PARTJAMENT IN SESSION

Dominion, Volume 22, Issue 267, 7 August 1929, Page 12

PARTJAMENT IN SESSION

DEBATE ON BUDGET OPENED LONDON LOAN EMBARGO NEW STANDING ORDERS When Parliament meets to-day a new set of Standing Orders will come into operation, the House of Representatives having approved yesterday the recommendations of the Select Committee. The main alteration will ba the inauguration of "daylight sittings.” The principal incident yesterday was the commencement of the Financial Debate, the opening speakers being the Hon. W. D. Stewart and the Minister of Lands (Hon. G W. Forbes). A preliminary skirmish on borrowing took place in the afternoon, when the Prime Minister (Rt. Hon. Sir Joseph Ward) informed the House that he had been precluded for eighteen months —not two years, as stated by him previously—from borrowing on the London market. The explanation did not satisfy Mr. Stewart, who returned to the attack in the course of his speech on the Budget. The debate was adjourned at 9.30 p.m. on the motion of Sir George Hunter (Waipawa).

A CHANGED POLICY THE PUBLIC DEBT INCREASING EXPENDITURE “RATE TOO HIGH” The effect the change of Government will have on the growth of the public debt was foreshadowed by the Hon. W. D. Stewart in the course of hia Financial Debate speech in the House of Representatives last night. Mr. Stewart said that apart from the question of balancing the Budget by far the moat important issue was the growth of the public debt if the Prime Minister’s plans were given effect to. Mr. Stewart said he knew there were business men even in his own electorate who had voted for the present Government, because it had promised to abolish the c.o.d. system, but thia concession would be of small comfort to them if on the wider issue they found that the rapid expansion of the public debt and the expenditure of loan moneys on public works that were not self-supporting, largely increased their tax burden. What the change of Government would mean in that respect, could be easily seen from a consideration of the facts. The policy of the late Government was to taper off borrowing, and that it was making Substantial progress towards that end was shown by the fact that whereas the net increase in the public debt in 1925-20 was £11,000,000, the following year it had fallen to £7,000,000, and in 1927-28 it had fallen to five and a half millions, and had that Government continued in office the net increase in the debt to March 31 last for last year would have been about £5,400,000. The first effect of the change of Government was that that policy was immediately reversed, and instead of showing a net increase for the year of less than five and a half millions, the actual net increase was about seven and a half millions, although the new Government had only been in office for four months. That would be seen in the Budget where it was shown that after deducting the loan moneys which were raised in anticipation of this year’s requirements, and which were properly attributable to this year, the gross increase in the debt was £10,650,750, from which must be deducted the debt repayments of £3,234,124, leaving a net increase, as he had stated, of seven and a half millions. But that was mild with what the future held when the full loan programme of the Government developed. Railway Construction. The Minister of Finance had stated that the Government would not embark on any programme of extravagant expenditure out of loan moneys, but under the heading of public works Sir Joseph Ward said he was going to increase expenditure on railway construction by 60 per cent, over the amount spent last year. Last year it was shown that the railway construction cost over £1,066,000, and if Sir Joseph was going to add sixty per cent, to that, the expenditure would rise to about £1,600,000. In addition to that he was going to spend £1,000,000 for electricity, and presumably that and other items were included in his £7,000,000 loan. In addition Sir Joseph Ward had stated that he was going to borrow up to £5,000,000 for land settlement, and if he spent £1,000,000 of this we would have an expenditure of over £8,000,000, and he had still to provide for State advances. If he spent four and three-quar-ter millions on State advances in six months, that would mean another £9,000,000 for the year, but as a part of that expenditure was catching up of arrears, let it be assumed that he was able to reduce the expenditure under that heading to £7,000,000. That would mean an aggregate loan expenditure for the year of over £15,000,000. Rate Too High. "Assuming the policy of debt repayment is maintained,” said Mr. Stewart, “we may deduct from this, say three and a-lialf millions, leaving a net increase in the debt of at least £13,000,000. I repeat what I have so often said, that in my opinion, it is far too high a rate of loan expenditure for this Dominion. I need not repeat what the Prime Minister has so often said, that in his opinion this Dominion was borrowing far too much annually. In fact, speaking only in June last, two months ago, in Auckland, he said: ‘We cannot go on borrowing at the rate we are doing; it is more than the country can stand.’ His argument'is that it is better to get public works completed and revenue-earning as quickly as possible. Surely he does not argue that all railways, roads, irrigation schemes and other public works, including the hydro-electric schemes, should go full steam ahead at the same time. It is sufficient for all practical purposes to concentrate on one or two of each of these so as to keep the loan expenditure within reasonable bounds. I have always maintained that our high credit in London is due to the fact that we have not plunged ahead with our borrowing in the same way as certain other countries, the credit of which on the London market has suffered In consequence.” Mr. Stewart added that the Prime Minister had repeatedly been asked to explain why he persisted in telling the electors that he was borrowing at four and a-half per cent. The Budget showed explicitly that the cost of the loan to the State, allowing for redemption and expenses, was over five per cent. PETROL STORES REGULATION SOUGHT. In view of the explosions that occurred as a result of a fire in a Christchurch petrol store, Mr. H. T. Armstrong, Labour member for Christchurch East, gave notice in the House of Representatives to ask the Minister of Internal Affairs: (1) Whether the Minister would introduce legislation this session, preventing local bodies from granting permits for the erection of petrol stores in residential areas; (2) whether the Minister would make provision in such legislation gpippelllng local bodies to set aside dangerous goods areas for such purposes, and to prevent such goods from being stored in large quantities outside such

