LOAN MONEYS

Hawke's Bay Tribune, Volume XIX, Issue 142, 5 June 1929, Page 4

LOAN MONEYS

From his explanation of the deficit tho Prime Minister, at Auckland last night, went on to say something about his own financial plans and operations. Hero we can scarcely compliment him on the same clearness, frankness. and candour. In the fust place, ho asks us to regard the new 7 million loan floated in January as being in part fulfilment of the big borrowing scheme he laid before the electors. This proposition can scarcely be accepted. That scheme involved an arrangement, to • be made before the end of this year, for the borrowing over a period of ten years, of 70 million, of which 10 was to be appropriated to railway construction and GO million was to be relent to settlers and workers at 4j per cent, without the taxpayers having to make any contribution. The 7 million loan was a quite isolated transaction in the way of what has become at least an annual operation on tho London market.

Then, in the next place, the Prime Minister would have his audience and newspaper readers throughout the country think that this sum was borrowed at 41 per cent. That, too, is not the case, for tho £lOO bonds bearing interest nt that rate were sold for £95. Allowing for this discount, which has to be mads up when the loan matures and provided for by a sinking-fund, and also for the flotation charges, the net proceeds of the loan available to the Government will cost it all of 5, not 41, per cent, in interest. This will scarcely admit of its being relent at 4| per cent, without the taxpayers being called upon to make up the difference, as well as the cost of administration. This 7 million, although, on quite good grounds, borrowed during last financial year, was meant for this year’s expenditure, and tho Prime Minister tells us the full amount still remains intact. What most people, his own press supporters included, are curious about is as to whence the millions have come that have been made available for (he Advances Office during tho last five or six months, and on what terms they were secured. No doubt this can be quite satisfactorily explained, but here, too, Sir Joseph Ward might take a leaf out of Mr. Downie Stewart’s book and take the people a little more into his confidence.