THE ECONOMY CAMPAIGN

Evening Post, Volume CXI, Issue 94, 22 April 1931, Page 5

THE ECONOMY CAMPAIGN

SECOND FINANCE BILL

SOME OUTSPOKEN CRITICISM

Having already agreed to one instalment of the Government s economy proposals, the House of Representatives yesterday settled down to consider the second instalment, as contained in the Finance Bill (No. 2), and when the adjournment was taken at midnight the second reading debate had not concluded. Reform members showed no. great opposition.to■ the measure, although criticising certain of the proposals, but Labour and Independent members were less friendly. Particular objection was taken to the proposal to increase the issue of Treasury Bills and to a curtailment of State and social services.

In moving the second reading, the Minister of Finance (the Eight Hon. G. W. Forbes) said that tho-Bill was for the purpose of giving legislative authority for bringing about further

necessary economies. If it were not for the enormous threatened deficit for the current year it would not be necessary to give effect to -them. The only method prudent men could adopt to meet tho deficiency in revenue was to cut down expenditure. So far as one could judge from expressions in the House there was unanimity that the Budget should be balanced. It gave] him encouragement to know that the House was in support of that main principle, which he contended was sound. Before the economics were decided upon the Government made a' very careful investigation of the position in the various departments to see where expenditure could be reduced while still ensuring a reasonable amount of service. No doubt there would be dif- J ferences of opinion as to whether the proposed economies were on the right lines, but he' assured the/House' that they had all received the Government's careful consideration. .. • ... THE TOTAL SAVING. Mr. Forbes said that the Bill would , result. in a saving aggregating £1,536,417 —that was, so far as the economics could be reckoned up; it was difficult to ascertain what tho actual saving would be in some cases until the economies had been in operation for some time. Explaining the clause which provides increased authority to borrow on Treasury Bills, the Prime Minister said that up to the present the Government had had authority to borrow up to £4,000,000, and the Bill proposed to increase the amount to £6,000,000, in anticipation oi' revenue. That was in line with tho authority to local bodies to borrow by way of overdraft in anticipation of rates. The accumulated surpluses had been so reduced that it was required to issue Treasury Bills for convenience in financing. The Leader of the Labour Party (Mr. 11. B. Holland): "Doesn't that amount to inflation?"

■ Mr. Forbes contended that there was ' a sound basis for the proposal, for under the Imporial system bills might ibo issued up to the full amount of the 1 estimated expenditure. It was hot proposed to do that, however. Turning to I the next clause, he said it was proposed to pay into the Consolidated Fund any reparation moneys received in ■ respect of the Great War up to the Ist April, 1933. That would amount to '£330,000 a year for the next two yearsMr Forbes justified the proposal to require, the Post and Telegraph Department to pay the result of the cuts into the iCpnsolidated Fund. .'• . I--' Miy-D. Jones (Reform, Mid-Canter-■bury): "It takes the whole of the I PrMr. S" Forbes added that the clause lalso secured to the Consolidated _Fund 'profits made prior to^lst; April, 1900. ;

