WAR BUDGET

Auckland Star, Volume LXXIII, Issue 106, 7 May 1942, Page 6

WAR BUDGET

FULL DRESS DEBATE

WAR CABINET IGNORED?

(By Telegraph.—Parliamentary Reporter.)

WELLINGTON, this day.

"Had it been suggested two years ago that the financial programme for this country would total £186,000,000 for one year, the statement would have been ridiculed by all," said the Leader of the Opposition, Mr. Holland, when opening the debate on the Financial Statement.

The position, he said, was that £186,000,000 had to be found, of which £133,000,000 was for war and £53,000,000 for ordinary expenditure. That meant that the total expenditure for war represented 14/6 in the £, and for domestic expenditure 5/6 in the £. Of the total needed taxation would produce £90,000,000, and borrowing £96,000,000. From her own resources New Zealand would raise £130,000,000 by borrowing overseas. This meant that New Zealand would provide two-thirds and that one-third would come from abroad. That was not the total bill. Municipalities' share in the cost of the E.P.S. was terrific, and so was the increased cost of hospital maintenance. He also mentioned the cost of voluntary services rendered by thousands of people and contributions to patriotic funds, the full total being a tremendous taxation on incomc, was 71 times greater today than it was in the first year of the last war.

Is Burden Being Spread?

"No one questions necessity for providing the required money," said Mr. Holland, "and no one questions that the burdens must be very heavy. Two questions, however, arise. The first is, are adequate steps being taken to ensure that the money is not wasted or spent unwisely? War is so wasteful that it is easy for waste and extravagance to creep in. The second question is, whether the burden is being spread in the most equitable manner possible, particularly bearing in mind those on the lower incomes."

Mr. Holland said ne had spoken to a considerable number of people whose burden of taxation had been increased tremendously, but he had not heard one complaint. The Financial Statement had been presented to the House before it had been submitted to the War Cabinet, despite the fact that £133,000,000 was for war purposes. It was a most unsatisfactory state of affairs, and a full explanation was needed from the Prime Minister. It was a matter for regret that the Government had not asked the War Cabinet to prepare the estimates for war expenditure. It was a situation that should be corrected in future.

_In stating that £60,000.000 or £70,000,000 was required for the purchase of New Zealand exports by Great Britain and that New Zealand required to borrow £46,000,000 overseas, Mr. Holland said that the figures showed how reliant the Dominion was on the Mother Country. "Where would our defences be to-day but for Britain?" he asked. Britain was always willing to help, and he wondered whether a thought was given to that when £4 a day was paid to handle New Zealand's produce. The Budget made it clear that the Government was unwilling to reduce domestic expenditure beyond the fall in revenue. It would spend up to the total of the income The Financial Statement reflected the position that the Opposition had been predicting for two years.

"Chickens Coming Home to Roost"

Chickens have come home to roost," he added. The problem had now to be faced. It had been oointed out in the past that unless New Zealand put iis house in order it would quickly face a financial crisis. That stage had been reached. New Zealand had to borrow £56,000 000 from overseas.

Mr. Lee (Democratic Labour, Grey Lynn): Mostly for goods we cannot produce in this country. Mr. Holland said that wages had to be reduced according to the Budget by almost £5,000,000, and extra taxes had been imposed. These bore heavily on those receiving smaller incomes. The position could have been avoided had the country adopted a coherent financial programme at the outset.

Mr. Holland suggested that war surtax or incomes would press particularly heavily on those thriftv people who had saved enough to provide small income from investment in their old age. He also quoted a contrast between a man with four children who was allowed to earn £5 5/ weekly. This man was taxed only on his wages, a total of 13/, but a man who earned £6 9/ paid 16/ in taxation. It would actually pay him to work one dav less and reduce his wages to avoid the extra penalty of 3/ extra tax.

Pensioners, owing to the high cost of living, were having a hard time, Mr. Holland said.

The Budget, continued Mr. Holland, was heavily penalising the small investor, including many widows who lived on dividends. Replying to Government members' laughter, Mr. Holland suggested that they would get their reward next December for scorning widows.