BUDGET DEBATE

Evening Star, Issue 20864, 6 August 1931, Page 3

BUDGET DEBATE

REFORM’S ATTITUDE ANNOUNCED WILL HELP RATHER THAN HINDER C-SJECTION TO PRIMAGE All eyes were on Afr Coates, the Leader of the Opposition, in the House last night when, in inaugurating the financial .Debate, he made tin; ’ eagerly-awaited announcement of the policy his party would adopt towards the Budget proposals. Crowded galleries listened to a renewal of his pledge to help rather than hinder the Government, and to his definite qualification that, to ho acceptable, the income taxation and primage proposals should be reconsidered by the Government. Further economies in administration were recommended by Mr Coates as compensation for the loss in revenue involved in modification ol the proposals. The only other speaker for the evening was the Hon. K. A. Hansom, who assured the House that, it it were possible to balance the Budget and .inflict less hardship, the Government would bo glad to consider any proposals in that direction. It might bo possible to effect further economies, but not without making a call for further sacrifices and imposing greater hardships. Mr Holland will be the speaker on the resumption of -the debate this afternoon. [pr.OM Ocn r.UII.tAMCXTM’.Y ItEl’Or.TEl:.] WFLLIXGTOX, August 5 Reform's attitude towards the Budget was defined by Mr Coates in the House to-night when inaugurating the Financial Debate. Broadly, this will bo the maintenance of the policy of helping rather than hindering, with the qualification that the Government is expected to reconsider its proposals relative to income tax and the imposition of primage duty. Mr Coates recalled that, as the result of a Reform conference in January last a ’statement was issued forecasting that a serious position Mas ahead of the country if appropriate steps wore not taken to meet it. , Hiring the brief session ho had announced that the Opposition would help rather than hinder in the. work of reconstruction. “ I think I am justified in saying,” ho added, “ that the Reform Party will still maintain that attitude on this occasion. We believe the times demand that wo should help rather than burden. The Opposition docs not intend, however, to hamper in ■ ny way its latitude or freedom to explore all avenues, and to, wherever possible, make suggestions for economics and proposals likely to assist the country during the present circumstances.” (“Hear, hear”) ■ NO ADVERSE MOTION. He .wished to direct the Prime Minister’s attention to some important features of the Budget. ..“H is not my intention,” ho continued, “to move an adverse resolution, but in adopting that course I wish to say that there arc one or two matters, very wide and important matters, on which the Opposition must reserve its right to explore every alternative before the Government can really say its proposals arc acceptable.” Ho was not saying this in any feeling of antagonism or opposition. . In the taxing Bills which tho Government would bring down wore proposals in regard to which the Opposition would explore every avenue for tho purpose either of searching economies which would prevent harshness of taxation, or to point out where economies could he effected to lesson tho full , weight of the proposed taxation. Another point which tho Opposition advocated was that there should bo an effort to relievo costs and prevent them creeping up. Duo feature of tho Budget would cause an unnecessary increase in costs, though the amount received would bo small compared with tho effect on those paying tho increased tax. Tho country was fortunate that in past years there had been Governments with sufficient foresight to build up reserves which during a period of depression wore of great advantage to the country. It was a fortunate fact that jwe had those reserves to call upon in time of need., BALANCED BUDGET PRINCIPLE. Ho was not niu.er-esxlimiting the difficult position of the country. The Government had brought down a balanced Budget, a principle which the Reform Party had consistently supported. By reaching that goal the country’s credit and its citizenship would ho the higher thought of. Until the primary industries wore restored to a sound basis the balancing of the Budget would continue to be a difficulty, and the country looked to the Government to assist in restoring stability to those industries. Expenditure had to bo adjusted in accordance with tho changed level of prices received for onr exportable products. Mr Coates predicted that unless an improvement was shown in revenue, tho Government in office next year would have even greater _ difficulty in balancing its Budget, and in that event more economics would have to ho looked for. In his view there was room for still more economies to he practised in tho departments. REDUCED SURTAX SUGGESTED. Dealing with the taxation proposals, Mr Coates said a JO per cent, surtax and the lowering of the general exemption placed on tho lower incomes what Reform considered to he an extraordinarily heavy impost. “ It hits the family man much sooner and much harder than it did previously.” Ho added; “ And when ho takes tho wages tax and unemployment levy into account, it is found that his costs have been enormously increased. In many cases it will ho found that tho charges of these men aro fixed either, by interest on mortgages or rent, as the ease, may be If it were possible to reduce the income tax surtax it would probably prove to bo a greater factor in bringing about a revival of confidence in tho country and progress in industry than anything else. Wo know, however, that is not possible in the present conditions. I believe it would lie in the interests of the country if the Prime Minister could _ reduce the 110 por cont. surtax on those incomes, and leave tho exemption at £-‘IOO. It tho increase could he. reduced to 15 per cent., it would not bo so difficult.” Mr Parry: How would Air Forbes make up the balance? Mr Coates: I believe there arc further economies that can he effected. Air Parry: What aro they? Mr Coates said that, in addition to departmental economies, it would he -ifi!,.. io so readjust matters as to

