THE LOAN BILL.

Sun (Christchurch), Volume I, Issue 226, 28 October 1914, Page 6

THE LOAN BILL.

■ ■ ■ • Liberal & Reform Financiers. A SPIRITED DISCUSSION. Cost of Loan Transactions. MR ALLEN REPLIES TO CHARGES. I i !'. " —, " j SIR JOSEPH WARD'S ARRANGHB- | MENT. [Prom our own Parliamentary Reporter.] WELLINGTON, October 27. A very important debate on the finances of the Dominion took place thisi evening in connection with the discus- i sion of the Public Works Estimates. . In moving the second reading of the Aid to Public Works and Land Settlement Bill, the Hon. J. Allen (Minister* of Finance) said that it provided for the raising of £2,000,000 for railways, j roads, telegraph construction, and other public works, and £1,000,000 for roads and bridges construction, mostly in the back-blocks districts. There were several reasons why more money was needed this year. The. expenditure on public works was of necessity higher than usual. Provision had partly to be made for the new Parliamentary Buildings, and there were also large contracts in hand in connection with other public buildings. | Criticism Expected. j He had no doubt the Government would be twitted with the increased expenditure, but "so far the expenditure of the Government had been less than "their predecessors. (Cries of Oh!). It; Iliad to be remembered, amongst other 'things, that a new telephone system had to be provided for, and considerably [more was asked for telegraph stations, jso t;hat there 'was some £34,000 more than was voted last year under this I heading. Hon. members would have Inoticed that the balance to the Coni solidated Fund at the end of last finanI cial year was not so large as the year. before. There were reasons for that,but the fact made it necessary to have more, provisions in the Loan Bill for carrying on the ordinary works of the country. It had been found that the provision made in previous Loan Bills had not been sufficient to carry on till the end of October, and they had been relying absolutely on transfers from the Consolidated Fund and the Public Works Fundi The balance had gone down, not on account of any depression in the country, but for special reasons which made one of the arguments for an increased Loan Bill this year. It had been the practice to pay into the Con- ' solidated Fund the revenue derived from the sale of lands under the deferredj.payment system. The Governmnt haddone away with that, and now all the. money so derived was transferred i direct to the lands for settlement account, with the result that less had to be borrowed for lands for settlement. Mr G. W. Russell: What is the difference? Mr'Allen: We don't utilise it for ordiinary revenue, but for the purchase of 'fresh lands. • j Mr Kussell: Tweedledum and tweedledee! '....'.. Mr Allen: Nothing of the kind. Continuing, he said that it had been the practice to erect buildings out of loan monej', and when they were burnt down to re-erect them out of loan money. That was unsound finance. Superannuation had also to be provided for out of the Consolidated Fund to the extent . of . £35,0007 There wasi also a.small loan coming due of £11,400, which the Government had decided to pay off out of ordinary revenue. These items made a total of £137,466. A Discourse on Surpluses. In the. ordinary course of things, this sum would have been added to the surplus for the year, making it some £560,000, instead of £426,000. The Government had been mef with an expense of £30,000 on account of the smallpox outbreak, and £93,000 on account of the strike. The railway revenue had suffered severely, and if all these items were added together the surplus would have amounted to £858,000. With a more sound system of finance, however, there was Only a surplus of £426,000, but, if they had acted like their predecessors, they could have claimed a bigger surplus. Sir Joseph Ward: Oh, make it a million! Mr Allen: Taking into account the loss in Customs duties and the cost of postal services ion account of the strike, it might have come to very nearly a million. The amount of the Loan Bill this year was higlf, but not higher than the two Loan Bills of 1909, when £2,250,000 was wanted for public works. This Government had not gone that length. Back-block Works. Provision was made for £1,500,000 for roads and bridges. Half a million was on account of the ordinary roads and bridges, and £1,000,000 was to be devoted to new, definitely-stated works. It Avas proposed to extend the expenditure of this million over three years, and only a portion of the money would be raised this year. As a matter of fact, four prifive millions would be required to properly open up the country, so that still more money would be needed. Mr Russell: This is election year. Mr Allen: It is election year, but the ; Government has acted quite openly. ; Money for Public Works. Dealing with the Public. Works Fund Mr Allen said that the balance on October 22 was £12,700. There were also investments totalling £30,000 which by ; this time would have been realised, and the amount made available for expendi- ' ture. 'He had neither transferred any- ' thing from the Consolidated ; Fund nor - from the Public Works Fund, and he '• had taken money from no other source 1 than that raised under the' Loan Bill. In the War Loan Bill which was .put { through earlier in the present session | provision was made that some of the money could, if necessary, be used for ) public 'work's,, aud a sum of £50,000 had i been so transferred. The total amount J immediately available for the carrying i on/of. public works was £92,700. .(Hear, i hear.) , There was sufficient- money to } enable, public works to be'carried on .- till the end of October, The Government * was very anxious that in future years t the Loan Bill should provide money to 1

