PARLIAMENT IN SESSION

Dominion, Volume 24, Issue 148, 19 March 1931, Page 10

PARLIAMENT IN SESSION

Wages Issue Figures Largely LEGISLATION FOR MORTGAGORS’ RELIEF Further Drastic Economy Hinted At Some idea of the diversity of opinion upon the Government’s proposals to reduce Public Servants’ salaries and wages and to empower the Arbitration Court to vary awards, was given when the second reading debate on the Finance Bill was set upon its . course in the House of Representatives yesterday. That there will be a bitter fight, especially by the Labour members, is certain, and it is not unlikely that, having gauged the feeling of the House from the tone of the speeches yesterday, the Prime Minister will seek to apply the spurs to-day by securing urgency. If he does the Labour Party will undoubtedly carry out its intention of doing its best to block the measure. Members showed considerable interest in the Mortgagors Relief Bill which came down by Governor-General’s message early in the afternoon, and a long time was spent in speeches upon the ■ first reading. The Bill aims at permitting mortgagors to apply to the Supreme Court for a temporary suspension of foreclosure, in accordance with a promise previously made by the Prime Minister, but members were chiefly concerned because there was no provision for the application of the Bill being made retrospective. However, Mr. Forbes gave an assurance that no exploitation by mortgagees would be countenanced. The Leader of the Opposition, Rt. Hon. J. G. Coates, resumed the I, debate on the Finance Bill, and his speech was marked by two points. He first questioned the Labour Party’s assertion that a reduction in wages would react upon the primary producers by showing the small proportion of primary products consumed locally, which meant, he said, that the question of purchasing power did not enter as largely as was <■ thought into the general economic situation, and he then advocated the establishment of a tribunal to deal with wages and other questions affecting the Public Service and to act as a buffer between the service and political issues. He also said he recognised the necessity for the adjustment of wages. Considerable interest was shown in the speech of the Minister of . Native Affairs in the evening. Among other things he hinted at the possibility of a reduction in the staff of the Public Service as well as a wage reduction, an overhaul of the service by what is understood to be a reorganisation of departments, and the desirability of approaching the British Government with a view to reducing the Dominion’s contribution toward naval defence.

The Leader of the Labour Party, Mr. H. E. Holland, made a vigorous attack upon the measure, in which he complained that although the Act would expire in December, 1932. the awards amended by the Arbitration Court would run on in their revised state. Parliamentary circles were also interested during the day in the speech made by Sir Francis Bell in the Legislative Council in which he disclaimed any further share in the .councils of the Reform Party. The debate was "drawn out until midnight, when the House adjourned.

MIRAMAR SCHOOLS Lack of Accommodation The necessity for a school at Miramar North was urged by Mr. R. Semple (Lab., Wellington East), who addressed an urgent question upon the point to the Minister of Education, when the House met. He said the Miramar schools were overcrowded, and he asked if steps could be taken immediately to have another provided at Miramar North. The Minister said a section of three acres had been acquired at Miramar North in anticipation of a future demand, the purchase having been made in advance, in view of the fact that it had been found that high prices had to be paid because provision was not made for the securing of land before it was actually needed. Mr. Semple could rest assured that the moment the accommodation was needed, a wooden structure would be erected on the site. PRESS TELEGRAMS Reports of Members’ Speeches The reason why the Government had amended the Press telegraphic limits at concession rates by allowing an extra 2000 words to morning and evening newspapers during the session of Parliament, was sought by Mr. F. Langstone (Lab., Waimarino), in an urgent question addressed to the Postmaster-General, Hon. J. B. Donald. Mr. Langstone also asked whether the Minister would give the general public the use of the Post and Telegraphic Service at the same rates as those now charged to newspapers. ‘‘The increase in the number of words which pay be sent by Press telegram at the lower rate applies only during sessions of Parliament, and is designed to permit of the adequate reporting of the speeches of members,” replied the Minister. The reduction in the postage rate on newspapers was to permit papers of 16 ounces and under, including the weeklies, to be carried for a penny. It was found that many of the weeklies went just over the eight ounces, and it meant that the increase in the postage was 400 per cent. To adopt the proposal to charge Press rates on ordinary telegrams would confer no benefit upon the general public, there being a minimum charge of 1/6 for Press messages. COUPON TRADING An intimation that legislation would be brought down this session dealing with coupon trading was given by the Prime Minister in reply to a question by the Leader of the Labour Party, Mr. 11. E. Holland. The legislation, he said, would be treated as urgent. WORKLESS MEN Question of Absorption EFFORTS IN MAIN CENTRES Attention to the large number of unemployed unabsorbed in Auckland was