"BREACH OF PROMISE"

Evening Post, Volume CXXVIII, Issue 29, 3 August 1939, Page 6

"BREACH OF PROMISE"

BUDGET DESCRIBED

MANY CONTRADICTIONS

MR. HAMILTON'S

ATTACK

Describing the Budget as "a breach-of-promise Budget," Mr. Hamilton mentioned ten or a dozen promises wMeh-he- said had been made but not kept by the Labour Government.

In 1935 the Labour Party had promised not to increase taxation, but it had been increased by £16,000,000 a year; there had "been a promise to use the: public > credit, but new loans had been raised in London and locally and prptiably more would follow; there was a promise to reduce overseas debt, but the Government had just borrowed £9,000,000 after going on its knees to the London bond holders; the cost of government was not to be increased, but it:had gone up by £28,000,000 a year; -ainemployriient was to be cured, but it had cost £6,500,000 last, year; tbke Government had promised to.provide free doctors and to find £1,200,000, but only £100,000 had been provided for the present year. The Minister of Health (the Hon. P. bFraser): If the medical profession agree- tomorrow, the money will be found. ' ■'. Mr. Hamilton: It is not on the Estimates, so the Minister does not expect •to get it SEDUCED PRODUCTION. The , Government had promised to increase production, Mr. ■'■ Hamilton continued, but had made unproductive work so attractive that production was falling. It had promised sickness benefits, but they were provided only for the poorest people who were complaining about the questions they had to answer before they could get help. It had promised houses at 12s 6d a week, but rents for State houses were froml6s.6d to 32s 6d a week. It had promised4to remove the. exchange rate, but it had pegged the rate to keep it from going any. higher. It had also promised to remove the sales tax. , If the Labour Party had disclosed the true position of the country before the elections there might have - been'a'different result, Mr. Hamilton said. When the National Party said the things that had since happened were going to happen, its statements had been strenuously denied. Mr. Fraser: You've got to make some excuse for your defeat. Mr. Hamilton: We are quite happy here. We will watch and see how the Government is going to get out of its. own muddlement. The Budget was also a Budget of contradictions, Mr. Hamilton said, It said the Government's efforts were directed towards raising the standards $ the people, but the taxation proposals were a direct blow at the standard of living of the average family. It declared that it was not economically sound ;to keep men on unproductive works, and that a taperiryg oft of' Public Works expenditure was desirable, but as many men were employed and the Public Works Vote was notxeduced. Only, a few days ago it was announced that 600 to 800 men would be employed at Christchurch making hiking tracks on the Cashmere Hills. When they were made they would have to teach the people how to hike^ There was also a contradiction in the statement that production should be increased. The taxation proposals would discourage the producer. INCREASED EXPENDITURE. The Budget also stated that the expenditure estimates had been carefully overhauled, but expenditure had been increased. Permanent and annual Parliamenatry votes in 1935-36 amounted to £25,890,000 and for 1939-40 they were £38,042,000, an increase of £12,152,000. During the.same period expenditure on Public Works had increased from £10,450,000 to £23,917,000, or by £13,467,000. . The Minister of Public Works (the Hon. R. Semple): But we are getting things done. Mr. Hamilton said the work was being- done without regard for whether it was productive or not. Unemployment and Social Security had increased from £4,882,0C0 to £9,000,000, <ht by £%xlß,ooo. Toial increases amounted* to 70 per cent. The Prime* Minister had .stated that further taxation was put of the question and that borrowing meant debt in perpetuity, but expenditure for the present financial year was £71,000,000 while only £47,000,000 was available from taxes, leaving £24,000,000 to be borrowed. When that was borrowed the increase of debt by borrowing since 1936 would be £46,000,000. EXCHANGE CONTROL. Mr. Hamilton referred to the question of exchange control. The Government's policy, he said, had led it to exhaust London exchange. Surely I it should have realised the value of these funds, and of having a fair amount of money available so that the Dominion • .could trade and keep its credit good. "We need a minimum of £15,000,000," said-Mr. -Hamilton, "and a maximum of £30,000,000,

