MR HOLLAND ON BUDGET

Ashburton Guardian, Volume 69, Issue 267, 24 August 1949, Page 4

MR HOLLAND ON BUDGET

Bold Lead Lacking' ELECTION-LOSING DOCUMENT (P.A.) WELLINGTON, August 23. This year’s Budget had disappointed and disillusioned those who sought relief from tax burdens, encouragement to produce more, some exampie of economy, some appreciation of hard work, and some reward for saving, said the Leader of the Opposition (Mr S. G. Holland) when he opened the Budget debate in the House of Representatives to-night. !t was an election-losing Budget, he said, lacking the bold lead which people had expected of it.

World prices, on which New Zealand depended so greatly, were at or past their peak, and Capitalist America was beginning to feel the strain of keeping the Socialist countries going, Mr Holland said. If a buyers’ market had not yet arrived, the sellers’ market had gone.

The prudent course for New Zealand in the face of the sterling area crisis was to increase production, thereby maintaining prosperity even if world prices fell, and to reduce production and living costs to meet the new situation which appeared to he developing, continued Mr Holland. The Budget appeared to be completely barren of any ideas to meet these changing circumstances. There was no thought for aiding production by a programme of rural housing, by tax relief or other Concessions to farmers. The Government was determined to continue its present inflationary policy, which meant that costs would inevitably rise further. Price control, which was, in effect, profit control, had failed to curb costs.

Instead of economising, the Govern-ment-acting as if present produce prices would continue for ever—was increasing departmental expenditure by £8,000,000, he said. Taxation could and must be cut without cutting social security or wages. The people should be treated like British people, and given their freedom. Many of the controls still in force were completely unjustified.

The Government’s stocks were declining with the resignations of Mr F. Langstone, Mr John Roberts and others, with the withdrawal of Mr H. G. Kilpatrick as a Parliamentary candidate, with the disintegration of Labour branches, and with the no-confidence motions of trade union branches. Now came the cruellest blow of all—an elec-tion-losing Budget, Mr Holland said. ‘

The Budget failed to reveal New Zealand’s commitments or the Government’s intentions in the face of the sterling area dollar crisis, said Mr Holland. The dollar loan proposal was a volte face from everything Mr Nash had advocated for the last 14 years. The American people had made a magnificent contribution to world recovery, but we should approach the question of a dollar loan from the United States with caution. Such loan could be raised only for capital expenditure, but even then, how would we repay it, and on what terms ?

Dollar Earnings The Budget gave no sign of helping to expand New Zealand’s dollar earnings, he said. There was a ready American market for rugs and other woollen goods, for which New Zealand was world famous, yet because labour had been tempted from woollen mills to newer industries we could not even make enough woollen goods for our own needs. The Minister of Finance disclosed a surplus of £2,(131,000 for the last financial year, which the Opposition had constantly .declared was an underestimate,'but when the Minister found the balances were too high, he transferred amounts to other accounts, and thus concealed the true’ position. Would the Minister, if what he did was right, allow a taxpayer or company to do the same? Would the Minister allow a company showing £ISOO profit to -transfer £SOO and declare a surplus of £IOOO for income £11,24.7,000, continued Mr Holland, tax purposes? There was a true surplus of which could and should be used to reduce taxation. The man in the street wanted to know why there was no tax reduction.

Many of the troubles in the country were attributed by Mr Holland to the policy of inflation followed by the Government. He quoted the Minister of Finance as saying in 1944 that it was a crime of the first magnitude at that time to create any credit.

-Mr Holland said that the Minister had continued' to pump money into circulation without it being supported by goods, and that policy made living costs rise. In every country inflation of that type led to disaster, and there was no escape for us unless we mended our ways. The Hon. A. 11. Nordmeycr said that Mr Holland had spoken of resignations as if they were confined to the Labour Party, “yet in my own electorate one of his more prominent supporters has resigned and is standing as a Liberal on the grounds that the National Party has departed entirely from tiro principles of liberalism which it once espoused.” One could go through the country and point to resignations from the National Party, but that would not lie news. Mr Holland’s speech showed that the Opposition had failed to give serious consideration to many items of the Budget, which had been either lightly brushed aside or conveniently ignored, said Mr Nordmeycr. It could, however, he agreed that prices were at, or had passed, their peak. That obvious fact had been emphasised in flic Budget itself. Mr Holland claimed that incentive for production was lacking, but production had in fact expanded steadily in recent years, when farmers and traders carried a heavier taxation burden than remained to-day. Mr Holland complained that company taxation should he remitted as it discouraged production, yet in the next breath lie said that every penny of this tax was passed on to the consumer.

Strange Talk Mr Nordmeycr said that, Mr Holland could not have it both ways. Talk of economy also came strangely from the leader of a party whose members during the present session had

asked for increases in departmental expenditure, which would make the £8,000,000 increase for ,which tiie Budget provided “seem like small change.” Opposition members had asked for social security benefits without the means test, had complained that the defence vote did not show greater “increases this year,” and would doubtless seek greater expenditure in their electorates when the estimates were debated. Mr Nordfneyer said that high taxation would have to continue to meet the level of expenditure to which the Government was committed. It. had been said that the Labour Government was greedy and would not let go’ any of its taxation, and the impression had been given that the Government was reluctant to reduce taxes once they had been imposed. That was simply not true. The national security tax had been remitted, and that reduction was worth £20,000,00; the 83 1-3 per cent, war tax had been reduced to 15 per cent., and that was worth £10,000,000; the exemption for a married man had been lifted from £SO tq £100; and last year the first £lO of taxation had been remitted, which had resulttd in 125,000 persons being exempt from taxation; the sales tax had been remitted in many instances. The statement that the Minister of Finance could spend the. people’s money better than they could themselves was not in accordance with fact, and had been taken out of its context, said Mr Nordmeyer. Had not the time come to realise that only the State could do certain jobs and undertake certain responsibilities better than the individual? Should a man undertake the education of his children? Should he shoulder his own rifle in defence of his country? There were many spheres in which it was imperative in the interests of the individual, that the State should undertake responsibilities which no one else could.