FINANCIAL DEBATE OPENS

Evening Post, Volume 32, Issue 32, 6 August 1931, Page 13

FINANCIAL DEBATE OPENS

REFORM TO CONTINUE POLICY OF HELP

BUT MR. COATES CALLS FOR MORE ECONOMY

' Expectations of a political crisis on the Government's financial proposals were banished when the Leader of the Opposition announced in the course of his opening ■ speech on the Financial Statement in the House of Representatives last night that ihe Reform Party will continue its policy of help rather than hindrance >and reserve the right at "a later stage to make suggestions for'practising further economies so that the burden of taxation may be lightened. The only other speech was that of the Minister of Lands, who said that the Govern ment would welcome any such proposals.

In opening, Mr. Coates reminded the House that last January, following a conference, the Reform Party issued a statement to the' effect that it was essential that the country's position 'should be grasped and that a serious condition would arise if steps wore not taken to meet the financial outlook. Later, daring the short session pf Parliament, he had informed the (Government, on behalf of the Reform Party, that it would be the' policy of the Opposition to help rather' than hinder in the "work of reconstruction " that faced the country. The party had endeavoured to adhere to that declaration, and it would maintain that atti"tudo on the Budget proposals now before the House. ((Reform "Hear hears.") He added that the Reform Party would reserve the,right to make suggestions and explore all avenues with a yiew to effecting economies and putting forward proposals which would assist the conntry in the present circumstances. , The party would not move an adverse motion against the Budget. -Whan the taxing Bills came down, the Opposition would suggest economies in ''order to prevent the . harshness of the taxation measures ' upon certain individuals. Wherever possible they wished to prevent costs creeping up, but some of the pro- ., posals, it seemed U 'him, must have that result. 1 Mr. Coates said that New Zealand had been fortunate in past years in having Governments' with sufficient foresight and business acumen to build np reserves, which, during the present . depression, were of great advantage. Mr. J. M'Combs (Labour, Lyttolton): VDo .you mean war surpluses?" - BALANCING THE BUDGET. , The Leader of tho Opposition said that he agreed with the principle of balancing the Budget; that had been tho policy of the Reform Party in the past. - It was essential in the interests of the country and the people that our accounts should square at the end of the year. Mr. W. E. Parry (Labour, Auckland Central): "Some don't." , "Mr.\ Coates i "I am speaking of this party." The importance of balancing the Budget'this" year was greater probably than on most occasions. , If ,wo were able''to balance our' Budget it would raise the reputation of the I Dominion; '"'But' even aftor the Budgot was balanced our difficulties would not be ended-' 'The primary industries must be established firmly, and until that was 'done "the Government would continue to'havo difficulty in balancing its Budget/;" A permanent readjustment was necessary. In whatever proposals we're put forward, the House" must realise that the question of costs was all-important. Until prices increased we must reduce our production" costs.

Mr. Coates referred to tho saving by Public Service cats and other Departmental^"economies outlined .'in the Budget^-amounting to about £2,000,000, and the "other aids in the balancing of the Budget,-and said it would appear that next, year a great deal more difficulty would be experienced in making

