Higher Taxes And Charges Forecast

Press, Volume CVI, Issue 31343, 13 April 1967, Page 14

Higher Taxes And Charges Forecast

Next month New Zealand would see another “black budget,” said Mr V. F. Cracknell, leader of the Social Credit Political League, in Christchurch last night.

He told a Fendalton by-election meeting with a capacity attendance that those who criticised the first “Black Budget would have to eat every word they said about it.

Mr Cracknell forecast that as a punishment in addition to the present economic measures applied by the Government, New Zealanders would face increased taxation with emphasis on indirect taxes and further increases in Government charges. The drop in wool prices was not the whole story behind the Dominion’s present economic plight, said Mr Cracknell. There was nothing wrong with New Zealand or New Zealanders at present The only real problem was that the country was trying to struggle along with an obsolete, inept, improvident financial policy. The people were told that New Zealand did not have sufficient overseas funds. Yet if there was a balance of payments problem then the obvious conclusion was that there was a drop in overseas income. But, said Mr Cracknell, in the eight-month period to February, 1967, this income had increased by £6 million, compared with the same period last year.

The basic problem this year was the lack of loan money overseas, he said. What had

been borrowed was at high rates of interest The last three loans, amounting to about £3O million, cost the country more than 7 per cent interest. “If we owe this amount for say 13 years we will have paid twice over out of the earnings of our produce,” he said. ‘Tilled Gap” Mr Cracknell said that the Government had overspent overseas and had filled the gap with borrowed money. “It borrowed £ll million in Switzerland and it will not disclose the terms of the loan. I would think this must be a particularly bad case. The interest may be more than 7} per cent” Looking at New Zealand’s debt position as a whole, he would think that in the financial year ending March 31, 1967, the country’s national debt internally and overseas, would be little short of £l2OO million, Mr Cracknell said. In a 10-year period the tax department’s harvest had increased steeply by up to £5O million a year. In spite of this the Government borrowed anything from £2O million to £6O million a year. “The more we borrow the more interest we pay. Such a pattern means only continuous inflation with inevitable

rising costs. As we increase our debts we increase our interest bill by increased

taxes and increased Government charges,” said Mr Cracknell.

This increasing taxation was destroying initiative and the people’s will to work, and it was all the time building into the nation’s cost structure.

In the last generation, the value of the £ had dropped to about 7s or, put another way, the cost of living had nearly trebled. In the last 11 years rents had increased by 17s in the £, food by 10s, home ownership by 13s, private transport by Bs, footwear by 9s and other services, so described, by 15s in the £. In the last three or four months, rail fares, power charges, eggs, coastal freight charges, air fares, and Post Office charges had all increased.

In February alone the food price index had gone up by 3.6 per cent yet the average increase in the cost of living for a whole year was normally about 3 per cent. Mr Cracknell admitted that the cause of this was the Government's subsidy removals. “Yet I believe the full story has yet to be told, much of it when the Department of Statistics produces the price index for the quarter ending March 31. They say it’s not quite ready yet,” he said. It was not the people on the higher income brackets who suffered but those on fixed incomes. The result of the disparity would mean a drastic drop in their standard of living. Mr Cracknell apologised for being “so critical and so negative” at a political meeting. “Unfair Measure” He said he believed the Government’s measures to be unfair. The people were not responsible for the mismanagement. It was the Government’s imprudence that had brought about the present situation. “The guilty party in the piece is to be the benefactor while the innocent party foots ttie bill,” he said. The Government should give a lead to the country by setting an example of economies in its own spending. Local bodies would have to delay all but the most urgent works and the private sector of the economy would have to be prepared to wait a little longer. “If these measures do not suffice then I suggest a system of compulsory savings would be better than compulsory taxes and increased charges. Once charges are imposed they are never, as you well know, taken off.” Mr Cracknell said that these measures were not in the policy of the Social Credit party. Under a Social Credit government the present state of affairs would not have arisen.