PARLIAMENT GOVERNMENT TAXATION POLICY UNDER FIRE

Greymouth Evening Star, 22 August 1946, Page 2

PARLIAMENT GOVERNMENT TAXATION POLICY UNDER FIRE

Expenditure Far Too High

No Real Relief for People Generally (P.A.) WELLINGTON, August 21. The Leader of the Opposition (Mr S. G. Holland) initiated the Budget debate in the House to-night before crowded galleries. Mi- Holland said that tens of thousands of New Zealanders, after listening to Mr Nash on Thursday last were disappointed, discouraged and disilusioned. It had been the Minister’s big opportunity, but how truly he had spoken when he explained that his promise in London of a Budget that would win the election was “only a joke.” Most of the Minister’s Budget speech was over the heads of the people, and when, in the last 15 minutes, Mr Nash produced his policy proposals, they offered relief to gold companies, to those who paid excess profits tax, to companies which would have about 30 per cent, more to distribute to shareholders, to those whose personal income tax was reduced, and to those who were about to build or furnish homes. -But thousands of workers felt they had been let down. Their name for the Budget was too unparliamentary to repeat, He (Mr Holland) termed it “Labour’s eleventh, longest, and last Budget.”

Mine Nationalisation

Mr Holland said there were two factions in. the Government, the Left Wing, which wanted lower taxation and lower living costs, and something for the workers, but who were not consulted; and the dominating Right Wing, which hated giving up the money. There was no note of realism for the future. So far as policy was concerned, all that could be found in the Budget was the nationalisation of coal mines; but he ‘questioned whether the Minister of Finance, if left alone, would carry that out. He believed there was the same pressure behind the Minister which made him take over the Bank of New Zealand. The only other statement of policy was the declaration to build 12,000 houses per year. There was no explanation of from where the materials were to come. The Government had run its course, was at the end of the road, had no ideas, no programme, and no imagination. The man in the street was bewildered. Large companies generally were acting as tax collectors for the Government, but the young artisan back from the war was wondering what there was in the Budget for him. There was still sales tax of 20 per cent, on working tools. The Budget had brought the farmer no reduction in his transport costs,.and the housewife, who wanted . household appliances, was forgotten. Bretton Woods Danger Mr Holland said the Minister of Finance had been in Britain; and did he ask the people to believe that he had not discussed the Bretton Woods proposals with the British Government and w'ith authorities in Washington? On the Minister’s return, he had said it would be difficult for New Zealand to keep out of Bretton Woods. Mr Holland said Bretton Woods was one of the most larreaching influences on the future of the world, but participation in it would strangle the economic progress of this country. People had the right to expect to be told the outcome of discussions on this important ques- ■ tion, and the people should be told plainly and frankly, were we to hand over control of our credit and currency to some foreign organisation whi.ch did not understand our country. x, r Examining the Government s hnancial policy, Mr Holland said the present Budget was the most difficult he had yet. confronted. One glaring instance 'of misleading information was that the Minister of Finance had claimed that the mortgage interest rate had reached its lowest level yet, at 3.87 per cent. That was an unfair, figure because it was the figure for March last, when the Government had made large- rehabilitation loans at low rates, some at 2 per cent., and some interest-free, thus bringing down the average interest rate. It the Minister's figures were correct, why did the State Advances Corporation jtill charge 4 .1-8 per cent? Misleading Figures Mr Holland said a second glaring instance of a misleading presentation of figures by Mr Nash was in a widely publicised table of the Budget in which Mr Nash sought to show that a married man with three children earning £5OO yearly would this year have a net residue of £521, including family allowances, which would be £lOO more than last year’s residue of £421. Mr Nash knew this was not the full picture. “I hate half-truths,” said Mr Holland. The Minister knew that .legislation passed last year increased the income tax exemption for a wife, but abolished exemption for children, consequent on the introduction oi the family allowance. The Minister knew perfectly well that only by a slip of the law did the .taxpayer for this year only .enjoy a double advantage in that he had an increased exemption for his wife, without losing his exemption for his children. 'But next year, the revised exemption scale would operate fully, and the taxpayer in the instance quoted, would pay £23 more than Mr Nash i had admitted.

Inflation Question Mr Holland said the Reserve Bank report showed that between 1940 and 1946 the volume of money increased by £110,000,000 from £70,000,000. to £lBo,ooo,ooo—while the value of production in the same period increased by £41,000,000 —from £144,000,000 to £185,00,000. The Reserve Bank report .also showed that the note issue at £43,500,000 for 1946 had increased by £3,290,000 over' the previous year, and had increased. sixfold in the 10 years from 1935 to 1946. That was probably what Mr F. P. Walsh had in mind when in hib report he had warned against the dangers' of inflation. Mr Holland, examining New Zealand’s cost structure, said we had to export half of our national production. To-day it was a seller’s market, but it would be foolish for the Government to build, as it was doing, a permanent high cost of production structure within the Dominion, based on the present high prices for pur produce overseas. It

would be equally foolish to attempt to build a high cost structure in the towns and to maintain a low cost structure in the country. It was because of a paramount nged for keeping costs down that the Opposition emphasised reduction of taxation, but the Minister of Finance thought differently. "He did not want to see costs come down. He preferred to reduce our overseas debt. Big • Surplus Again ]\Jr Holland said there were two major reasons why there was not a greater reduction in taxation. The Minister of Finance wanted to see a huge surplus at the end of this year, and was budgeting for a surplus of more than' £2o,ooo,ooo:—and there was a huge increase of £42,000,000 in the cost of government. It was little wonder that the Government was still going to extract £14,500,000 in sales tax, and that there was no reduction of war-time duties on tyres, petrol, or postage, and that the £7,000,000 in wages tax was still on. It was no wonder there was no relief in the estate and succession duty, and no reduction on the beer and tobacco taxes. Mr Holland said, in support ol his assertion that the Minister of Finance would budget for a huge surplus, that the estimated surplus in the War Expenses Account was £12,737,000, in the Social Security Account, £3,966,000, and in the Consolidated Fund, £4,509,000, making a total of £21,212,000. To show the increase in the cost of administration, he said that the total expenditure of all Government departments for the year 1936-37 was £30,600,000, winch increased to £57,200,000 in 1945-46; and for the year 1946-47 the cost was estimated at 100.3 millions. Mr Holland reviewed other accounts, criticising proposed expenditure. He said that in the opinion of the Opposition, a very strong case had been made for a thorough investigation and overhaul of departmental expenditure. The Opposition proposed to take up that task at the earliest opportunity. The Mines The Minister of Finance had announced a policy to nationalise the mines. It was the National Party s policy to denationalise as much as possible, and it would denationalise houses by selling houses to the tenants in them. The fact that the Minister of Finance had. announced the nationalisation of mines was a betrayal of coal owners and of farmers in the Waikato who had banded together and purchased two coal mines. The nationalisation of mines would be an election issue.