FINANCIAL DEBATE

Evening Star, Issue 21819, 7 September 1934, Page 6

FINANCIAL DEBATE

MR W. D. STEWART ON PUBLIC ACCOUNTS NEW TAXATION OBSCURED REVENUE FALL HIGH EXCHANGE KILLED SURPLUS [Per United Press Association.] WELLINGTON, September 7. The House met at 10.30 a.m. Mr Chapman asked the Minister of . Finance whether he would consider the advisability of promoting legislation for the purpose of invalidating all transfers since August 8, 1931, of the debentures of the Investment Trust of New Zealand. Mr Coates, replying, said the answer was contained in his answer on the same subject yesterday. The Financial Debate was resumed by Mr Downie Stewart, who said tbe Budget indicated for the current year a substantial improvement in the public finances. Indeed, in some respects it would appear ns if prosperity had come back to the Budget before it had come back to the people, because there was still widespread unemployment and many, people were still suffering hardship. However, the public finances showed «. substantial improvement. During last year the exports rose, tho railway revenue improved, and the prices of wool and meat rose substantially. At first glance it would appear as if that improvement was reflected in the public accounts, as the Budget stated that the revenue for the year was greater by £1,465,000 than for the preceding year, but if tho figures were examined in detail it was clear that, apart from the new taxation imposed, all the main sources of revenue fell away. The Customs revenue yielded £353,600 in excess of the previous year. . but early last year new duties were imposed on motor spirits, tobacco, and sugar, and also on the export of gold. These increases were calculated to yield about a million, so that had it not been for the new taxation the Customs revenue would have shown a heavy drop. The prospects for tho current year seemed much more reassuring, because without any new taxation having been imposed the estimates of revenue showed substantial prospective increases in practically all items. He supposed the estimated uncrease in Customs revenue of £1,114,000 was a conservative estimate. He thought the Minister justified in making some concessions. ■ and their psychological effect should encourage further confidence and expansion. It seemed abundantly clear, however, that had it not been for the high exchange last .year’s Budget would not only have been balanced, but would have shown a substantial surplus that would have warranted at an earlier date the concessions now being made, and would have warranted a substantial reduction in taxation this year. ■ After reviewing the events of recent years, Mr Stewart said he was forced to come to the conclusion that before long a complete overhaul of direct taxation would he necessary in order to determine whether tho burden was being justly distributed; whether it was arbitrary and capricious, and whether it was not in danger of discouraging the expansion of enterprise and thereby defeating itself. If so, it would dry up the sources of wealth and hinder tho return to prosperity. , Referring to the proposed mortgage corporation, Mr Stewart said it would be interesting to know to what extent the Government would be called on, directly or indirectly, to guarantee the bonds issued by the corporation. Already demands had been made that the corporation be entirely a Government concern; in other words that the Government must, - directly or indirectly, guarantee the bonds. That was, ominous, because if the operations of the corporation spread far and wide and the Government had to stand behind the scheme, _ it merely meant another huge addition to the public debt,' either directly or indirectly. He hoped ’ the Government would be cautious about allowing itself to be drawn into guaranteeing the bonds. Dealing with the Reserve Bank and Labour criticism of it, Mr Stewart thought the small amount the country had to pay to the Reserve Bank to have an independent board to act as a buffer between' political demands and the taxpayer was worth while. BUDGET OFFERS NO HOPE. Mr Armstrong said he could ; see no hope for the people in the Budget, unless it was the 9d a week for the old age pensioner,. which he had to wait till October to obtain, and meantime the price of commodities had soared far above the increase that would be received. The whole basis of prosperity rested on the purchasing power of the people. The Government had gone the wrong way about the problem. _ It had paralysed industries that were m existence, and. had then taken the money of the workers to establish new ones. He asked if any member of the House wanted the 2d reduction in the unemployment tax until the relief, worker was properly provided for ? Mr Samuel: Not one.' Mr M'Leod: And they dont want the 5 per cent, increase. ■ ■ Mr Armstrong said it was not the small wage earner, but the moneyed people and the big businesses, that wanted a reduction. The unemployment fund was being plundered, by profiteers, who were not in need of it, and for whom the fund was not established. Although irregularities had taken place in tho operation of the building scheme, and the Unemployment Board said that in such cases a demand was made for a refund of the subsidy, that demand was nob made until the irregularities were exposed in the House. Mr Armstrong said the Government was only balancing the Budget by increasing the national, debt. He. contended that there was no need to go to Auckland to seo high finance. He considered that there should be an inquiry into the Budget in addition to certain companies. Mr Bodkin said tbe Budget was a hopeful message to every person in the country except those in the Labour Party. , The House then adjourned.