OPPOSITION'S DUTY

Evening Post, Volume CXXX, Issue 4, 4 July 1940, Page 5

OPPOSITION'S DUTY

BUT WAR REMEMBERED

LARGEST BUDGET YET

"I am not quite sure whether I am opening this Budget debate or whether I am replying to statements in the Press and to broadcast messages that have been delivered since the Budget made its appearance in the House," said Mr. Hamilton, to the accompaniment of Opposition hear, hears. Although it was his duty to be critical, one had to remember .that it was war time. "We have to consider here then," he added, "the methods of finding and expending the largest amount of money ever asked for by any Government in this country—£9B,soo,ooo, a fairly huge amount." The subject of how the war was to be paid for provided the only approach to this year's Budget, and how the war was to be paid for and by whom could not be treated as simply a normal question of public finance. These were I abnormal days and called for abnormal action. No one could shirk an equitable sacrifice. The problem must be looked at as a whole, first, rather than as an analysis of taxes and loans, etc. The forces affecting the division of the national income must be studied to solve / the problem equitably and efficiently. Before considering these points in detail, it must be said, in qualification of most comment, that the war itself would produce far harder cases than the system of financing it. Anyone j who thought that some proposal made his contribution excessive, should also remember the incomes lost by those who were really hard hit by the war— tradesmen, importers, garage proprietors, employers generally, not to mention the men who had volunteered to date from well-paid jobs to serve in the Army, Navy, or Air Force. However, taking1 all this into account, it remained clear to him at least that the Budget had not completely captured the proper approach. In much it did not approach the maximum effort possible, and, in other ways, it struck inequitably. Above all, it lacked the example of sacrifice which it demanded in every line, and while lacking this example, proceeded in his opinion to distribute its demands in such a way that it could be said to be weighted against the family man on the lower income scales. | "HIT THE CRADLE." A' Budget that hit the cradle at this time, missed its greatest opportunity to protect the basis of national life and provide for the future. In many respects, the Budget was both confused and confusing. It professed to recognise the need for economies and did not practise them. The country was paying dearly for the 'extravagant spending of the past five years, and the worst feature was the seeming inability of the Government to realise it. Discussing the Dominion's financial position at the outbreak of the war, Mr. Hamilton declared that we had had three or four prosperous years and should have been strongly prepared. Yet the. overdraft at the Reserve Bank was at the limit, sterling funds were depleted and rationed, there were huge domestic commitments, and public works and sustenance were at peak. These were some of the main problems. He agreed with the Budget statement that money was worth only what could be purchased with it and that the problem of the war was organising New Zealand's man-power and economic resources to produce to the maximum goods and services required for the war effort. To his mind the Government was failing to meet each problem effectively. The Government had failed to keep the cost of living down and had failed to effectively organise man-power. The purchasing power of wages or income was as important as the amount of wages or income people received. That fact' was too often overlooked. It was strange that some would sooner have £5 than £4 even though £4 might purchase more. He quoted selling prices of certain articles this year as compared with last year in illustration of his argument. Since 1935 the cost of living had increased by fully 20 per cent, Mr. Hamilton continued. • High wages were paid to meet high prices. This favoured the single man and hit the family man. The plight of the married [man with a family in receipt of low wages was grave indeed. Increasing costs struck at the very heart of the country's economy. A greater effort to prevent the cause of this was necessary. NOT AT MAXIMUM. "No one would say that we are working at our maximum effort yet," he went on. "We retain our 40-hour I week." Awards and conditions are still (. on a peacetime basis while Britain works the clock round, full out. More goods must be produced to satisfy our own and overseas requirements, and to stabilise our price levels. We should not sit down and say we would live on what we had got." He believed the gap could be bridged by facing up lo the question of hours, wages, regula- , tions, and industrial trouble, all of

which were throttling back the production machine. "There have been ten months of war," he added, "and still we have not faced up to this. The time for talk about it has passed."

Mr. Hamilton said he knew there were some things in which, for instance, longer hours would not bring about any assistance to the war effort or production, but there were scores of ways in which extra effort to assist could be made by longer hours and proper co-operation between all sections of the community. There were too many men and women doing work far below their potential ability. That was waste. "All in" was not just an idle phrase. It could not be too plainly said that war neither could nor should be a period when a good time was had by all who kept jobs on the home front rather than on the actual front.

Reviewing the Budget proposals, as far as money was concerned, Mr. Hamilton said the figures were staggering. For the war taxation was to yield £14,120,000, internal borrowing £3,630,----000, and overseas borrowing £19,750,000 —a total of £37,500,000. For domestic purposes taxation and revenue were estimated at £37,000,000, borrowing for public works £15,000,000, and Social Security tax £9,000,000, a total of £61,000,000. The grand aggregate was £98,500,000. The total borrowing was £38,380,000 and the total taxation £60,120,000. "It is absolute rot to say it cannot be cut down," he said. Less .than 40 per cent, was for war purposes. He understood that Great Britain's war cost was abotit 75 per cent, of the total. x LEAD WANTED. The Government should provide a lead in what could be accomplished in respect to economies to bring about a rapid diversion into more productive work. The- Government was demanding that families and individuals should make sacrifices and' cut out sections of their expenditure. Surely it was idle and irresponsible to suggest that the Government should not set an example and prune to the bone. He hoped the

Government would show its intention as the year advanced of making a real effort to economise.