v THB OPOSSUM MONEYS. There had been some correspondence, he proceeded, concerning the proposal to discontinue the payments to acclimatisation societies from the collection of opossum moneys. _ ; The Leader of the Opposition (the Eight Hon. J. G. Coates): "Don't you thinkthat is petty larceny?" ■ Mr Forbes replied that that was for the House to judge. "It is not as though one were breaking into a house in the dark," he added. ■ Mr Jones: "Doing it in the open. Mr. Forbes said that very large expenditure had to be met in the'destruction of deer, and it was felt to be only reasonable that the revenue derived from opossums should be devoted to that purpose. It was therefore proposed to enable the Minister of Internal Affairs to use his discretionm making payments to i acelimatisatidn societies. (Beform laughter.) Mr. Coates: "Will you put the censor OIIMr Forbes said that acclimatisation societies, like any other societies, must realise that the country was in nothing like the prosperous state it was ma feThe eLe Sade gr°of the Labour Party asked how much the economies m respect to the National Provident Fund..would Yield, and Mr. Forbes replied that it would be about £30,000. _ Mr. Jones: "What about the babies' &Mt: XA. Nash (Reform, PalmerstoMr. Hollandf"What is the amount to be saved on the family allowances? The Prime Minister replied that he was unable to give the amount He said he thought the House would agree with the reasonableness of the proposals, and added that he would explain the: clauses in greater detail in the Committee stage. It was only l>y exercising such economies that they could hope to balance the Budget. Mr. Coates: "It is-better to tackle a necessary job cheerfully, isn't itl Mr. Forbes: "Yes; we don't want to make long, faces." DETAILED SAVINGS. In conclusion,'he read the following list of savings to be effected from different sources: — ■■ .■■ . . . .' £ ■ &: Separation moneys ... 9?0.000 Keductions of salaries .. 190,W0 Salaries payable out of accounts outside the Public Account . • ii> UM Greymouth Harbour n subsidy ..— **»■■ N.Z. Institute grant .. «« Samoa Military Police WoO Opossum revenue ...... *>oou National Provident Fund administration * expenses 30,«8 Reduction in subsidy . 12,00U Land assurance deposit account ....'A.:::. 23,500 Saving in -Education ' _ Department (about)-. o,(Ml A MILLION TO THE BAD. The Hon. W. Downie Stewart (Eeform, Dunedin West) said they all realised that the Prime, Minister was faced with a very difficult problem, so far as the finances of the country were concerned.' It appeared to him that the sooner the Prime Minister balanced his Budget the better, for every successive statement he made regarding the country's position he was another £1,000,----000 to the bad. (Laughter.) "The Prime Minister appears to ba la this

happy position, however," said Mr. Stewart. "Every time he says the deficit is going to be bigger than he thought it:was, he is lauded for making what is called a frank statement." (Renewed laughter.) Mr. Stewart said that the taxable resources of the country at the present time were not very great, and therefore every economy that could be justified should certainly be adopted.' ■ ' .

He thought members generally would support anything that would avoid them drifting into the position of Australia. Judging by the cable messages from day to day the position in Australia seemed to be becoming a nightmare, and if they in New Zealand could avoid reaching a, similar position he thought they would submit to a great deal to achieve that object. A HASTY PRODUCTION. Mr. Stewart thought he was justified in saying that the Bill they were considering was a somewhat hasty production. The attention of the Government had been drawn, both by himself and other members of . the Beforin Party, to the fact that the present year was likely to be more difficult than the last, and the Prime Minister had been urged to act at once in order that a careful .scrutiny could be made of the various departments. The work of the Economy Ooininittoo appeared to have been rather hurried. If the Committee had been initiated twelve months ago it would have been possible to spread tho burden more equitably. New Zealand had reached the position when a large percentage of its expenditure was not open for review. For, instance, tho war debt and the war pensions absorbed —quite unavoidably—the whole of tho land and income tax. The paying off of the war debt would be a slow process, and the war pensions showed a tendency to incroaso instead of decrease. *riie area upon which tho Economy Committee had to work had been extremely limited. It was an -nnf or-! tunato feature of the Dominion's . fin-: anccs that at a time when revenue was mostly required the volumo of imports dropped and tho revenue from taxation dropped. That made it doubly difficult to moot the situation.

.Referring to the proposal to increase tho authority to borrow on Treasury bills, Mr. Stewart said the rise from £4,000,000 to £6,000,000 was a very substantial one, and he could not "refrain from drawing attention to the fact that when tho Reform Party Jnst JTjcreased the authority to borrow on Treasury bills it was subjected to very strong Criticism from, the Opposition, which was now the Government. However, if .the Treasury bills were -used' in a legitimate manner and were purely in anticipation of revenue, he raised no objection to the course the Government was pursuing. The Loader of the Labour Party seemed .to ■ think that the proposal was a form of inflation, but be thought lie was in error in that respect. v

Touching on the proposal to restrict the import and export of silver coins, Mr. Stewart said it appeared to him that a rather severe penalty was being placed on those who 'contravened the Order in Council, for it was quite possible that a contravention would bo quite accidental. :.'