drawn by Mr. W. E. Parry (Lab., Auckland Central). He asked the Minister of Labour, Hon. S. G. Smith, whether, in view of the difficulties of the Auckland Unemployment Committee in coping with the position, the expenses of the committee and the salary of a full-time secretary would be met by the Unemployment Board. “I am astonished to hoar the honourable member say the committee cannot function because the board will not allow it to have a full-time secretary,” replied the Minister. If the Unemployment Committee was not functioning in Auckland someone was, for last week, under the No. 5 scheme, 1474 men had been placed for two 'days, 1621 men had been placed for three days, and 1528 men had been placed for four days, a total of 4623 men, to whom wages totalling £11,145 had been paid. Mr. Parry: Why have you not replied to their letter? No Difficulties Elsewhere. The Minister said there were no difficulties in other parts of New Zealand. The Dunedin committee had placed all eligible men. . Mr. F. Langstone (Lab., Waimarino) : Part time. The Minister added that 2916 men had been placed in Christchurch. There were 159 local committees throughout the Dominion, nnd if an average of £3 a week were given to each to pay a secretary, £32,060 a year would have to he taken out of the fund for that purpose. Mr. Parry: That statement is absurd. Mr. Smith: It is a fact nevertheless. In Auckland they seem to be concentrating on a demand, for a paid secretary whereas elsewhere any office expenses are

being met by the local bodies. In view of the fact that there are no other complaints, the board feels it would not be justified in acceding to the request. The Minister stated later that a total of 2000 men had been placed in Wellington during the period he had mentioned and it was hoped to place another 1000 soon. Supplies of Food. “The matter of establishing placewhere food can be supplied to the unemployed is receiving the consideration of the Government,’’ said the Prime Minister, when replying to an urgent question asked by the Rev. C. L. Carr (Lab., Timaru). EARTHQUAKE AREA Building Regulations A thorough inspection of buildings in earthquake fault areas was advocated by the Rev. C. L. Carr (Lab., Timaru), in an urgent question he addressed to the Prime Minister. He also urged the reconditioning of buildings pronounced unsafe, the preparation of building regulations for use in localities subject to earthquakes, and that the fullest advice be obtained from seismologists. Mr. Forbes replied that the Buildings Regulations Committee had already made an expert inspection in the devastated area in Hawke’s Bay, and was working on a model set of by-laws for the guidance of local bodies and building authorities. Legislation would be brought down this session providing for regulations for use in buildings designed to resist earthquakes. Full advantage was being taken of the advice of seismologists both inside and outside the Public Service. The inquiry was taking place under the Department of Scientific and Industrial Research. NIEMEYER REPORT Not Yet in Government’s Hands The Government has not yet received the report of Sir Otto Niemeyer, the English banking authority, upon the banking, currency and and exchange position of the Dominion, according to a statement by the Prime Minister, in reply to Mr. J. S. Fletcher (Ind., Grey Lynn). Mr. Fletcher asked the Prime Minister if he would place the report before the House, in view of the serious financial position of the country, but Mr. Forbes assured him it had not come to hand. It is understood that the report will not be delivered until about the end of this month at the earliest. MORTGAGORS’ RELIEF Special Legislation POSTPONEMENT OF SALES The Mortgagors Relief Bill, described as an Act to grant relief to mortgagors in certain cases by a postponement of the powers of sale by mortgagees on account of the special economic conditions prevailing at the present time, was introduced by Governor-General’s Message as soon as formal business had been finished. The measure empowers the Supreme Court to consider measures of relief, providing the mortgagor makes application to the court within one month of the date ■ upon which the mortgagee has served him with notice of his intention to exercise the powers of sale, rescission or entry into possession of property or interest over which security is held. In determining whether relief shall be granted, the court may consider the effect of a continuance of the mortgage upon the security, the inability of the mortg-affor to redeem the property either with his own money or money borrowed at reasonable interest, the conduct of the mortgagor in relation to any breaches of the mortgage covenant, the possibility of hardship to either party, the extent to which the mortgagor’s default has been caused by the economic conditions of the country, and whether any relief granted will enable the mortgagor' to meet his liabilities within a reasonable time. Suspension of Foreclosure. Having regard to these circumstances, the court may order for not more , than 12 months the suspension of the foreclosure powers of the mortgagee, although the mortgagee may apply for an alteration of this order within the specified period should the terms be broken by the mortgagor. The order may be extended from time to time as the court thinks fit for periods not exceeding 12 months, and the court may alter the terms of the order in any way dictated by the merits of the case. Applications for relief may be made to and heard before a judge in chambers, and neither party shall have the right of appeal against any order made