make it possible to reduce the inci-deuce-of taxation in that regard. Thclo would bo time to consider that aspect before the taxing .Bills wore presented to the House. Discussing the proposal lo raise an additional million by Customs increases. Mr Coates declared that nobody liked placing an impost on tea and sugar, hut, after all, the money bad to bo found. Labour Members; So long as you don't tax incomes. Mr Coates; It's all very line, W arc all in this; and the country's Budget has to bu balanced. We have to lace the position, and so far no better suggestion has been made. Mr Fletcher: What about the oil kings-' . Mr Coates; We l:avo ample lime before the taxing measures come down to consider the oil kings, and no doubt tho oil kings will receive proper consideration. STRONG OBJECTION TO PRIMAGE. The worst element in the C usloais taxation, declared Mr Coates, was the primage duty. Although in the "ai years his party imposed a primage duty, it was when produce prices wore more stable. Primage affected tho dutyfree goods recpiired by fanners and the industries. It. increased tho cost ot production. ' When tho earning power of tho workers had been reduced, it was essentia! to keep down the cost or living, and give tho laimcrs a chance to produce at a profit. Mr Holland (header ol the Labour Party); Does that mean that your party will resist the primage duty? Mr Coates: I am ivutting the position. and asking the Prime Minister to reconsider the primage duty. Mr Parry; We will sec what von arc in favour of EDUCATION ECONOMY NEEDED. Mr Coates stated that an Hducation Economy Commission was promised in the short session, but had hot been set up. There was a large amount of education expenditure under the item cf permanent appropriations over which it was generally thought that Parliament had no control. “ 1. don’t see why the Education Department should got off scot-free” declared the Leader of the Opposition, iti urging that it was possible to eflcct largo economies in this department without reducing the cflieioucy of the education system BORROWING AND UNEMPLOYMENT. 'The reason for the increase in borrowing and the increase in expenditure was Tlr Forbes: L'nomploymcni. Mr Coates: Exactly. Unemployment lias led the Government on the road ot increased borrowing to meet cases ot distress It was essential that money lot imemUoyment relief should be spent, on reproductive works, ami lie asked whether certain road exuondituro canm under that heading, particularly when it involved loan moneys. He asked whether the economies being practised by tho department were real economics, and he invited Air Forbes to indicate what savings bad been effected, for ox-amnlo. in the amalgamation of departments Tho increase ou tho railwav construction vote from £900,000 in 1928 to £1.570.000 in 1901 was tro mentions in view of tho fact that construction on several lines find been stopped. it was to bo noted, also, that the increase in tho public debt in 1931 was greater than it bad been lor the previous two years. There had been increases in expenditure on road construction. Could we not have said “ Cut this railway expenditure and this access-road expenditure in halt, and spend the money on land development?” asked Mr Coates. Mr Parry: That is what wo asked von to do. ’ Mr Coates said it would be hotter business in finding work for tho unemployed if £1,250,000 of the money .spent on railways and roads from capital funds wore applied to tho development of tho land. Mr Hogan: How many men would that employ? Mr Coates: The men you have now. Continuing, Mr Coates asked what the policy of iho Highways Board would be, and bo urged that for ibis year its subsidy to rates for the maintenance of highways should be increased.

