FIRST LONG SITTING

Evening Star, Issue 23354, 25 August 1939, Page 12

FIRST LONG SITTING

The Finance Bill

Borrowing Programme of £22,000,000 r The House of Representatives completed its longest sitting of the present session when it adjourned at 2.30 a.m. to-day after a protracted discussion on the second reading of the Finance Bill. The debate broke no new ground, the speeches being mainly reiteration of points made by both sides during the Address-in-Reply and the Financial Statement discussions. The tedium was relieved in the evening when Mr Semple challenged the Leader of the Opposition and the members of his party to prove accusations previously heard that squandering of Public Works funds had taken place during his administration. Members generally showed no inclination to discuss the provisions of the Bill, which involved a borrowing programme of over £22,000,000 and an increase in taxation, but, with the forbearance of the Speaker, covered a wide field of political topics. Only two divisions were taken during the 12-hour sitting. Government members who countered the criticism of Mr Holland (National, Christchurch North) of the heavy spending policy by inviting him to explain what he would cut down, got the unexpected reply that he would reduce the size of Parliament. “ That would not save anything,” declared Mr M‘Combs. “It is thoroughly ridiculous to have a Parliament of 120 men to run a country of this size,” continued Mr Holland, who amid laughter explained that in making this suggestion he had consulted nobody. Another thing he would do would be-to extend the period during which the proposed Public Works allocation will be spent. As a. matter of fact, he considered that the Government itself had begun to cut. The increased taxation was a definite cut in wages, and the social security benefits were curtailed by a cruel means tests. The. limit had been reached in taxation and in the number of persons employed by the-State, for he was amazed to find that two persons in every five were dependent on the State. Counting pensioners, relief workers, those on Public Works, as well as Civil servants, and allowing one dependent for each, there were 642,000 dependent on the State. These people drew £41,500,000 annually.

The Acting Prime Minister: They all have to work for it,

PRELIMINARIES [Pin United! Press Association.] , . WELLINGTON, August 24. 'When the House met'at 2.30 p.m., Mr 'Roy gave notice of his intention 'to ask' leave to introduce the Lower Clutha River. Amendment Bills numbers 2 and 3. Mr Cobbe, in an urgent question to the Acting Prime Minister, asked if it were the Government’s intention to have an investigation made into the loss and damage • caused by the recent Manawatu floods, with a view to the Government granting special assistance to those who suffered as the result. Mr Fraser, replying, said the Government would be pleased' to make such an investigation with a view to deciding whether special assistance was necessary. URGENCY TAKEN. Before proceeding with the second reading of the Finance Bill and the Land and Income Tax (annual) Bill, Mr Fraser suggested that the discussion on both these measures should ,be taken concurrently, as many matters in one affected the provisions of the other. He assured the House, however, that the second reading would be taken of tho Land and Income (annual) Bill. Ho moved for urgency for both measures. Mr Hamilton: What is the reason for urgency? . .. Mr Fraser: Loan authorities are required and the Taxing Department is anxious to proceed with its work. Mr Holland: The tax demands are out, though. (Laughter.) Mr Fraser: Yes, some* of them are out, but the department feels there should bo some authority for them. (Laughter.) . He continued that if the House put through the Finance Bill to-night they would perhaps take the Land and Income Tax (annual) Bill to-morrow. There would be no effort to stop reasonable discussion. The Opposition forced the motion for urgency to a division, the motion being carried by 41-22. The voting was on purely party lines. TAXATION And LOAN CRITIC, Mr Fraser then moved the second reading of the Finance Bill, explaining the provisions of the measure in detail. . . The Leader of the Opposition. Mr Hamilton, said the at somewhat of a disadvantage in discussing the Finance Bill because of the absence of both the Minister of Finance and the Prime Minister. The Government was creating borrowing records, he said, and outlined the Government borrowings from 1933 to JL939. Borrowing was up over £15,000,000 in two years. Where was the Government going to get the money from? Then, he added, there was an increase of £13,500,000 on Public Works expenditure in three years. The Government had two main sources of revenue —taxation and borrowing. Taxation had been taken to excess, and borrowing was now being taken to ultra-ex-cess. If the Government wanted to live extravagantly, then it should tax the people to pay for it. That would be a shock to the people. The Government, however, _ had chosen the borrowing method, giving a false idea of prosperity. Mr Hamilton analysed road finance, stating that the Minister of Public Works,,Mr Semple, had stated that the financing of highways operations entirely from revenue instead of partly from loan money was receiving attention. How the’ Minister’s policy had changed, said Mr Hamilton, who added that the percentage of highways expenditure ' from loans had risen from 9.8 per cent, in 1933-34 to 29 per cent, for 1937-38. The percentage of road expenditure met by borrowing had more (ban doubled in tlie two years aft-r tho Goi eminent had come into ■rifle*.

