WAR FINANCE

Ashburton Guardian, Volume 60, Issue 309, 7 October 1940, Page 3

WAR FINANCE

CRITICISM . IN THE HOUSE. THE EFFECTS ON BUSINESS. VOLUNTARY LOAN SUGGESTED. (Special to the “Guardian”) WELLINGTON, October 5. The implications of the war loan, with its compulsory provision in particular, and the financing of the war effort in general, came in for considerable discussion in the House of Representatives this week. Opposition members were critical about the method adopted by the Minister of Finance (the Hon. W. Nash) for raising the money, and prophesied serious effects on the business and industrial communities if subscribers were compelled to. pay over money that was in use. Alternatives were put forward, the most popular being an appeal for a voluntary loan at a rate of interest that would not exceed the interest to be paid during the last 10 years on the 13-year loan proposed. Jt was claimed that there was sufficient free money to meet requirements in that way. The debate was opened by Mr Nash giving a general review of war finance and war expenditure, but he did not have anything to say about reasons for adopting the basis taken for raising the loan, nor did he discuss possible alternatives. The • first Opposition speaker was the Rt. Hon. J. G. Coates (National, Kaipara), a member of the. War Cabinet, who gave his colleagues something to talk about by saying that the War Cabinet had never been consulted about the raising of war funds.

Method of Raising Money. The debate -then settled down to a series of exchanges in which the Opposition, while agreeing that money must be found for war purposes, were emphatic that the method adopted was unnecessary and full of pitfalls at the present juncture, and Government members talked about the prosperity of the Dominion and made references, meant to be sarcastic, about the Opposition failing to realise that therd was a war on. Summed up, the Opposition argument was that “free” money could have been secured at a low rate of interest and its use would not have had any effect on domestic conditions, but the casting of a net to collect money from all and sundry would bring in funds that were, and should continue to be, busy earning taxation for the State. It was also suggested that the Minister of Finance had adopted his compulsory, partial-free-loaii scheme Lo satisfy those members of the Government who were inclined to lean, toward the non-interest policy of Mr J. A. Lee (Democratic Labour, Grey Lynn).

Where contributions to the (loan were based on income earned, it was argued there were sure to be many who would not be able to draw on that income.to pay their subscriptions, with the result that they would have to rely on an overdraft to secure shares. This would be followed by a rush to sell on the market so that money would lie secured for essential business purposes, and the shares would probably drop 50 or GO per cent, of their nominal value. Losses to those who did not possess “free” money and gains for those who could buy at a discount were visualised,

with a resultant' disorganisation of industrv.

A Complicated Measure,

Members were interested, but not surprised, to receive the Excess Profits Tax Bill during the week, and an interesting debate on this measure is probable next week. The Bill is an exceedingly technical and: oomplUcat'ed measure, as many problems are raised when excess profits have to be defined. No one is likely to argue that anyone should be able to make excessive profits out of war conditions, and-as there is provision in the Bill for rewards for personal efforts there should not he any objection in a general way, but in such a Bill there may be many points that are open to criticism. The basis adopted for assessing excess profits will probably he debated fairly fully as it would be -difficult to select a 'basis that does not lead to anomalies. The Minister in charge of the Bill (Mr Nash) has arranged for certain alternatives but these may noc be regarded as spreading far enough.

Motorists and Petrol. The uso of petrol in air force training gave members an opportunity to say something about the important question of petrol rationing as the debate on war finance widened. One Government member argued that the needs of the Royal New Zealand Air Force were so great that private motorists were lucky to get any ration of petrol at all. He also criticised the Press of the Dominion for not supporting -the Government in its rationing policy, stating that they had had an opportunity to peruse communications that had been exchanged by tlie New Zealand and British Governments. He also criticised the motor trade for advocating an increase in petrol rations. Opposition members retorted that those, engaged in the motor trade were having their living taken away by the rationing aiid had a right to ask for the restrictions to be relaxed. They also pointed out that more generous provisions wore made in other countries.

The most important matter to be considered by the House next week will be the Excess Profits Tax Bill but a debate has also been promised on the use of Regulations. This debate will probably be as limited as possible as Opposition members are sure to criticise the Government for using Ordors-in-'Couneil to the exclusion of measures which can he discussed, by Parliament. As the debate is sure to be initiated by some member moving the adjournment of the House it can lapse at the 'conclusion of the sitting if the Government wishes it to do so.