SUPERANNUATION FUNDS STATE’S LIABILITY EX-MINISTER’S VIEWS The State’s liability in regard to the superannuation funds was the subject of a critical survey by the Hon. W. D. Stewart in the House of Representatives last night. Attention was drawn in the Budget, said Mr Stewart, to the fact that the State was behind in its subsidies to the superannuation funds. That was correct. The State had always been behind. In the report laid on the table last year, dealing with Public Service Superannuation Fund, the actuary showed that when the fund was originally started by the present Prime Minister there was a deficiency estimated at one and a half million, which ought to have been met either by a capital payment or annual payments of principal and interest' to extinguish it. In 1919 Sir James Allen pointed out that he had twice already had to come to the help of the present Prime Minister’s superannuation funds. It was only fair to say that Sir Joseph Ward, in answer to Sir James Allen, had stated that the National Government, which was engaged in war transactions, was not in a position to contribute. But as was pointed out by Sir James Allen the present Prime Minister was building up huge surpluses and apparently very little of the enormous tax revenue was applied for war purposes beyond paying pensions, whereas other countries such as Canada, Australia, and England were meeting a part of their current war expenses out of tax revenue. However, that was past history. Continuing, Mr. Stewart said it was very easy to overstate the position; for example, at Rotorua the Prime Minister stated that the State liability was £6,600,000, and aroused alarm in the minds of the people who heard him; but while the actuary showed that this was the State’s potential liability he did not mean to imply that the State ought to pay in £6,000,000 to put the fund sound. In fact, elsewhere in his report he made it clear that the principle of the Act was that members contributed their share during their period of service and the State paid its share of the pensions as they matured. The actuary went on to say that this principle of deferring payment was defensible on broad economic grounds, and was quite sound financially, but to say that the whole £6,000,000 should be paid in was the same as if they were to say that the total liability to the State for all old age pensions now in existence should be capitalised and set apart so as to provide an adequate sum to provide all those pensions over their full period. In 1912 the actuary pointed out that to set aside an adequate amount to meet all old age pensions would require over £10,000,000, yet no one would advocate doing more to liquidate that liability than pay the increasing yearly charge. It was obvious, therefore, that while the security of the State stood behind the fund, the obligation of the State was met if it contributed at its own convenience sufficient capital to meet all existing obligations. The usual practice had been for the State to pay in when good years showed a substantial surplus, and the Prime Minister resisted a claim some years ago that this payment should be automatically fixed by Statute to meet the annual subsidies recommended by the actuary for each three years. » “It is not denied,” added Mr. Stewart, “that these funds are behind hand just now, and that further contributions will have to be made to them. I am very glad the Prime Minister is looking into the whole position. We set up a committee last year, or the year before—last year, I think it was—to look into the anomalies and claims made for increased benefits, and we were awaiting the findings of that committee before going into the whole question of the funds, but if the Prime Minister has decided to go about it in another way I have no criticism to raise if it means the same thing.” THE PRIMAGE DUTY REFORM’S ATTITUDE AMENDMENT FORESHADOWED A caucus of the Reform Party yesterday discussed the course of action to be followed generally with regard to the Financial Debate in the House of Representatives. When the House met the Leader of the Opposition (Right Hon. J. G. Coates) gave notice to move an amendment when the Customs Bill comes before the House. It is understood the amendment relates to the doubling of the primage duties, and in the lobbies there is now a feeling that the House will very shortly have its first division, and that the Government’s proposals in regard to the tariff will be the cause of it. FAMILY HOLIDAYS USE OF CONCESSION TICKETS. A plea for consideration for fathers of families, who usually are granted only two weeks’ holidays annually, was entered by Mr. W. J. Broadfoot (Waitomo) in a notice of a question given in the House of Representatives yesterday. Mr. Broadfoot wants the Minister of Railways to consider whether it would not be possible for a father accompanying his family on a holiday and making use of the family concession ticket to return earlier than the rest of the family. It appears that at present the whole family is required to return together, but Mr. Broadfoot points out that the granting of the concession asked would allow a family to stay away on holiday until near the end of the school vacation. The Select Committee to inquire into matters relative to the wheat industry was set up by the House of Representatives yesterday. Ths personnel is *s annoanwk