though if we got above that we may be a bit too high. I say that the" exchange rate should be controlled .by the independent Reserve Bank instead of by the Government, and it should be allowed to go free. There was sctaie criticism when the exchange was raised. Today there is a pretty serious complaint that the Government' is holding the exchange down at the expense of the exporters. The present system is robbing the exporters and penalising the producers of the country's real wealth," STATE HOUSING SCHEME. Increased building costs, • involving increased ■_. rentals, had resulted from the Government's housing policy, said Mr. Hamilton. . Although the official index figures from 1935 to 1938 showed a rise of only 10 per cent, in rents, the true position today was that rents had risen by about 33 1-3 per cent, in the four years. There was no real : policy yet for rural houses. The Budget quoted the number of houses built in the towns and cities, but there had been a large reduction in the pumber built in the. country since Labour took offlce. He suggested in regard to the alleged shortage of building tradesmen thata questionnaire should be; sent around to Public Works and reliei jobs to find out how many such tradesmen were available. The Minister of Public Works interjected band said that instructions had been given to the engineers months ago to sack every such tradesman on Public Works. The men were riot there. v FINANCIAL CHANGES. Some of the major -financial alterations that took place iri the Dominion during the last financial year were outlined by Mr. Hamilton. He quoted figures to show that the Reserve Bank overdraft had increased by ';£ 14,735,000; that the note issue had increased by £1,780,000 to £15,000,000; that Post deposits had dropped by/£2;2OQ^ 000 to £60,000,000; that London funds had dropped by £17,000,000 to £9,000,----000; that the local body rate of interest had increased from 3| per cent, to 4 i per cent.; that the Dairy Industry Account had shown a net loss of £1,440,000; that the National Debt had increased by £13/768,930 to £303,970,----000; that the. expenditure on unemployment had increased by more than 50 per cent, to £6,474,000; and that borrowings had increased from £7,455,----000 to £16,748,000, or 124 per cent. He assessed the amount of capital that had left the country at £10,000,000. "It should not be difficult for any responsible member to see from these figures the dangerous and unsound position into which New Zealand is fast drifting," said Mr. Hamilton. "Who are the friends of the ,bahks and the money-lenders now?" he asked, when referring to the increase in the interest rate. "The last Government brought the rate of interest down to the lowest it had been for forty years, and since the present Government came in it has done nothing but go up. You should see that conditions in the Dominion warrant an 'increase in the Mr. J. A. Lee (Government, Grey Lynn): Use the Reserve Bank. Mr. Hamilton: The Reserve Bank is being used to its maximum today; The Government is in a tight corner. GUARANTEED PRICE. Dealing with- the'guaranteed • price system, Mr. : Hamilton said that the third year, of operation had ended on Monday-last. It was estimated that there- would be a substantial deficit, generally, estimated at £ 2,000,000, when the accounts were closed. For the first year, 1936-37, butter showed a loss to the Government of £384,000, whereas cheese showed, a profit of £120,000. This, with some further small debts, left a deficiency in the accounts to the benefit of the dairy farmers of £272,000, and it had been liquidated from last- year's revenue before the Budget surplus of £810,000 was arrived at. According to the terms of the guaranteed price system,' the first year stood on its own; any deficiency was the liability of the Consolidated Fund. The beginning of the second year saw the schenle in full operation. For the first year the price arrived at was the average; price of the previous eight or teni years,; but, for the second and succeedingyears, A the price arrived at was such as to place the dairy farmers on a basis comparable with the general standard of: living throughout New Zealand. -Taking the second year, 1937-38, they found that, after paying the substantial, bonus -of £815,000 above the.guaranteed;price, the Government, still had a. credit balance in the account of ,£560,000. The sale of butter showed a. pirofi,t of £443,000. and. the'sale of cheese, a profit of £100,000/ Those amounts, together with the ' profits from .whey butter, made up'fee amount mentioned. A WIN AND A LOSS., ■''.'. "It is seen therefore that, although the dairy farmers had a win from the Government the first year of £272,000, they had a loss over market realisa: tions the second year of £560,000. It is also to be noticed that those supplying cheese facto»ies got £120,000 the first year and £100,000 the second year less than their cheese realised on the London market." The estimated deficit of £2,000,000 for the third year just ended would be reduced by the credit surplus of £560,000 from the previous year, leaving a deficiency of about £ 1,500,000. Mr.. Hamilton . said he thought it was about time that the Government cleared up the doubt "in the dairy farmers' minds' as to who was going to bear the deficit—the Government or the dairy farmers.

