THE FINANCIAL DEBATE.

Press, Volume LIX, Issue 17813, 12 July 1923, Page 11

THE FINANCIAL DEBATE.

YESTERDAY'S SPEECHES. (iJIEIDGED P3IES3 ASSOCIATIOS EZPO3T.) WELLINGTON, July 11. In the House of Representatives this afternoon the debate on the Budget was resumed bv Mr T. K. Sidey (Duneain South), I who, in reply to the Hon. W. Downis i Stewart, said the Minister would have j it appear that the Government wps • giving all the Leader of the Opposition i asked for in the matter of company | taxation. The Government was now i only considering legislation to ensuro ; a more equal distribution of the burden j of taxation, but they had heard that I story so often that they hesitated to ! believe whether it meant anything o: | not. Possibly the continual hammer- | ing at the subject from the Opposition ■ benches was having its effect. The j Minister accused Mr W T ilford of inconsistency in tho matter of Customs taxa- • tion, conveniently ignoring the differi ence between taxation in protective I and revenue purposes. The more the ! former class of taxation was effective, the less Customs revenue from that source was received. When the Government introduced the Tariff Bill they declared that it was designed to produce revenue, not to effect protection, j Last year, while the importations in- | creased by only 2 per cent., the CusI toms revenue increased by 18 per cent. It was tlu'jse who could best afford to pay who were subject to direct taxation, but it was the masses of the people who wero subjected to indirect taxation. The Government last year reduced direct taxation, which was paid by- the few, and increased indirect taxation which was paid by the many. Tho Prime Minister was indulging in congratulations over a surplus of £1,315,683, but the speaker reminded Mr Massey that it was only last year that he endorsed the opinion that the Finance Minister should not have too large a surplus. As the Primo Minister evidently did not consider a surplus of over 1J millions was not too large, would ho inform the House how much, by way of surplus, did he consider the Finance Minister was justified in taking out of the pockets of the people in post-war times? Dealing with revenue and expenditure, Mr Sidey said, on tho revenue side, the chief increase was in CustomSj which was largely duo to increased taxation On the subject of expenditure he reminded tiie House that last year the Prime Minister sought in many ways to explain away his deficit. For a time he put forward sinking funds as an explanation, until it was demonstrated that they never affected the position at all. Then lie blamed the purchases of coal, but they heard nothing about coal on this occasion. If coal contributed to the deficit last .year, might that not have contributed to the surplus this year? Exports and imports were next referred to, the speaker contending that the figures in' the Budget were misleading and valueless. One remarkable feature of the Budget was that, while the gross debt was reduced by £IOI,OOO, interest charges had been materially increased. It looked as if they were paying off loans with money which should be earning a higher rate, or with money borrowed at a higher rate than the loans repaid. The Public Debt extinction proposal was not sufficiently outlined to enable members to criticise it. The Public Debt Extinction Act had been scoffed at by the Government when in opposition, but they had never issued a loan in London without placing the provisions of the Public Debt Extinction Act in a foremost place in the prospectus. Everyone knew that it was not practicable to stop borrowing, even for not strictly productive purposes, but no one knew better than the Prime Minister how all his pre-office pledges had been thrown to the winds in the matter of borrowing, and how the expenditure under his administration had enormously increased even before the war, until he found himself absolutely compelled to face the situation. This year he proposed to increase the expenditure under the annual appropriations by £1,500,000 over the actual expenditure of last year. Mr J. W. Munro (Dunedin North) said he considered that the Budget read like a story from a fairy-tale. The methods employed in New Zealand for feeding, clothing, and housing the people were not operating efficiently today. He challenged the Reform Party to state where-were their former accusations against Labour? One of the principal needs of the country to-day was houses, but the God of Mammon said "No," and the people had to go without. He appealed to the Gov eminent to move with respect to lious- j ing. The wages of the people of the country had been raided to effect the j Government's economies. Both the Liberal and Reform parties were to blame. While the Government brought down its "fairy-tale Budget," it continued to allow the people to be exploited. He trusted that he was in order in referring to the Budget as a '"fairy-tale." Mr Munro next dealt with immigration, and said that the Government brought people out here m order to be able to raid wages. The Government also sought to have a greater number of heads to count in order to make taxation per capita appear lower. There was need for an increase .in pensions, but the Government said that that could not' be, and yet it proposed to allow the wealthy taxpayers of the country a reduction in taxation amounting to £2,000,000. The Bank of New Zealand had its fangs right into this country, but if the Labour Party got into power it would not allow things to go on a? they wero going at present. Most of the big companies were spreading their reserves among their shareholders, and thus laying foundations for trusts. Mr Munro, spoke in favour of a State Bank, and urged a reduction in interest. He believed that the handwriting was on the wall so far as the Government was concerned, and in years to come our children's children would say that the Massey Government was the worst administration this country had ever seen. (Laughter.) The Hon. C. J. Parr said the. trouble with men like the last speaker was that they were always up in the clouds, and would never come down to tin tacks. It could not be denied that there had been improvement in the capitalistic system. It had been vastly improved on what it was even thirty years ago. What did the Labour Party offer in place of it? Socialisation of the means of production, distribution, and exchange, which was only idle talk, and would do nothing towards uplifting humanity. The Labour Party might get on the Treasury benches some day, but never until they hauled down the flag of Socialism. Dealing with the question of the interest charged by the banks doing business in New Zealand, he pointed out that the banks in this country paid large sums in taxation to the Government. The Bank of New Zealand was paying about 9s 6d in the £■■ If they were not under an obligation they could easily reduce their interest charges to (3 per cent., the amount charged by the Commonwealth Bank, which paid no taxation to the Federal Government of Australia. He denied that the Government had raided wages, which were fixed by the Arbitration Court, not the Government. In like manner he con-