LONDON BORROWING PRIME MINISTER MISTAKEN NO TWO-TEARS’ EMBARGO SHARP PASSAGE IN HOUSE "1 was not excluded from borrowing on the London market for two years, but for eighteen months, according to the official file in the Treasury, I gave two years to the House under the strong impression that I was sure of my facts... I had for the first tima in my history as Minister of Finance to agree to a second loan being raised in the same year.” This information was given to the House of Representatives yesterday by the Prime Minister (Rt. Hon. Sir Joseph Ward) in the course of a Ministerial statement on borrowing. There were some lively interjections while the Prime Minister was speaking, and the matter received further ventilation in the evening when the Hon. W. D. Stewart replied to the Prime Minister’s statement.

The subject was in the first instance raised by the Leader of the Opposition (Rt Hon. J. G. Coates), who reminded the Prime Minister of his promise to make a statement to the House concerning the alleged two years’ embargo on New Zealand’s borrowing on the London money market The Prime Minister intimated that he would make a statement during the afternoon, and at a later stage he was given permission to do so. “The position is that when I came into office the first thing I found was the very important documents dealing with my predecessor’s negotiations with London, and calling for urgent decision re borrowing and conversions,” said the Prime Minister. “These papers, I found, laid down London proposals to borrow the following year’s requirements in the then year. The acceptance of this meant no borrowing on the London market during 1929-1930, and I had immediately to take up the matter, as it bad been left without decision by my predecessor. The Treasury was anxious for prompt action in a matter that had been waiting for over two months, and it will be realised that personally I had little time to go into the minute details of these very complicated transactions. I did realise this, however, that, coming into office after carrying a policy at the election for extended borrowing, I was much concerned at the position, which was a change from the usual loan per annum, and I had to set about getting the best conditions to fit in with my policy. “I agreed to the conditions, provided the new money was increased to cover what I considered my policy required, and also a large amount for conversion purposes,” continued the Prime Minister. “I mistakenly concluded- that it meant a longer period of abstention in London than on a personal perusal I frankly admit I now find to be the case. I took the reference in the reports to me as applying to the two calendar years, 1929 and 1930, whereas the actual period covered by my predecessor would not exceed eighteen months, that is, from January, 1929, to the usual month in 1930; that is, May. A close review of the complete file shows this to have been actually the position when my predecessor left office, and he was correct in challenging my statement as to the two financial years. I was not excluded from borrowing on the London market for two years, but for 18 months, according to the special file in the Treasury. A Lively Passage. “I gave two years to the House under the strong impression that I was sure of my facts,” added the Prime Minister; “1929 to 1930 is not two years in actual length of time—it is eighteen months — and I had for the first time in my history as Minister of Finance to agree to a second loan being raised in the same year. It is a most unusual procedure, and one I have never known previously in connection with the finances of this country. The local money market turned favourably towards providing money for State advances, but we could not have obtained the money in London after we came into office, not even after a double loan in one year. I was thrown back upon other resources to obtain the money for the State Advances Department. I was offered £2,000,000 from another country, but I refused it, preferring to rely on the local market. I haye given the facts, and I do the ex-Minister of Finance the credit of saying he was right in challenging my statement that I was precluded for two years from going on the London market. I was, however, right in saying that I was precluded for 18 months.” Mr. Coates: By whom? The Prime Minister: By the decision of my predecessor. Mr. Stewart: I made no decision. Mr. Coates: None at all. The Prime Minister: The ex-Minister of Finance Mr. Stewart: I left it over. Mr. Coates (to the Prime Minister) : Why not apologise? Be fair. The Prime Minister: You know nothing about it. Mr. Coates (heatedly) : I know you are dodging about it. . _ , , Mr. Speaker (sternly) : Order! Order! There was further interjection, and Mr. Speaker intervened with the statement that an argument was developing. He asked the Leader of the Opposition to refrain from interjecting, and to reserve his comments for the debate on the Financial Statement. The Prime Minister thanked Mr. Speaker for his intervention. “I am very much obliged to vou, Sir, for protecting me.” he said. “I am not accustomed to such vicious attacks. The late Minister of Finance says he left the course quite clear for me. I want to say he negotiated for £5,000,000. Mr. Stewart: I did not. The Prime Minister: When I came in the negotiations were under way, and were partly completed. Mr. Speaker suggested that the disputed points could be contested during the debate. . . - .4. The Prime Minister: All I want to say is that the negotiations were partly completed. It was a conversion operation for nnrt of the loans falling due. I had to take up the position where it was left. Mr. Stewart: I will deal with that ton, Mr. A. Hamilton, Reform member for Wallace, to the Prime Minister: Play the game! . . „ , , Mr. Speaker: Order! Order! An Extraordinary Statement. “It was a very extraordinary statement,” said the Hon. W. Downie btewart in referring to the matter during his Financial Debate speech in the evening. “I want to say it was a very contradictory statement, and it was a very unfair statement. (Reform hear, hears.) It was long overdue, because the Prime Minister has for some weeks allowed the serious accusation made by him to stand against me. He has refused me any redress; he has declined to lay the papers on the table of the House; he has allowed his colleagues to attack me again and again; and whenever the matter has cropped up he has repeated his charge in more aggravated language. Only last week he said that when he did disclose the position I would not have a leg to stand on. . “The question I want answered is what is all this ‘mystery’ about,” Mr. Stewart continued. “It has all turned on the simple question as to whether the Prime Minister should accept the advice of his London advisers and borrow the year’s requirements three months before the normal time.” He decided to accept their advice, and the fact that this meant borrowing twice in the one year was a mere accident which, us the Prime Minister himself■ had said, might have happened Govassuuaati Za hia atatamaat