Mr. Stewart said he could not quite understand the proposal to amalgamate the Statistical Department with the Department of Industries and Commerce. The Statistical Department seemed to be most unfortunate. Mr. Stewart asked what was to be the position of the Government Statistician, who must be a man of considerable seniority so far as length of service and administrative responsibility was concerned. Unless some very substantial economy could be effected, it did not seem reasonable to ask an officer of the seniority of the Government Statistician to be regarded as the head of a sub-department of the Industries and Commerce Department, which in itself had had a very chequered career. He wanted to know what the relative rating of the ofiicers would be.. ■

TRADE COMMISSIONERS. While on; the. subject of the Department of Industries and. Commerce, he desired to ask the Government if it did not think that the time had arrived for a review of the position of the Department's trade representative in Canada, especially in view ' of the present trade relations of the Dominion with Canada. About the: same time that Ijhe trade representative arrived in Canada, a retaliatory war sprang up between the two countries, the net result of which had been that practically the whole of New Zealand's trade with Canada had crashed. He was not discussing the merits or demerits of the matter, but there was certainly a most unfortunate result of the play and counter-play of the tariff war, in that a magnificent butter market was lost. It seemed to him that there could be very little for a New Zealand Trade Commissioner to do in Canada at the present time. Mr. Stewart also doubted the wisdonj of sending, an officer to investigate markets in the East, as the ground had previously been covered. In conclusion, Mr. Stewart expressed the hope that the Minister of Education would explain more fully the provisions of the Bill in reference to the abolition of junior and senior national scholarships and the granting of bursaries. . "OLD CURIOSITY SHOP." Mr. M. J. Savage (Labour, Auckland West) said that he agreed with Mr. Stewart that the further the Government went with economios the worse became the position. Generally speaking, the Bill was a collection of odds and end. A member: "An old curiosity shop." Mr. Savage said that Treasury bills had always been issued from time to time in anticipation of revenue, but an increase from £4,000,000 to £6,000,000 would mean that the next Minister oi! Finance would have to meet increased liabilities. Apparently the present Minister of Finance had lost hope of being in office next year. "The incoming Minister of Finance will say the very thing I am saying to-night," said Mr. Savage. Mr. J. S. Fletcher (Independent, Grey Lynn): "When will that be?" Mr. Savage: . "The sooner, brother, the better.'" The Bill provided that the reparations money set. aside annually for repayment of debt was to be paid into the Consolidated Fund instead of being used for debt redemption purposes in addition to the amount to be. paid out of the Consolidated Fund. It was

estimated that the Consolidated Fund would benefit by £330,000, and this would mean that the debt redemption payments would suffer to a similar extent. . The legislation provided for a raid on the Post Office fund. Last year £1,000,000 had been taken from this fund, and now it. was proposed to take anything that was left. Mr. W. E. Parry (Labour, Auckland Central): "Cleans it up.", THE ONLY COURSE. Mr. W. P. Lysnar (Independent, Gisborne) said he would support the measure, as he believed the Government, had adopted tlie only measures of economy which were'open to it. He believed the Government was on the right track. Mr. Lysnar expressed the hope that acclimatisation societies would not be deprived of all their revenue. Mr. Forbes: "That will be safeguarded." . . Mr. Lysnar said he was in favour of the Education -Department being overhauled, but he thought there should be a bigger saving than £8000, which was a very paltry sum. He would like to see something done in the direction of centralising the control of education, and favoured the setting up of a board in Wellington, on which the Minister of Education and the Director would have seats.- Such a central board would result in a very considerable ■saving. He thought it was a good thing to tighten up'so' far as scholarships were concerned, for there were some children who were kept at school too long. .•■■■'

Mr. Savage said it had always been understood that the policy-holders of the State Insurance Offices paid for the expenses of these departments, and that the policy-holders should benefit from tho profits. Thus the policy-holders would want to know why the Government was taking the-benefits from reduced salaries in these offices for the Consolidated Fund. He wondered whether the proposal to prohibit tho import or export of silver would benefit the Dominion to any extent, or whether it was a move on the party of the Associated Banks. Had coined silver been substituted to any great extent to defeat the exchange rate? Would the provision to declare that railway workers' or teachers' payments were not to be pay or salary for superannuation purposes, mean that the contributions to the superannuation funds would be reduced? One could hardly imagine that the provision could be made for any other purpose. The reduction of the maternity benefits under the National Provident Fund was a curtailment of the principle of the fund, and the family allowance, which was already narrow in scope, was to be narrowed down still further. The Land Assurance. Deposit Account was to be: abolished. This account had been established to meet claims under the Land Transfer Act, and he wanted to know whether there was any further possibility of claims under this Act. , DANGERS OF HARDSHIP. ...

