STATE FINANCES

Evening Post, Volume CXII, Issue 45, 21 August 1931, Page 7

STATE FINANCES

DEBATE CONTINUES

FIVE MORE SPEAKERS

BALANCING THE BUDGET

The debate on the financial proposals of the Government was continued in the House of Eepresentatives yesterday. Five speakers participated in the debate. .

Mr. W. E. Parry (Labouv, Auckland Central) said that the Labour Party had supported the Government when it had increased tho wages up to the Arbitration Court standard, but when the workers were down to 9s and 12s per (lajv the Beform Party had consented to the primage duty of 3 per cent. Mr. K. A. Wright (Keform, Wellington Suburbs): "That is not so." Mr. Parry said that tho working girl was being called upon to pay one penny for the first 6s 8d she earned, but in the ease of the woman who had received an income she was not called upon to pay until she had received an income of £250 per year. The Reform Party had supported this form of equality of sacrifice When, the Labour Party had supported the ! 2 per cent, primage duty, the -wages were 14s per day, but now that the rate had been reduced the wages had been reduced to 12s Gd and 98 per day. Mr. Parry said it would be interesting to see what the Beform Party thought about the taxation proposals. It would be interesting to sec whether they supported the extraordinary increase in the primage, duty. Mr. H. S. S. Kyle (Eeform, Eicearton): "What are you going to do?" •Mr.Parry: ' 'We.will vote against it, you can'depend on that."He condemned the increase against the workers, who, he said, had already made their contribution towards1 the country's rehabilitation through the wages cut. THE RIGHT COTJKSE. .Mr..-E. F. Healy (United, Wairau), naid tfhere was agreement on all sides outside; the House, that the Prime- Minister was taking; the right course to balance the Budget, and. he was to be congratulated for his fine, bold spirit. One of the disturbing elements.to-day, he said,, was the universality, of the time-payment system in the purchase of furniture, wireless sets, motor-cars, etci The Government had done wonderful work'in tho circumstances in assisting the farmers. Substantial assistance had.been, given to the farmers in the carriage of fertilisers. In fact, this year the, estimate for the carriage of lime was £43,000 and for the , carriage- of fertilisers £97,000. There, was also £.8000 set aside, for herd-testingj and in addition good work was being carried, out in research The farmers themselves- were realising the valuable aid being given to' them by the Government. Mr. Healy defended the construction of the South; Island Main Trunk railway line. It, had been said that 748 men were engaged .on .-.the ■line,'but if ever 'men; were engaged in Xjroductive work they-were. TKTHAT OF THE SURPLUSES? Mr. D.. Jones . (Bef orm; Mid-Canter;: bury) said that when the- United Party Government took joffice there were accumulated surpluses left : by the Kef orm Party amounting to over £,2,000,0001 Tho accumulated surplus left by the National. Government amounted to £li; 500,000.; This '.should have been considered as a" surplus and should have gone to paying the war expenditure. .' When the Eeform Party went out of office there was a deficit, but this could' have been made up by Tisingf the profit's made by the' Post Office. To-day the country was faced with the necessity of making up nearly £ouV.million pounds \ .of additional taxation. The difficulties of the situation were admitted, but the Eeform Party felt' compelled to say that the policy of drift which had been- continued during .the last three years was the all-impor-tant .question. .When the exports for the year totalled £39,500,000*-^ drop of £17,600,000 since 1929—it must be apparent that it was impossible for the Dominion to carry'on with a Government expenditure standing at £24,708,000, a sum in excoss of last year's expenditure despite, reductions in salaries, economies, etc. Mr. Jones pointed out that in 1930 he had emphasised the serious:position into which New Zealand was drifting, stating that the conntry was only twelve months be'Mnd Australia. In spite of that New 'Zealand had refused-to alter its course. Warnings had resulted in raps over.the knuckles for the Kef orm Party for pessimism. . , ■ When the late Eight Hon. W. p. Massey was-confronted with' the slump of 1921 ho had ordered the Estimates to be cut to the lowest point, then ho had reduced them, 10 per cent., and then 10 per cent.' more. Recognising still further the urgency of reducing taxation,, he had. asked a. sub-commit-tee of the Public Accounts Committee to make further cuts in the expenditure, and a reduction of £1,250,000 in the Estimates was made. The result of his economy efforts was shown in a , reduction of taxation from £17 4s 4d per head in 1921 to £12 14s 8d in 1922. -.■■ •:■ :•■ . To-day the Government was going an absolutely , the . opposite direction. With the enormous shrinkage in the national income, and with the' State taking over £7,000,000 .per annum mote than it was three years ago in additional taxation, it must be patent that a collapse was not fa- distant if the present course were pursued. Despite reductions in salaries and ecoiiomies, the Government had not been able to-reduce expenditure, which included £1,100,000 for unemployment subsidiati.'. Mr. Jones stated that during the last three years the Government had borrowed. £32,130,000, and, apart from the Advances to Settlers and the hydro-electric works, it was difficult to see that the greater part of this amount could be interest-bearing. He requested definite evidence from tho Prime Minister -or the Minister of Public Works on this point. He emphasised the fact that in future borrowing the Dominion should decide on essential works arid rationing of money so that, in particular, the hydro-electric works at Awapuni and Waitaki should have first consideration. GOVERNMENT EXPENDITURE, . Mr. Jones pointed out that on rail■way construction ana additions to open Dines the Government had spent over £5,000,000 in three years. In addition its road construction vote had increased from £705,000.a year to £1,475,000 a year, and the public buildings vote had increased from £605,000 in 1928 to £939,000 in 1931. Considering the serious financial position of the Dominion a great deal of this expenditure was unjustified. Despite tile opinion of the Minister of Education, who in his speech had avoided every, point of criticism in respect of expenditure, the P«me. Minister had -definitely stated that large savings could be effected J.lie .most, alarming feature of the Budget was that the Government appeared to think that there was some inexhaustible source of revenue to meet taxation. Every further turn of the screw, however, was putting businesses and farmers out of action, and increasmtr unemployment. In addition, there was no constructive thought in tho direction of increasing production or