; deniued the advoency-of a State bank, j v hieh might lieip to bolster up a danj gerous system of finance, but which i v.-as not in the interests of the country generally. i] le Budget brought down j by the Government was a sound one. i Ihe Press of the country had said so. I lie was deeply disappointed with Mr \ Sidey s speech, because everyone knew | that he v.-as the brains of the Opposition where finance was concerned. Mr Sidey asked for a more equitable distribution ot taxation, but he knew that that could not be effected in five j minutes, anil he suggested no remedy | himself. Ihe facts, however, showed that while in recent years there had j ;l reduction in Customs, there had | been a remarkable increase—about -100 | per cent.—in income-tax. Mr Sidey had complained of inaccuracies in the j Government's Estimates, but after all the Estimates were only Estimates, and could never be realised to a sixpence. Ihe fact that the expenditure had been less titan the Estimates was surely proof the Government was exercising the strictest economy, and instead of being as an offence on the part of the Government it was something to their credit. The Leader of the Opposition criticised the borrowing of the Government, but borrowing could not be stopped. If Mr Wilford came into office to-morrow, he would have to borrow, therefore it was unfair to misrepresent the position in the way he had done. Dealing next with thu lifting of the moratorium, the Minister contended that the position was not going to bo anything like as difficult as many speakers had reprei scnted. The evils had been grossly j misrepresented, as iu a majority of cases matters would be adjusted between borrower and lender. lie main- | tained that the repurchase of tax-free bonds at 5 per cent, was a good bargain for tho State, and concluded by declaring that so far the criticism of the Budget had been of a pettyfogging character. If there had been weak spots in the Budget, Mr Sidey would have found them. They therefore were entitled to claim that it was a sound Eudget. It was a great performance on the part of the Government to como through such a difficult period with such a substantial surplus, and one of the best loan flotations on record. It was something of which the Government might be- proud. He could not detect ouo single substantial point in Mr Wilford's speech. The country was satisfied with the Budget, and it was for the House to say whether or not it was satisfied. Mr W. A. Veitch (Wanganui) contended that the economies spoken of in the Budget were not real, but were only crude curtailments of necessary expenditure. Money had actually been borrowed to pay off the national debt. There was so much Ministerial weakness that 110 effective control existed over the public expenditure. He advocated setting up a committee of the House to carefully supervise the expenditure, and so check the heads of Departments, whose whole object was to wangle as much money as possible out of the Treasury. He said he did not contend that the Prime Minister should not go to the Imperial Conference, but lie was not entitled to close down Parliament and prevent it attending to the many domestic problems which urgently called for settlement. The Prime Minister might have a duty to the Empire us a whole, but lie also had a. duty to the Dominion, and he should not use the numerical strength of his party to prevent the rest of the House functioning as members of. Parliament. Mr W. J. Jordan (Manakau) declared that there were no humanising attributes about capitalists. They never got together and considered how best they could improve the lot of those employed by them. The banks were simply profiteering institutions, but not for the benefit of their staffs or of their depositors, but only for the benefit of the shareholders in London. The Reform Party was wilfully bungling the management of railways, so that they might use it as an argument against the establishment of a State bank. The Government was withholding land near the city of Auckland from workers who urgently needed homes until the city trains were further extended, so that the Government might be able to get a higher price when the land was sold. The man in the street did not trust the Reform Party because it had not its promises in regard to housing. The Prime Minister in his last Budget said there was only one road to success, and that was by work. With that the speaker agreed, but what of tho men who were being driven off their farms owing to the high rate of interest? Could it be said that these men had'not worked? Yet what was their fate at the hands of the money-lenders ? He appealed to the Prime Minister not to forget the plight of the under dog, if lie ever reached the alleged Economic Conference. Mr O. J. Ilawken (Egmont) said it had been urged that the Prime Minister should not close down Parliament when he went Home. If Parliament went on as it was going it would be impossible for Mr Massey to go Home at all. They had now been in session , for four weeks, and had done nothing owing entirely to the talking propensities of the Opposition. The

