Budget Debate Focused On Borrowing, Spending

Press, Volume CIII, Issue 30482, 2 July 1964, Page 3

Budget Debate Focused On Borrowing, Spending

(From Our Parliamentary Reporter)

WELLINGTON, July 1.

The Budget debate continued in Parliament tonight with attacks by Opposition members on alleged Government overspending, inequalities in the Budget provisions, and the Government’s disregard of the advice of the Monetary and Economic Council. - .

Charges were made that too. great a percentage of company profits were going overseas and too much of the control of such companies was dictated overseas.

To this, Government members charged that the' overspending was only apparent when compared with Labour efforts, and that the Government already had moved on the control of take-over blds. Mr W. E. Rowling (Opp., Buller) said the Prime Minister had attempted to show livestock decreased under Labour, increased under National. The facts were that between January, 1958, and January, 1961, cattle increased j 9.5 per cent, breeding ewes 8.8 per cent, sheep and lambs 13.3 per cent, wheat acreage 123 per cent and oats acreage 43 per cent. The Budget was another “hire-purchase, on the nevernever” effort, in spite of warnings from many responsive quarters, including the Monetary and Economic Council. It aimed to collect £403,900,000 in taxation which came well from the Minister of Finance (Mr Lake) who, as a Parliamentary candidate in 1960, said he held to the principle that every possible penny should stay in the worker’s pay packet. £loom Above 1958 Mr Lake: I still do. Mr Rowling continued that Mr Holyoake, when Leader of the Opposition, said about the same time that the Government was taking too much of the people’s earnings. Yet this year’s Budget would take almost £lOO million more id tax than the much-maligned 1958 Budget. . • • Of- the £95,400,000 the Government borrowed in the last financial year, only £23,100,000 was left for effective use. Interest and management payments of the public debt absorbed £41,300.000 and loan payments £32,800,000. In the 1962-63 year, when £81,500.000 had been borrowed, £35,700,000 was left for effective use, so the tragic road the Government was

marching could clearly be seen. Borrowing went up and money left for effective use went down.

A third of company profits were going overseas and a third of the control was in overseas hands. This pointed to the perilous path the Government was treading. Overseas interests last year earned £23,800,000 in profits in New Zealand, and while a considerable amount of this was reinvested in this country, in the long termeven this would create problems. A recent survey of a 14year period in Australia showed that United States’ investment of £178,100,000 in that time earned £373 million in profits. New Zealand’s balance of payments was too vulnerable to allow that situation to develop here. Yet the Government was permitting it. “Easier For Labour”

The Under-Secretary for Finance (Mr R. D. Muldqon) asked what items in the Budget did the Opposition want to reduce.

Opposition speakers, he said, had made a great deal of play concerning alleged over-spending, but had not so far named the points at which they would economise. On the suggestion that the excess retention, tax should be abolished, he said that this was easier to say when one was a member of the Opposition than when one was bn the Government benches, as the Leader of the Opposition had found out. Mr Rowling- had spoken about the threat of overseas companies, “But I believe he is merely trying to get on the band-waggon.”' The Labour Party was bringing in a bill concerning takeover bids, which indicated how it felt in the matter.

Avoiding P.A.Y.E.

Mr Muldoon said that at present any provisional taxpayer could avoid paying P.A.Y.E. by turning himself into a company. This was something the Government would have to look at. There were many other anomalies which, as promised in the Budget, would be attended to later in the session.

“We do not think that major alterations in the incidence of taxation are helpful,” Mr Muldoon said. “They upset the balance and destroy confidence. We do not think that they are warranted economically.” Mr M. A. Connelly (Opp., Riccarton) said the high wool prices had followed .a Wet winter in Europe.' The Government was prepared to gamble on the high prices continuing, but it would be a miracle if they did.

Concessions in the Government’s fourth Budget were estimated to have cost £3O million. Of this only £6 million had gone to the worker who comprised 80 per cent of the population. The rest went to a small favoured section of the community. With a £6B million deficit, the Government would be borrowing £135 million. In the. last three years the Government had had Budget deficit of £146 million. The Government had broken faith with the people. It had not reduced taxation as promised at the last election, said Mr Connelly.