carry on works past the end of October. They hoped some day to be able to carry on to the end of the financial year. They could never be sure what balance of the Consolidated Fund would be avail!able for transfer to the Public Works J Fund. Therefore, if this policy were ! to be carried out next year, they must get authority under the present Bill to i raise the money. "Baising the Money with the Wind." The question then arose, Where is the money to be raised? As hon. members knew, it was impossible to raise a stock loan or a debenture loan in London at the present time. The only method is by the issue of Treasury Bills. Fortunately, before the war broke out, a Bill was passed by Parliament giving the Government power to issue such j bills in London. He hoped with assistI ance to be able a little later to raise money for public works by this means in London, but whether he could or ! could not, the balances held by the | State Advances Department were so j strong that he would be able to carry on works to'the end of the financial ! year without going to London at all, i provided always that he could redeem the loan falling due in December—the three-million loan raised by his predecessors four years ago. Mr A. M. Myers (Auckland East): ! But haven't you got that arranged? | Mr Allen: The holders of these debentures won't convert them. They must have their cash. The money must be v paid in London to the great financial institutions which advanced it. If we i can get that loan out of: the way and 'settlers and local bodies have a little I patience with us, we have no difficulty in carrying on till the end of the financial year. Hon. gentlemen would agree that that was a very satisfactory state of affairs. War Loan Successfully Raised. Under the War Loan Bill the Government had power to raise £2,000,000, and he was very pleased to say that the' amount had been. ; obtained in London on exceedingly favourable terms. He I could not disclose at present exactly at Uvhat rate it was raised, but it was very • favourable to the Dominion. The money was being provided for us in London on the loth of every month. Mr A. M, Myers: For what period? Mr Allen: Any period we like. The • Government had been asked to name the period. 'At -present it was taking £300,000 a month, and would do so until December, although it was anticipated that the amounts required after that I month would not be so large. J Mr G. W. Russell (Avon):-So good old Mother England is footing the bill; after all? ' .1 Mr Allen: Does the hon. member' ; object? | Mi- Russell: We want you to say. so.; Mr Allen: I will say so if you wish.! Why shouldn't I? ' j Mr Russell: But you are taking all; the credit for the Government. j Mr F. H. Smith (Waitaki): It shows j that the Government is trusted. (Government applause and Opposition laughter.) Government's Promises Fulfilled. Coming to the subject of the Loan j Bill itself, Mr Allen said that it had j been charged .'against the Government; that it had made certain promises at the elections with regard to .'borrowing find had hot fulfilled them. ' Ah Opposition Member: Hear, hear. He could not remember when any member of the Government promised that they wouid reduce borrowing, but they did say that they would attempt to, reduce it, and would spend borrowed money with more care and discretion than their predecessors. Mr Russell: You did say so. Mr Allen: Show me the passage. Mr Myers: Give us the figures, will you,? •--..■.- ■ . ;• '.,- ".-.■■ Sir Joseph Ward: By Jove, I tell you this is a marvel. i Mr Allen: It is a marvel. It is another of those .attacks on the Government which have been shattered to the base. Between/ July 12, 1912, and September 30, 1914, the period during which the Government has been in office, the amount borrowed has been £14,636,880. ■The' hon. gentlemen say that we promised to decrease borrowing, so I shall j go back over a similar period previous to the date the present Government came into power. I have made enquiries from the Treasury, and have ascertained Sir Joseph, Ward: I shall read it out "when I make my speech. ; Mr Allen: Well, I'll take it that the hon. gentlemen are right. " ■ •' ■ i Sir Joseph Ward: You have forgotten what you said. Mr Allen: It is easy to forget what is said, - but it is not easy to forget promises. The Government has fulfilled the promises it has made. (Ironical Opposition laughter.) 