Budget was perhaps the most satisfactory document ever placed before Parliament, and one of its most satisfactory features was the proposals in connexion with the Advances Department, for those proposals would be of very great benefit to farmers. The rate of interest charged in New Zealand had been adversely criticised, but interest was only an expression of the amount of money available. When money became more plentiful, interest would fall, and while it had been stated that we were paying a higher rate in New Zealand than was the case in Australia, he had definite information that the rate was exactly the same in both countries. He believed that the banks had done great service to tho Dominion, as, by restricting the scope of borrowing, they had kept the country sound. The housing question today overshadowed every other proposal in the Budget, but he foresaw great danger in training people to think that the State would find a home for everyone, because under that impression they would become le3s thrifty. If the State was going to find houses for people, the State had a right to expect people t-o do something towards it. The Labour Party had a great deal to do with this phase of tho subject, but unfortunately tho Labour Party seemed to have very little regard for thrift. Mr A. J. Murdoch (M/irsden) wanted to know what step's the Govern-' ment was taking to check the excessively high rates of iitterest being charged in the dominion, such rates in some cases rising as high as 20 per cent. He also wanted to know how the Government proposed to cope with the position after the moratorium had closed? The Prime Minister proposed to supplement the funds of. the Advances Department by five millions. One million of that would be absorbed by housing. How, then, could tho position be met by the four millions which remained? The Advances Department had done valuable work in the past, but it had been considerably hampered by the Valuation Department. What was wanted was more expert valuers to overtake the work. He regretted that, although we had several experimental farms, we had no agricultural school to which farmers' sons could be sent to' learn the scientific side of farming. We had schools to I teach other businesses. Why not ! schools to teach boys the scientific side j of our staple products? ( Mr C. E. Macmillan (Tauranga) contended that the Opposition was incou-

sistent in opposing borrowing by Government, and at the same time complaining that the Government was not borrowing sufficient to meet the needs of settlers when the moratorium closed. It seemed to him that the attitude of the respective parties was that if the Government borrowed they proposed to repay, while the Opposition proposed to borrow, but not to repay. As a bit of constructive criticism, he suggested tiie . wholesale purchase v>£ benzine, which could be bought and sold again to the people at a lower rate than now obtained. A small commission could be charged by the State for the service thus rendered, and the money could be applied to procuring good roads for the Dominion. What the country wanted most was cheap land, and any system which encouraged fictitious land values was to be deprecated. One* of the biggest problems which the House had to solve was how to relieve the farmer from excessive interest which in many cases he would be called upon to pay. Many soldier settlers were waiting for the House to pass the legislation proposed by the Government, but were debarred from enjoying the benefits of that legislation by the delay caused by the Opposition. He suggested that the House should pass the legislation first, and the parties could settle their differences afterwards. Mr F. Lye (Waikato) declared that it was the bounden duty of the Government to find sufficient money to meet all cases of necessity when the moratorium expired, because the legislation of the Government had created a position under which millions of money would fall due on the same day, and unless relief was provided the farmers would undoubtedly be exploited by the mortgagees. The debate was adjourned on the motion of Mr D. G. Sullivan, and the House rose at 11.20 p.m.