The giving of discretion lo the education boards to refuse to employ married women teachers was a step in the right direction in cases where both husband and wife were earning good salaries, but there was a danger, if the power was not used with caution, that cases of hardship might arise, said Mr. Savage. It might be that the husband was an, invalid or was unemployed. Mr. Savage regarded the proposal to abolish junior and senior scholarships as a reactionary movement. The Bill gave power to the Minister to establish bursaries for secondary or higher .educa^ tion, but it seemed that- tho Government was going to save money at the expense of the children. The Minister of Education: "No! No!"

Mr. Savage: "I hope that the Minister will be able to explain the matter satisfactorily." . •..-■;■■■ ■'■■■■;., The Minister: "You will be satisfied when you hear the explanation." Mr. Savage said that one would not lose much sleep over tho Bill,- although it had possibilities of movements in the wrong direction. He hoped that the Prime Minister would satisfy everyone that it .was , not the intention of the .Government to rely.on short-dated loans in order to givo the impression that-there was no need to increase taxation, because these chickens; had an unhappy knack of coming' home, to roost. -.; Was it the intention of the Minister to postpone .increasing "taxation as much as possible until after the election? . ■; ' . ■ ' ... .. ;

ANI.O.U, SYSTEM. It was just as well' that the people should know the position. It was no use trying to cover it up by an 1.0. U. system which they would have to face sooner or later by taxation, continued Mr. Savage. He agreed that these were not prosperous times and that the money would have to be found, but the question was whether the Government was taking the right line of action. He asked the Prime Minister to tell the House how much was hold in Treasury bills at the present time. In Australia the increasing of Treasury bills would be called inflation, and yet the liability per head in New Zealand was more than in Australia. " „ Mr. Stewart: "It is not an issue of Treasury notes in Australia, it is bank notes."' , . .■ Mr. Parry: "Same thing." . Mr. Stewart: "One is redeemed bofore the end of the year. Mr. Savage said that the Australian banks were endeavouring to limit Commonwealth Treasury bills to £8,500,000 ana yet in New Zealand the limit, was going to be increased to £6,p00,000. One wondered how long it would be before the Government would face up to the position. '. ./ ■ . ■■•'.., INCONSISTENCIES. ■ Mr. C. a. Wilkinson (Independent, Egmont) asked for a further explanation of the proposal to take the profits from the Post Office and to credit them to the Consolidated Fund. How. did the Prime Minister square that with his earlier declaration that the profits'should remain in'the Post Office for developmental purposes? In regard, to tho proposal to apply to the Consolidated Fund the amount of the cut m the Government Insurance Department, he pointed out that twelve months ago Mr. Forbes had stated that those funds belonged to the policy-holders. That again was a complete change of front. The country could not go on increasing taxation generally. It would have a bad effect on the people and increase unemployment. It might be inevitable to increase taxation to balance the Bud-get,-the principle of which he agreedwith". HIGHLY-TAXED COUNTRY. New Zealand was a very highly-taxed country, and, the Government^ should carefully consider what steps, it took, said Mr. Wilkinson. He suggested again that increased revenue could be derived from the liquor, monopoly. The biggest hotel in the Dominion paid £40 a year, licence fee, the same as the smallest, and the same asa small.'auc: tioneer's, licence fee. It was less than the annual charge on, men driving heavy motor lorries. Many of the large hotels could well pay £1000 a year. He ex-, pressed the hope that the Government would consider that suggest)on, and also a second suggestion for the improvement of the currency (reported elsewhere) before it attempted to' increase taxation on *he people generally. "PETTY CASH GOVERNMENT." Mr. J. S. Fletcher (Independent, Grey Lynn) said the Government might be described as a "petty cash Government-; it. was taking a. pound, note out of tho till of one Department, ,and a few shillings from others to make up its Budget., He said he:could remember the. Minister of. 'Health-, saying it', was wrong to make use of the Post; Office profits. : The. Hon. A.; J;~ Stallwwthyt'";This

is not the same reserve."

The debate was adjourned,

Mr. Fletcher: "It is like robbing the hen roost."

