Wairarapa Times-Age WEDNESDAY, MAY 18, 1938. AN OPTIMISTIC FINANCIER.

Wairarapa Times-Age, 18 May 1938, Page 6

Wairarapa Times-Age WEDNESDAY, MAY 18, 1938. AN OPTIMISTIC FINANCIER.

REVIEWING the national finances, in his speech at Lower Hutt on Monday night, the Minister of Finance (the Hon W. Nash) found himself in some respects very happily placed indeed. An overflowing revenue and a big surplus are usually items of bliss to a New Zealand Finance Minister and by these standards, Mr Nash is, so to speak, on the top of a wave. Leaving upwards of five millions of unemployment taxation out of account, he was able to point to a total revenue for the year which lately closed of over 36 millions and to a surplus of £BlO,OOO. The revenue includes £31,664,000 derived from taxation a yield greater by over ten millions than that of two years ago.

This, as it stands, is a remarkable position. Apart altogether, however, from the political opponents whose criticism and pretensions Mr Nash was so evidently anxious to demolish, a good many thoughtful people in the Dominion are very far from being satisfied that the financial position meantime disclosed is as sound and stable as it is spectacular. With Mr Nash as purse-bearer and purse-filler, the present Government is launching out into ever-increasing expenditure as if, in the Prime Minister’s now familiar phrase, the sky were the limit to the possibilities of increasing taxation.

The actual limit, however, is not “the sky,” but the ability of the people of this, country to produce usable wealth. Side by side with, the bounding optimism of its ideas on national finance, the Labour Government cherishes a theory that this is an age of overflowing production in which only good management is needed to ensure a large and gratifying increase in the national income year by year.

So far as this country in its present state or in any stage of development it is likely to attain for a good many years to come is concerned, the theory of abounding production freely on tap, or waiting to be tapped, is largely fallacious. The theory can only be entertained, indeed, by those who have failed to grasp the elementary facts of our . economic organisation and development.

No amount of political conjuring or legerdemain can dispose of the simple fact that the national economy of this country rests to a vital extent on the marketing of primary products, chiefly in unsheltered markets, and that while this state of affairs continues, _ the degree of , prosperity attainable by our total population must depend on the prices obtained for export produce.

t Farm production in 1936 amounted to approximately 63 per cent of the total national production. Exports, consisting almost wholly of farm products, constitute not far from one-half of our total production. We have to take whatever prices are obtainable for export produce, but obviously the level of these prices must determine whether not only the farming industry, but many otherindustries and economic services besides that are auxiliary to farming, are to be prosperous or the reverse.

*No longer ago than 1932-33, the prices obtained for New Zealand farm produce were only 47 per cent of what they had been in 1928-29. That is to say, they had fallen in four years to less than half their former level. In the fact that we have no means whatever of averting similar fluctuations in oversea prices as time goes on, weighty reasons may be found for refusing to regard as a matter for congratulation an increase by over ten millions in two years of the amount of taxation (other than unemployment taxation) paid by an almost stationary population. Still less is it possible in these circumstances to rejoice at the prospect of further heavy increases in taxation burdens.