REPLY BY PRIME MINISTER

Dominion, Volume 33, Issue 239, 4 July 1940, Page 11

REPLY BY PRIME MINISTER

Finance For War Effort USE OF RESOURCES OF DOMINION

Public Works Expenditure

■‘This country cannot be stultified in its war effort, no matter what means financially have to be adopted,” said the Prime Minister, Mr. Fraser, when replying to the Leader of the Opposition in the Budget debate. New Zealand, he said, could not be defeated financially on the home front. Orthodox and unorthodox theories had no fears for him at the moment. Fie wanted the best to work for the best.

Mr. Fraser congratulated Mr. Hamilton on the tone of his remarks, and also on his “proclivity for wandering up the by-ways and never reaching his destination.” He had failed to arrive at any conclusion or had carefully avoided making concrete suggestions for remedying what, he considered to be a state of affairs showing extravagant handling of the public finance. The educative work of the Government was proved by Mr. Hamilton’s concern for the family man. However, the Budget showed practical concern to relieve the man on small income with more than one child. It was the clear duty of the House and the Government to consider amelioration of any hardship. The Government was given power to use the entire resources of the Dominion, and without raising any alarm or boosting any methods that might be called unorthodox he wanted to say that if they thought they could go through the war on orthodox methods they would be mistaken. They would have to try, if necessary, powers that had been untried, and he believed that those would be responded to in the hearts of all. General Prosperity. The increase in the cost of living since the war began was about the same as the rise in Australia, said Mr. Fraser. The Dominion was much more fortunate than many other countries. Nobody could say that the increase of 3.1 per cent, was excessive, in view of all the circumstances. The increase since the Government came in five years ago was 20.5 per cent., but that was outweighed by. the general prosperity and the redistribution of the national income. The Opposition’s doctrine was the old one of “prune to the bone.” It was a case of the leopard not changing its spots. Nobody would say that the policy adopted in the depression years should be adopted in prosperous years or in war years. . “Would it be as great a victory if we defeated Hitler and his hordes and turned round to see devastation in our own homes, wages reduced, social security cut and an unemployed army, through pruning to the bone?” asked Mr. Fraser. Mr. Hamilton: Only on public works. “Neither our prosperity nor our war effort can be built up on the poverty of the poor,” replied the Prime Minister. It was a fallacy to say that all the taxation was a burden and wasteful, continued Mr. Fraser. Fifty-four per cent, of taxation was returned to the people in the form of social services. From the economic aspect, it was a redistribution of the country’s income. He asked the Opposition to suggest where the cuts should be made. Unity and Solidarity. On the ground that unity and solidarity were needed in the country, Mr. Fraser suggested, when the question of the Government’s attitude to the striking State miners was raised, that it was not ac good thing to attack any section of the community. Dealing with the national security levy, Mr. Fraser recalled that the workers and miners had voluntarily • levied themselves 10 per cent, to help their fellow-workers in an industrial struggle. If they would do that in an industrial struggle, he believed tliey would accept the levy when t'heir homes and lives were in peril. An Opposition member: What did the State miners do today?

“I am not going to be drawn,” replied Mr. Fraser. “The State miners are just as good as members of the Opposition and myself. I believe there has been a bad mistake made there, and that they have taken up the wrong attitude. As they have taken that, it is the Government’s duty to enforce the law. It is not a good thing to sort out miners, waterside workers, farmers, or any particular section for attacks at present, because we want solidarity.” “But we don’t want to show weakness,” I’emarked Mr. Bodkin (Opposition, Central Otago)'. “No section of the community can be allowed to defy the collective people embodied in the Stale,” replied the Prime Minister. “I know’ a good many .people in the Runanga district. They are loyal, and I hope common-sense will prevail there.” Medical Benefits. A statement that the position in regard to the country might make the medical benefits under the Social Security Act almost imperative in due course was made by Mr. Fraser. Ho said that increased civil budget expenditure of £2,340.000 was to a great extent associated with the social security benefits.

Mr. Kyle (Opposition, Ricearton) : What about the medical benefits the people have not got? Mr. Fraser replied that if Mr. Kyle ■was prepared to help to put the benefits into operation his) assistance would be welcomed..

Mr. Coates (Opposition. Kaipara): Ton have no objection to their standing over till after the war? Mr. Fraser said the introduction might be almost imperative in due course. It all depended on whether the 'people’s health was to be adequately looked after. “Surely that is a war measure, too,” commented Mr. Frost (Government, New Plymouth). “As far as the general civil votes are concerned, the Leader of the Opposition, while deploring the amounts involved. did not point out where they could be cut,” said Mr. Fraser. He invited members of the Opposition to show where economies might legitimately be made, and claimed flint mix’ll of the work for which provision was being made was essential in the interests of the future, when victory hail been achieved, 'and the soldiers were back in Now Zealand. Men on Public Works.

The latest return for men employed on public works showed that in June the total was 17.089, Mr. Fraser said. Actually, on the department’s payroll there were 12,711 men in June this year, against 10,414 a year earlier, a reduction of 3703. The present total was a smaller number than there had been on the department's payroll for a number of years.

