BUDGET DEBATE

Greymouth Evening Star, 11 August 1928, Page 7

BUDGET DEBATE

LABOUR LEADER’S CRITICISM

AN EFFECTIVE REPLY (Special to ''Star.”) WELLINGTON, August 10 ; A financial debate was opened in the House this afternoon, by' lhe Leader of the Opposition (Mr. Holland) who suggested that, there was no reason why income lax receipts should have declined. The fact that legislation had been passed relieving certain people of taxation accounted for the drop. Wool receipts for 1927 had increased by about £BOO,OOO in the aggregate, as compared with 192 G, yet wealthy sheepowners paid no income tax. If taxation were paid on the amount taken by wool sales, the Minister would have had a huge increase in income tax instead of a deficit. In reply to the Prime Minister, Mr. Holland stated he was prepared to make the large sheepowners pay income tax. Mr. Coates. And take the land tax off? “Certainly not,” replied Mr. Holland. Mr. Holland said he had been laughed at years ago for predicting’ that the capital value of soldier settlement lands would have to be written down by about £7.000,000 on account of fictitious book entries, yet the budget showed writings, off amounting to three and a-half millions and he felt sure his prediction would be fully realised. He accused the Government of gambling in land values, and forcing up the prices of land above real values by making big gifts to the wealthy original owners of the land. The Government should have anticipated the fall in values after the war, and shaped its course accordingly. To-day we were paying the price for the Government’s’ blunder and soldiers still on land would eventually fail and be forced off their holdings. It was fair better to cut the losses now and give the soldier-settlers an opportunity of making good on a capital value on which they could make good. He added that it was misleading to states the Railway loss for last year at £291,452. Actually it was £781,020. The Prime Minister took £489,568 from the Consolidated Fund, p'ut it through the Railway Account, and balled it net Railway revenue. It would be far better to show the loss actually as it occurred. The excess of withdrawals from the Post Office Savings Bank over deposits was the result of the Government’s policy which drove money from savings bank to private banks and left the Government in a position where it had to borrow back at 54 per cent, that which it had previously had at 34 per cent. In regard to public debt Mr. Holland said half, the revenue was going in meeting charges on the public debt. Every one must realise what a serious position that was. The Minister of Education (Mr. Wright) said he was satisfied Mr. Holland had been able to- find very little fault with the Budget, and there had been little real criticism in his speech. The fall in income tax had been due to depressed incomes during 1926-27, owing to general depression. They could not go beyond a certain point in the matter of taxation, as land holders woulld not go on earning profits if they were to be taxed to the limit. It had io be remembered that there were many big land holders who had heavy mortgages on their properties, and that had to be taken into consideration, when it came to the question of assessing taxation. In regard to soldiers’ settlement, did Mr. Holland suggest that the Government should have confiscated the interest of the owners in the land in order to place soldiers upon it? Mr. Holland: “I suggest it should have been bought at fair value.” The fair value, said Mr. Wright, was the market value, but the Government had no alternative but to purchase the land at the price then ruling although it was high.

Referring to the Railways, the Minister said that Mr. Holland could not object to the fact that there had been a loss on the year’s workings, but apparently he objected to the form of book-keeping used. As a matter of fact, if something were not done to meet the position many of the branch lines would have to be scrapped. Mr. Holland had stated the debt charges amounted to over £12,000,000 but he did not. state that over C 6,000,000 was in respect of interest earning concerns. Half of the annual charges thus did not affect the taxpayer at all. Replying to criticism in regard to borrowing, the Minister said that the raising of large sums was not necessarily an indication of extravagance. It could not be said that the Budget was a vote catching one. There was no opportunism in it. It was a statement of fact that next year would be a boom year, and the Minister of Finance was justified in holding out hope of being able to reduce taxation. It could not be charged against the Government that it had unduly increased taxation, except for war purposes. There had been good and careful administration, and the electors would be satisfied that the Government had done all that was humanly possible to bring the country safely through a critical time.

Mr. Ransom said the Minister had made a barren speech, one lacking in anything that was likely to convince the people that the Government worthy of support He had given no evidence of I lie future outlook or of the desire to benefit the conditions ol tlie people of the country. The prospects of relief, particularly in regard to taxation, were not very bright, if Government was waiting for a boom year. Referring Io loans to farmers, Mr. Ransom said that the difficulty of farmers had been caused primarily by deflation after the war, in which the Government’s operations had been a, contributing factor. While he believed the land tax was inequitable, there were difficulties in removing it. He thought farmers should pay income tax,' and that if those in receipt of over £lOOO were taxed, it would produce not less than £2.000,000. The present taxation encouraged aggregation.

Mr. D. Jones said that Mr. Ransom had been speaking all the time-for the big man, although he had endeavoured to make it appear that it was the small man he was concerned about. If big land holders were taxed on their incomes, it would be all to their bene-

fit, and it was exactly that thing they were anxious to obtain.

Mr. Savage said in recent times the Reform party had been increasing its own record for borrowing. Over a period of eight years,,the Government had added £50,000,000 to the public debt, and during the last three years, the debt had been increased by £2,000,000 in lound figures. That was a record for the Reform Party itself and that was not saying a small thing. Tn regard to the question 'of deadweight debt. The speaker submitted that the most costly loans should be paid off first whether they called it a war loan or ordinary loan. When it came to'the question of redemption, he claimed that it was betted to redeem a. 5 A per cent, loan rather than 4 A per cent, loan because the exemption from income tax was not. a recurrent thing. He argued that the weight of public debt was increasing. With regard to Post Office Savings Bank deposits, Mr. Savage maintained that in the 1927 session, the Finance Minister had given the impression that the object of the Post Office bill was to place him in a position to be able to compete against private banks for deposits if necessary. Was it not necessary? In private banks, the deposits were rising whereas in public banks the deposits wore falling. If that did not show that the real Government of the Country was the associated banks then he was a poor judge of power that ruled. The debate was adjourned at 11.31 p.m.