under the Act. When the unpaid principal under any mortgage does not exceed £5OO a magistrate is empowered to make orders for relief. Similarly no appeal may be made against the magistrate’s decision. By Order-in-Council the GovernorGeneral may bring within the provisions of the Act all leases of land with compulsory or optional purchasing clauses, the Supreme Court receiving full power and jurisdiction to adjust these agreements as is granted in the case of mortgages. The Grown is included in the operation of the Act, which will be brought into force by the issue of a proclamation and virtually, repealed by a similar procedure. Provisions are made, however, that following the cessation of the operation of the Act by proclamation, all orders made under the Act shall endure and all proceedings may be taken and jurisdiction be exercised under these orders. Exemptions. In addition to securities for loans granted under the Repatriation Act, 1918, and mortgages executed after the passing of the Act, which are specifically exempt, the Governor-General is empowered to exempt by Order-in-Council any other class of mortgage from the operation of the Act. For the purposes of definition a mortgage includes any deed, memorandum of mortgage, instrument or agreement where security is granted over land or chattels and includes agreements where security is given on life insurance and endowment policies or annuities, and will affect the unpaid balance on agreements of sale and purchase of land. For Mutual Protection. In making brief reference to the contents of the Bill, the Prime Minister said it was the outcome of his recent statement in which he promised that provision would be made whereby mortgagors and mortgagees could be brought together with a view to making satisfactory arrangements for their mutual protection. Its provisions would supplement the appointment of Commissioners of Crown Lands as adjustment commissioners, who were already engaged in assisting mortgagors and mortgagees to make arrangements, and who were carrying out very-useful work. The Bill made provision for the delaying of the calling up of a mortgage if it were not considered advisable that this should be done. The arrangement would be different from the moratorium previously in force, whereby a mortgagee had to approach the court to have the moratorium lifted. Mr. H. G. Diekie (Ref., Patea) asked if the expense involved in taking advantage of the Act would be very great. The Prime Minister said it was not expected that any great expense would be involved. There would be full provision for all circumstances to be reviewed. The action would be along the lines of that relating to rent restriction in that application would be made before a judge in chambers. Interest Payments. Mr. W. J. Polson (Ind., Stratford) asked if the tribunal would have the power to deal with the postponement of interest. The Prime Minister said consideration would also be given to the question whether a person should be sold up in respect of interest payments. Mr. W. L. Martin (Lab., Raglan): Is the legislation to be retrospective? The Prime Minister: No. The proposal is that the legislation will .be brought into operation by proclamation, and when it is considered that it has served its purpose, it can be repealed by proclamation. , Mr. M. J. Savage (Lab., Auckland West) said the Prime Minister’s statement was welcome as far as it went, but he asked what was to be the position of the average farmer in the meantime. He asked whether anything would be included in the Act making foreclosure impossible immediately. The Bill was an acknowledgment that something had to be done, but if something were merely to be put on paper, no relief at all would be given. The bad old practice was Simply being continued. They were concerned about the protection of the ordinary mortgagor in the meantime. . The legislation would simply stimulate the calling up of mortgages, and more harm than good would be done. Colonel T. W. McDonald (U., Wairarapa) said he had letters in his possession showing that certain mortgagees were doing their utmost to sell up the mortgagors, and no doubt every member in the House had similar information. Unless a clause were inserted in the Bill making it impossible for any action to be taken by mortgagees until their cases had been considered by the tribunal, little good would be done. Mr. Martin asked that the proposed legislation should be made retrospective to the beginning of this year, and Mr. C. H. Chapman (Lab., Wellington North) said it should be made retrospective at least to that day as, he said, advantage of their position would no doubt be taken by mortgagees as soon as the introduction of the legislation had been announced. Effect on Fanners. Mr. Polson said he would deprecate anything that went too far because, it would have an effect upon the farming community that would not be apparent to those who would go the whole >way. If too much scope were offered the result would be that it would be impossible to borrow on rural security at all. Mr. E. J. Howard (Lab.. Christchurch South) expressed a fear that the introduction of the Bill would result in a panic in the country. He asked for an assurance that workers’ homes would be protected against mortgagees. Mr. H. 8. S. Kyle (Ref., Riccarton) expressed the opinion that the Bill would be met favourably by the great majority of people. He thought it would prove of great benefit to thousands of settlers. Mr. "H. T. Armstrong (Lab., Christchurch