1 do not know whether the hon. gentlemen . are right, but I will take it that it is so—that the Government promised to reduce borr6v.ing. It has reduced borrowing. That is a promise which the Government has certainly fulfilled. (Opposition Members: Oh!) During that period my predecessors borrowed £16,496,775. I do not .hear any of the hon. gentlemen say "Oh!" (Loud Government laughter.) The period to which these figures apply is from April 1, 1910, to July 9, 1912. It might be said that the difference is only two millions, spread OA'er more than two years, it would be said that the difference was due to the necessity for borrowing money, to repay loans. Let them examine that statement. For current expenditure the present Government had borrowed • £9,078,680, as i against which its predecessors had ber- ! rowed £10,031,950 —a difference of close on a ■ million. For the redemption of loans the figures were: Present Government £5,558,200, previous Government £6,464,820— also a difference of nearly a million. : Credit of the Country. As for the credit of the country, it was a curious thing that every loan of the last Government's,became more ex- ', pensive as they went on. In 1910 a loan , cost £4 5/8, the next cost £4 11/1, and [ the next £5 1/1. The first loan of the 1 Massey Government cost £4 5/4, and • the credit of the country had been get- i ting better every year the present Government remained in office: That was < shown by the decreasing cost of the loans. (Loud Opposition laughter.) No other country stood in better credit nor „ could raise its money on better terms ; in London than New Zealand. He had ' answered the charge, therefore, that the Government had reduced borrowing, j (Hilarious Opposition laughter.) The Government had been charged with increasing taxation. They had increased it. He would admit it. They said when ( they came into office, that they would 3 increase the graduated land tax to j break up large estates. They had done i it, and that was how the Opposition < members made out that the Govern- , ment had "increased taxation. The ; Leader of the Opposition had made out ; somewhere in the south that the'.. Mas- ' sey Government had increased the Cus- i toms duties.. As . a: matter, of fact, in ■

. 1909-10 the Customs duties per head ) were £2 17/-, in 1910-11 £3 3/-, in 1911-i2 . £3 6/-. All the time during the Liberal i Government's reign the duties per head - increased. In 1912-13 the sum per head 3 was £3 7/6, and in 1913-14, the second i year of the Massey Government, it had ; dropped to £3 6/1. What had the Oppo- > sition to say to that? Mr Russell: The spending power of • the people was less. t Mr Vigor-Brown: Name any articles 'l you have taken the duty off? (Opposition laughter.) ; Members: On packing eases. ; Mr Allen (continuing): Then there ' was the increase of the graduated land tax. In 1909-10 it was 13/7 per head, ; in 1910-11 13/11, in 1911-12 12/8, in ; j 1912-13 13/11, and the last year, 1913-14, 1114/3. That was a complete answer to [ | the Opposition charges. i j An Amazed Opposition. ■; Sir Joseph Ward said that they could- ',] learn one thing from the. Minister's 11 speech. It was that the more the reve- : nue fell the more the Government of [! the country should borrow. He was , ! simply amazed to hear the Minister say | the Government had not increased taxai j tion, and the facetious way in which j he referred to Customs taxation. According to their own table, the Government had increased the taxation during the last two years by 6/2 a head. That Avas clear from the Year Book published by themselves. But the most extraordinary thing about the whole of the Minister's speech was the declaration about the Government having reduced borrowing. The Minister had referred to the Loan Bills of 1909. He had looked them tip, and the Ward Government had borrowed £4,500,000 that year. The Minister had the political audacity to say that that was more than his own borrowings this yeJir. As a matter of fact, tlie Massey Government had borrowed during this session of Parliament nearly twice that amount. Then they had the .Minister's astounding statement that jof the £2,000)000 war loan which the House passed a few weeks previously he had taken £50,000 to bolster up the Public Works Fund. The , House had never dreamt that that money would have been touched until they knew what they would haA-e to pay for war expenses. He hoped the country would realise what the Minister was doing. Since the Minister had come into office the settlers had been . shrieking for money. The workers and the local bodies had been crying out for adv/a noes in 1908 —a year of financial stringency. ! The Ward Government lent £1,197,415 to j settlers and £203,000 to workers in 1909 I —the. amounts were respectively j £1,433,000 and £299,000. During the six | years he was Prime Minister of the ! country the settlers got the j workers £1,821,000, and the local bodies j £1,695,680; but since the GoI vernment had come - into power every lone of these Departments had been i starved. They had not been able to j carry out their work. So faj- as the poor back-blockers were concerned, if they would be satisfied with what the Government -proposed to do for them, then "By the Lord Harry, they niust be easily satisfied!" .." Look, at the expenditure on public buildings' | parison,'.' continued Sir Joseph. A sum I of £710,000 was to.be spent; on publie buildings, and only £9059 on lighthouses, which were essential for the safety of the travelling