PARLIAMENT BUDGET DEBATE OPENED

Press, Volume XCVI, Issue 28343, 31 July 1957, Page 12

PARLIAMENT BUDGET DEBATE OPENED

Mr Nash And Mr Holland Speak

Mr Nash said that the Budget must be one of the most obscure ever presented anywhere. The Minister of Finance (Mr J. T. Watts) himself did not say what it meant. Since the Budget had been presented there had been supplementary statements, and apparently there was to be more yet “How can the House discuss a Budget that will be explained later?” asked Mr Nash. For the financial year 1957-58 social security charges would not be levied on income other than salary and wages, according to the Government’s P.A.Y.E. proposals. Wage and salary earners would pay Is fid on every £ earned now, but others would not pay the social security tax on this year’s income when PA.Y.E. was introduced. This involved a remission of tax to these persons of £18,000,000. Figures for the last year available showed that persons other than wage and salary earners had paid -£ 16,700,000 in social security tax. In 1939 Labour had remitted some £1,000.000 when social security legislation had been changed, but there was a great difference between £1,000,000 and £18,000,000. “The general run of legislation from the other side of the House favours the wealthy section,” Mr Nash said.

The Minister of Finance claimed that P.A.Y.E. was not a method of providing tax relief. Why, then. Should the whol£ of one year’s income tax be remitted to persons earning from £lO,OOO to £40,000 a year? Seven persons receiving £378,000 were not to pay tax of £92.000. One result of the proposals was that persons were trying to. see that this year’s incomes would be higher. Money on maintenance and other things would be spent next year, and they would pay tax on a lower sum.

Employers and P.A.Y.E. Mr Nash said that employers knew what was in the P.A.Y.E. scheme. The House had the right to know before anybody else about legislation. But the Minister was to describe the scheme to the public later The House should know now. for example, why persons earning £2O a week Or less would not pay social security tax on,the first £2. Through the introduction of P.A.Y.E. civil servants, instead of paying tax on this year’s salaries, would pay it on those of next year. They would therefore pay tax oh an additional £4O, assuming they got rises, and he therefore suggested that the Minister consider this.

The 25 per cent, rebate offered was not as good as it would have been had the Minister continued the 20 per cent, rebate last year, instead of lowering it to 10 per cent. The rebate had been low-, ered, according to Mr Watts, not to increase the taxation burden

but to take money out of circulation. It would- have been better

for the taxpayer, said Mr Nash, if the Government had continued

the 20 per cent rebate last year and offered the same again this year, instead of 10 per cent, last year and 25 per cent, this year. He suggested that the Government could have given a flat rebate of £ 100 to everyone this year. Every year the amount of tax collected by the Government had increased, and tax collected la the last taxation year had been a record. Taxation collected by the Labour Government in its last •even years of office had totalled £825.000.000, compared with £1,497,000,000 in the seven years of the present Government. Social Security Benefits

It was important that social security, beneficiaries and others should share m the increase m the national income, Mr Nash said. The Government had decided to increase the weekly rate of benefit for age and other related benefits by 3s 6d to a new level of £3 17s 6d Labour, ne said, would make the basic rate £4 a week, with an additional 5s for single persons. This wouio be carried right through. Mr Nash said that if funds were available and conditions were right. Labour would give the age benefit at 65 without a means' test. He did not promise that this would be done immediately, but “as soon as we can see daylight.” It would be good economy to do away with the means test.

Commending the Government’s exemption on the personal earnings of persons receiving invalid benefits for blindness, Mr Nash said it was psychologically important that blind persons be encouraged to work There was a good case for giving them the right to their earnings without affecting their pensions. Because of changed conditions such as the increase in the cost of living, fresh consideration should be given to some of the superannuitants who retired before 1949, be said. Inflation has depreciated the value of money and stretched savings very hard Money invested in savings, even with interest added, might not «he same purchasing power

(New Zeaiana Press Association) WELLINGTON, July 30. The Budget debate was initiated in the House of Representatives tonight by the Leader of the Opposition (Mr Nash). He and the Prime Minister (Mr Holland) were the only speakers, and before the House rose at 10.1 p.m. three-quarters of the 200 persons who had eagerly lined at the galleries at 7.30 p.m. had quietly left.

It was a disappointing start to a debate which is expected to last six weeks. Both speakers had extensions of time, Mr Nash speaking for 65 minutes and Mr Holland 85 minutes. Mr Holland’s speech was mainly a recapitulation of the Government’s achievements. Mr Nash claimed that under P.A.Y.E. the Government was remitting £18,000,000 in social security tax payable by other than wage and salary earners. The Government, he said, should have maintained the income tax rebate, both this year and last year, at 20 per cent. It could have given a flat rebate of £lOO to everyone this year, he said.