Mr. Coates: How does that taby with 1'7,089? Mr. Eraser said that the difference

was made up of men employed on contracts, who did not appear on the department’s payroll, and men employed by local bodies on subsidies granted from the Public Works Fund. “These men, I am informed, are working mainly on county roads,” Mr. Fraser added. “Are we going to cut them off?”

Mr. Coates: If war work is.more essential, certainly cut them off. Mr. Fraser: Yes, I agree, but if the only result is to throw men out of work without benefitting the war, then what have wo achieved? The Prime Minister said that the Leader of the Opposition had. quoted astronomical figures in connexion with unemployment benefits under rhe Social Security scheme. Actually 3966 people were receiving unemployment benefits, 8500 were working under scheme 1-3, 3936 were working under scheme 4b, and there were another 450 in miscellaneous classes. This made a total of 16,752, of whom nearly 12,000 were engaged usefully. In justifying the Government's public works policy, Mr. Fraser ret erred particularly to roads. He emphasized the importance of good roads in increasing military mobility and power of concentration. “It is a foolish policy to turn men off work that will ultimately be beneficial and turn them into the. ranks of the unemployed,” Mr. Fraser added. “The problem is to get them transferred and that is receiving daily attention.” The Prime Minister also discussed the urgency of proceeding with bousing construction, which lie said, like the control of river erosion, was one of the things that must go on, “I assume that however bitter the war may be, victory will be attained, and when it is attained and the lads come back and want to marry, are we going to tell them to herd together in slums?” he asked.

The Prime Minister said the Government had no intention to take all the securities New Zealanders held in Australia and suddenly plunge them onto the market and depress their value. These securities would be utilized for what was essential tor the war effort of this country. Citizens who held securities would be pleased and proud to assist in providing what funds this country required if it were to live through the present crisis. There was no length the Government would not go, and no obstacle, orthodox or unorthodox, would stop the Government and the. country in its efforts to achieve victory and defeat the threat of Hitlerism for ever. AMENDMENT MOVED Mr. Lee’s Criticism Of Budget PUBLIC CREDIT’S USE Government Charged With Lack Of Leadership

“This Budget is orthodox, and more than produced by the Labour Government it shackles New Zealand to financial orthodoxy, even granted that it contains some excellent features,” declared Mr. Lee (Democratic Labour, Grey Lynn), who followed the Prime Minister, Mr. Fraser, in the debate.

Mr. Leo roundly condemned the orthodox system of finance, and said: “I am delivering the sort of speech I used to deliver in the Caucus of the Labour Party.

“Millions can die, nations can perish, the beast can straddle Europe, and, as Mussolini said, the black wings of bombing planes can blot the sun from the sky, but here in New Zealand orthodox finance must prevail,” he said. Mr. Lee moved an amendment to the motion that the Speaker do leave the chair in the terms that the-Budget proposals were not acceptable without further amendment in that they made no provision for the use of the public credit to'increase New Zealand’s internal production. Borrowing For Housing. “I heard the Prime Minister say £400,000 was to be used for irrigation, and so many millions for housing,” Mr. Lee said. “All those millions bring into existence goods, add to our purchasing power, and yet, as I see it, this Budget proposes to borrow even for housing. There is no reason why the people of New Zealand should be unnecessarily bled to provide that money, because the cost will more than recoup itself over the period in goods and services.” Mr. Leo alleged that the Minister of Finance, Mr. Nash, was using the war to win a triumph for orthodoxy, ami criticized the Government’s refusal to establish exchange control years ago. He believed the Budget had been patterned by’ those who worshipped at the shrine of St. Orthodoxy, but that where it demanded sacrifices from wealth and accumulation it was a good Budget. Men took the risk. Wealth and accumulation must take the risk too.

“I do not think the Budget is planned to create the maximum quantity of goods,” he said. “It is planned to produce on orthodox lines the maximum amount of money. The reduction in wages, I believe, is not for the war effort. There lias been an increase in wages in Britain, in the agriculture, cotton, and steel industries, in dockyards and in certain candle works. “One individual is trying to control

the destiny of the nation, and that individual is trying to defeat financial unorthodoxy. All of the time we have been blocked by orthodoxy. I say orthodoxy is not going to help us to win the war. It is certainly going to help to defeat the Labour Party.” Mr. Lee contended that the shortage of consumption goods was due to the Labour Party’s hick of leadership, its lack of imagination, and its determination to hang on to orthodoxy though the heavens fall. The Minister of Finance in the Budget set his face against Reserve Bank borrowing. The text of Mr. Lee’s amendment was that the Budget, proposals were not acceptable without further revision and amendment on the grounds: Burden of Internal Debt.

(1) They make no provision for the use of the public credit to increase New Zealand's internal production.

(2) They increase the burden of internal debt, which will constitute a crushing liability on the people after the war.

(3) The system of finance outlined in the Financial Statement is not calculated to enable the rehabilitation of the soldiers after the war at the standard which is their right, and (4) They will reduce, without adding to 'the country's war effort, the consumption of food and other necessaries of life iu thousands of New Zealand homes.