during the afternoon the Prime Minister had stated that the Reform Finance Minister had left the decision over for two months, despite pressing pleas for a decision from the Treasury. That statement was not correct. Treasury and Cabinet had both agreed with Mr. Stewart that it would be most improper and unfair to settle the question, as the succeeding Finance Minister might not accept London advice. Had the question been settled, then the Prime Minister might well have complained that Mr. Stewart had anticipated him and tied his hands. From the Past. On the question of the propriety of the procedure actually followed, Mr. Stewart reminded the Prime Minister of his statement when going out of office in 1912. During the term of the Mackenzie Government a £4,000,000 loan was negotiated on the London market, and when questions were raised in the House as to whether Sir Joseph Ward himself should not have arranged the loan, Sir Joseph Ward had made the following statement: —• . I It has been suggested that information was withheld for some improper reason. There is not a thing connected with the loans that is not in the Treasury and which a perusal of will show that the suggestion is absolutely unfounded. What was the position when I gave up office? . . . I put on record during the last short session that I did not feel _ justified in raising a loan of four millions in February last; and I gave my reasons for it. I believe them to be sound reasons; I believe I did the right thing, and the only thing I could have done. If on account of the closeness of parties I had not acted as I did —if I had not left the position free and clear to my successors —I would have been blamed for taking action then, and I would have been charged that I ought to have allowed my successors the freedom to act as they thought proper as to the amount, the rate, and everything connected with it —that is, if I had raised a loan when there was a doubt as to whether the Governmen of which I was the head would continue in office. “On this aspect of the question I have convicted the Prime Minister out of his own mouth,” added Mr. Stewart, who contended that he had followed a very good precedent in acting in the same manner as had Sir Joseph Ward in 1912. The ex-Minister claimed that the Prime Minister could not reconcile his complaint that on the one hand the problem had been thrust on him and that on the other his hands were tied through some action of Mr. Stewart’s. If New Zealand could not borrow on the London market for 18 months it was because the Prime Minister had already borrowed before the financial year began. He had borrowed because he thought thj London advisers were right, but he was under no obligation to follow that advice. Mr. Stewart claimed he had protected the Prime Minister in every way. The £5,000,000 Loan. Mr. Stewart said that on January 17 last he had replied to a statement by the Prime Minister in the following terms:— “Sir Joseph Ward’s statement on the loan transactions has been interpreted by some newspapers to mean that I had proposed to raise £5,000,000 and to convert another £10,000,000 of tile 1929 maturing debt. This is incorrect, as 1 had made no proposals. What actually happened was that in the middle of the election campaign our London financial advisers cabled suggesting that we should convert another £10,000,000 of the 1929 maturities, and also borrow in anticipation of our next year’s loan requirements, for reasons stated by them. As the latter proposal would involve borrowing twice in one year and was a marked departure from our usual procedure, I cabled to ascertain when London considered a decision should be made, as we were in the middle of the election campaign. Their reply was that if action was taken by January, it would meet the case. When the election results were known I considered it would be improper for an outgoing Government to prevent the new Government making its own decision on so important a transaction, or to tie their hands, when there was ample time for Sir Joseph Ward to consider how the proposals would work in with his own loan proposals. It will be seen, therefore, that the proposal emanated from London and not from me. The suggestion in some papers that I had known the position months before the election is entirely without foundation, also the accusation that I had misled the electors as to the high credit of New Zealand, and that I had embarrassed my successor.” Proceeding, Mr. Stewart said that the Treasury had drawn his attention to the fact that if a prospectus were to issue on the London market in January,' it would be advisable to forward material in anticipation of Sir Joseph Ward’s decision. Agreeing to that, Mr. Stewart had advised the Treasury that if Sir Joseph did not agree with the London advice he would have ample time to cable the High Commissioner not to proceed with the prospectus. Quite probably the Treasury, in forwarding the particulars, anticipated that the requirements for the incoming year would be £5.000,000, as that was the normal loan, but that in no way embarrassed or tied the hands of the. incoming Finance Minister. There was no commitment, obligation or embarrassment. . . , , On the other hand the position had been protected in every way for the succeeding Treasurer. But ever since the election there had been “mystery,” suggestion, innuendo, and statements that the Prime Minister had been embarrassed by some action of Mr. Stewart’s; whereas a glance at the file would have been all that was required to show that nothing of the sort took place. “I have every reason to complain, as it may be the fate of any other member to find himself in the same position,” Mr Stewart added. “If facts are to be misrepresented and distorted for party purposes, public life will become intolerable in New Zealand.”