The Government had been very eulogistic of the scheme while ii was showing a profit to the State, but it was a different story when a profit to the farmers was shown. It was time that the Government realised that the basis of NeAv Zealand's economy was very largely linked up with the price of our export products. The dairy farmers had been promised a standard of living comparable with that of other sections, and they would insist on that promise being fulfilled. Mr. A. G. Osborne (Government, Manukau): Give them the compensated price, eh? Mr. Hamilton: Quite a good price, too. Mr. Osborne: Tell us. Mr. Hamilton: The dairy farmer's policy is to keep costs in proper relation to prices, and 'if the Government does not do that, it should compensate the farmers. That is only a fair proposition. ■' 'CAMPAIGN AGAINST MONEY. "An/attempt is being made to run a campaign depicting money as a black and evil thing," said Mr. Hamilton. "This campaign, although meeting with a measure of public approval, is really undermining and destroying the real foundations of our wealth, and is really a blow to thrift and enterprise, and the savings of our average New Zealand citizen or family. It may be thought, or inferred, by some that this blow is aimed at big \ money interests, but an attack on money, as money, is an attack on those possessing small savings, as well as large savings. It is well for those with small savings to pay attention to this fafct. "If something goes wrong in ' our economic system, : and a reason is I wanted for the troubles and difficulties ! ■ —which may be largely brought about by thriftless public and private expenditure—it then, unfortunately, becomes popular among those who do not realise what.»is being , aimed ',at, to blame money, or the money system, or the 'dividend kings,' or the 'money bugs,' or the 'financial gangsters.' "The source of money is production. It has taken the Government four years to realise that money does not grow on mulberry bushes. Money manipulation contributed to this Government's serious embarrassments. The Government up to March had I taken £14,000,000 out of the Reserve Bank Avithout any backing of production. And that is why in the annual report of the Reserve Bank recently | it is set out plainly that £12,000,000 of new money had expressed itself in a demand for imports, and thus London funds fell by £12,000,000. CAPITAL AND LABOUR. "Capital cannot do without Labour, or Labour without Capital. Talk of 'financial, gangsters,' 'dividend kings,' 'money bugs,' and so on, is a menace to the peace and security of typical New Zealanders and the typical New Zealand family." "It may be asked, 'Why the need for individual effort and incentive to individual effort?' Experience is that people will not work continuously unless they feel they, are better off by so doing. If- ownership of savings • (capital) brings no advantage, then no one will trouble to save. You have to keep the.stimulus to work, the stimulus to work efficiently, and the stimulus to save. State domination and regimentation diminish the incentive. The more that principle is extended, the worse the result. And, of course, this whole problem. involves the question of reasonable personal liberty. are we getting to? Industry in Italy, Russia, Germany, and so oh has been put in various forms of strait-jackets, and along a similar road, New Zealand has gone far." Mr. Coates: We are in a straitjacket now. > Mr. Hamilton: The group which has suffered most'in New Zealand is that group composed of people with small or medium fixed incomes, such as salaried officials and clerks, the Public Service, for instance, recipients of pensions, and little investors, living on interest or rent. The latter group is hit particularly hard because of the added Government control of rentals. The net is spreading wider and wider now. THE PEOPLE'S POCKET. "The Consolidated Fund—another ! name for the people's pocket—is being i further picked to ; the drugging tune of pleasant platitudes which are never expressed in practical action. lam sure the time has come when the average New Zealander must realise that essentially the-assault on the.so-called 'money bogy'—savings—is ridiculous, i Every time a -member of this House attacks the/money system, he attacks the people, their-, families, and their homes. .It is an interesting paradox that this /Government, loudest in its attack on the money system, and its interest payments,, is such a great borrower." NATIONAL SAVINGS. Referring to the proposed National Savings Scheme, Mr. Hamilton said that a few years ago the Government had told the people to spend their way to prosperity and now. it was asking the wage-earners to save so that they could lend to the Government. What had happened to the use of public credit? he asked. The. Government had been very quiet about what had been done in land settlement last year. Evidently it had been a black year and, in any event, any small areas brought in were offset by the large amount of land that was going out of production. In the past a big contribution to the national income had been made by third-class land and the Government should endeavour to keep that land in production instead of trying to bring new areas in. If the Government would see that the farmer's income was protected, that it was made comparable with other incomes, and that the farmer was protected against rising costs, there would be no need to worry about land settlement; the land would settle itself. ( SOCIAL SECURITY. Referring to Social Security, Mr. Hamilton said the people had to pay the full taxation, but the Government had no intention, of providing doctors. Mr. Fbraser: Every/ intention. i Mr. Hamilton: Yes, but we know that i the road to Hell-is paved with good; intentions. We want more than intentions. The Government had promised £560,000 for medicine and appliances, but had only allowed for £50,000. That was a saving of £510,000, and the Government had made no attempt to provide, the benefit. No allowance had been made for hospital out-patients, although about half were out-patients. \Tbhey had, to pay, and pay the tax as well. Tbhen,the sickness benefit and its means test, was about the meanest of ball. "The person who gets sickness benefit.has: got to get up pretty early in the morning,".he said. The benefits promised had been reduced by £2,000,000 and the people would have to pay that themselves. BORROWING AND ASSETS. The terms of the financial arrangements recently made by Mr. Nash imposed a terrific toll on -the Dominion's export wealth, although conversions might ease the position somewhat. In all the circumstances, said Mr. Hamilton, he thought that the British Government had- treated New Zealand very generously, seeing that her credit was probably as.low as that of any other part of the Empire, if not lower. The present Government was continu-

