THE BILL DEBATED.

Auckland Star, Volume LVI, Issue 232, 1 October 1925, Page 11

THE BILL DEBATED.

LAST MINUTE LEGISLATION. COMPLAINT BY OPPOSITION. EXCESSIVE BORROWING. (By Telegraph.—Press Assoclatloh.) WELLINGTON, Wednesday. When tho Minister of Finance, Hon. W. Nosworthy, moved the second reading of the Finance Bill in the House to-night Mr. G. W. Forbes, Leader of the Opposition, complained of the paucity of information given by the Minister. It was a bill of 52 clauses and there were many of these which must have some origin or purpose of which the House had not heen told.

The Minister intimated that he would give further information in committee.

Continuing, Mr. Forbes said it was a pity the bill had not been before the Public Accounts Committee, because it was one of the most important measures of the session and members could not grasp the full significance of all its provisions in the few minutes that the bill had been in their hands. Only the advanced state of the session would justify them in letting the hill pass with, the meagre information given them.

The Scheme Criticised. Mr. T. K. Sidey referred to the scheme for repayment of the public debt. He gave the following reasons to justify the establishment of sinking funds, hy borrowing in the country, and in support of the existing system: (1) Maintenance of national credit; (2) the fact that the sinking fund, as well as interest had been provided for, operated as a check oh overborrowing. (3) The existing system ) while securing objects (1) and (2), enabled the country to get the benefit of accumulations of sinking funds for developmental purposes. During the period of the war the investment of sinking funds in non-liquid securities placed them largely beyond the reach of impecunious Finance Ministers.

Mr. Sidey referred to the new scheme under the same heads. If reduction of debt were the only consideration, the new scheme probably bad an advantage. There were, however, other considerations. At the present time it appeared inopportune to withdraw an annual sum of over £900,000 from investment by the Public Trustee, which was being utilised to assist private mortgagors and local bodies, and it was particularly inopportune that an annual and ever increasing sum of £370,000 would, under the new scheme, be diverted from the Advances Office at a time when money was so urgently required that we were actually adding to the Advances Tune two millions of borrowing money. When the office was congested with applications, it was incongruous to withdraw such sum to pay off debt on one band and borrow so largely on the other.

"Collaring the Sinking Fund." The new scheme in its inception, presented a temptation to the Finance Minister. The Government repudiated any suggestion that they were collaring the sinking funds, but what was the position ? At the present time, to meet sinking fund payments, the Consolidated Fund had to find £684,000, but, by using the interest of accumulated sinking funds, the Consolidated Fund would meet the charge under the new scheme and save £325,000. In so far as the Consolidated Fund was relieved of an existing charge by utilisation of sinking fund moneys to that extent, it was collaring sinking funds. Less exception could be taken in this respect if at the commencement of the new scheme Consolidated Fund payments were the same as formerly. By way of reply, it was pointed out that, although Consolidated Fund payments were less, the public debt would be liquidated in 60 years, as against 75 under the old scheme. One reason why that was possible was the introduction of a scheme for liquidation of our war debt of £50,000,000 in 39 years Irom tho date of issue. That had involved an annual payment of about half-a-million from the Consolidated Fund. It was now, proposed that war loans should be liquidated with other debt in 60 years. Every prospectus on loans floated in London since the war had contained a separate paragraph setting forth that special provision was made for liquidating our war debt. The new scheme constituted a breach of an important i edition, on the faith of which our loans were raised. By way of justification, it was pointed out that when the Public Debt Extincsion Act, 1910, was passed, a similar thing was dc-ne. The cases, however, were not analogous, as former loan prospectuses made no reference to the sinking funds concerned.

Referring to mo tast loan, Mr. Sidey said the House and the country were still waiting information as to what interest the country was paying on the loan after all expenses were taken into account. It was time tne country had this information. What rate of interest was the Advances Department paying for the two million being supplied to it V He observed in the annual report of the Department that the workers' branch made a loss Jast year. He always maintained that the Government should be a model employer.

Reply by Minister. Sir James Parr said Mr. Sidey was most evidently c nservative. So far as the sinking funds were concerned, his theories were quite out of date and impracticable > as they could only result in embarrassing tbe public finances, and the proposals of the Governmehfwould not only reduce the public debt, but also reduce the interest bill. The best judges of the country's financial position were

the London brokers. Proposals had been placed before them, and they had approved. A clause in the bill permitting of the payment of £100 per annum to the chairman of Education Boards was put in at his instigation. This money was not regarded as payment, but was some little endowment to men who, of necessity, had given a great deal of tiiiie to public work. Education Boards were practically the only public boards that did not pay their dhairmen. Clause 45; empowering newspaper proprietors to sit on lofeal bodies and accept advertisements, waS in the public interests. Othetwise,. __-$■ tJSeful men were jhut out df public life, especially on high school boairds.

Hon. J. A. Hanan protested against a continued borrowing policy. Over the period between April, 1920, and March, 1025, the community had paid out over sixteen millions more than it received. The balance of trade was in our favour by nine millions, the balance of payments was against us by sixteen millions. According to financial critics there was a disparity here of 25 millions over the five years, or five millions per year. This showed that much ot our alleged prosperity was fictitious and revealed a serious state of affairs.

Mr. L. M. Isitt denounced the remission of taxation on racing clubs, which, he declared, were making thousands per year.

Discussion was continued by Messrs Field, Wright, Veitch, the Hon. Anderson, tho Hon. McLeod, and the Hon. Sir R. H. Rhodes.

The Hon. W. Nosworthy, in reply, said he agreed that we were borrowing a good deal of money, hut we had to borrow to complete necessary works and clean up present commitments. He hoped merchants would keep imports down, because, to be safe, we ought to have a balance of ten millions of trade in our favour. He regretted a tendency on the part of a section of the people to be extravagant, and if he remained at the Treasury he was determined to keep public expenditure within the strictest limits. The money required for death duty stocks would be new money, and would bear the same rate of interest as that at which the loan was raised.

The House then went into committee on the bill.