INCREASED TAXATION DEFICIT AN EXCUSE, NOT THE CAUSE five SALIENT POINTS EX-MINISTER’S SEARCHING ANALYSIS Five salient points were made by the Hon. W. D. Stewart, ex-Minister of Finance in the Coates Cabinet, in the House of Representatives last night when, in inaugurating the debate on tiie Financial Statement on behalf of the Opposition, he analysed the Budget proposals for increased taxation. These points were;— (1) That a substantial part of the deficit of £577.000 was obviously due to transactions that took place after he had left office. (2) That he came through three difficult years, of which two at least were gruelling years of depression, and managed to balance the Budget each time. (3) That taxation was not being imposed for the purpose of restoring the balance as it existed last year, but for the purpose of meeting new obligations. (4) That, having regard to the expansion of trade and imports since the beginning of this financial year, it was questionable whether the proposed increases in taxation or any part of them was necessary. (5) That if the object aimed at was to secure surplus revenue for public works, that ought to be stated explicitly to enable the House and the country to pass an opinion on it. “Veritable Godsend.” Leading up to those points, Mr. Stewart said the deficit was said to be attributable entirely to the past Government, and was also said to be a source of embarrassment to the present Government. In his opinion, however, the deficit had been a veritable Godsend to the present Government, which had used the deficit as a stalking-horse to show why its programme had not been fulfilled; to show why taxation, instead of being reduced, was actually to be increased. Apart from the question of deciding with whom the responsibility for the deficit lay, Mr. Stewart thought he would be correct In saying that a moderate deficit was no indication of unsound finance, provided the deficit did not constantly recur. The main value of a small surplus was psychological. It created a good impression. However, if a Minister tried close Budgeting to meet the objection that a large surplus would show that taxation was too high, then that Minister would find there would be a very close margin in a year when revenue fluctuated. Whenever there was a change of Government during a financial year, a controversy always 'arose as to who was responsible for the position at the end of the year, particularly if there were a deficit. The new Minister of Finance naturally claimed that he had no control oyer the estimates and expenditure, and the outgoing Minister also naturally claimed he had no means of adjusting expenditure if the revenue showed signs of tailing short. Mr. Stewart recalled that when the Reform Government was leaving office he said he saw no reason to anticipate the accounts would not balance at the end of the year. He based that statement on the figures for seven months of the year, which showed that Customs revenue was then holding normal. -Lhe new Minister of Finance had later given figures for a period of eight months, and had said the position showed a considerable improvement on the previous month, although the Minister had announced he was doubtful if the revenue would reach the estimate, and strict control would be necessary. As late as March -1, s P™k ing at Invercargill. Sir Joseph Ward held tentatively to the view that the accounts would not balance, but said it was not possible to make a statement, so close were the estimates then to the actual figures. Both in the House on December 13 nnd at Invercargill on March 21 Sir Joseph Ward had guarded himself. Loan Conversions. The Minister of Finance had explained that the Customs revenue had declined in the last three or four months of the last financial year, particularly the revenue from spirits, proceeded Mr. Stewart, who said it had been extraordinarily difficult to estimate what the revenue from that source would be. When revision in taxation, increasing the duty on spirits, was expected in 1927, heavy stocks had been brought in, but actually the increased duty was not made as anticipated. It was thought the stocks thus brought in would have been exhausted during the past year and that, therefore, the imports would increase, but, while that had been so in Wellington, it had not been so in the rest of New Zealand. “It will be noticed that part of the deficit consists of £157,000 for interest pavable out of the loan conversions, and that item is not far short of a third of the deficit,” pointed out Mr. Stewart. Obviously this part of the deficit has nothing whatever to do with my estimates, and is really only a paper entry which should really come into this year’s accounts, as it represents a prepayment of interest. If it is open to the new Minister of Finance to say he could not control the estimates of revenue, it is equally open to me to say I could not control expenditure after we went out of office.” Annual Circular. “It has been asserted that the fact of a circular having been sent round by the previous Prime Minister to all Departments, warning them to cut down expenditure, was evidence that we must have known a deficit was coming,” continued Mr. Stewart. “Indeed, one Government paper has gone the length of saying the matter amounts to a scandal, as I must have known when I predicted a balanced Budget that this circular had gone out and was in conflict with my statement in the House. The answer is that such a circular is sent out every year at the request of the Minister of Finance, when we see there is going to be dose sailing, to square the yard-arms. There was, therefore, nothing unusual about the circular sent out last year. It was the normal procedure. “The important point which now arises is whether the proposed increased taxation is for the purpose of making good the deficit or whether it is being imposed to meet new liabilities that were not a charge last year at all,” said Mr. Stewart. “My contention is that the new taxation is iiot for the purpose of restoring the deficit of last year, and that is obvious from a study of a table in the Budget showing the estimate of revenue for the current year with the actual revenue of last year. There it is shown that the revenue is estimated to increase by over one and a half millions. Included in that estimate is the result of the primage duty, which is estimated to yield £300.000 for the balance of the year, and an increase in the land tax of about £350.000. if we deduct these extra items of revenue so as to see what the estimated revenue would be without the extra taxation we see that the Minister of Finance estimates that the revenue will increase by about one million pounds, that is to say that the normal development of trade on imports and other factors will yield him that amount. It is obvious, therefore, that he anticipates that the normal revenue would be far more than adequate to make up the deficit of last year, and the new taxation can only be required for new obligations. Increased Debt Charges. “Now these obligations cannot relate Ja juaaual Rpprftpriatiooa. iaa iL®

