BUDGET DEBATE OPENS

Press, Volume LXXXII, Issue 24960, 22 August 1946, Page 4

BUDGET DEBATE OPENS

Speech By Leader Of Opposition

TAXATION RATE CRITICISED

(From Our Parliamentary Reporter.) WELLINGTON, August 21. A thorough investigation and overhaul of departmental expenditure were urged by the Leader of the Opposition (Mr S. G. Holland), when he opened the Budget debate in the House of Representatives this evening. Mr Holland contended that Mr Nash was budgeting for a surplus of £21,000,000 in the War Expenses Ac S°H?}’r'S, Social Security Account, and the con S °Mr at Honan'd said the Opposition would make an election issue of the , nationalisation of the coal mines, which he described as a betrayal of the promise to hand back the Waikato mines after the war. People recalled, said Mr Holland, that Mr Nash had told the earlier that the war cost £107,000,000, of which £51,500,000 was raised by war taxation, and the public expected this war taxation to be remitted. It had been the Ministers big opportunity, but how truly he had spoken when he .explained that his promise in- London of a Budget that would win the election was ‘only a 3 °Mr Holland said there were two factions in the Government, the Lett Wing, which wanted lower taxation and lower living costs, and something for the workers, but were not consulted, and the dominating Right Wing, which hated giving up the money. There was no note of realism for tne future. The idea seemed to be to tax people to the limit and enjoy spending their money. So far as policy was concerned all that could be found in the Budget was the nationalisation of coalmines, but he questioned whether the Minister of Finance, if left alone, would carry that out. He believed there was'the same pressure behind the Minister which made him take over the Bank of New Zealand. The only other statement or policy was the declaration to buna 12,000 houses a year. There, was no explanation as to where materials were to come from.

Departmental Expenditure Mr Holland said the Budget provided lor an increase in departmental expenditure to the extent of £42,000,000. That was the answer to any proposed economies. The Government had run its course and was at the end of the road. It had no ideas, no programme, no imagination. The man in the street was bewildered. There was no justification for this colossal expenditure of public money in time of peace. The young artisarf back from the war was wondering what there was in the Budget for him. There was still a sales tax of 20 per cent, on working tools. The Budget had brought the farmer no reduction in his transport costs, and the housewife who wanted household appliances was forgotten. Mr Holland said a notable omission from the Budget was reference to a most important financial matter —Bretton Woods. The Minister of Finance had been in Britain, and did he ask the people to believe that he' had not discussed the Bretton Woods proposals with the British Government and the authorities in Washington? On the Minister’s return he had said it would be difficult for New Zealand to keep out of Bretton Woods. Mr Holland said Bretton Woods was one of the most far-reaching influences on the future of the world, but participation would strangle the economic progress of this country . The people had a i right to expect to be tcld the outc6me* of the discussions on this important question, and the people should be told, plainly and frankly, were we to hand over the control of our credit and currency to some foreign organisation which did not understand our country. Mr Holland said it was foolish for the Government to build, as it was doing, a permanent high cost of production structure within the Dominion, based on present high prices for our produce overseas. It was equally foolish to attempt to build a high cost structure in towns and maintain a low cost structure in . the country. It was because of the paramount need for keeping costs down that the Opposition emphasised a reduction of taxation, but the Minister of Finance thought differently. He did not want to see costs come down. He preferred to reduce our overseas debt. That was why the Government was a year late with its removal of the sales tax on building and furniture. It had used last year’s surplus to pay off

UStSU. ycdl 3 auipius pa] overseas debt when, instead, thousands of servicemen could have been given the benefit of an earlier abolition of the sales tax. “Budgeting for Surplus*' Mr Holland said there were two major reasons why there was not a greater reduction in taxation. The Minister of Finance wanted to see a huge surplus at the end of this year, and was budgeting for a surplus of more than £20,000,000, and there was a huge increase of £42,000,000 in the cost of government. It was little wonder that the Government was still going to extract £14,500,000 in sales tax, and that there was no reduction of wartime duties on tyre, petrol, and postage, and that the £7,000,000 in wages tax was still on. No wonder there was no relief in estate and succession duty, and no reduction on the beer and tobacco taxes. Mr Holland said in support of his assertion that the Minister of Finance would budget for a huge surplus that the estimated surplus in the war expenses account was 12.735 millions, social security account 3.96 millions, and the Consolidated Fund 4.509 millions, making a total of 21.212 millions. To show the increase in the cost of administration he said that total expenditure of all Government departments for the year 1936-37 was 30.fi millions, which increased to 57.2 millions in 1945-46, and for the year 194647 the cost was estimated at 100.3

Mr Nash, interjecting, said the Leader of the Opposition was misleading the people. Mr Holland: When we get the most noise we are being most effective. Criticising proposed expenditure, Mr Holland said that in the opinion of the Opposition a very strong case had been made for a thorough investigation, and an overhaul o£ departmental expenditure. The Opposition proposed to take up that task at the earliest opportunity. The Minister of Finance had announced a policy to nationalise the mines. It was the National Party’s policy to denationalise as much as possible, and it would denationalise houses by selling houses to those tenants in them. The proposal to nationalise the mines was a betrayal of the coal mine owners, and of farmers in the Waikato. The latter had banned together and purchased two coalmines which, in spite of previous assertions to the contrary by the Prime Minister and the Minister of Mines, would now be taken from them. The nationalisation of the mines would be an election issue.