effecting such economies as would enable- New Zealand to balance the private and .public budgets .if'the future.

NEED FOR COHESION.

...The Postmaster-General,.(the Hon. J. .B.Donald). said that the present position was undoubtedly bad, but it would be worse next year, and there was. a need for greater cohesion in the House. Members should therefore give more constructive criticism than had been given during the debate. Next year there would bo no reserves to fall back upon, nor would they have the interest remissions.thoy had had .this year from tho British, Government. ■ . ...

The necessity for all members facing up to tho position was plain, and it depended how they faced up to.it ■whether the Dominion would sink or swim.: .'.'■■■ ■ "'■ . ■'- ' '; ■. '- '■. ■-,-. :■

Mr. Donald defended the 10 per cent, cut, though he regretted the necessity for making it. : : ■

Mr. W. B.Barnard (Labour, Napier) "What good has it done?" .

The Minister said that if/the reduction had not been'made a much larger number of businesses would have. been forced into liquidati6n. V. - ■;.-... ,

It had been' suggested that the income tax should be higher, but there was such a thing as taking too much through income, and'he thought the tax was high enough. It had also been suggested that death duties should be made higher, but he would sooner see income tax' increased -and the death duties abolished. A death , duty tax was a capital tax, and he did not think revenne from, that source should go into the general fund"; it would be better to apply it to debt. liquidation. He maintained that we should borrow all our loans in the Dominiou, keeping the interest money in the country. It would be a very good thing if an Economic Empire Conference were called attended by representatives-of all parties in all the Dominions. Great good would accrue, lie felt sure, in the matter of uniformity of policy, and he intended to pass the suggestion, which had been made to him by a friend, to the Prime Minister. Mr. Donald disagreed with tho idea of a State bank, for it would be subject to political control. He considered that the means taken for balancing tho Budget this year were the best in the circumstances. If ever there, was a chance for secondary industries to prosper it-was during the present economic depression because of the fall in imports, and every assistance and encouragement should be given for their establishment and promotion. Mr. Donald attributed the present trouble largely to the effect of mass production. The wants of the people had been supplied.

Mr. E. J. Howard (Labour, Christchurch South): "Millions hungry ." Mr. Douald: "I am talking about goods, not food." Discussing the plight of the farmers, he declared that there were .just as many business men in difficulties to-day, and ho hoped the farming members of the House would be as ready to assist the business men as the businessmen were ready to help Mm fanners. ' , The debate was adjourned. '