accounts balance. 'If the revenue did not improve it would be more necessary for economies to be practised. There was room for economies to be made -in addition to those already effected by the Government. - I HEAVY TAXATION. Turning ito the taxation proposals, the Leader' of the Opposition said that the reduction in the income-tax exemption would affect the lower-paid , man very extraordinarily. Mr. Coates cited a number of instances of how the new taxation proposals affecting income worked out, and pointed out that the' ratio of increase was greater on the moderate salaries than on those higher up, the scale. The Beform -Party regarded the increase as extraordinarily heavy. It, bit the family man much sooner than it did previously, and it affected him the more when one considered that he also had to meet higher charges for unemployment and additional costs in' other directions. The sum effect was that his costs had been added 'to enormously. Moreover, his mortgage and rent charges were fixed. If it were possible to reduce the incometax, 'that, would probably be the greatest factor in' bringing' about a revival- of confidence in the country, but they knew that that ,was not possible under present conditions. Once It was admitted that the proper course was to balance the Budget, there could be no going back on th*t. It would be In the Interests of the country If the Prini«' M J«'-*-~ eonld reduce the SO per cent surtax on Income to 15 per cent, or even vso per cent., and leave the exemption at £300. Mr. Parry: "How would you suggest lie should make up,the balance?" "I have already stated that I believe further economies can bo effected," Mr. Coates replied. Mr. Parry: "What are they?" Mr. Coates; said he. also believed that it was' possible to make adjustments. It was not possible in two or three days after the presentation of the Budget to work out alternatives and say exactly how .economies could be made. He; believed that readjustments could be made in such a way as to make it possible to reduce tho incidence of taxation. There: would be time enough to consider tho'matter in the interval before tho taxing Bills came before the, House. ' THE PBIMAOE IMPOST. Mr. Coates referred to the proposed Customs increases, and said that no one liked fixing an impost on tea and sugar, but-— Labour members: "Yes, but.' Don't touch incomes." Mr. Coates said that everybody was affected by the increases, but they had to face: the position. Mr. J. S. Fletcher (Independent, Grey Lynn): " What about tho oil companies!" Mr. Coates: ;"Well, we will have ample opportunity of considering that when the Bills come down." He be-. lieved that the worst feature of the Customs taxation was the prim ago fixity, which placed an additional impost

The reductions of expenditure mentioned in the Budget wero actual savings. It had teen suggested that further savings could be made in administrativo expenses, and Ue did not deny that that might be ths case, but they could not: be made without further , personal hardship,' and the House would have to decide whether further hardship was. justified. Tlio Economy Committee was fetill making investigations into further pos siblc economies, and it might be a good thing if permanent economy committee,, not necessarily composed oi! members of ■Jabinet or heads o£ Depailjuients, was set up. The Hon. W. Dowme Stewart (Itet'orm, Duncdin West): "I snggested that in the past." Mr. W. P. Endean (Reform, Parnoll): "Another crib." TAXATION INCIDENCE. Mr. Ransom said that it had been suggested that £1,000,000 might bo cut off the Education Vote, but the present Government valued the system so highly, and realised thfc seriousness O' any economies, that it ' would not make ,any reduction in the voto until a committee of experts had made an investigation. The Government did not want to sacrifico the present system. It had been" stated that the incidence of income-tax was falling heavily on the man with a moderate income, but most of ''the criticisms did not take into account the exemptions for children and life insurance. A man receiving £400 a § year in 1930 paid £2 17s 9d without' exemptions, and now paid £6 6s lid, an increase of £3 9s 2d. If ho had one child he paid an increase of £3 4s' 4d, two children £2 0s Bd, and, three children'£l 0s 4d. Theso amounts did not tike into consideration any insurance premiums. The income-tax payable in New Zealand notwithstanding the increase was far below.that of other countries. As far as the Customs resolutions were concerned, they had been brought down with the Budget in order to give' an in- ' dication on wide lines of tho Government's proposals to increase taxation, and to allow' time for business iv-rmi,. and others to consider the proposals before tho legislation .was v t' .> down. , , ' Mr. Coatcs: "Your main reason was to get revenue." , Mr. Ransom: "Provided they can find the amount' of taxation tvom Customs, the .Government is prepared to consider any proposals which may; be submitted." Mr. Samuel;. "Why not allow a. eonimittoe of business men outside the House toi,settle the question?" DEPARTMENTAL ECONOMIES. '.' Mr. Ransom said that there had been criticism. of the primage duty, but he would point out that in some countries the primage duty was as high as 10 per cent. In every instance where there had been an amalgamation of departments, a saving had been made, and in several instances where tho position of assistant head of a'department had become vacant the' position had not been, filled. Other men were doing the work, and ' tho salary of those officials had been a direct saving. Mr. F. Langstone (Labour, Waimarino): "Were these men formerly ornaments?"

