Wairarapa Times-Age SATURDAY, JUNE 1, 1940. PAYING FOR THE WAR.

Wairarapa Times-Age, 1 June 1940, Page 4

Wairarapa Times-Age SATURDAY, JUNE 1, 1940. PAYING FOR THE WAR.

QOME very interesting and important aspects of wax fi ° and of the policy that may be adopted in dealing with the problems involved were touched upon by the klinister of Fmanc (Mr Nash) when he spoke on the Emergency Amendment Bill in the House of Representatives on Thursday evening. In developing the theme that no one should to make any profit out of the war, and indeed that , nob < in the Dominion during the present crisis should recene aiy thing more from the community than was needed to sustain their obligations and to meet their commitments, .Mr Nash said that war could be carried on only by the things that lie in stock before it began or were produced during its currency. Why then, he asked, should they put it on the soldier whei he returned to pay? The man who went away to serve Ins country should not be worse off than the man who stayed at home.

These propositions may be expected to command general agreement. So far as New Zealand is concerned, however, the policy of paying for the war as we go is complicated very considerably by the fact that much of the war equipment of our fighting forces has to be bought from Great Britain and that the maintenance of our forces overseas also has to be met a... an external charge. If the whole of our war costs, internal ami external, are to be met by the maximum taxation of which the Finance Minister spoke, this taxation and the sacrifices it must entail will have to be on a heroic scale and one not hitherto imagined in this country. In an outline of war finance given in March last, Mr Nash slated that the estimated cost of our armed forces during the present financial year was £33,000,000, made up as follows: £ Navy 1,500,000 Army (overseas and in New Zealand) 25,000,000 Ail , ‘ J 6,500,000 It was further estimated, the Minister said, that expenses to be financed in or from New Zealand would amount £13,000,000, while expenses overseas, including the full initial equipment of the Division with guns, munitions, etc., would be of the order of £20,000,000. The overseas requirements, Mr Nash added, would be provided on a loan basis under financial arrangements with the United Kingdom Government. If the last-mentioned arrangement is to stand, part of Hie Dominion’s war costs will remain as a burden on our soldiers when they return, as well as upon the rest of the community. The only alternative, no doubt would be to set new and extremely exacting standards in war taxation.

Particularly when it is remembered that our war costs are being increased —for example, by the extended provision now proposed for home defence —and are very likely to be further and considerably increased in other ways, it may be doubted whether it is practicable for this country to meet the whole of its war costs as it goes. A country relying wholly on its own resources could, as the Finance Minister observed, carry on war only with things that were in stock when the war began or were produced during its currency. New Zealand, however, is borrowing from .the United Kingdom a large proportion of the material it is using in the war.

It does not necessarily follow that we must be content to meet out of current taxation only our internal war costs. It may be practicable to meet in addition a part of our external war costs. If that is to be done, however, it will be necessary not only to impose very heavy taxation, but also to achieve a considerable expansion of exports, or to make a further heavy cut in imports—probably, indeed, to do both of these things.

In the twelve months to March 31 last, our exports were valued (in New Zealand currency) at £59,643,339 and our imports at £45,571,774, leaving an excess of exports of £14,071,565. This excess is little, if at all, more than enough to meet our ordinary annual commitments of debt and other charges payable overseas. It probably provides nothing at all towards the annual payment of £3,500,000 to which we are committed during the next four years in redemption of the recent £16,000,000 renewal loan floated in London, and of course nothing towards war costs.

As has been said, if we are to pay any part of our external war costs as we go, we must increase exports, reduce imports, or do both of these things. The possibility of doing something on these lines may be well worth going into. It is probably impracticable to muster the resources that would enable us to meet currently the whole or any very large part of our external war costs. On the other hand, it appears to be an essential condition of a return to sound financial stability in this country that we should make regular and substantial annual payments in redemption of our oversea indebtedness. In adding heavily to our external indebtedness, the war also emphasises the necessity of doing all that we can progressively to reduce our total burden of external debt.