East) said the Bill reminded him of the closing of the stable door after the horse had gone. The legislation should be retrospective, otherwise the difficulties of thousands would not be met. The moneylenders could not be blamed for foreclosing in view of the Prime Minister’s "statement. Mr. R. McKeen (Lab.. Wellington South) said the Government’s policy should be to keep people on the land and in their homes. There was no reason why the tribunal should not review even the terms of mortgages and reduce interest rates. He hoped ample provision would be made to protect the interestpaying home-owner. The hope that the Bill would not hold up the much more important legislation dealing with the. plight of Hawke's Bay was expressed by Mr. W. E. Barnard (Lab., Napier). Mr. P. Fraser (Lab., Wellington Central) asked whether provision would be made for the temporary safeguarding of the mortgagor until such time as the Bill became operative. Mr. J. A. Young (Ref.. Hamilton) considered that such a Bill was needed. Owing to the' Prime Minister’s statemeat that the Bill would become effective by Order-in-Council many mortgagees would probably set out immediately to bring about a foreclosure. He thought the Bill should operate from the time it was introduced if that was possible, or even from the beginning of the session. “No Exploitation.” The Prime Minister said he would look into the question of the time from when the Bill was to operate. Referring to the contention that the provisions in the Bill should apply to workers and settlers, Mr. Forbes said there was a special clause which stated that all the provisions applied to the Crown. In introducing legislation such as that before the House, neu ground was being broken, and mistakes could be made. It was desirable that the public should know the proposals in tin Bill. The Government would see that no advantage was taken of the Act st far as its operation was concerned. The Bill may operate from that day. Any effort to get. ahead of the Act. would no' be successful. The Bill was read a first time.

REFORM’S VIEW

Aid for the Farmers COSTS & WORLD PRICES Public Service Tribunal ’*A real problem faces the country, and the primary producer in particular,” said the Leader of the Opposition, Rt. Hon. J. G. Coates, in speaking to the second reading of the Finance Bill making provision for Public Service salary and wage reductions, and the variation of Arbitration Court awards, which was resumed after the first reading of the Mortgagors’ Relief Bill had been taken. “I want to say to the Prime Minister and the Government, from my place in the House,” proceeded Mr. Coates, “that while the business we are dealing with is important, there is one outstanding feature as far as the farmer is concerned, which in turn affects everybody else in the country. We must tackle this job of making satisfactory arrangements for him and clearing the ground before we leave Wellington. It is essential that we should deal with the problems facing the primary producer.” Mr. Coates said every member would be concerned at the Prime Minister’s statement, made the previous night, that this year’s deficit would be at least £1.200,000 and not £750.000 as anticipated. The real question to be faced at the moment was the ability of the country to pay its way, and whether the position could be met by increased taxation, as was proposed by the Government. There had been a serious change for the worse in the financial position in the short space of a month, and the urgency of a solution being found was apparent. Immediate Action. At present those responsible for the conduct of the country’s affairs were up against a real problem, and they would have to take it in hand very soon, or further difficulties would become apparent. The question arose whether the Government could continue passing on its increased charges to the taxpayers. They would have first of all to find the reason for the present state of affairs, and then the solution would no doubt resolve itself into a question of the process to be followed. Mr. Coates said he would be. justified in pointing out grave errors of judgment of which the Government had been guilty, and in mentioning that the Reform Party had made it clear from time to time that the present situation would come about. However, the position would be aggravated unless a definite line of action were taken, and little good could be served by adopting that attitvde. The Root of the Trouble. Only one of two courses remained open. Either taxation would have to be reduced or costs would have to come down all round. By increasing taxation, general charges would be maintained, which meant that every private budget in the country would be affected. It was correct that the Government was facing its present difficulties because private budgets were not being balanced. That was the root of the trouble. Enterprise was being stifled simply because charges could not be met. There was credit in the country, but it was being withheld for this very reason, for there were many men who would launch out if they knew that they could be relieved of the heavy burden of costs at present weighing them down. The cost of Government* would have to come down. The Government’s Budget and the private budgets could not be separated ; the one reacted upon the others. Mr. Coates said he thought the Public Servants admitted, that the finances of the country demanded that a course would have to Be followed as a result of which the cost to the community as a whole could be cut down. They could not expect to be exempt