Mr Forbes; The whole question of highways finance is at present before a special committee. Mr Coates declared that nothing would help tho producer more in the present crisis than assistance with his annual rates.

The Hon. A. J. Murdoch ; So you suggest the petrol tax should bo used. Mr. Coates: Certainly, I believe the petrol tax should be used, and I know tho motorists are quite prepared f,o stand in and assist the country ratepayer. (Hear, hear. ) In conclusion, Air Coates said he believed New Zealand was the soundest country on the lace ol flic globe, and to win through from the present dilUenlties it was a matter of facing up to the problems fairly and squarely. Then; was no easy road out, and it was not sound policy for tho country to spend more than it received.

LAHB MINISTER’S COMMENT

REFCRM'S IMPROVED OUTLOOK The Hon. K. A. Bansom, Minister of Lands, expressed appreciation of the fair attitude of the Leader of the Opposition, contrasting it with last year’s Opposition epithets, such as ".the Black Budget.” To suggest that the Government had not taken warning in regard to the future was to ignore last year’s adverse comment on its Budget, which was said to be aimed at a lug surplus. The Government had been searching for a long time for economies with a mimmum*of hardship, hut it was impossible altogether to avoid individual hardship. Thc°aecnmnlated surpluses were mostly secured during the term of oflice of Sir Joseph Ward as Minister of Finance. It was good to hoar the Leader of the Opposition approve of a balanced Budget. In this he was backed by the opinion of tho country. It had been suggested that this could he secured with less hardship than was involved iu tho Budget proposals. H anyone could suggest better methods ctf balancing without hardship, then.the Finance Munster would bo glad to consider them. Ho contended that the Budget sliowod tho Government’s recognition of tho fact that tho '.primary producer was entitled to tho greatest consideration. , . . . Answering Mr Coates s inquiry, he assured tho House that tho estimates would siiow the reality of the £305,000 administrative savings. Jr the Government had to go further, the House would have to consider tho element ol personal hardship involved in dismissals. Tim Keonomy Committee was still at work', and ho believed a permanent committee, not confined to Ministers and heads of departments, would ho desirable. ” Wo value onr education system too high ly to sacrifice any part by indiscriminate economy,’ declared Mr Hansom, who said it was

considered better to have an inquiry by a committee of experts to satisfy tho House and the country that in bringing about economy the system would not be sacrificed by hurried measures.

Tho Minister contended that Now Zealand income tax was not unduly liigh compared with other countries. ]f primage duty was objected to, it was open to those concerned to make representations to the Government. *‘ But,” bo added, ‘‘ibo all-essential point is that. provided you give the Treasurin' the same amount of taxation, .1 am sure ho will be willing to meet those concerned.”

The primage duty was light compared to the Australia, where in some cases it amounted to 10 per cent. He agreed with the contention that road construction should be. for tho development of land. VTicn it was suggested that the Government should give more consideration to the back country roads, ho could not help recalling last session’s defeat of tho proposal to allocate a penny of the petrol tax for baekblocks roads. The Leader of tho Opposition protested against this, and tho Minister of Finance had to withdraw flic item. Tims £IOO.OOO was lost to tho backblocks roads. It was a disappointing fact that the low prices of primary products were not fully passed on to the consumer. As an example, though no high degree of skill was required to produce knitting wool, it cost 10s a pound, though the 'highest price of the raw material was TOd. He would like to know where the profit was going, and it would pay not only this but every oilier Government in the world, to set up commissions to inquire into the difference between the. cost- ol raw material and uianul'aehired goods. Some said it was due to big - wages. “1 do i.ot regard wages as the principal factor in keeping up high costs, either for foodstuffs or raw materials.” Tho Minister contrasted tho demand for higher wages with tho demand for a reduction in taxation. It was a case ot finding some tax which would hit tho other fellow. Tho complexity of the economic storm was such that grave responsibility rested on every public man ol every party. 'The primary producers, while bearing their share of indirect taxation, were being specially considered in respect to direct, taxation. The country must look to land settlement to got over tho difficulties, together with an improvement in the quality of our products and more intensive farming.