OPENING BY MR HOLLAND

Press, Volume LXXXIII, Issue 25273, 27 August 1947, Page 8

OPENING BY MR HOLLAND

“Subsidy System Has Broken Down” NO INCENTIVES TO WORK

(From Our Parliamentary Reporter.) WELLINGTON, August 26. The Budget was by inference a confession that the country was deep in inflation, said the Leader of the Opposition (Mr S. G. Holland) when he opened the Budget debate to crowded galleries. He contended that the sub-: sidy scheme had now’ broken down and that “the lid was off—at least partially.” This year’s Budget must have given Mr Nash less pride of authorship than any of his previous ones, said Mr Holland. Workers were voicing their dissatisfaction, traders were calling for a supplementary budget, social security beneficiaries w’ould be no better off there was no taxation reductions of consequence, and the cost of living was to be increased by £7.000,000 by the removal of subsidies. Speaking to last year’s Budget he had said that the Minister of Finance was underestimating income. This had been stoutly denied but he was prepared to say it again, said Mr Holland. He could not prove it for another year yet, but he could prove that he had been right a year ago. If the estimates for the current year were realised the Dominion would finish the \ year with a balance of £13.200.000 But the surplus might be much greater than that. The Minister had much to say about incentives for increasing production, but nothing was done about it, said Mr Holland. If the National Party were on the Treasury benches it would be writing such incentives into the law of the land. Industrial efficiency had fallen and was falling for the lack of incentive. Had the National Party been in power it would have provided an in centive for people more than 60 to work by taxation concessions. Workers’ earnings from profit-sharing schemes would have been exempt from income tax. As an incentive to self-reliance the present taxation of £2OO would have been increased to £3OO of superannuation and similar incomes. As an incentive to longer hours and more production, income tax and social security taxes on overtime earnings would have been at ordinary rates, not at time and a half, and the allowable income for age beneficiaries would have been increased to £1 10s. with provision cf an increased age benefit of 2s 6d for each year application for the benefit was delayed. Incentive would also be provided for the faster turn round of ships. Petrol tax w’ould also have been reduced **1716 Budget confesses that this country is deep into inflation.” continued Mr Holland Inflation was a method of cutting workers’ wages, social security, and other income. Goods available for- consumption were only 83 per cent, of what was available in 1938-39. Production, particularly factory production, had fallen ©ver the last few years. “I have said all along that the system would break down,” said Mr Hol-

land discussing subsidies “In my judgment it has broken down now.” Subsidies had been designed to keep costs down; all they had done was to hide them.

The Government now admitted that it could not continue all subsidies without increased taxes. It dare - not increase taxes, and therefore the decision had been taken to raise prices. The lid was off completely —but partially off. Prices would -soar and there would be the demand for more wages. Already before the ink ■was dry on new awards applications were made for further increases. The. first and hardest hit were those on fixed incomes, the thrifty, superannuitants, legacy-holders, widows, and those with investments and sav-

ings. Mr Holland saitj that although ne had asked the Minister for full details of subsidies and where the money came from he had been denied the detailed information. Mr Holland read to the House a list of subsidies amounting to £4.000,000, and claimed the right to equally detailed information on the whole subsidy expenditure of £14.000.000. “We are going to make every effort to get that information; we are going to be tough,” he said. “When we set ourselves the task of getting information we go the tough way about it, so you might as well give in to start with.”

Earlier in the year the workers asked for a wage increase and the Minister, realising an increase would be granted, asked the Arbitration Court to held up its announcement until subsidies had been taken off The workers then received a greater increase than they otherwise would have. The Minister’s plan was that the workers would be pleased with their increase and would not notice the increased prices, but the workers had “taken a tumble.” A subtle method of hoodwinking the workers had not come off. One trouble in New Zealand to-day was that there were too many industries for New Zealand’s manpower, ■with too much emphasis on semiluxury production at the expense of essentials. Mr Holland urged the encouragement of more worthwhile production in the Dominion and the removal of many controls on imports from Britain. New Zealand’s future welfare depended on maintaining production from her natural resources and on giving full play to the willingness and capacity for work of her people without placing any premium on idleness.