MR NORDMEYER’S REPLY

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

MR NORDMEYER’S REPLY

OPPOSITION FIGURES QUESTIONED

TAXATION AS CURB ON INFLATION <P.A.) WELLINGTON, August 26. “A dismal, depressing, and doleful dirge” was the description given by the Minister of Industries and Commerce (Mr A. H. Nordmeyer) to the Budget speech of the Leader of the Opposition (Mr S. G. Holland) in the House of Representatives this evening. The.trouble about the Lfeader of the Opposition, said Mr Nordmeyer, was that there was a Labour Government in power, and his philosophy was “while there’s a Labour Government all’s wrong with the world.” Mr Nordmeyer said the shortage of goods in New Zealand was inevitable in the post-war world. Discussing Mr Holland’s figures about difference between income and goods. Mr Nordmeyer said that Mr Holland had not taken into account that costs were reckoned as at the factory door without transport and wholesalers’ . and retailers’ margins. Also there was an intangible which Mr Holland had not mentioned, and that was the value of services rendered in New Zealand as apart from goods available.

Gap Between Goods and Income Mr Nordmeyer admitted that there was a gap between the value of incomes and the value of goods and services, but claimed that it was nowhere near as big as Mr Holland claimed it was. Mr Nordmeyer said Mr Holland had added the figures remaining in the Consolidated Fund, the Social Security Fund, and War Expenses Account at March 31 to work out a surplus, but he had overlooked substantial transfers between these accounts. If the total receipts in these funds were added together and the total payments subtracted there would be a surplus of only £200,000. Commenting that Mr Holland had said that the Budget had pleased no one, Mr Nordmeyer said he personally had found a number of old age beneficiaries who were very pleased with it. He had no doubt that recipients of other social security benefits would be equally pleased. The increase in the cost of living because of the abolition of certain subsidies would not amount to the increase social security beneficiaries would receive each week.

Mr Nordmeyer asked the Opposition where it stood on the question of subsidies. He had listened to Opposition speakers telling the people they were only being deluded, as the subsidy system was only another way of making them pay for things. Now the Opposition was complaining when subsidies were being removed. Reduction of Taxation The statement had also been made that the Minister of Finance was deliberately underestimating taxation and at the same time there was talk of inflations, said Mr Nordmeyer. Mr Holland knew very well that one way of combating inflations was to increase taxation or to keep it at a high level. The Leader of the Opposition and certain newspapers had been complaining that war taxation . was still being kept on, although the war was over, said Mr Nordmeyer. He would remind the House that since the war a number of taxation reductions had been made, but it was impossible to go on reducing taxation when increasing expenditure was called for in so many directions, particularly for social services. There were still many war charges. The debt for the recent war at March 31 stood at £221.000.000, on which the annual charges for interest and sinking fund were £7,500,000.

War pensions this year showed an increase of £3,000.000. Gratuities accounted for nearly £2,000,000 and the cost of J Force was nearly £6,000.000. The defence vote was more than £10.000,000. compared with £2.400,000 in 1939. The charges for various rehabilitation measures amounting to nearly £6,000,000 brought the total charge associated with the recent war for this year to £31,800,000.

Those who said that war taxation should be abolished were either ignorant of the position or were deliberately misleading the country, said Mr /Nordmeyer. While the war charges remained the charges would have to be met and they might, remain for a long, long time.

Incentive Payments Much had been said by Mr Holland about incentive payments. 'lf a private member’s bill was introduced from the Government side of the House providing that, after a reasonable rate of interest had been paid from any concern, the remainder should be divided among the workers he wondered how the Ledder of the Opposition woyld vote. The most important change in stabilisation was that affecting shipping and rail freights. In future the whole cost of transport would have to be borne by the user. It could not oe expected that rail charges which had been unaltered since 1938 should go on at the present levels indefinitely, leaving taxation to meet the deficit in the railway working account. The public would be more interested in consumer subsidies and the whole effect of the changes being made in these subsidies would be to increase the war-time prices index by 3.6 points, which was not to say an increase of 3 per cent. He estimated the increase in the cost of living for the average consumer at Is per week, but he agreed that other subsidy reductions such as those on freights would affect living costs to some degree. The wage rates index had risen from 1252 in 1942 to 1445 in 1946 and would increase further as a result of the Arbitration Court’s recent judgment. These figures had been corrected by the Government statistician in the light of changing retail prices and the result showed that purchasing power had increased.

DEARER TOBACCO

(From Our Parliamentary Reporter.) WELLINGTON, August 26. Discussing subsidies in the House of Representatives this evening, the Minister of Industries and Commerce (Mr A. H. Nordmeyer) said it was expected that, because of the abolition of subsidies on imported tobacco leaf, there would be a slight rise in the price of cigarettes and tobacco. Sugar would go to about 7d a pound, and there would be other small increases.