Minister says he has kept down the increase 'over last year’s expenditure to £30,000. The extra revenue must therefore be required for meeting his increased debt charges and other permanent appropriatious, amounting to £700,000. It seems to me therefore that, the inference is clear that the deficit of last year is being made. an. excuse for increased taxation while it is not the real cause of it, as the normal expansion of revenue would of itself restore the balance. It is there!ore wrong and misleading to tell the public that he lias had to increase taxation because there was a deficit last year. If he-has to increase taxation it is for another purpose altogether, that is, to meet new liabilities with which his predecessor.had nothing to do. it is more than likely that the Minister is trying to get back to his old practice of creating large surpluses, and colour is lent to this by his statement in the Budget that he thinks surplus revenue should be used for public works. If that is his policy it ought to be clearly stated for the House to consider it. Speaking in Auckland in November, the Minister made a statement that be was not in favour of going on the London market for public works loans, which, he said, tended to financial embarrassment. The Minister added that he would provide for those being largely made out of revenue as he did (or many years toward the eftiutruatiua af Dublia utwlyh’*

STANDING ORDERS REVISION BY HOUSE AMENDMENTS APPROVED The new Standing Orders were approved by the House of Representatives yesterday, and will come into force today. , , Minor amendments were made when the various items were under consideration in committee. The proposal prohibiting the circulation of newspapers in the chamber during the sitting of the House was rejected. ' The Prime Minister (Right Hon. Sir Joseph Ward) expressed appreciation on behalf of himself and the House to the Speaker (Sir Charles Statham), who, by consent of the House, piloted the Orders through their committee stage. Other members, including Mr P. Fraser (Wellington Central), Mr. J. A. Nnsh (Palmerston), Mr. S. G. Smith (new 1 ly-. mouth), and the Minister of Justice (Hon. T. M. Wilford) also paid tribute to Sir Charles Statham for his valuable advice- . . z-,, . In returning thanks, Sir Charles Statham said he trusted that the new Standing Orders would stand the test when they came into operation. ILL-TREATED WIVES Mr. J. McCombs (Lyttelton) gave notice in the House of Representatives yesterday to ask the Minister of Justice whether he would have the law altered so that the admission of a wife, ill-treated by her husband, that she could have run away, would not defeat the ends of of justice.