Discussing the Dominion’s public debt, he said that in our conduct of affairs it was essential that those in authority should show steadiness and solidity "in inspiring confidence. What should the correct attitude to the public debt of New, : Zealand be? he asked. It was clear that a large section of Labour members looked forward to a debt crisis that would give them the conditions and opportunities for which they were He outlined the gradual building up of the public debt and repayments thereof over the last 100 years, and said he could not state too emphatically that a wrong view of the debt question might shake the whole foundation of the Dominion’s economy. Our obligations were just obligations. For the country to enjoy all the amenities that our borrowing from the Motherland had made possible, and now to allow agitation to be started against the debt obligations was, to put it mildly, unconscionable. He criticised the Government for the large amount of unauthorised expenditure, and said the Government’s accusation that previous administrations had balanced their Budgets out of borrowed moneys was an absurd statement. With regard to income tax increases, he said that, as in most oj its activities, the Government was placing a further burden on the people, especially the family man and those on lower and average incomes. IN HANDS OF GAMBLERS. Mr Hargest said one could not help feeling that New Zealand was to-day in the hands of irresponsible gamblers controlling the country’s affairs, and that tho legislation brought down in the last three years was,designed to bring about a purely Socialistic State. The Government was making it impossible to carry on unless the country went in for more taxation and more borrowing or inflation. He criticised the Finance Bill and the public works expenditure, and speaking of New Zealand’s secondary industries said some of the most reputable manufacturers in New Zealand, with plenty of money, could not get overseas credits. He also criticised the administration of the railways, and said that the load on the taxpayers for railway services was heavier than it had ever been before. Railways and public works were bleeding the country white. When the new lines came into service the Minister would not be able even to make working expenses. RAILWAYS SOUND. The Minister of Railways (Mr Sullivan), replying to Mr Hargest, said he had not boasted about railway finances, but had merely given information and facts. In presenting the position Mr Hargest had taken no account of that, but had set out to discredit the control of tho railway system. Dealing with the purchase of road transport services, the Minister said huge sums had had to bo written off. Having regard to the improvement in the services and the better wages and conditions for the men, the Government considered it had done very well indeed to show any net profit on the undertaking. Mr Sullivan added that he was sincerely concerned about the manufacturing industries, and desired to make them a great success, but, regarding Mr Hargest’s criticism concerning the supply of raw materials, the manufacturers knew exactly where they stood, and the oversea suppliers knew exactly where they stood too. INTOLERANT OF CRITICISM. Mr Endean said it was regrettable that the Government was intolerant of criticism, as had been demonstrated by the Minister of Railways’ criticism of Mr Hargest. The Opposition was keen to see that New Zealand tried to assist the Mother Country in her present hour of trial. He proceeded to criticise railways administration, stating that the Minister’s claim that the services given by the railways were greater than