from the storms that affected everybody else. He assumed they were prepared to do the fair thing by the country, and they would do it provided the country treated them fairly. Consumption and Export. The Labour Party asserted that a reduction in wages would mean an inevitable fall in the purchasing power of the country which would in turn redound upon the primary producers. The figures relating to the local consumption of primary produce and the amount exported showed that the effect as proposed would be infinitesimal. The amount of butter produced in New Zealand last year totalled 212,000,0001 b., and the amount consumed in the country was only 50,000,0001b.i exports reaching 161,000,000 lb. The production of cheese was 182,000,0001 b., the local consumption being 11,000,0001 b., and the amount exported 171.0001 b. Of the total amount of butterfat produced only about one-seventh was consumed locally. The chief cause of the present plight of the primary producer was the level of prices for his products on world markets. The outcome was that the primary producer had to be placed in a position in which he could supply his products at a profit at world market prices. Less than half the mutton produced was consumed in New Zealand, and only one-fourteenth of the lamb. The production of wool totalled 243,000,0001 b., last year, but only 7,000,0001 b. was locally used. The question then arose as to how much the local purchasing power could affect these staple lines of products. New Zealand being an exporting country had first to look to the welfare of her exporters and right their position as soon as possible. The prices realised by primary producers were down by a total of £20,000,000, and the result was that there was that much less money in circulation. Prices for Products. Reference was made by Mr. Coates to the price level index for the chief exporting products and he based comparisons upon 1929 prices with the figure 1000 as the basis. These figures showed that the price level of wool had fallen from 1659 in 1929 to 623 in January, 1931. Dairy product prices had fallen from 1285 to 988, and meat from 1769 to 1470. One could ask with reason whether increased taxation was going to right the position as revealed in these figures. Mr. Coates said it was imperative that credit should not be withheld from thfarmers and that production should continue. The Government, with private enterprise, should do everything in its power to see that the farmers received financial accommodation. Credit would be forthcoming quickly if the mortgagee would allow his assets to be improved or maintained, to say the least. Two or three years would probably see them through the worst of their problems, but in the meantime it was important to make arrangements to let the producers carry on. He asked the Government to consider this position with all the sincerity and emphasis that he could command. One of the most important points was that the farmer should obtain sufficient supplies of fertiliser, for if he did not get it for one season production would drop immediately. Reverting to the question of Public Servants’ salaries, Mr. Coates said he realised the necessity for effecting the 10 per cent, reduction. He could speak for the Opposition side of the House in saying that they agreed it was essential that fairness should be applied in reducing the wages nnd salaries of those in the service. He agreed himself that there would have to be a curtailment. Mr. D. G.. Sullivan (Lab., Avon): Then you do not agree with Sir Francis Bell. Mr. Coates said he considered it necessary and advisable that a commission or tribunal should be appointed to which the Public Servants should have the right to go and state their case if hardship would be likely to arise from the reduction thev would suffer in wages. Mr. Howard : Hardship clauses. Public Service Issues. Mr. Coates said he did not suggest hardship clauses as he well remembered the hardship clauses inserted in the previous Bill. The Public Service and political issues were always being brought

up and, although ths responsibility was undoubtedly the Government’s, he thought the service should have a chance to take its troubles to some independent body without having to intrude them into general political questions. The questions affecting the Public Service should be kept out of Parliament as far as possible. It was a serious thing for a man to be making promises to the Public Servants upon political considerations and the political morality of the country was affected by this practice. Such a commission or tribunal as proposed could have before it the cases of men or women who would suffer by wage reductions and it could examine their personal budgets. He was sure that any recommendation made by this body would meet with the approval of Parliament. Touching upon the burden of high rents, Mr. Coates said this question was one of the most serious to be dealt with, and he considered that a lead should be given by an announcement from the Government that Parliament expected landlords throughout the Dominion to reduce their rents. Mr. P. Fraser (Lab., Wellington Central) : Blessed is he that expecteth nothing. Mr. Coates concluded with a reference to* interest rates, which, he said, could not be dealt with while the Government was on the market at 51 per cent. He made a final appeal for the ex-service men in the Public Service, who, he said, had suffered severely already in many cases through wage reductions. LABOUR VIEWPOINT Equality of Sacrifice “BROKEN CONTRACTS” The Leader of the Labour