THE BUDGET DEBATE

Evening Star, Issue 20255, 16 August 1929, Page 7

THE BUDGET DEBATE

TAX PROPOSAL DEFENDED [Ter United L’ress Association.] WELLINGTON, August 15. Tho debate on tho Budget; was resumed in -the House of Representatives by Mr G. C. Munns (Roskill), who referred to the statement by a Labour member that tho present debate was a “ sham political battle ” between the United Parly and the Reform Party. Ho said that tho policies of the two parties were diametrically opposed, and ho would say candidly that if tho Reform Party .still adhered to its old policy he would prefer to vote with Labour than with Reform. Persistent interjection from tho Reform and Labour benches and ah occasional retort by Mr Munns culminated in the Speaker, after several calls for order, rising and insisting cm Jess interruption. ' Mr 'Munns said there had been a chorus of complaint against the proposal for an increased land tax, but he considered the people who had not carried tlicir fair burden in the past should not be allowed to continue in that happy state. There was only one duty they could not escape paying, he added, and that was death duty', and even then their relatives complained that the death duty 7 was too high. He said that he, in common with many others, was anxious that the Pacroa-Pokeno Railway should bo constructed, and he was sure it was recognised as a matter of urgency. It was unfortunate that such a heavy programme of urgent construction in other directions had prevented the immediate undertaking of tins work, but he hoped it would not be long before the construction of the Paeroa-Pokeno line would be under way.

Sir Munns, replying to a reference by Mr D. Jones (Mid-Canterbury) last night to an agricultural bias in the education system, said the proposal had been adopted by the party before tho Prime Minister had been appointed its leader. It was not intended to force agricultural education on anyone whose inclinations were opposed to such training, hut everything would be done to encourage those who had.any desire to seek a living on the land. Mr W. E. Barnard (Napier) .said he hoped the United Party would he able to carry out its pledges. With tho presentation of the Budget tlie House was now able to form its judgment' as to the proposals of tho Government, and one could only .hope that tho Prime Minister had not displayed all his wares. There was nothing in the Budget to indicate that cheap money would bo available to the workers and tho settlers of the dominion. The country was expecting the Prime Minister to make good all his promises, and lie for one was trying to exercise patience in order to give, Kir Joseph Ward a chance before issuing a writ for breach of contract. Tho Prime Minister had diagnosed the economic ills of the country, but had not yet offered a practical cure, Speaking of land taxation, Mr Barnard .said he thought tho Government’s proposals would receive a pretty general endorsement by his side of the House and by the country as a whole. The “ wool kings ” had escaped hearing a fair share of the taxation, and it gave him a great deal of satisfaction to know that the Government had decided to put an end to the policy of giving substantial exemption to a class which was well able to pay its share. There might bo genuine cases of hardship, but in such .cases the occupier of the land would probably, in any case, he in a more or less precarious position, and if he were a prudent man ho would endeavour to relinquish Jiis heavily-mort-gaged property and take up a holding more in accordance with the amount of his capital. He was deeply disappointed in the Government’s decision to increase the primage duty, which wquld tend to increase the cost of living. Ho suspected that some members of tho United Party were a little uncomfortable as the result of tin's decision, which possibly conflicted with tho promises some candidates might have given their constituents during the election campaign. He welcomed the Government’s attitude" towards unemployment, and hoped it would successfully cope with this serious problem. He supported the proposal to establish an unemployment insurance scheme.

Mr W. D. Lysnar (Gisborne) expressed the. view thn t there was no real cause for the extra taxation which it was proposed to charge the farmers, and that if such a policy were put into effect it would be ruinous to the .prosperity of the country generally. He suggested that if the Government had decided that additional taxation was necessary it should have explored other avenues. For instance, ho thought the Bank of New Zealand should be called ou to pay more in taxation, and there were other sources of revenue that should be investigated before increasing the burden on tho laud. He did, not think tho Government should endeavour to produce a surplus at such a time as tho present. It should certainly balance its Budget, but should not impose any more taxation than was actually necessary. It had been stated that tho Government desired tho additional land tax to achieve two objects—to.produce revenue and to breakup largo estates. Ho considered the latter to bo an admission of weakness. If the Government found it could not acquire sufficient land under the present compulsory provisions of the Act it should present to the House in a straightforward way a plan to increase its powers under the Act. If tho Government wanted to destroy tho value of laud it should proceed to place its proposed legislation in .the Statute Book. It would ruin the value of land, and it might ruin the Governme'nt. too. (Laughter.) Mr Lysnar vigorously opposed a reduction of the amount of mortgage exemption, and asked if it were fair to.tax a man on the mortgage he had raised on his property in order to develop the productivity of his land. He would prefer income tax on all farmers on the same terms as other people enjoyed to the present proposals. Be did nob think, any farmer earning £IOO, £2OO, or £3OO per year more than the usual £3OO exemption would object to paying £1 to £3 income tax. He admitted that that was not the policy of'tho Reform Party, but he wished it was. Mr Lysnar, .concluding his speech, said a good deal of tho land that, would bo penalised under the now proposals was unsuitable for settlement, and he claimed Uuyt this view had been illustrated in some instances under the soldiers’ settlement scheme. ’ He suggested that an extra tax on foreign imports was preferable to increased primage duty. Mr W.‘J. Poison (Stratford) stated that the Budget outlined four proposals—namely, that the farmers khould pay income tax or land tax, whichever was the- greater, that farmers should pay a graduated land, tax/that farmers should pay a tax on their debts.: and that fanners and the general public should pay a tax through tho Chstoms. Actually it meant that’ a very large percentage of the taxation would he borne by. the farmers, but particularly the large man. Tim small man would feel tho effect only of the Custom's taxation. Mr Poison added that lie