the revenue received was absolutely fallacious. No private enterprise run on the same basis as the railways wore being run by the present Government could hope to exist. And there was not a lino in New Zealand that was paying to-day. The net railway earnings since 3936 had dropped by £300,000, and this was duo to the economic embarrassment created by the Government’s present policy. Eio contended that the Government’s real deficit last year was in the nature of £8,000,000. The Government had sustained this deficit in good times when prices were good, whereas the last Government had had a deficiency _ of only £8,000,000 in a time of depression. Mr Endean compared Britain’s expenditure on defence with our own, and stated that he doubted if the £2,000,000 being spent on defence under the Public Works Estimates would be of much value for the purpose to which it was assigned. PUBLIC WORKS DEFENDED. The Minister of Public Works, Mr Semple, said ho had been accused of being the greatest spendthrift in the Government, and later on he would give the honourable members of the Opposition the opportunity of proving that. Ho stated that unless New Zealand- could increase production to provide for increased population we would have a very sad future, and he outlined the work which the Public Works Department was doing in connection with irrigation throughout the Dominion to enable production to be increased. The Loader of the Opposition had stated that the Minister should be stopped from spending public money. This was most unfair, said Mr Semple, because every item of the Estimates was approved by the House before it could be spent. (Mr Semple then issued the challenge reported elsewhere.) FULL CREDIT ACCORDED. Mr .lull gave the Minister full credit for being one of the most active Ministers who had ever occupied that position, and in attempting to save large sums of money in the work of his department. He appreciated quite a lot of the work that Mr Semple had done, but the Minister had talked of saving hundreds of thousands by the use of machinery compared with hand work, but who would attempt to do that work by hand? No one would, so there had been no saving. MR LEE DEFENDS HOUSING. Mr Lee defended the State housing programme, and said that there were inferior houses built by past Governments that had cost more. He did not condemn the houses built in the past, because they were needed, and the Government of the day had done a good job in providing them, but the Opposition should admit that times had advanced, and that the type of house being built was in keeping with present requirements. He appealed to the Opposition to ask their friends who had raided the sterling funds of this country to disgorge and hand back the money to New Zealand for defence purposes. SMASH AND GRAB.

Mr Holland said Mr Leo hail referred to the Opposition smash-and-grab party. The smash was on the Government’s side ot the House, he said, because it had already nearly smashed the country, and as far as grab was concerned, the Opposition would certainly grab the reins of office whenever it could, and return the country to financial equilibrium. Mr Holland said the Government had justified its expenditure because of an increase in the national income. While this had been true, the Government overlooked the fact that the income was falling rapidly, and the taxation next year must increase still further. Mr Richards: Where would you economise? HOW ECONOMISE? Mr Holland: Speaking off my own bat, the first thing I would do would be to reduce the size of Parliament. I would also spread the public works expenditure over a longer period than is provided for in this Bill. Mr Richards said the Opposition complained of excessive Government expenditure, but he would ask them' to indicate which items of expenditure they would reduce. He also asked the Opposition to tell the country what their policy would be if they were returned to the Treasury benches. Mr Bodkin contended that the real justification for all the loan money which the Government was raising was the presence of the unemployed. The Government saw no prospect of industry offering work and wages for the thousands of men who were attached to the public works, and it was in a state of hopelessness and helplessness. AMENDMENT. Mr Kyle also criticised what he said was the most extravagant Government expenditure this country had ever entered into. He then moved an amendment that the Bill be referred back to the Government for further consideration, ou the grounds that the authorities for borrowing for public works and highways were excessive; also that the public finances should be so arranged as to bring our expenditure within such bounds that we were living within our income. ’ The amendment was defeated by 3923, and the debate on the second reading was still continuing at midnight, with the prospect of a very long sitting. Messrs Broadfoot, Morgan, Williams, arid Coates continued the second reading debate, the last-named speaking at 1 a.m.

Tne debate was still continuing at 2 a.m.

SECOND READING COMPLETED [Per United Pkess Association.} WELLINGTON, August 25. j.lie debate ou tho second reading of the Finance Bill was continued in the House this morning until 2.22, when the Bill was somewhat unexpectedly read a second time without reply from the Acting Leader of the House, Mr Fraser, who was momentarily out cf the chamber. The second reading of the Land and Income Tax (Annual) Bill was then formally moved in Mr Fraser’s absence by the Minister of Railways, Mr Sullivan. After a few minutes’ debate, in which Mr Fraser returned, and stated that he would answer the various points raised on the Finance Bill in the committee stage, the Bill was read a second time. Mr Fraser stated that it was hoped to get both Bills through the remaining stages to-day, so that the Legislative Council could deal with them tonight or to-morrow morning. The House then adjourned at 2.30 a.m. until 11.30 a.m.