A Reform member: "It is the other chap's lien roost!" ■ ! Mr. Fletcher: "No, it is the people's lien roost —the people's reserve in the Post Office." A Beform voice: "Well, you will need to izet off it pretty quick." Mr. Fletcher: "Yes, I understand some of you gentlemen are going to sit there in a short time." SUGGESTION OF PATRONAGE. "There is one thing that stinks in the nostrils of every Scotsman," said Mr. Fletolier, changing the subject, "and that .is the word 'patronage.' That word has caused ■ more trouble than anything else in connection with the Church -in Scotland, and the proi posal in the Bill so far as bursaries are concerned will make for trouble in the same way. I, for one, will object to that going through. I believe everyone should have a chance. A boy should not be put in the humiliating position of being given a bursaiy at the pleasure of the Minister or an inspector of schools." He could see no necessity for the increase in the issue of Treasury Bills, and he asked if all outstanding bills had been redeemed at 31st March. Mr. Fletcher also wanted- to know why the House had not had furnished to it the Economy Committee's report. Millions of1 pounds were going out of the Dominion through the operation of oil 'monopolies, and that exploitation could be stopped. At least £2,000,000 could be saved in that direction. He denounced the Government's "orgy of taxation," and declared that the Government was killing the goose that laid' the golden egg. There was not one constructive proposal in the Billi '

Mr. R. Seinylo (Labour, Wellington East): "It puts us further, into the ditch." ■ ...

"Of course it does," Mr. Fletcher, agreed. Wo were going deeper and deeper into the mire, and he wondered what the end was going to be. The country needed wise statesmanship and constructive proposals. Mr. Semplo: . "You can't get a chicken out of an oyster shell." (Laughter.) Mr. Fletcher: "No. I would be very pleased to get an oyster out of an oyster shell; we might even get a pearl." The whole taxation system shonld be recast and untapped resources developed. "MORE CREDITABLE METHOD." The Leader of the Labour Party (Mr. H. E. Holland)- strongly criticised the proposals to interfere with the National Provident Fund and the maternity benefit. Previously the wives of liusbands earning up to £300 and belonging to the fund or to friendly societies were entitled to a benefit of £6. It was now proposed to cut the benefit down by £2, which was far greater than the 10 per cent, cut on tho Civil Servants. The actionSvas in line with tho deduction mado in tho piece rates for co-operative workers on Public Works. The family allowance had also been curtailed, and yet there were members on the Government benches who had protested that the original legislation introduced' by the Eeform Party had not been liberal enough. Bather than cut down tho maternity benefits it would bo better for the Government, if it was so hard pressed, to take up a street collection. This would be a far more creditable method of getting the money than taking it from the babies ' about to be born. Of all the things done by tho Government nothing was more worthy of condemnation than the clauses in the Bill before tho House. He hoped that tho Government was not contemplating withdrawing the grants from the acclimatisation societies, which were doing valuable work—voluntarily in many cases—because that would cost tho country far more than it was costing at the present. •■

Mr. J. O'Brien (Labour; Westland) said that the Bill, as was the, case with other Bills which were designed to. balance the Budget, interfered with public utilities, and would only cause more unemployment. Certain banking institutions would be gratified to know that the profits of the Post. Office Savings Bank were to bot taken by tho Government, leaving the Savings Bank high and dry. It was unfair to take the cuts in the trading departments for the purpose of augmenting tho Consolidated Fund. He advised the Prime Minister to search for\ other' avenues of making up revenue than those affected by tho Bill. . The Bill was characteristic.. of .the Government, said Mr. P. Fraser (Labour, Wellington Central), who described it as a miserable measure ; which continued- the policy of raiding the poorer sections of the community. Maternity bonuses,' family allowances, arid education were now to be tackled. The education proposals were a subterfuge. The few grains of reform»involved' were so overwhelmed by. the chaff that there was no alternative but to oppose all the proposals on that subject. It seemed that the fight on behalf of the poor was to be fought once more by the Labour members, with the aid of the few Independents. The attack on the National Provident Fund would be resented by all concerned. ; It would certainly weaken the fund. The Family Allowances Act had never been ii very creditablcmeasure, and now the Government was seeking to make it more miserable. ;