Party, Mr. H. E. Holland, described the speech of the Leader of the Opposition as a dismal contribution to the discussion on the Government’s proposals. From Mr. Coates’s remarks he gathered that the Reform Party was in favour of “cuts” in salaries and wages, and would support the Government in its 10 per cent, reduction proposal. The Leader of the Opposition had said that the Public Servants were in favour of the “cut” being made. A Reform member: He did not say that. ~ , , . , . Mr. Holland said that his advice was that the Public Servants were solidly against the “cuts,” but that if they were to be made they wanted them to operate on the basis of equality of sacrifice. _ It seemed that the Leader of the Opposition had lost for himself the wage and salary workers and was trying to gain ground in the country. He knew he was going to lose on the industrial swing, and hoped to make it up on the rural roundabouts. Figures to show the value of primary produce exported from the Dominion were quoted by Mr. Holland. These, he said, showed that there was an enormous quantity of primary produce consumed within the Dominion. Referring to Mr. Coates’s suggestion that there should be some sort of tribunal to deal with cases where hardship would be the outcome of the 10 per cent, “cut,” Mr. Holland said the proposal took his mind back to 1922, They all knew that although a hardship clause was included in the Public Service Adjustment Act, it. was never administered, and that hardly one Civil Servant could be found who had benefited as a result of the clause. No Compliments for Mr. Forbes. “We cannot compliment the Prime Minister on the tactics he adopted yesterday insofar as one result of those tactics goes,” proceeded Mr. Holland. “The Prime Minister has been appealing to us not to hold up business, and yet he takes a whole day to himself and makes one speech—a reiterated jeremiad. I often wonder if he is a pessimist or an optimist; sometimes he appoars as. a pessimistic optimist, and at another time as an optimistic pessimist. “Why did the Prime Minister take a whole day to himself and let the work of Parliament go? The answer is that he might get an unanswerable statement through the Press and have one day’s Press Association message to himself.” Wage Reductions. Mr. Holland said that Mr. Forbes had gone away from New Zealand to the Imperial Conference pledged to no wage reduction, and the Acting-Prime Minister had said while he was away that it was not the policy of the United Government to reduce wages, but immediately after the Prime Minister returned to the Dominion it was announced that wages were to be reduced. Who was the authority the honourable gentleman consulted in London? The Minister of Railways, Hon. W. A. Veitch: Absolute necessity. “I hope to hear some details of the message Sir Otto Niemeyer carried when he came here,” said Mr. Holland. The Prime Minister: I have had no message from Sir Otto Niemeyer whatever, or his opinion in regard to our finances. ~ , . ~ A good deal had been said about the equality of sacrifice, Mr. Holland said. The anticipated deficit at the end of next financial year was £4,500,000 and the Public Servants were expected to make up £1,500,000. The Public Servants, who were one-ninth of the workers of the Dominion, were to be compelled to find one-third of the amount of the deficiency. In addition, a number of other Public Servants would suffer, and already had suffered, under other adjustments by dismissal. That position would apply to casuals. A number of Civil Servants would also contribute under the additional taxation proposals. Variation of Awards. The variation of awards meant the breaking of contracts. An award was a contract between employer and employee. He did not care how the Government tried to get away from the question, what was contemplated was an absolute breaking of contracts and a standing ultimatum to the workers ot the country that no agreement made by the Arbitration Court was of any value. . , He had tried to get some information as to what extent the wage reductions, if given effect to, would make it possible for our primary products to compete with those from cheap labour countries. He had understood that the sole reason for the “cuts” in the wages of the workers outside the Public Service was to enable the Dominion to bring down costs of production to enable the producers to compete with the products of overseas countries in the world’s markets. The Prime Minister, however, had stated that the wages “cuts” could not help in that direction " There would be a depreciated local market to the extent of the amount of wage reduction. There were one or two sections ot the community who were not going to come under the “cuts.” The Prime Minister had been asked the position ot judges nnd replied that their salaries were not siibiect to review by Parliament. Mr. Holland suggested that when the salaries of the Public Servants were . brought down the salaries of those in other branches of the service whose remuneration ran-ed from £lBOO to £2OOO should not“be "eft out. He noticed in the Bill that the Governor-General s salary was exempt There should be no exemption. If the salary of one was touched, all should be touched. One serious aspect of the Bill was the provision in it whereby the repeal of the Act would not affect awards or ~„reements that had been amended. No matter to what extent wages might be reduced and the cost of living might rise before December, 1932, the amend ed awards would remain in operation for the period for which they were made.