Mr. Hamilton analysed the war expenditure figures. He said that £14,120,000 was to be found from taxa-{ tion, and £23,380,000 was to be borrowed. Out of the war expenses of £37,500,000 taxation was to provide 37£ per cent, and borrowing 62£ per cent. If the war continued for three years, it would take eight years of this taxation to . pay the debt—five years after the war. That, he thought, was fairly conservative finance. The taxation was well spread, and not many would complain if the Government practised economy as much as it was asking private individuals and business firms to do. COMPULSORY LOAN. Mr. Hamilton complained a'oout the vagueness of the Government's proposal for a compulsory loan. Nothing contributed more to doubt and uncertainty and the holding up of progress i than indefiniteness. The Budget stated i that it was the intention of the Government to formulate for the consideration of the House a procedure under which all who had means would be required to assist by subscribing to loans for these purposes. "In my opinion," said Mr. Hamilton, "it is better to bring these matters forward as concrete proposals to start with, and not leave them hanging in the air. That would be one way of avoiding confusion and misunderstanding. How can business plan for the future under these proposals? The Government should be definite, and inspire confidence. Nothing is more upsetting than these uncertainties. It should tell the people the facts, even though it is telling the worst."

Touching on the question of excess profits, Mr. Hamilton said that here again the basis was unspecified. The excess profits tax was introduced in 1916. It was of 45 per cent, and was based on a three-year average. It was dropped, in 1917 as it proved inequitable, and was replaced by a progressive land and income tax, with a special war tax on income.

"A high rate of excess profits tax is theoretically desirable, in order to bring into the Treasury more 'booty, and to prevent particular individuals or companies gaining too largely as a result of the wartime demand for their products," said Mr. Hamilton, "but surely a really high yield, or oven a fairly substantial yield, from s>uch a tax would mean that the Government's policy has at least moderately favoured a particular class, which is not its intention. The Minister says he will take the whole excess profits. I do not think there will be any. There will be great anomalies in this —many taxpayers will be caught only on an ordinary increase. This question should be cleared up immediately, otherwise it will stifle many enterprises." . OVERSEAS SECURITIES. Discussing the announcement that the Government would take authority to take over overseas securities, Mr. Hamilton said that a much closer look must be taken of this question than was provided by the somewhat indefinite statement in the Budget. The Budget stated that overseas securities held by New Zealand residents could be acquired by the Government at current market prices. That was all. There were no details, no explanations.

Mr. C. A. Wilkinson (Independent, Egmont): Does that mean slump prices?

What machinery was to be used? Mr. Hamilton asked, and how was it to work? He had received inquiries from all parts of New Zealand and it was essential that the Minister should answer some pertinent questions to clear up doubts and fears. The per-

sonnel of the commission to be set up to deal with the matter was important.

Had the Minister made calculations I regarding what the position would be if some other country took retaliatory measures? What was the position with private companies? Would their shares be taken over, and what would be the basis of valuation? Would all assets as well as shares be taken over, and who would ultimately benefit by the sale of the shares? What steps were being taken to ensure that there was no effect on the Australian share markets? Had the Government mads any arrangements to overcome tho Australian regulations which did not allow exports, to be purchased with Australian money? Mr. Hamilton added that current market prices would be an unfair basis in many cases because of the war conditions. PUBLIC WORKS. Dealing with Public Works expenditure, Mr. Hamilton pointed out that the £20,589,000 proposed in the Budgsl was twice the amount voted four years ago and suggested that the Minister of Public Works should do as the Hen. William Fraser had done during the j last war and make the vote do for two years. The Minister could even J go back to the 1935-36 figure of £5,630,000 and "scratch along on that." That would enable him to manage without borrowing the £15,000,000 proposed.

With over 20,000 men in military sorvire some adjustment was needed in the country's expenditure, Mr. Hamilton said. The amount set aside for railways was far too high, and the £4,000,000 for housing could not be justified under wartime conditions. Tho vote for roads and highways was too much for desperate conditions, and the expenditure on public buildings capped the lot. The Government should make some sacrifices and set an example for the taxpayers.

Summing up his arguments, Mr. Hamilton said that he realised the Government had a tremendous task, but the first thing it should aim at was equality of sacrifice. ' If the country's positon could be improved they should not wait a year before improving it. Those who could make sacrifices must make them, but those who could not should be protected. In some respects the Budget was not severe enough, particularly regarding the Government's own contribution. The family man was being penalised unfairly, but if the Government would put its own house in order there would be no need to hit such people so hard. Government expenditure should come under review immediately, there should be an adjustment in the manpower now leaning on the State, and hours and conditions of work should be waived where that was required to assist the country to victory.