ally charging past Administrations with having borrowed money involving interest payments, but it should admit tne assets that thosij- loans had created. There was no fear of the Government handing over any of those assets to those who had lent the money. Some of the £17,000,000 that was being renewed had been borrowed as far back as 1856, and was made up of various items over the years to abbout 1910, and was consolidated in 1926. j PETROL TAX INCREASE. j Touching briefly on the increase in i the petrol tax, Mr. Hamilton^ claimed i that it was a direct blow at produc- ! tion, primary production in particu- j lar, and was certain to result in the i burden of the sharp increase being carried by certain sections of the community least able to bear it. As far as primary industry was concerned, it was as sure a way as any to reduce production further.. Mr. Hamilton had a word to say oh behalf of the small farmers and income tax. All farmers would now j bear a double tax, land and income, and the Government was increasing the load of trouble for this section of the community. He estimated that about 25,000 farmers would be involved, and he said that the cost of collection would be enormous, while the benefit to State funds would be very doubtful. A man with a family of two and.an income of £365 paid only £1 10s 2d. It would cost the farmer more than that to fill in his return. "Perhaps there is more need today than ever for the Government to realise its responsibilities in statements concerning money to the people," \Mr. | Hamilton went on. The Government cannot blame the money system. But the warnings are clear, and the people must be assured they have been heeded in the shaping of future policy, if confidence is: to be restored. WARNINGS GIVEN. "Impartial authorities in England,, while giving help without asking for fixed assurances as to policy, left no doubt in their warnings. The Reserve Bank, in its recent report, was equally frank. It said that there is a need to curb the demands which the Government is making on the resources | of that institution. "A return to time-tested principles is essential," said Mr. Hamilton. "All ! that the Government has done for four | years has been to follow a back-door method of cutting living standards— and the further the course is pursued, the deeper the cut, and the more I grievous the hardship. | , "In good times this Government has j brought us to a period of trial and | difficulty to even the most favoured, j and to a period of distress and anxiety 'to the less fortunate. Enterprise has i been discouraged—the flow of ' new l capital discouraged, and employment retarded even in good times. The typical New Zealand family—father, mother, and the elder children—know that difficulties have been created in-. I stead of relief provided through' taxaj tion and the cost of living. And we are being asked to approve^ a Budget : that, instead of needed relief, adds to '[ burdens, adds to the family load—a I Budget that is making people with initiative, on the land and in the ! towns, say, 'What's the use?' "If the Prime Minister or . other i members of the Government ruggedly deny all this, and continue their 'land flowing with milk and honey' talk, then the time has arrived when the public's patience has reached breaking point. New Zealand's progress depends upon a united effort of industry," commerce, agriculture, and labour in co-operation. This is the course that the Government should steer."