STATE ECONOMY,

Important Indications FURTHER MEASURES Several important indications of the Government’s proposals for bringing about further savings in expenditure were given by the Minister of Native Affairs, Sir Apirana Ngata. He hinted that it might be found necessary to effect reductions in the Public Service staff as well as making a wages and salaries cut. An overhaul of State departments, apparently by reorganisation, was suggested either this session or next, while Sir Apirana added that it was desirable to make representations to the British Government concerning the amount contributed by the Dominion toward naval defence. Sir Apirana said that even before the Prime Minister left for the Imperial Conference it was apparent that expenditure from the Consolidated Fund would have to be limited. The economies proposed met with anything but satisfaction from the House. One of the first proposals was what was termed a “raid on the highways fund,” which was called upon to make a direct contribution of about £250,000 to the Consolidated Fund. An increase in the petrol tax was also made. Then came retrenchments in the defence forces, and this was the subject of bitter warfare in Parliament. On the suggestion of the Minister of Finance, the Ministers, in drawing up their estimates, cut down the grants to societies and other organisations, and in addition about £60,000 was drawn from the Land Assurance Fund and placed at the credit of the Consolidated Fund. Other adjustments were made by Treasury to balance the Budget, and this was followed by reductions in the railways staff. The formation of the Unemployment Board might not be regarded as a saving, but a total of £600,000 was expected from the direct levy for the relief of unemployment. Departments’ Finance. One of the first things the Prime Minister did on his return from the conference was to call together heads of departments to see whether, by further economies, the decline of the Customs and railways revenue could be countered. At that time the figures beforft Cabinet did not show any indication of the financial landslide that had since taken place. It was so late in the year that the departments had committed themselves to various items of expenditure and it was found particularly difficult to pull up the spending. At the beginning of December the departments reported that, while they were able to effect economies in expenditure, credits in aid, for which they were budgeting, were slipping fast, and it became apparent, that what were termed ordinary economies would not meet the position. , _ This led to the setting up of the Economy Committee to deal in detail with the Estimates. Requests were made from all sides for the summoning of Parliament. The great difficulty that developed was the position of the farmers, for no one could have anticipated the great drop in prices that occurred within a few months. Allowance had to be made for the reluctance of a body of men, such as Cabinet, to deal with such a position by such drastic measures as were proposed until the move became absolutely necessary. The task they had set about doing was most unpleasant, and it would not have been undertaken had it not been absolutely imperative. Labour Politics. The Prime Minister who returned to New Zealand on January 20 was a different man from the one who went away on the previous August 25. He had con l ® back from a place, where were fixed the prices of the Dominion’s products. He had visited the great markets and conversed with statesmen and commercial men. He had returned with the Prime Minister ot Australia and had seen something of the conditions of Great Britain and Australia under Labour Governments, and although they should not criticise unduly the efforts of Australia to put her house in order, those efforts showed the trend of Labour politics throughout the world. At the end of January the Prime Minister was prepared to call Parliament together a week earlier than it had met, but the Hawke’s Bay earthquake intervened. The nine months’ figures showed that a deficit of £4,500,000 would have to be budgeted for. It had been apparent for some time that an overhaul in the Public Service was necessary and opportunity would be given either this session or next to deal with this. Sir Apirana drew attention to the total charges that had to be met by the Government each year. He said that permanent charges absorbed £17,000,000, and annual charges £7,070,000. Of this latter amount the social services, such as hospitals, education and health, took no less than £5,100,000, leaving £2,000,000 for the othe rservices which were mostly revenue-producing. The Government, in preaching economy, had to start with itself. One of two courses was open, the reduction of the scale of salaries or the reduction of staffs. It would probably be necessary to bring about both. Until the beginning of December, Cabinet would not face the question of salary reductions, but as the facts piled one on top of the other it became clear that a salary cut would become necessary sooner or later. It had been suggested that the Government should graduate the cut, but the House would have to take into consideration a severer income tax, and this would mean that the higher-paid men would suffer more in proportion. With income tax and the “cut” a man receiving £3OOO would have to give one-fifth of his salary. Naval Defence. The Economy Committee had found that in trying to effect economies in the Public Service it had very little room in which to turn. The public needed to be educated more than it was upon the cost of the Public Service, and how small was the total involved in its running compared with the total appropriations. When one got down to a consideration of the social