THE BUDGET ATTACKED

Evening Star, Issue 19005, 29 July 1925, Page 2

THE BUDGET ATTACKED

MR SiDEY LAUNCHES LIBERAL ' offensive KO'CDHFISEKBE ASSEMEHT fPi-:u United Press Association.] AVKIJAXGTON, .Inly 28. Tiio galleries wore crowded to-night in view ol' I.JIO opening of ilio Budget i debate, but their occupants must have been disappointed, for the Leader of the Opposition, who was not feeling very well, was conspicuous- by bis absence, and Mr Sifley idled the breach and made the opening speech. When tho Speaker took the chair Mr Sidoy rose to open the debate. He said that tho Prime Minister (the Hon. Mr j Coates") was now at tho head of tho Ile--1 form. Party, and, although ■ he had not ! been during his political career on the ; Opposition side of the House, lie would ! no doubt concede there were functions j and responsibilities devolving upon the j Opposition. Ho would also acknowledge that his party stood just prej ciscly where it stood before his accession to its leadership. This was acknowledged in his statement .to tho ITess on assuming the Prime Ministerslap, when ho indicated there would be no material departure from tho Reform | policy. His assertion at that time that | proposals in fuller detail would bo emj bodied in the Financial Statement aroused expectations which the result had not justified. The Financial Statej ment contained little that was new, j and it was indeed a characteristic “ Reform Budget,” ns it was full of -protests about economy, and it had the usual pious warnings about overborrowing. He (Mr Sidoy) remembered by heart a similar warning in the Reform Party’s first Budget, repeated in various forms many times since. This Financial Statement contained the same old declaration that the Government was considering the placing of taxation on a more equitable basis. If full advantage had been taken of this country’s great productiveness and high prices its condition would be far bettor than it was to-day. If the. Government had been alive to its opportunities almost the whole of tho war debt could have been paid out of the high prices of our products during the war. I Instead of that the Government had I not put on war taxation until there was a cry from one end of the country to the other. It put no restraint on the importation of luxuries, and permitted what was described at the time as an “ orgy of extravagance.” The great reduction in expenditure claimed to have been made, apart from tho “ cut,” ■was evidence of previous extravagance, The lie form Party had given far too free rein to expenditure immediately on assuming office. The expenditure had increased in a far greater ratio than before, and while tho claim made for remissions of taxation and charges, referring, no doubt, to land and income tax, and the postal concessions, nothing was said about the increased Customs tariff and telephone charges after tho Customs tariff of 1921-23. While the importations in the following year increased by 2 per cent., the Customs taxation increased by 18 per (jent., and while tho imports last year increased by 37 per cent, over those for tho year 1921-23, the Customs taxation increased during the same period by 4SJ- per cent. The same tendency was again in evidence last year that had been going on since 1918, by which the proportion of indirect taxation paid in large measure by tho many was increased compared with the direct taxation paid by the few last year. Even including motor licensing fees as direct taxation, there was a further proportionate increase of indirect taxation which now amounted to 50 per cent. The revenue was underestimated by £058,000, and tho expenditure over-estimated by £867,000. This was somewhat nearer "the mark than had been the case in recent years, but tho claim made that tho sum of £867,000 was a “saving appropriation” indicated that the exercise of economy might bo very wide of the mark, and, in fact, might only be tho result of another estimation of expenditure on the postponement of payments beyond tho financial year. There was £600,000 of outstanding liabilities, being £40,000 more than tho previous year. Tho revenue had increased by £632,630. They would, however, recollect that in the previous year tho sum of £540,000, interest on discharged soldiers’ settlement loan moneys, was expressly excluded from tho Revenue Account. That sum was included last year. To make fair comparison, therefore, with tho previous year, tho sum of £5-10,000 should be deducted from revenue, when it would appear’ that tho increase of revenue was £142,000, while the increase in expenditure was £1,251,000. Next year tho estimate was for further increases over last year of £1,690,000, while the revenue was estimated to be increased only to £900,000.

Reference urns m,ade to exports and imports and to a diminishing margin between them. This country had boon saved from the effects of over-importa-tion by the high prices ol its products, particularly wool, lor l-lio last quarter of tho financial year. Ho thought, that ,000 bales less were exported than in the same quarter of the previous year. The value was £2,100.000 more, and while for the same, period 01,0l)l!c:wt less lamb and mutton was exported the value was £-1(3,000 more. PENSIONS JUGGLING.