on the farmer ana worker, and thus increased tlio cost of production and tho cost of living. Every effort should bo made to assist the' worker and fanner. Tho leader of tho Labour Party" (Mr. H. E. Holland): "Does that mean the Reform Party will resist the primage duty?" Mr. Coates: "I am asking the Prime Minister to reconsider tho primage duty levy." Mr. A. M. Samuel (Kef orm, Thames): "Is the Labour. Party still.in favour of primage?" Mr. Parry: ""Wo will see what you are in favour of before two are finished." Mr. .Coates went on to, make reference to education, and asked why the commission or, committee promised by the Prime Minister during the short session had not been set up. would like to know if tho Departmental economies which had been effected were real economies. more sorrowing: more expenditure: Mr. Coates said that since 1928 the railway construction vote had increased from £900,000 to £1,576,000, -despito the fact that several lines had been stopped. Borrowing had increased very materially since tho present Government had been in office, and as a result the National Debt had increased. Tho, expenditure on roads, excluding main, highways, had increased from £705,000 in 1928 to £1,475,000 in 1931. What was the reason for, the increased borrowing and the increased.expenditure? Tho Primo Minister: "Unemploy- ■ ment." ~ s' , Mr. Coates: "That is exactly tho position. If it was due to anything else the Government would deserve castigation. As it is tho position is serious." Mr. Coates said that it was essential that money raised should be spent on projects that would return to the conntry .the,, best possible results. Was it not possible for them to spend the money in a better way—the development of land, for instance? , A member: "Roads, are necessary to open-up land." ; ■ Mr. 'Coates: "Some roads are." He believed that if would ' have been .better business if tUe Government had' spent tho, £1,250,000 expended on roads and railways on the development of the land. The future of New Zaaland depended on agricul- , ture and they should concentrate on increasing production. , maHWAirs policyv Turning to highways, tho Leader of tho Opposition asked the Government if it had discussed with the Highways' Board what its policy was going to be during the current year, especially in relation to the relief of the primary producers. , x Mr. Forbes: "The whole question is being considered by a special committee." No greater relief could be given to the primary producers than by means of-reduced rates. He believed the petrol tax should be, used by the Highways Board, and'he believed1 the motorists would be willing to agree to that course. Mr. Coates went on to refer to restrictions being imposed on' a number of people as a result of annoying Government inspectors, and suggested that the whole position could be profitably explored, with a view ( to giving relief. FAIR CRITICISM. ..- " Tho' Minister of Lands (the Hon. E: A. Ransom) expressed his deep appreciation of the manner in which the Leader of the Opposition had approached his subject. - His criticisms, although one might not agree with' them, were very fair. It had been said that the .Government had not taken timely steps to meet tho position, but it would be remembered that last year the Budget had been called a "Black Budget." , Tho Prime Minister had noted the gravity of the situation ,and had taken, stops to meet it. , i Mr. Parry: "Round one." Mr. Hansom said that the Government was extremely grateful for tho attitude adopted by the Opposition. • Mr. Samuel: ."What about a National Cabinet??' . Mr. Parry: ','Set it to music." A Labour member: "Is that the only song you know?" MINIMUM OF HARDSHIP. '. Mr. Kansoin said that as far as possible tho Government ,had endeavoured to make its economies so as to inflict the minimum of hardship. Unfortunately all economies inflicted individual hardship, as most of them involved the dismissal of men. The Leader of the Opposition had implieu that the reserves , which were now being drawn upon were built up by tho Reform Party, but most of thorn had been created when the late Bir Joseph Ward was a member of the isational Government. All would 'agree that it was most fortunato that i those reserves had been set asido -in order to help to meet a time liko tho present. The Government was extremely pleased that the Reform Party had concurred with, it in tho principle that the Budget shonld be balanced. If this step was not taken' New Zealand would lose tho high reputation ii held abroad. It had been suggested that the amount required might be found without inflicting the hardships contained in the present proposals. If proposals which would give this result were submitted by any section of the House ■th > would not hesitate to adopt them. - Tho Leader of the Opposition had said that the real difficulty would arise next year, but he suggested that the problem of balancing the Budget had been mot this year. Mr. H. S. S. Kyle Ricearton): "There will be no reserves next yoar." Mr. Eansom: "If tho same Government is in power next year, it will again deal with the position to the entire satisfaction of the Dominion, ai d I am sure that the country will see, the wisdom of putting it back." (Reform laughter.) HELP FOR PRODUOERSi Unquestionably the; primary producer should be protected, and anyono roading the Financial Statement would see that tho Government was fully alive to this fact; Tho primary producers were boing called: pou to bear a few items of general taxation, but they were not being levied with any special taxation, and were receiving tho same measure of protection as in the past.