t today as it had several years ago. ‘ Mr Nash said that astoundingly ? low dividends were being paid on . Government debentures today, t Government shares costing £lOO I 10 years ago were selling at £95. i Persons were getting less than I 2 per cent, on their investments. » Between June, 1947, and June, 1957, prices went up 64.5 per cent., i so that £BOO then had a value of I only £493 4s 5d today. In the Post Office Savings Bank also, i £lOO invested in 1949 was today t worth only £BB 13s lOd. i The Government had shown j specialised discrimination in ad- . justing land tax, continued Mr [ Nash. Only those who had land 1 mortgage free and . who were ’ fairly wealthy were affected, i By transferring the creation of i credit from the Reserve Bank to the trading banks, the Government : had simply increased the trading banks* profits, said Mr Nash. “Banks may make money any ■ time if the Government gives I them the right to make money and sell it,” said Mr Nash He asked why the State AdI vances Corporation had borrowed i £ 12,000.000 from the trading banks : at 3.5 per cent. It could have [ been borrowed with just as much effect from the Reserve Bank, he said. One bank had increased its ’ profits by 144 per .cent., another by 73 per cent., and another by 40 per cent. Dividends had increased similarly. Mr Nash said that a danger facing the economy was that a higher income was due to a higher price, > not to greater production. Up to 1 1955-56 export production had increased 13.8 per cent, in volume, but 66.4 per cent, in value. In 1956 New Zealand had received £34,500,000 more for the sajne volume of goods exported in 1952. Financial policy could decide New Zealand’s future, and the major test of it was social advantage, not personal profit MR HOLLAND’S SPEECH Mr Hollands said that Mr Nash’s text was, “I don’t understand.” However, Mr Nash was well aware that the Budget did not include legislation, but was merely a document whereby the Government informed Parliament of its intentions. Mr Nash had apparently complained of leakages, but newspapers could not be blamed for speculating. “The Budget has been well received, and people are saying it is just what they wanted.” said Mr Holland. Four/main things distinguished the administration of the present Government—(l) lower rates of taxation; (2) the amazing increase in farm and factory production; (3) industrial peace; and (4) a great liberalisation of the social security system for persons in need, i . , * Many claims had been made by the Labour Party about the present Administration, Mr Holland said. One was that it could cause unemployment. The Govern - ment’s policy was to find wellpaid employment for everyone capable of a job. Instead of increasing taxes, the Government had reduced rates right throughout the taxation scale. More houses were being built than were ever built under Labour, more schools, and more power stations. Air services and rail services, formerly running at colossal losses, were now making reasonable contributions. There were more goods and more people , in the shops, and people had more purchasing power in their pockets. < There was a high standard of living. and savings were higher than ( ever before. ( The country today was free , from industrial gangsterism, and ■ free from rationing. t “It is easier to tie a knot than undo it,” said Mr Holland, referring to his Government’s efforts to change policies of the former La- i hour Administration. i Mr Holland said that nobody ] could claim that any previous government had a better record < than the present one. Industrial Situation “The average working man in 1 New Zealand is a decent, honest, hard-working citizen, anxious to give a day’s work for a day’s ' remuneration,” said Mr Holland, referring to the difference in the

industrial situation before and after 1951.

Mr Holland said that the present Government had set out to increase farm production, and had succeeded without increasing taxation.

If between 1950 and 1958 the Government had left taxation rates at the same level as under Labour, £264,000,000 more would have come out of the taxpayers' pockets.

“No other country in the world has such a record of consistent tax reduction as this country under the Government that at present occupies the Treasury senches,” Mr Holland said. “We have, with one year excepted, reduced taxation in every Budget.”

Because of the importance of agricultural exports in the economy, the Government hadset out to increase production, «\d in a practical nad

the approval of the farmers. The Government had dealt with the rabbit nuisance, ana 376.000 acres of waste land renaered useless by rabbits had been brought back into production.

Along with other marginal land, this made a total of 160,000 acres which were being developed to support 5030 new farms. In 1049, there had been only 27,000 tractors m New Zealand. compared with 62,000 today. In 1949, not a ton of fertiliser had been spread from the air, compared with 400,000 tons spread by topdressing planes last year.

Under Labour the number of workers employed on farms had dropped by 30.000. The present Government had stopped the downward drift, and had increased the number of farm workers by 4500. The country today had 1,000,000 more cattle and 7,000,000 more sheep than under the Labour Government. P.A.Y.E.

Mr Holland said that the Minister of Finance had “written his name in very large letters in the political history of this country" with his P.A.Y.E. income tax system. If the Opposition opposed P.A.Y.E. it would be opposing something that had been described as one of the most forward 1 moves in taxation for years. Mr Holland paid a tribute to the “wealthy” people of New Zealand for their important contribution to taxation revenue “The wealthy people are the people who have the satisfaction of knowing that they have done a jolly good job for ' this country,” he said.

It had been said that the Government was not sympathetic to the manufacturers, but there were 700 more factories and 25,000 more factory employees under the present Administration.

The Government stood for priy vate ownership of the means/bf production, distribution, " and ' iexchange. The Budget debate gave an opportunity for widespread discussion of all aspects s of administration, and the Government looked forward to It. concluded Mr Hollanjf TrophY for N.Z. Dancer.— jean Matdenan of New Zealand won the championship trophy for overseas entrants at the international festival of dancing at Edinburgh. —London, July 30.