“AN ABNORMAL” BUDGET

Press, Volume LXXIV, Issue 22467, 30 July 1938, Page 16

“AN ABNORMAL” BUDGET

CRITICISM BY MR S. G. HOLLAND

TAXABLE CAPACITY OF INDUSTRY

ECONOMIES AIMED AT BY OPPOSITION

[From Our Parliamentary Reporter.] WELLINGTON, July 29. “The manufacturers of this country have no better friend than the Opposition,” said Mr S. G. Holland (National, Christchurch North) during the financial debate in the House of Representatives to-day. “We have a policy that is appealing to them and that policy will be disclosed at the proper time.” The Budget, said Mr Holland, could best be described as an abnormal one. It provided for an abnormal expenditure, and the income on which the Government based its expenditure was also abnormal, but was not necessarily permanent. Imports had reached totals out of all proportion to the total of exports, and the deficiency was being financed out of the accumulation of London funds which was bequeathed to the present Government by its predecessor. Failing a recovery in export rf lc f? and a falling away of imports, -ur Holland continued, there were only three ways by which the Government could meet the situation. It must raise tne exchange rate, ration imports, or raise a loan in London to meet' the deficiency. "Which of the three will the GoverniiiCnt adopt,” Mr Holland asked, “or nave they another method?” The Budget anticipated that imports this year would be £54,000,000 against £58,000,000 last year, but in the year ending in April, 1938, the excess ot exports was only £7,000,000, and with £11,000,000 required to service overseas dehts. This left a deficiency, £3,000,000. Next year it appeared that the deficiency would be between £7.000,000 and £8,000,000. “Could Do Better” Figures showed that private enterprise was far better able to deal with national income than was the Government, said Mr Holland. The rising return from taxation showed that private enterprise, from which the bulk of revenue came, was healthy. Railway accounts, on the Minister’s own admission, showed that revenue had fallen by 48 per cent, this year. There was grave doubt, however, whether the return from taxation of private enterprise could be maintained at its present level. He had had from a public accountant particulars of 56 consecutive sets of accounts, from which income tax returns had been compiled. Some showed increases in net taxable income, but an aggregate of 56 showed a drop of from £26,000 to £IB,OOO between this year and last year. “What Economies?” “If income falls away what expenditure will the Labour Government cut first,” asked Mr Holland. “Members ! will recall that during the depression, : tne wages of the employees of a Lab- ■ our newspaper were cut at once. Labour speakers continually said that cost cutting meant the reduction ot somebody’s income.” Costs in ministry could be divided into three categories—labour, material, and overhead. Overhead was generally about onethird of the total costs of manufaciur- ■ ing, and it was the reduction of over- ( head that (he Opposition would aim , at when it became the Government. , This reduction would be accompanied , by an increase in efficiency. “It must be realised that labour and j capital succeed or fail together,” said Mr Holland. “It is significant that this Government has not found a substitute for monetary capital. It thinks only of the wage earner. Yet capital, which alone can supply work for the wage earner, will only be invested and create work if it can see a chance for reasonable profit. Industry can only ( be profitable when wages arc reason- 2 able.”