4.
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1931, when the earlier salary levy was in force, and in subsequent years but they have overlooked or ignored the large increases in taxation imposed in 1930, 1931 and 1932 which (together with an improvement in the prosperity of the Colony, the rise in exchange and various large windfalls to revenue) raised the balances of the Colony in certain years to heights which no Government could have foreseen when the former salary levy was imposed. The Treasurer's Annual reports, his memoranda which accompanied the annual estimates and the speeches with which the annual budgets were introduced afford explanations of the estimates and of the reasons which proved them to have
been perhaps in some cases over-cautious.
Events may indeed prove that the Government is
erring on the side of caution now, but no one could suggest that the present outlook justifies the taking of any avoidable risk.
8.
It is perhaps unnecessary to discuss the distorted
view expressed at the end of paragraph 4 of the petition as to the Government's policy with regard to the relation between
surplus balances and Government salaries. You will be well aware
that no such policy exists and that only the abnormality of the
present position has necessitated a temporary levy. The
petitioners have overlooked the fact that the use of the
"conventional" dollar for certain items of revenue has
automatically increased taxation by a sum slightly larger than
that anticipated to be raised from the reduction of salaries.
9.
The petitioners have discussed at length the
question of increased taxation. On this I do not think I need
say more than that their suggestions will receive every considera-
tion in the review of the whole financial position which has now
become necessary in order to maintain a balanced budget on the
present more or less stabilised level of Exchange. I have
several items of the tariff under immediate attention, but care
is necessary to avoid extinguishing the feeble glimmer of