Taranaki Daily News. THURSDAY, AUGUST 4, 1921. ECONOMICAL STRANGULATION.

Taranaki Daily News, 4 August 1921, Page 4

Taranaki Daily News. THURSDAY, AUGUST 4, 1921. ECONOMICAL STRANGULATION.

No apology is needed, for once more stressing the danger to the Dominion of the financial situation drifting intp such serious difficulties as will impose on the people greater burdens than they can bear. At the present time, and so far as can be seen ahead, it is the dairying industry alone that is saving New Zealand from economic strangulation, but even that bulwark will be of little, if any, avail unless a drastic system of pruning is carried out in every Department of the State. We claim no credit for persistently insisting on reducing national expenditure to the point at which an appreciable reduction of taxation is made possible. It is a duty which, it is satisfactory to note, is being fearlessly performed by the responsible Press of the Dominion on behalf of the public, and there must be no cessation of the campaign until the end in view has been achieved. The railway traffic returns for the June quai’ter are well calculated to produce a shock to the taxpayers, inasmuch as they conclusively show they are being run at a Joss, which lias to be made good by taxation. As compared with the corresponding period of last year there is an increased revenue of £106,550, but an increased expenditure of £504,335. A more striking illustration 'of the need for rigid economy is afforded by the rates of expenditure in the year 1914-15, as compared with those of 1920-21, whereby it is seen that the permanent appropriations have increased by £7,729,548, and the annual appropriations by £7,959,380, a total of £15,688,928. It is somewhat remarkable that these increases should have so nearly approximated under each head, but while the increase in the permanent appropriations is easily accounted for by interest on war loans and pensions, and can only be reduced as time goes on, what justification can be found for the annual appropriations being doubled at a time when, by reason of the inevitable growth of the permanent appropriations, it was absolutely necessary to economise instead of spending lavishly? The fact is that the unrestricted expenditure during the war period developed into a baneful practice, and so much stress was laid on the Dominion’s phenomenal prosperity during and immediately after the war, that extravagance became rampant, nowhere liiore so than in departmental expenditure. As the Dominion Treasurer does

not possess the purse of Fortunatus, the time came when prices fell and the economic law brought about the penalty that always follows its infraction. That penalty does not fall on the Government or the Civil Service, but on the public, for it is the people who have to pay. So long as the people submit to being bled to death by those whom they have entrusted with the management of the affairs of the nation, so long will they ignore the process of economic strangulation that is now at work. As individuals, if they live beyond their means, bankruptcy follows as a matter of course, possibly with penal consequences. The Government can escape this disaster by borrowing and making use of all the funds underitscontrol,including surpluses—on paperwithout worrying over the day of reckoning. Not/only has the Government squeezed the Treasury dry, but it has submitted the people to the same process by means of local loans—-with a compulsory proviso, so that not only have incomes been heavily raided through the Customs and Taxation Departments, but private reserves have been absorbed to a large extent, while large sums have been withdrawn by Post Office Savings Bank depositors for investment at much higher interest. On the one hand, therefore, the'flow of money has been stopped, while on the other hand lower prices mean less national revenue and a much reduced ability to bear the crushing taxation that is in vogue. No country that is submitted to such an intense financial strain can progress—the load, is too heavy, and there is a serious menace to industry. The financial stringency now so painfully evident, and the high interest that borrowed money commands, are the outward , and visible signs of living on credit, to which there is necessarily a limit. Nothing is more certain than this: The Dominion has been heavily drained of its reserve capital, while much of its produce is of less value; taxation has reached the point when the strain may prove too heavy, so that unless the requisite measures of administrative economy are instituted, the outlook is very serious indeed. It is not a question of, reducing departmental expenditure by thousands, but by millions. The position is so serious that it demands prompt attention or there is no forecasting, what evil will happen. It is not a matter of party politics, but of national policy. Greater production means papital expenditure as well as manual energy. It is time fpr a national stocktaking, and the people should insist on expenditure being brought within revenue, not by inflating the revenue at their expense, but by curtailing the outgoings in every, direction.