ADDITION TO COSTS

Evening Post, Volume CXXVIII, Issue 29, 3 August 1939, Page 7

ADDITION TO COSTS

FARMERS' BURDEN

HIGH-SPENDING POLICY

"An intense disappointment to farmers" was the description applied to the Budget by the Dominion president of the New Zealand Farmers' Union (Mr. W. W. Mulholland) in a statement issued last evening. Farmers, he said, had been encouraged to look for a lightening of the burden of Government expenditure. In view of Mr. Nash's recent suggestion to farmers that they should be' content to forgo increases in prices as part of a policy to stop rising costs, it was natural for them to assume that the Government would take its own medicine, said Mr. Mulholland. The huge increase in the petrol tax, for instance, meant a considerable addition to farmers' costs. It meant an increase of about 25 per cent, on the cost of petrol for farm power purposes. As farmers were also large users of transport both on and off the farm, they would be substantially affected in this manner also. They did not suffer alone in this, however, as all people living outside the main centres whose cost of living and of carrying on their business was also considerably influenced by transport costs were similarly affected. This tax, as a means of raising general revenue, was particularly unsatisfactory in that, while being a direct addition to costs of production and costs of living, its incidence was much more severe on people living in the country and. in provincial towns than on those living in the cities. INJUSTICE EXTENDED. "Mr. Savage justifies the proposal to abolish the exemption of farmers with £3000 or less unimproved value of land from income tax by saying 'the effect will be to place farmers upon the same basis as other sections of the community.' Actually, it extends still farther a very grave injustice from which the farming industries have suffered for some time, in that, unlike other sections .of the community, they are required to pay a tax on their land at the highest rates ever imposed, in addition to income tax, and are not even allowed to deduct the amount of the land tax from the income on which they will now have to pay income tax. To free them from this injustice it will be necessary to abolish the special taxes on their land which are taxes on the means of producing their marketable products." The enormous expenditure of practically £24,000,000 on public works was dismaying, said Mr. Mulholland. Apparently it was to equal last year's expenditure with the defence expenditure of £2,000,000 added. It would appear that public works were going to be made to take over the expenditure previously made from the employment fund, and apart from defence it was apparent that a great deal of the expenditure on public v/orks was going to be used for the relief of unemployment. The most sinister aspect of this was that £19,000,000 was to be financed from loan moneys. The effect of the Government taking this huge sum from the resources of the Dominion and consequently from private expenditure to be expended on works which were largely unproductive and frequently valueless, must be to perpetuate unemployment. REDUCED CONSUMABLE GOODS. Money expended by the Government in this way did not reproduce itself, while if it were left in the hands of private individuals to use in productive enterprise it produced more and more employment as the resulting goods moved in the channels of commerce and production, and generated the production of other goods and services. The terms of the £17,000,000 loan transaction appeared to require that of-exports in the next five years £16,000.000 would not be available to the public of New Zealand as consumable goods. The £5,000,000 spent 'on the Onekaka project and the expenl diture of other millions on plant would i also be a direct reduction of the conI sumable goods available in New Zealand, so that the public must expect a severe shortage of goods. This, added to the huge inflation of. local money, partly due to. the paying out of New Zealand money in New Zealand for exports which did not bring in consumable goods, must result in enormously rising prices.

"The difficulties of the export industries are not lightened by this Budget," concluded Mr. Mulholland.