was not going to defend the tux on a Juan's debts. Many people, confident in the bona tides of the Government, had gone in for land investment, and had heavily mortgaged themselves. It was not fair that they should find overnight that their exemption from taxation had been reduced. He kiiew ox an instance in which it would be necessary for the property to produce 25 per cent, on the amount invested to enable tho occupiers to carry on, and that whs not within the bounds of possibility. He believed something \in the nature or a hardship clause should be included in the Government’e plans, -so that relier might he obtained in extreme cases. The principle of the ability to pay should never be overlooked. Mr Poison went on to refer to the primage duty. He said he regretted the necessity for the increase, but it had been the least dislocating way to obtain the money required, and it was only a temporary expedient. He knew that taxation was invariably passed on, but in tins case he believed a considerable portion would never be transferred to tne consumer, particularly as it was only a temporary measure. It seemed to him' that it was better to a-sk tho general community to hoar this small increase than to undertake a rearrangement of the whole system of taxation for tho sake of eight or nine months. Mr Poison said he agreed with Labour members that over 5 per cent, of the total taxation was too much to expend on defence. He did not think the South Island railway extension would pay for many years to come, and he advocated an attempt to reduce the national expenditure considerably, He bad hoard the suggestion that an agucultural bank should be established, but he pointed out that the long and short term credits at present advanced constituted the main functions of an agricultural bank. n ~ Mr W. K. Parry (Auckland Gen tral) said ho had; hoped that the Government intended to adimmstei socul . legislation in the spirit of the law smu pot in theTetter of the law as had been the practice in tho past, bo lai the Government had not made the improvement in this direction that ho had expected. He had no doubt that the Prime Minister was out tor a surplus, and he had hoped ,tbat when other members had expressed this view - toe representatives of the Governmen would have agreed that this was so and would have defended suchja course on tho ground that more money was being provided to enable a more sympathetic interpretation of the social legislation of the country. Mr 1 arry said he was convinced there would never be general prosperity thiouglioiit tho country until tho purchasing power of-the working people was made 1 compatible with a- decent standard oi I civilisation. Ho had thoroughly investigated tho problem of unemployment, I gnd he was satisfied the only possible solution consisted of an advanced land settlement policy and a determined development of the secondary industries. Mr Parry added that people were expecting increases in the old-age pensions and the blind pensions, and he hoped the Government was not going to let them down. Mr A. Harris (Waitomata) ’agreed that there were vast possibilities for the development of the pumice lands, and he hoped that the Prime Minister would see that the settlers there were granted assistance by the State Advances Department. Government aid had been denied these settlers for some years on tho ground that the land was not suitable, and ho asked Sir Joseph Ward and the Minister of Lands (Air Forbes) to reconsider their views as to the quality of these areas, and in particular to qrrango for assistance to the settlers from the State Advances Department. Mr Harris, replying to the criticisms of the Reform’s administration of the soldier settlement scheme, said that while he admitted there had been failures, as there had been in every walk of life, there had also been many happy results. The scheme had been the means of placing on the land men who had had no experience cf farming, and of whom many were now well on tho way to independence. Tho Reform Government,had had to adopt some suitable moans of repatriation, and while in some cases soldier settlement had been costly, it had, on the whole, been a valuable step in the progress of the country. Referring to the proposal to write off eight millions from the Railway Capital Account, Mr Harris said this meant that the assets had decreased by eight millions, or that the National Debt had increased by that sum. It was absurd to say that the railways should not be required to pay interest on this money which had been raised by taxation, and had relieved the administration from tho necessity for borrowing for rail construction. Mi Harris claimed that there had been a great change in the feeling of the country. The optimism that had followed the United Party’s promises of cheapmoney had been replaced by pessimism, and already there was talk of a change of Government. “ The United Party’s stock has gone clown to zero,” "lie added. “We no longer hear tho flambuoyant challenges to go to the country. _ We now hear predictions that the session will run its full course.”

The House rose at 10.30 p.xn. till 10.-30 a.m. to-morrow.