■ Referring to the increase in old ago and widows’ pensions, Mr Sidey said that last voar the increased amount provided for pensions was £'69,000, which was almost entirely met hy the reduction in war and military pensions of £OB,OOO. It was true that the increase in these pensions only ran for a portion'of the year, hut this year the estimated increase in pensions (due to the 2a 6d increase to all pensioners) was put down at £IOO,OOO, and the estimated saving on war pensions was put down at about £160,000, which was much more than sufficient to cover that increase. ENCOURAGING SPECULATION. The proposal to prevent land aggregation by an increased stamp duty on conveyances was unlikely to effect its object. There was usually a sufficient margin between what the adjoining owner could give as compared with the outsider. To permit of this, the Government was deliberately encouraging aggregation and speculation in mode-rately-sized holdings by its mortgage exemptions from the land tax. "The purchaser might buy and escape additional taxation by allowing a largo part of the purchase money to remain on mortgage. The suggestion that the Government would materially assist investment on mortgage by the proposals in the Budget was also an illusion. The os per cent, mortgage duty to be remitted was not paid by the mortgagee, hut hy the mortgagor, and the reduction or 4 2-3 d in the maximum income tax would have little or no effect. Local body debentures were more attractive as an investment. INCIDENCE OP TAXATION. The Jhidgot contained no proposal to alter the incidence of taxation in spite of_ the committee's and the commission’s reports. It might be conceded that the proposals for the repayment of the debt, if strictly carircd out, would be more effective for that purpose than the schamo now existing, hut they meant—

1. The initiation of proposals, on tho strength of which in repeated prospectuses this country had borrowed on the Loudon market. Not only had the provisions of tho Public Extinction Act been set forth at the head of every prospectus, but the Special War Loans Sinking Fund had been mentioned as estimated to extinguish the Avar loans within thirty-nine years from tho date of (heir issue. The nenv proposals would divert money hitherto found for war loans sinking funds to the purposes of the larger scheme, and the interest on the accumulated funds would also be diverted at the inception of the scheme. Tho Consolidated Fund would pay less than it did to-day. 2, The object of tho Public Debt Extinction Act in providing for tho investment of the sinking funds in loans to local bodies, settlers, and workers, Avas that the sinking funds should not ho liquid, and should therefore ho beyond the temptation of an impecunious Finance Minister. It Avas precisely because they Avere not'liquid, and therefore not available for debt reduction, that exception avus now taken to them by the GoA-ernmcnt. FUSION FAILURE.

Discussing fusion, Mr Sidey said lie Avas not one of those who took part in tho recent negotiations for a, now party, and had indeed been somewhat aloof from them. If it_ Avere desired to bring such a party into existence it avou ld surely bo admitted that tlio best time Avas before party fighting Avas renewed under tho Reform leader, av!io had hitherto not been closely indent,ified Avitli tho fends. 'Whatever proposals might have been made or discussed by tho delegates regarding any definite number of portfolios to he allotted to cither party, bp (Mr Sidey) Avas in a position to sav that the caucus of the party to which ho belonged did concur in tho decision that no stipulation should be made for any number of portfolios, but that tho matter should no left entirely in tho hands of tho leader of tho now party. That was indicated in a letter to the Prime Minister by the Leader of tho Opposition, In such circumstances it appeared very ungenerous on the part of the Prime Minister to make tho statement attributed to him at Palmerston North recently-—namely: “The Liberal Party were simply out for the loaves and the fishes of office, and their dcsiro to amalgamate on a national basis was only skin deep." That Avas more ungenerous, in view of the announcement of Hie Lender of tho Opposition that ho (Mr Wilford) would not accept, office. Nothing could bolter illustrate tho wisdom of tho contention that tho time for forming a, new party was before party fighting Avas renewed when statements such as that were made from the public platform. Huch statements wero calculated not to bring tho parties together, but to drive thorn farther apart. It tioav appeared to him (Mr Sidey) that tho best Avay in Avhicli a, now parly could

he hnnight about would be first of all to clear the air by turning the Government out of office. The rank and file of .both parties might then get together and there would _bo no ol ono party absorbing tlio other. If it were too late for Hie House to do that, it would be for the country to do it at the next election. NO-CONFIDENCE AMENDMENT. In order to lest the feeling of (he Mouse on flu's subject, Mr Sidey concluded hy staling ihui ho proposed to move as amendment to the motion before flic House:— 1 That this House has no confidents in the Government, because it has failed to bring about a more equitable system of taxation by placing the burden on the individuals in proportion to their ability to pay. The amendment was .seconded hy Mr G. W. Forbes.

