“PAY OR PERISH”

Wairarapa Times-Age, 1 July 1940, Page 5

“PAY OR PERISH”

MR NASH ON WAR FINANCE EXPOSITION OF BUDGET PROPOSALS. DRASTIC BUT NOT MORE THAN • ADEQUATE. (By Telegraph—Press Association.) WELLINGTON, This Day. “The fundamental task of wai' finance is to effect a smooth and rapid transfer of men and resources from ordinary productive employment, to the purpose of war —io the task of destruction,” said the Minister of Finance, Mr Nash, in tin address last night. He added that the raising of money by taxation or by borrowing as outlined in the Budget was the method by which this transfer was effected. It was estimated that, for the balance of the present financial year, special war taxation would bring in an additional £14,000,000. “Only a year ago most people would have said, and with some justification, that increased taxation could not possibly be made to yield such a large additional revenue,” said Mr Nash. “But today our nation is at war. Today the question. ‘Can the country stand this added burden of taxation?’ simply docs not arise. Either wc shoulder the burden as best we can or we go under. Either we pay or we perish. In terms of money the price we are required to pay may indeed seem a heavy one. But compared with all that we stand to lose, as individuals, and as a nation, it is surely a very modest sacrifice. “The Budget proposals are admittedly very drastic. Yet, would other than the most drastic measures be considered adequate in face of the situation confronting us?” GAP IN PRODUCTION. Reference was made by the Minister to the country’s war activity in relation to actual goods and services. He said that all the persons involved, not only the 40,000 who have joined the defence forces but all those who were wholly engaged in war work of some kind or another, together with their wives and their children, were all consuming the same quantity of goods as they did before the war. Not only that, but before September last the 40,000 men were producing goods themselves. That meant that the total production of the Dominion that was available for meeting the needs of the civilian population had been reduced by a very considerable amount. Production had been speeded up amazingly but there was still a big gap to fill. This gap was further accentuated by the fact that it had become more and more difficult to import those goods which they could not produce in New Zealand. The overseas countries which used to supply New Zealand were mainly within the Empire and they were too busy supplying their own war needs to spare many goods for this country. “Knowing that there is this shortage the main problem of the Government is to ensure that the shortage is fairly spread and avoid affecting those who are short enough already,” said Mr Nash. “If taxation were not increased then everyone with the same amount of money would try to buy the same amount of goods as before. But the same amount of goods would not be available and so prices would tend to rise in spite of every effort to control them. Taxation is admittedly required in ordei' to pay for our war commitments but it also has the effect, if imposed intelligently, of ensuring that the shortage of goods and services is spread evenly over the whole community.

MR NASH ON WAR FINANCE — \ WITHDRAWAL OF MEN. (Continued from page 5.) “The Budget itself does not reduce the amount of goods which your income and mine will buy. That quantity of goods is already reduced by the withdrawal of men from industry to take their place in the Army, Navy and Air Force and by the reduced quantities that Britain and other countries can afford to let us have. Whai the Budget attempts, and. I think, achieves, is to spread that shortage evenly over the community so that each shares equitably. "Of the £17,750,000 which will have to be raised within New Zealand during the current financial year, not less than £14,120,000 is estimated to accrue from special war taxation. Undoubtedly it will mean that substantial sacrifices will have to be made by one and all, but irrespective of what financial procedure is adopted there is no possible way by which the community as a whole can avoid them. They could not be escaped, for example, merely by borrowing the sum that is required instead of by obtaining it through taxation. The choice between taxation and borrowing' is not as it is often represented to be, a choice between putting the burden on the present generation and putting it on the future. WAR A CURRENT EFFORT. “The raising of a loan for war purposes unless it is an external loan does not relieve the community of any of its real burden. A loan would certainly give the money we need, but it cannot provide more men of military age than are now alive. It cannot make available for the purposes of the war more uniforms, more munitions, more coal, more food, than is at present available or in the process of production. In other words, and this cannot be emphasised too often or too strongly, the war is essentially a current effort. "We cannot fight the war with men or munitions or materials of any kind which are to be produced after it is over. We can only fight the war with men ana materials that are with us now, or are .produced before it ends. "There is one other way in addition to the external borrowing by which we can add to the resources that can be made immediately available for war purposes. If, for example, we draw on investments made by New Zealand citizens in the past in foreign countries we can increase our present resources at the expense of having smaller assets and consequently reduced income from those assets in the future. Steps have already been taken under the Finance Emergency Regulations to this end. “Generally speaking, the real economic burden of the war falls on those who are compelled to do without the goods and services which have been diverted from ordinary civil consumption to the war effort. It is essentially a sacrifice which has to be borne now, and as the war proceeds.

TAXES & CONSUMPTION.

“By spreading taxation widely and so ensuring that the necessary reduction. in consumption is brought about, prices will be prevented from rising and nobody will be able to gain any advantage in theshape of higher incomes e.r greater profits from war conditions. It has been truly stated that under conditions of modern totalitarian warfare, the amount of sacrifice which a plan of finance imposes is a measure oi its efficiency since it is a measure of the volume of resources that is sei free for the war. Considered in this light the 1940 Budget is essentially a War Budget. Every item in it has some relation to the war, though the plain headings do not necessarily indicate that. “Just to give an example, a large part of the staff of the Education Department has been engaged for some weeks entirely on the work connected with the register of manpower. Indeed in the case of practically every department the work of administration has been enormously increased as a direct result of war activities. In these circumstances, it will be obvious that the scope for cutting down the cost of administration is strictly limited. In spite of this extra work, however, the cost of general Governmental administration will be less during the current financial year than was the case in the year that has just passed. This has only been possible as the result of the most careful pruning of all departmental expenditure and the elimination of every activity that can possibly be dispensed with for the duration c the war. “Throwing men out of employmeni will not help to win the war; cutting down on assistance to primary and rcondary industries will not make lor a more- efficient war effort" said Mr Nash. “Failing to make reasonable -rovirion for the maintenance and development cl' our national productive assets "will not contribute to the proseu'tinn of the struggle. Taking 2s Gd or 5s from the aged or widow will not bring victory any closer. Though money in itself is not one of the primary sinews of war, the way in whicn it is provided is a matter of utmost importance. The policy that is followed in connection with war finance will in the first place have a vital bearing on the efficiency of the war effort. In the second place, it can either accentuate or lessen the degree of social turmoil and individual hardship which war must inevitably cause to the majority of citizens, whether they belong to the victorious or the defeated country. In the third place, it is important to remember that a wise and sound policy of financing war expenditure will avoid serious post-war difficulties which in any case are bound Io be severe. NEED OF HARD WORK. “Those who cannot go or who cannot fight should serve in New Zealand cither by working here or paying here, or both.' Some must fight, some must work, some must pay, some may have to fight and pay. some may have to work and pay. but there is one thing certain, that those who can pay must, and no one- who understands the issues will question the need and necessity. We can cither put our hearts and souls and minds and muscles and possessions into the war while it lasts, or we can case up now and pay later, when wc will have no possession and the enemy may use our muscles, stifle our minds and souls, and break our hearts. If I know the British people. wherever they are. they will never allow this to happen,' but we do sometimes tend to leave things rather too long. The time is short, and if we are to win, wc must not only pay now but work harder now than ever before.”