"MOCK" BUDGET

Evening Post, Volume CXX, Issue 127, 25 November 1935, Page 18

"MOCK" BUDGET

DEMOCRAT PLANS

REPLY BY MR. COATES

FIGURES EXAMINED

(By Telegraph—Press Association.)

AUCKLAND, November 24.

A criticism of what he termed the "mock" Budget put forward by the Leader of the.Democrat Party, Mr. T. C. A. Hislop, was made by the Minister of Finance (the Right Hon. J. G. Coates) at the Auckland Town Hall tonight. He said Mr. Hislop had indulged in wild guesses. Either he was a complete novice in public finance or he was completely irresponsible.

Mr. Coates also condemned Mr. Hislop's use of the report by the AuditorGeneral on the public accounts as the basis for charges of mismanagement and. deception ..on the part of the Government, ■ "I regret to say that 1 have no choice, but to believe that Mr. Hislop's misrepresentation is calculated and deliberate," he declared.

As had already been stated, Mr. Hislop proposed to reduce taxation by a total of £5,040,000. The estimated revenue in the' Government's Budget was £25,742,000, but Mr. Hislop budgeted for £24,055,000, in addition to the cost of his insurance scheme. On his own showing, therefore, he would have to.find £3,353,000. This, on present trade figures, he could not possibly get from Customs duties, especially, as his proposal to reduce exchange gradually would reduce imports and retard business generally until parity was reached.

"RAIDING THE SINKING FUNDS."

Mr» Hislop proposed a "review of the amortisation fund commitments on Public Debt" as an economy measure. Every New Zealand prospectus for loans in the United Kingdom promised to maintain sinking funds. Mr. Hislop proposed, in effect, to raid the sinking funs—a flagrant breach of trust which, if attempted, would do tremendous injury to the country's credit. The provision of £8,740,000 for annual appropriations apparently included i only £1,900,000 for pensions, the balance to be found by special taxation. Deducting the amount for pensions, this left only £6,840,000. for all other purposes, whereas the current estimates, including social services '(apart from pensions), defence, law and order, agriculture, and other Departments totalled £6,715,000;

Thus there remained only £ 125,000 for all other services. The expenses of the revenue Departments alone amounted to three times that sum, to say nothing of the costs of the Departments concerned with general administration. This completely revealed Mr. Hislop's lack of capacity to handle public finance. The Democrat "Budget" provided only £4,000,000 for all I pensions, 'including the universal scheme. Present pensions cost £3,375,000, and the cost of a complete universal scheifle had been estimated by an inter-departmental committee at £8,300,000. per annum. For health insurance £1,650,000 was provided, but the estimated cost was £3,750,000 for a universal scheme. "WILD GUESSES." Mr. Hislop's estimates were merely wild guesses, and he and his associates could have made no close calculation of the cost of the benefits they promised to the public. The cost of the subsidy to the farmers was given as £3,750,000. The present benefit to the farmers from exchange was nearly £14,000,000, and the direct cost to the Budget was £1,600,000. Mr. Hislop would, therefore, give one-third of the exchange benefit at double the cost.

For salary restoration and superannuation subsidies Mr. Hislop allowed £850,000, whereas the former item would cost £800,000 and the actuarial cost of the full subsidy to the superannuation funds was £500,000 a year. In fact there was no need to provide such a subsidy. To bring the funds up to their full amount would require £ 22.00 C ,000. The proper course was to let the liability fall upon the State. The Gc vernment had given an assurance tl ;at superannuation payments would 1 >c made from the Consolidated Fund as required, and this promise would be honoured.

"Mr. Hislop's Budget only confirms my previous estima*e that the programme of the Democrats means a gap of £22,000,000, apart from the cost of additional borrowing," remarked Mr. Coates.