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Salient. An organ of student opinion at Victoria University, Wellington. Vol. 23. No. 7. Monday, August 8, 1960.

Professor Holmes On the 1960 Budget

page 14

Professor Holmes On the 1960 Budget

Given current economic circumstances and prospects. I think that Mr Nordmeyer has given away too much in his 1960 Budget.

I realise that the general view is that Mr Nordmeyer has shown commendable restraint in election year, and that one editor has gone so fas as to call his effort "a skinflint Budget." But there is nothing "skinflint" about the expenditure side of Mr Nordmeyer's Budget, which many people have tended to ignore in their preoccupation with expectations of tax reduction. Expenditure in the Consolidated, Social Security, Defence and Road Funds are estimated to increase by nearly £28 million or 9%. i.e., by about the same amount as in the previous year, with social service expenditure going up by £20 million and subsidies by £2½ million. The programme of works and capital expenditure has also been significantly increased; this year's programme totals £96.5 million, as compared with £85 million proposed in last year's Budget.

Business Booming

As Mr Nordmeyer himself has asserted in this year's Economic Survey, it should be the aim of fiscal policy to ensure that the impact of the public finances is in the direction required to ensure a sound and balanced rate of economic growth. To this end, the Budget should try to counteract any tendency towards slackness or restrain any tendency for the level of demand to impose undue strain on the productive resources and overseas funds available. This year there is no tendency towards slackness. On the contrary, business is booming, unemployment is negligible, and labour shortages are increasing. Moreover, the volume of purchasing power in the hands of the people has been rising considerably; for instance, bank deposits are over £40 million or 14% higher than at the same time last year. A major cause of this increase has been the deficit in the public accounts for 1953-60.

Taxation Rates Reduced

In this sort of situation, a sharp rise in public expenditure should have been accompanied by an increase in taxation; but in fact, rates of taxation have been reduced. It is true that the tax concessions announced on Budget night were not very far-reaching; on balance, the concessions would probably not diminish the revenue which Government would have derived at the old rates by much more than £5 million in this financial year. However, one should not look only at the new concessions made in this Budget. This year, the lower rates of income tax announced in the 1959 Budget, and the reductions in sales tax and customs duty made in November and December last, will operate for a full 12 months. The Minister estimates that these concessions were worth £35 million in a full year.

Despite these reductions in tax rates, the Minister expects his receipts from taxation to rise by about £13 million in comparison with last year, because he expects incomes and expenditure to be substantially higher and he will not have to make the large refunds of income tax which were necessary last year. But, given that his local receipts fell short of his expenditure by about £18 million last year, and that his expenditure is rising so substantially, this rise in tax receipts would clearly be insufficient of itself to prevent an even more substantial deficit this year.

Variety Of Schemes

In fact, the Minister is relying on an improvement in his ability to borrow from the public to reduce the deficit to somewhat more sensible proportions. He is introducing a variety of schemes (e.g., tax concessions confined to interest earned on Government stock or from small savings institutions which invest entirely or substantially in Government loans; the introduction of development bonds; restrictions on the rates of interest which can be paid by companies and local authorities) which will all work in the direction of attracting more loan-money to the Government and reducing its need to repay loans maturing this year.

But, despite these measures, an overall deficit of more than £20 million in the public account seems likely to remain. In short, the Government's finances are likely to operate clearly in an inflationary direction, when they should be doing exactly the opposite. In my view, this is the least responsible of Mr Nordmeyer's three Budgets.

Mate'sgoinorright

The mortality rate among small literary magazines is notoriously High in New Zealand. One, however, which appears still healthy in its recently published fifth issue is "Mate."

Printed in Auckland and edited by Robin Dudding, it has pleasing format and typography. And this natty apparel clothes a stimulating body of contributions.

The poems are interesting without being specially impressive.

Some examples: Hone Tuwhare's effective imagery seems to need more direction; Gordon Challis's admirable concepts sometimes bump on a knot in the rhythm. The trouble in the poems generally is that poetic vision, fresh and arresting imagery, is contained in somewhat clumsy framework. The exception is Louis Johnson's "Prometheus," a comparison with which should show the point. The greatest strength of this issue of "Mate" lies in the prose, O. E. Middleton has the master craftsman's touch in "Cutting Day," an exquisite evocation of scene, character and emotion. Maori idiom and attributes are caught with rare precision by Noel Hilliard in "A Piece of Land."

Other prose contributions are interesting, but the pieces by Middleton and Hilliard would alone be worth the three shillings.—J.P.

"Talking of bathrooms, I have something to ask of your ladyship. I should like to paint you."

"Not in my bath?"

"No, in the nude."

"But I am fearfully thin, Mr Jimson."

"I want the bony structure to go with the face."

"I'm afraid my husband wouldn't approve."

"He needn't look. And it will cost you only a hundred guineas—a cheap price for immortality."—Culley Jimson in "The Horse's Mouth" by Joyce Cary.

Executive Members B. P. Dawkins

Executive Members B. P. Dawkins

Executive Members J. A. Tannahill

Executive Members J. A. Tannahill

An Apology.

On Page 4 of the last issue of "Salient" in the Article "Candidates Answer 'Salient' Questionnaire" there appeared a mistake we feel we should apologise for. Under Question 6—"Should panty raids be re-established as a part of capping proceedings?"—Diana Picton was quoted as saying, "I am panting with anticipation." Miss picton wouldn't dream of saying such a thing—Steve O'Regan would, and did, please substitute O'Regan for Picton.