“A LITTLE REMINDER” TAXATION INCREASES DEFENDED ENCOURAGING LAND SETTLEMENT ACQUISITION OF ESTATES Defeuding the Government's taxation proposals in the course of his Financial Debate speech in the House of Representatives last night, the Minister of Lands (Hon. G. W. Forbes) described the increases as “a little reminder,” and expressed the conviction that those affected would not be able to make any complaint. The Minister dealt also with the question of land settlement, affirming that in its selection of properties for subdivision the Government was influenced by the prospects of increased settlement and increased production. The Minister said that it was imperative that the Budget should be balanced, and to bring about the desired state of affairs, it was necessary that additional taxation should be levied. There was no escape from the position. He did not think anybody who had a thought for prudent finance would criticise the Prime Minister in making up his mind to try to balance the finances. It was advisable to build up surpluses; they had been very useful in the past. Referring to the State Advances Office, the Minister said there was no doubt the late Government had allowed things to get into a pretty bad state. Every member of Parliament had been besieged with requests to do something for applicants. It was high time the change took place, if for nothing else. The Reform Party had neglected what was one of its most important functions. There was no sounder policy than the advancing of money to people to build homes. When a Government neglected that aspect of its responsibilities it was looking for trouble. When the Government had assumed office the Prime Minister had dealt with the matter. Superannuation Funds. Touching on the question of the State superannuation funds, the Minister said he attributed the present position to the compulsory retirement of men who had completed 40 years of service. The funds would require very substantial contribution from the State in order to make them sound. It was very essential that they should be put on a sound footing. The contributors looked forward with a good deal of confidence to the benefits to be derived from the scheme. It had been hoped that some of the anomalies of the past would have been rectified, but the position of the funds did not allow of that. South Island Railway. Railway construction was the next subject dealt with by the Minister, who said Sir Joseph Ward was to be congratulated on his courage in promising the electors to complete the South Island Main Trunk railway. In spite of criticism, Sir Joseph intended to fulfil his promise. A good deal had been said against the proposal, but it was all a matter of opinion. Mr. Forbes believed that, when it came to travelling long distances, people would use the railways. The policy of the Government had been endorsed by the people, with the result that the Government was where it was at the present time. Mr. J. A. Nash (Palmerston) : Where is it? Mr. Forbes: The railway is not through yet, but it will be put through. Mr. Nash: It’s a long way to Tipperary. (Laughter.) < Doleful Predictions. I The Minister next touched on the land question. He stated he had always been a believer in the graduated land tax. Owners of large areas were keeping back the progress of the country, and should be prepared to pay for the privilege of owning such large areas. The Reform Party represented the large landowner, and it was quite natural for members of that party to say that the proposed tax was unjust and a real hardship. There had been doleful predictions about men being forced off the land, but he would like to know why the men with large areas should not pay their fair share of taxation. Everyone would agree that they bad escaped lightly in the past, and he thought they woiild accept the proposals in the right spirit. (Reform laughter.) If New Zealand was to progress there must be a policy of closer land settlement. The very fact that there were so many people in the towns and so few in the country indicated the present position was most unsatisfactory. The idea was to get as many people on to the land as possible. Want of a land settlement policy had a very important bearing on the unemployment question. Unless something were done there would be difficult times ahead. However, he felt that the large owners would respond, and meet their obligations as they should be met. Acquiring Holdings. The Minister gave some details of properties offered under the Land for Settlements Act, 1925. The number offered was 569; number declined, 340; number under action. 215; number bought. 14. Mr. Forbes also quoted from a statement of twelve typical properties offered to the Government, giving the vendor s prices and the Government valuation and showing the large discrepancy between them. These were as under: — Govt.

Those figures, the Minister proceeded, indicated the nature of the response to the appeal by the Government to Jhe patriotism of the landholders. V ere the Government to sit down and say it could do nothing when it believed that through land settlement was a solution to be found of the unemployment