publie. Unexpected votes for the last two r years amounted to £1,579j365. The expenditure on publie works was a- delusion snare so • far as the railways were eonceriiedi< .j;*e: ; one thing - standing boldly out was the huge; and unparalleled expenditure on public buildings, and the '.Government talked about the expenditure on the Parliamentary buildings in excuse. V Last year only £35,000 was spent in this' direction. Nothing was proposed in the way of reduction of taxation. What about the repeal of the mortgage t&x? A microbe of financial madness seemed to be getting hold bf~ the Government. Expenditure had gone up two millions, and loans had been increased by £15,000,000 since the Government had been in offiee. ' '. The Prime Minister in Reply. The Rt. Hon. W.F. Massey said that i it could not ; be considered'; that the statements of the Minister of Finauce - had been successfully criticised. The Leader of the Opposition had charged, the Government with increasing- taxation by £309,600. That must mean.that more had ;been taken out of the people through the Customs, but n"ot an item e#)uld bei pointed to. where this was-so. As a matter of fact" there hard been "reductions. The - Government had abolished tlie taxation on discounts which had been levied on mercßahts through the Customs, and done away-with: tlie vexatious duty on packing/cases. The revenue had not gone back to anything like the extent he expected on" account of the war. The loans which bad been floated during the year showed that the credit of New Zealand was better than that of any of the other oversea dominions, and this was the' best testimony that could be obtained regarding the sound financial management of . the Government. ' ' Mr J. Payne (Grey Lynn): The credit of the eountry is due to the Liberal Party. ; Mr A. M. Myers (Auckland East): Your loan was for only ten years. I -...." Loans to Settlers. . U Continuing, the Prime Minister repeated the statement made-by the Hon, i Mr Allen regarding the loans raised by i the Massey Government. - He cOusider- | ed the borrowing was justified by the conditions which obtained--;when they itook office. They had: raised the amount to be lent to settlerai Mr Witty': You'll lower it again -if you are in when the elections are over. Mr Massey: We are lending large sums to settlers, and in my opinion it Js exti-emely fortunate that while the Empire is at war we are able to let 'them have any money at all. (Government hear, hears.) That they would come, through tho financial crisis of the war, he had no doubt, and then the settlers would bo getting what was due to them. Bcforo last election the Treasury was depleted because money was squandered amongst wealthy local bodies, and.the figures for the advances to workers show the Advances. Department had been used for electioneering purposes.;.;.; ;. Government' s Swan Song. Mr G. W. Russell (Avon) said the fin© speeches of the Prime Minister and the Minister of Finance ihade : a sort of death bed apology for this ghastly condition into which they had got the finances of the country. Mi- Wilford: A political.swan song. The whole record of the Government, Mr Russell continued, was an amazing one of broken pledges. , The. Govor-n-------inent had promised local government reform and assured finance for loeal bodies, and in the 1912; Budget promised a Bill for the purpose, but it had never come^;■•; They had done horlifng in 1913, and -this year still nothing:'/. The Houb6 was asked to-night to pMs r the Publie Works Estimates on the same'old ; method wliieh they had dehonheed.-TBis was the third time thoy had brought-in ;

the Estimates on this old method. The third time the Hon. William Fraser had gone back on his Government's promise'. Mr Fraser: Do you denounce the system? Mr Russell: I do, and when I was Minister of Internal Affairs I brought in a proposal which the present Government copied and outlined in the 1912 Budget. Last year the Minister of Finance had definitely promised a Bill reducing the Customs tariff on the necessaries of.life. Where was the Bill? The Minister was silent. He knew well enough .that he and his Government had ttioken that promise. There was yet aaother promise broken. The Cov eminent had promised legislation proAbiding for compulsory insurance against sickness and unemployment. The Hon. Mr Hemes, in a speech at Greymouth, had admitted the Government's omission, and made the excuse that it was time for 'New Zealand to imitate such a scheme when they had seen the success of Mr Lloyd George's scheme at Home. That was the way they wrig- ' gled out of it. Yet, as had been shown over and : over again, they sat in the Treasury benches naked and unashamed." '"* Misrepresentation Alleged. The Minister of Finance had grossly misrepresented Mr Myers during his speech. Mr Allen had referred to £1,431,000 of the £4,500,000 loan as . being required for the renewal of MiMyers's loan. As a matter of fact the documents showed that the present Minister had the spending of this money himself. He could not understand how the Minister could possibly get up and so misrepresent the. position, for when this £1,431,000 was taken into account, the Hon- James Allen's borrowing record could be added to by £2,862,000. That made a big difference. The ina-n who would juggle with figures in. such a way as the Minister had that night would be better on a racecourse than in.charge of the country's finance. An Opposition member: He would make a good spieler. Mr Russell continued that he had, never seen such humour as could be derived from this year's Public Works Estimates. For example, works which had had nothing spent on them last year were receiving huge votes this year, but they did not mean to spend anything like the vote. Mr Wilford: Have you read, the votes for the Bay of Islands electorate? Buying Office. Mr Russell read one example. There •was the wharf at v ßussell, for which £l5O was voted last year and nothing spent. The Government had therefore voted £3OO this year. The Public Works Estimates contained ample proof of the fact that the Government was buying its way back to the Treasury benches : with the electors.' own money. • The whole of their actions showed them as breakers of solemn promises, and it was their performances this election, •.'• and not just wordy promises, with which they had to go to the electors. No Government had finished up a Parlia- . ment with such a record of unfulfilled 2>ledges. They had shown themselves the spotted owls of democracy. (Opposition applause.) Mr A; M. Myers (Auckland East) said a severe indictment had been made : against' the Government in regard ,to broken promises-; The unexpended votes .shown in the Estimates were ridiculous. „ -The pledge of reduced borrowing had ~ ; been uterly neglected. The average in- ,}'• creased borrowing of the Liberal Go-' ..; vexument, was £s^ooo,ooo,per annum, and; that of the present Administration was £5,000,000. In his ; treatment" of the Minister of Finance had aut( . daeiously attempted to mislead the ''.'.House.' For every £IOO of revenue the" . Treasurer anticipated an expenditure of 99.08 per cent.,.-. That was shown by his own figures.. The flotation of loans this year..showed that the credit,of South Australia was just as good as that of New Zealand., He had been told by London. financiers that the reason New Zealand loans were regarded with favour was that an investigation showed ' they- were spent on reproductive works, and the -sinking fund system had been ■ established. . It had to >be recollected -that when, the-four and a half .million Joan was floated, there was an abnormal jinx of money. There was no justification for the.present Government taking any special, credit to themselves. The -, Government has neglected local government and -town-planning legislation. He failed to see where the Government had carried, out any of their pledges to reduce . borrowing and expenditure. Mr. Allen: We have done so. Mr Myers: The figures show that-you . - have, on an average, borrowed £2,000,000 more a year than the late Government. '. . Mr Massey: AVe had to borrow to pay your debts. , ...'.- Mr Myers: I wonder how much the . incoming. Government will have to. borrow to pay yours. Judging by the commitments, there will be an awkward ~ ~ problem to face. Mr Massey: The next generation may j think about that, Mr Myers: It will, I think, have to be considered the next month. . The Hon. W. Fraser (Minister of Public Works) said that it had been contended that when he came into office he .had stopped public works. Opposition members: No. Mr Fraser: Yes it was. Hon. members liad quoted unexpended votes to show that he had not been carrying out ; works authorised by Parliament, but on every set of Estimates such unexpended sums appeared. When the Government Came into office money was very difii- • cult to obtain, and so it had been when i the previous Government was in office. J One of the last speeches he had made when in Opposition was in criticism of the unfortunate circumstances under which the Myers loan was raised. He - had then said that he did not blame MiMyers for accepting the terms, but he did blame his predecessors for putting "' ■•■-•■ him in such a position that he had to ac- ' Cept them. There could :be no doubt ''.that when Mr Myers took office the credit of ;the country has been pledged 'so deeply that the 4$ million loan had to ••be-floated at any price* and for a short y'term. He had been accused of stopping public works, but for the financial year ended March 2:1, 1912; ■he had spent £468,972, and during the next year the -, expenditure was £493,646. These figures -were higher than those of any year in .. the; previous six with the exception of the- two election years. ' (Government ~'""members: Oh!) . Then there was talk of the failure of the Government to fulfil its pledges. What had it had ...from the Opposition?; Members of the ~'Opposition had wasted a great deal of ..time, and man after man had got up simply to reply to what his predecessor had said. To judge by their attitude ,'.. th'ey wisli.ed to continue sitting until \ .January. There;was'X gj : eat : deal of i .'difference between for raising, money,; arid the cash. ;Slt% members on.the Opposition side of ,V, thCJJbnse knew d|ffierenCe', but they wished the people to "'}, think : there was none. '"■ When lie■•'had-.stated- earlier.'in ,the session that;he, intended to prepare las Statement as if there had been