I , Mr. Ransom: "The present GovernI ment is not looking for ornaments as :ar as the administration is concerned, it is looking for service. I~ have always held as. an employer of labour that you cannot, get the. best return unless you keep the men working on full time. There had certainly - been no extravagant, expenditure of money on the construction.of roads as far as tho present Administration was concerned, and on this point they were getting closer and closer to the Reform Party. (Laughter.) It had been tho Government's policy not to construct any roads unless they e'ould be metalled.' Mr. Ransom expressed pleasure that the Leader of the Opposition agreed that the petrol tax should be used for the benefit of country ratepayers. AWAY, WITH POLITICAL DIFFERENCES. Continuing, he'-,depreeatod any idea that the "present problems were purely Now Zealand one's^ ' They were not political* problems, but economic, and wor id-wide.' Unless they faced them in that light.they would fail.in dealing with' them. He was convinced that the House wished to put aside political differences ' and assist in - solving tho problems of the Empire. There must be a'great' measure .. of personal v and national' sacrifico and a spirit of .hard work. The people desired some assurance of ultimate success .in grappling with the problems, and the Government had shown in the Budget that it was not going to side-step any of its responsibilities. The Primo Minister was standing up to his responsibilities, and had shown the people in the Budget 'what the actual position was.

Mr. J. M'Combß (Labour, Lyttel ton): "He has painted them as blac as, possible."

Mr. Ransom said that the prpsont depression was chiefly due to the long period of decline in the prices of primary produce, and the'extensive fall in tho "cost of raw .materials. There waa justification for a world-wide investigation of the difference between the cost .of raw materials and the cost of manufactured products. Ho also referrod to the unprecedented unemployment, particularly in the United Kingdom, largely as the result of foreign competition based on low, wages. There had' also been a restriction of tho Home market owing to tho variation in 1 exchange in trading with European countries, and we in Now Zealand were feeling the direct reflox. Mr. Ransom referred to other contributing causes of the slump, and advocated a return to the system of exchange of gold for .orir, produce instead oi an; equivalent value of other goods.

RESPONSIBILITY ON MEMBERS.

There were people who said that what was needed was higher salaries, reduced taxation, and the release of hidden capital, but he would very much like to know whero that hidden capital was. Mr. Ransom stressed ,the heavy personal responsibility that rested on every member.

Mr. Langstone: "Since when have you been a schoolmaster?"

Tho Minister said that the primary producers' had been specially considered so far as direct taxation was concerned.

Roplying to an interjection, he said that ho did not think there were any more surprises coming forward. : "I think you know the worst," said the Minister; They had to look to land settlement for the solution of 'the major difficulties. Ho paid a tribute to the work performed by the Department; of Agriculture, in, the direction of bringing about more intensive cultivation, and added ■ that at the same time he believed the time had arrived when they should have more instructors and less inspectors.

Tho Minister spoke of < the desirability of reducing the cost of local body government, and said he welcomed the proposal in tho Budget to set up a Hoyal Commission to deal with tho prohlem. ■;•■ Everything .possible: should bo done to relievo the position brought, about by heavy county rating.

The dehato was adjourned on- the motion of the Leader of tho Labour Party (Mr. H. E. Holland).

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