problem? Was it to be wondered at then that some action had been taken in regard to the matter? He recalled that in its 1925 manifesto the Reform Party had promised to take land compulsorily if it could not be acquired by amicable settlement, but in the succeeding years that plank had dropped out of the policy. Mr. A. M. Samuel (Thames): You have the same machinery. Encouraging Subdivision. Continuing, the Minister said that he intended to go ahead with land settlement, and the effect of the taxation proposals would be to encourage the cuttingup of the larger holdings. Conflicting accounts had been received as to how the new taxation would affect the landholders, but he did not anticipate there would be trouble. The Government had gone to the country with a promise to cut up the large estates, and that policy had been endorsed. Reform members: And cheap finance! The Minister: Yes, but I do not think that had anything like the effect in the country districts as had the proposal for the subdivision of the large estates. “A Little Reminder.” The supertax proposal was one that irritated the Opposition, and there had been complaints that the small owners would suffer. As a matter of fact, the number of landholders affected was 1752. The Minister said he was satisfied that the taxation question would be accepted by the farmers as being a very necessary thing. He did not think the landowners could feel aggrieved over the increases suggested. “I suppose,” the Minister added, “that we will be blamed for not increasing it enough; but it must be recognised that in regard to alterations in taxation a sudden heavy change might take those concerned unawares and cause them considerable hardship. I don’t believe in putting on a crushing impost; but at the same time a gentle little reminder like the present proposals is quite reasonable, and even those affected by it will not be able to make any complaint. Also I don’t think there should be any complaints in regard to the payment of income tax. . . A man told me some time ago that he was earning about £5OOO a year and paid a land tax of £lOO. He said he did not think it was a fair thing for him to escape with that. He was troubled over it, but now we have been able to make him a contented man. (Laughter.) He will now have a chance to make a better contribution towards the expenses of the State.” Referring again to the Government's land settlement policy, the Minister said he hoped to be able to acquire the properties that should be purchased. In that search the Government was endeavouring to see that two principles were observed: (1) Increased settlement; and (2) increased production. The question always considered in regard to a likely acquisition was whether in effecting the subdivision increased production would result. Where there was no prospect of resultant production increase the property was not wanted.

Notice of his intention to introduce the Petone and Lower Hutt Gas Lighting Amendment Bill was given by the Minister of Defence (Hon. T. M. Wilford) in the House of Representatives yesterday. Mr. R. A. Wright (Wellington Suburbs) gave notice to introduce the New Zealand Institute of Architects Amendment Bill. The Prime Minister promised Mr. J. A. Nash (Palmerston) yesterday Io look into the question of setting apart an afternoon for a visit by Parliamentarians to Massey Agricultural College.

DISAPPOINTING BUDGET EXCESSIVE BORROWING UNJUST TAXATION PROPOSALS Three general objections to the Budget proposals were expressed by the Hon. W. D. Stewart, ex-Minister of Finance, in concluding his speech in the Budget debate in the House of Representatives last evening. Mr. Stewart said his objections were: (1) That the Government’s borrowing proposals were beyond what New Zealand could engage in, and were a flat contradiction of the Prime Minister’s own statements for years past. (2) That the Government’s railways policy was unsound because it admitted losses must continue to mount up. (3) That the taxation proposals were unjust because the men who were heavily mortgaged would be subjected to what would amount to a capital levy. Elaborating the last point briefly, Mr. Stewart said the Prime Minister ought to have a further investigation into the injustice that would be done to the large section which would be affected by the taxation proposals. Mr. Stewart said that if, as the Prime Minister stated, the losses on the railways would soon be £2,000,000 unless he could find a solution of the problem to coordinate transport, surely the reasonable course would be to solve the problem first before plunging into millions on loan expenditure which, failing such solution, would only increase the railway deficit. “The more the Budget is examined, the more disappointing it will be found,” concluded Mr. Stewart. “Return of Confidence.” A different view was taken by the Minister of Lands (Hon. G. W. Forbes), who congratulated the Prime Minister on his Budget, and said he was sure extreme pleasure would be felt right throughout New Zealand that Sir Joseph Ward was once again in a position to present a Budget to the House. The Prime Minister had been associated with very successful financial deals in the past, and the fact that he had again taken charge of the country's affairs had beeq responsible for a return of confidence from one end of the Dominion to the other. There was a feeling that the affairs of the country were in the hands of a gentleman who had long experience, and who was capable of looking after them. Throughout New Zealand the Budget had been generally commended, and the Prime Minister had received congratulatory telegrams from the North Cape to the Bluff.

District Acres Price £ Vain. £ Wellington ... 540 38.581 29,400 Auckland .... 1500 40.392 19 000 Canterbury ... 4450 41.500 32.050 Auckland .... 1000 24.925 10.800 Auckland .... 1200 24.240 12,100 Auckland .... 1500 34.944 18.000 Auckland .... 1400 21,700 11.900 Auckland .... 700 23.3S0 4.905 Auckland .... 1950 33.439 13.950 Taranaki .... 1050 9.3S7 4,649 Wellington .. 1350 40.830 28,445 Westland .... 850 12.000 5,490