MINISTER’S REPLY “ CHEERING UP A DISMAL PROPHET ” The Hon. Sir James Parr, following Mr Sidey, said that ho could not rise to speak in this debate without feeling the absence of ono who for so many years had read and defended the Budget in the House. He referred to the late Mr Massey, who, although not a trained business man, yet had great natural intuition in matters of finance, and his judgment was often right when professional financial men were in the wrong. The present Minister of Finance was entitled to credit for the practical Budget which ho had produced. It showed clearly the strong position of tlio dominion’s finance, which was further evidenced by the success of our last, loan, than which no bettor terms had been obtained by any other dominion. Mr Sidey had pretested against continued borrowing, but ho must admit that reasonable borrowing was necessary, and that was all the late or present Premier ever advocated or practised. Ho had complained of the proportion between direct and indirect taxation, hut be had ignored tlio reduction in • tlio income tux, to which he could surely not object. He also complained that- the surplus had been got by manuipulating receipt s and expenditure. The fact was that Hie surplus had been largely obtained by keeping down expenditure, and he asked whether Mr Sidey contended that this saving should not have boon made. He denied that any aggregation of land was going on in Now Zealand, and he demanded more explicit information as to what class of laud was being aggregated. His experience with at least the education endowments was that a mi,stake had been made in cutting them up into too small areas to enable holders to make a docent livin". Coming to the sinking fund question, he'denied that any injury would be done to the dominion’s credit by their sinking fund proposals. What they proposed to do was only what was being done in Britain and America, and surely it must he admitted that these countries had more experience in these matters than we. It would stabilise our credit on the stock market, by enabling us to buy up our own stock when the market was against us. The contention that it was the intention to “collar” the sinking funds and waste them was all nonsense, and had no foundation in fact, Mr Sidey had boon a dismal prophet. Ha would therefore' try to cheer him up by pointing out that New Zealand was a wonderful country, in proof of which lie seated that our trado to-day was worth 104 millions sterling—a wonderful tribute to tlie fertility of our country and the industry of our people. The result was an arresting one. Our prosperity never was greater than it was to-day, and It was spread through all classes. It belonged to no one class more titan to another. Tho deposits in our savings banks proved this, because those deposits wero not held by a low people, the average deposit per depositor being £64. A. similar story was told today when he came to speak ol private savings. The banks had 117,006 depositors with credits of .1d,216,579. There wore thus in the dominion 85,000 depositors in our savings banks, whose total deposits amounted to £62,100,000, Adding to ibis the dope its in at) banks, wo had a grand tmal of £102,000,060, which showed in a striking way the prosperity of not ono section, but of all sections of our people. If the London market should ever bo against ns, this accumulated wealth might well be used for purposes of internal borrowing. New Zealand was notji dismal country. This was shown by iiie patronage given to picture ihcatros and to racing. No less than 11 miHions had been put through the totalisator last year. Motor cars and vehicles importation for next year would total tlio large sum of over six millions. Tho people paid £59.'!,000 in Customs duties on imported motor vehicles during tlio last sis months. Not all these vehicles wero for pure pleasure. Many of them were necessary to business development, but this expenditure, while some of it was to bo regretted, wont to show that tlio spending power of New Zealand was largo, and apparently increasing. So fur as borrowing was concerned there was; a cloud in tho sky which required watching. Our National Debt, and private indebtedness were both large, but there wero assets against these liabilities totalling to about 40a in the £. Our interest bill was large, and this led him to say that there should be care in this respect. IVc .should insist that there bo no borrowing by local bodies except for urgent reproductive v/orks, ami them should bo no countenancing local bodies borrowing at Of per cent. A slcrn cheek' must bo kept on borrowing at high rates of interest., especially for long periods. In a general way ho did not favor local borrowing, but Avb.cn flic London market iva.s against ns, and things were prosperous here, we might, bo well advised to raise a million or two amongst onr own people. Ho referred favorably to the reduction of income tax, which was necessary to tlio relief of business. The email man should not object to the big man getting some relief, because our exemption was the lowest in the Avorld, in proof of which bo quoted the rates paid in other countries.

THE FINAL SPEAKER Mr V eitch condemned tho concessions in taxation because they were made on an inequitable basis. Yvhat should have been done was first to place the incidence of taxation on an equitable basis, and then all remissions would bo fair and just. We must also increase our national income bv increased production, but that could not be clone without giving the farmer financial assistance through agricultural banks, not through private financial institutions, which wore always thinking of themselves and not of the farmer. In this matter Parliament was not functioning. Onr big State departments wore now t oo big to ho managed by men engaged in parliamentary work, and there should ne parliamentary committees which would sit during" the recess to consider questions of management and expenditure. Our parliamentary system required amending in this direction, and if the Prime Minister wished to make a name, for himself here was his opportunity. Mr Vcitch advocated building our own railway engines • and rolling stock rather than importing them. The present policy of buying outside New Zealand was altogether wrong, while our own workshops were idle and we_ were importing a large number of immigrants. The debate was adiournod on the motion of Mr F. .1. liollcstou (Timaru), and the House rose at 11 pjn.