THE FINANCIAL POSITION.

Taranaki Daily News, 4 October 1921, Page 2

THE FINANCIAL POSITION.

A BIG DEFICIT. (From Our Own Correspondent.) Wellington, Oct. 1. It was not a cheering statement concerning the financial position of the Dominion which the Hon. W. D. Stewart made in the House on Wednesday night, but it had the redeeming virtue of being frank. The acting leader, without any unnecessary emphasis, gave members to understand quite deafly that the Government wa« in an extremely difficult position. The expenditure for the first five months of the financial year, from April 1 to August 31, had amounted to £12,340.042 and the revenue to only £7,849,19'6. leaving a deficit of £4,490,S4’C>. There had been a decrease in the revenue for the five months, compared with that for the corresponding period of last year, of £1,316,420 and an increase in the expenditure of £2,065,943. The decrease in the revenue is easily v.nderstood. The Customs deficiency alone amounted to £1,372,351, so that there is no need to look further for an explanation of what lias happened. The enormous importations of the previous year could not be repeated, and to this extent there is consolation in the figures. They at least show that the lavish private expenditure of the war years has been moderated.

THE OTHER SIDE. But the figures on the other side tell quite a different tale of the public expenditure. Mr. Stewart again attempts to disguise nothing. It was well known to members, he said, that it was usual in the early months of the financial year to have an excess of expenditure over revenue, but, he hastened to add, it was not usually anything like so high as it was on the present occasion. Analysing the abnormal position the Minister mentioned an increase of £455,055 for interest and sinking fund on the public debt, of £312,000 for bonus payments and of £1,166,928 for railway expenditure, a total of £-1,934,483, leaving an amount of only £131,460 incapable, as one may say, of explanation. The railway expenditure included. £200,000 for increased wages and bonus and £660,000 for the importation of coal rendered necessary by “the failure of local coal production.” It would, seem, therefore, that the increased expenditure during the five months which cannot’be brought directly to book amounts to £438,288, this figure being reached by adding the sums of £131,460 and £306,828 together.

THE INEVITABLE. But the fact that the country has on hand a large stock of costly imported coal of doubtful quality does not materially ease the position. What is needed, sorely and immediately, is a drastic cut in the public expenditure. Retiring a few hundred or a few thousand civil servants, discontinuing a train service here and there, adding sixpence or a shilling to the duty op tobacco, further reducing the size of telegraph forms, or all these things together are not going to relieve the Government of its growing anxieties. Retrenchment is an ugly word, suggestive of inconvenience to every section of. the community and hardship to many individuals, but the Dominion will have to face the inevitable sooner or later, and the sooner the speedier its return to normal conditions. There are indications that this is the view held by Ministers and by a majority of the members of the House. The Governor-General’s speech made very pointed allusion to the need for economy and the mover and seconder of the Ad-dress-in-Reply hardly would have referred to the subject as they did without acme inspiration from the Treasury benches. RETRENCHMENT. Mr. Stewart’s own excursion into the history of retrenchment carried him back to the famous “ten per cent reduction” of 1880, which many people at the time denounced, not without some reason, as infamous on account of its inequitable operation. But those were the days of small things in the country’s finance, the reduction representing a saving of only some £lOO,OOO, and doing nothing to stay the leakages in other directions. In 1921 it will be necessary to take much more comprehensive measures, and to take them with a closer regard for the principle of equality of sacrifice. Meanwhile, without making any invidious distinction, a special meed of "praise is due to the Hon. J. G. Coates, the Minister of Public Works and Post-master-General, who, in the two great departments he controls, is boldly facing the unpleasant task of retrenchment in every possible direction. As Minister of Public Works he is saying no to innumerable requests for expenditure, and as Postmaster-General is effecting economies which a less courageous administrator would have hesitated to make in the absence of liis chief. In these two departments Mr. Massey will find him-, self saved a great deal of unpleasant work that had to be done.