficient the capital and resources of industry as well as the revenue of the Government, the rise in prices, itself beiojr caus-

Ed by the great excess of the demands of the Government over resources which they can obtain from the real savings of the people, and by the excessive demands of industry on the available capital of the country." The Government of this Dominion is making huge demands upon the capital of the people, for taxation and loans. Up till now they have been met without difficulty because of the exceptional prices obtained for produce at Home. From now on, however, the position will be entirely changed, and if the country is to carry its big load then the Government must immediately overhaul its great spending departments, and arrest the tremendous increase that has been so conspicuous a feature of the administration in recent years.