services such as pensions, which were tapu, it was seen that there was not much left that could be cut. There were certain services that had to be maintained such as education, defence, and other things. As far as naval defence was concerned the Dominion was tied to the British Admiralty for contributions to the Singapore base to the exont of £125,000 a year, while the New Zealand Division of the Royal Navy had to be maintained. They would like to make a reduction of 25 per cent, in the contributions, and although it was impossible to make a reduction at present, it was desirable to make representations to the British Government with whom the arrangements were made. CURRENCY ISSUE Hon. Downie Stewart’s View DANGER OF DEPLETION “If the econom.' > josals now before the House are not ....ed, there will arise a situation far more serious for the country than a mere 10 per cent, reduction in the workers' wages,” declared the Hon. W. Downie Stewart (Ref., Dunedin West), in warning members of the Labour Party against the dangers of depleted currency. ~ “These proposals,” he said, do not seem to have been considered from the viewpoint of a possible depletion in currency, which is the most serious thing that’eould occur.” With the trade balance in favour ot this country, the exchange rate was already 10 per cent, down, but if the trade balance were to swing against us, the exchange position would become worse, and when that happened the wage-earner would be the man who would be called upon to bear the heaviest burden. By reason of our reduced exchange rate, our import prices and export prices were up, and although it was holding fairly steady

at present if he read the situation aright the Labour Party and those whom it represented had more reason to fear depleted currency than the effect of a mere 10 per cent, wage cut. The Australian £1 was now worth only 14/- at Home, and the New Zealand £1 exchanged for 18/-, a depreciation which was harder upon the wage-earner than upon any other section of the community. Members of the House had seen the effect of European deflation. Upon the other hand, if economy were effected it would enable the country to keep down the cost of production and compete more favourably upon the export markets of the Old World. Mr. P. Fraser (Lab., Wellington Central) : Can you give us a single instance of that? Mr. Stewart: There is no magic about it. It is an economic law. If the Civil Service does not receive a cut and the cost of living falls the Civil Service ■will be getting the equivalent of a rise in real wage's. Price Stabilisation. Stabilisation of prices within New Zealand had been suggested, and although he had not heard the argument fully elaborated he could not imagine producers here selling their goods at a stable price in New Zealand when a sudden rise in price occurred on the markets of the world. Mr. Stewart asked some pointed questions of Labour members as to why they had not voiced a protest in the House in 1918 when the Arbitration Court, acting under the provisions of the War Legislation and Statute Law Amendment Act, broke agreements and altered awards by raising wages to meet an emergency in a rise in the cost of living. On that occasion the court had fixed a standard living wage, because applications poured in, necessitating the handling of the postion en bloc. Furthermore, the court had then made the awards retrospective from six months to six months. “It is a significant thing,” Mr. Stewart went on, “that the voice of Labour was not raised in protest when the tide was running against the employer.” Both Harmful. Mr W. Nash (Lab., Hutt) said that both inflation and deflation were harmful to the worker. It would probably be found that 10,000 to 15,000 males in the Dominion, working under awards, received less than £4 a week. Those were people who would be hard hit by the wage reduction proposals. The whole principle of taking the salaries of the Public Servants and making a levy on them was unfair, and unequitable. He wondered if the difficult of the Prime Minister was that he wanted the money next month.. If the money was to be obtained by taxation it could not be secured until a much later date. . The House adjourned at midnight until 2.30 this afternoon. LEGISLATIVE COUNCIL Address-in-Reply Debate The Address-in-Reply debate was resumed in the Legislative Council yesterday afternoon. „ xi The remarks of Sir Francis Bell, the first speaker, are reported elsewhere in this issue. , „ „ _ Sir Edwin Mitchelson, who followed Sir Francis, said the country was facing a crisis, and every member of the community would have to come to the aid of the Government. Excessive borrowing and reckless spending were the factors responsible for the present position. The state of the country’s finances as revealed by the Prime Minister’s statement in the House was sufficient to make everyone think. It was the duty of every member of Parliament to assist in restoring prosperity; country should be placed before constituency. To defeat the Government's proposals would result in disaster, and would only precipitate another election. Preference to unionists should be abolished. The time had arrived when unionism should be done away with. The Hon. D. Buddo said it was the duty of all sections to contribute- toward making up the shortage in the Budget. He sympathised with the Government in its efforts to adjust the public finances. He suggested that the local bodies might be able to tighten up in their expenditure. No loan should be raised without the approval of the ratepayers. A temporary arrangement might be made to tide the primary producer over his difficulties. He was not in favour of a moratorium. The debate was adjourned on the motion of the Hon. M. Fagan.