BUDGET DEBATE

Gisborne Times, Volume LXI, Issue 9771, 31 July 1924, Page 5

BUDGET DEBATE

MR. SIDEY AS FINANCIAL

CRITIC.

LAST LOAN TOO DEAR FOR ADVANCES DEPARTMENT.

WELLINGTON, July 30. The debate on the Budget was continued by Mr Sidey (Dunedin South) who said that the Minister of Education (Mr Parr) evidently had been completely taken by surprise by the nature of the Leader of the Opposition’s attack on on the Budget, his whole speech being an admission that he was unable to follow Juan. He therefore was obliged to inn. back on Mr Wilford’s speeches in the country for the substance of his reply. The time was when the country expected to find the Government policy proposals in the Budget, hut that time had passed. Taxation proposals were always eagerly looked for,-, hut in spite of the fact that the Taxation Commission had concluded its investigation- and it was known its report was not to be widely departed from, there was no reference to it in the Budget, because the Government evidently was unable to make up its mind. Discussing the surplus the speaker blamed the Premier for withholding the announcement of tho surplus for so long. This was contrary to the usual practice, but while the information had not been given to the peoplo of New Zealand as early as usual, the fact was published in London as early as May that the surplus would be over a million and a-half. The surplus was really much larger than tho sum announced. By taking into account several other sums which should have been taken into account, tho surplus really amounted to £2,250,000. Perhaps the Premier was reluctant to announce the true figures because he was conscious it was too large, and that he had been takiug too much money out of the pockets of the people. •

ANALYSIS OF YEARLY ACCOUNTS In connection with the yearly accounts, continued the speaker, there wero some respects in which these accounts did not improve with closer inspection. A good deal of credit was being taken by the Government because their expenditure was less than last year. The test of the Government’s administration was that their expenditure must bo under annual appropriations, and not under permanent appropriations, which were largely beyond Government control. Under the annual appropriations the expenditure .as compared with tho previous year increased by £408.000. If tho increase in outstanding liabilities were added, the increased expenditure would be found to be well over half a million, and that in spite of the fact that £93,000 of last year’s decrease in expenditure was due to the fact that there was no general election. If the figures were taken strictly as they appeared in the Budget, it would be observed that notwithstanding the increase of £1,200,000 in the Customs revenue, the total increase in revenue was wiped out byincreased expenditure under the annual appropriation. It was expenditure under permanent appropriations which enabled the Govermnonc to claim their expenditure was less than last year. A reduction m pensions of about £150,000, chiefly- war pensions, was sufficient to account fur the difference in expenditure between the two years, and he was sure the Government would not claim any credit for that. Much the same thing might be said of the statement in the Budget that the revenue last y T ear was short of the estimate by £8630. The Minister of Education in his speech last niguL claimed that as a record in. New, Zealand’s financial history. This was a grave illusion. NATIONAL ENDOWMENT REVENUE.

Mr. Sidey said the Prime Minister last year in his estimate of the revenue for 1923-24, included the sum of £128,000 on national endowment revenue. Having, however, excluded national endowment revenue altogether from his accounts, he ought to have deducted from last year’s estimates £128,000 allowed on that account in ascertaining whether liis estimate of the revenue had been exceeded. This he failed to do. Deducting £128,000 from the total esthaute of £27,969,000 it was found that his estimate for 1923-24 was £27,841,000 without endowment revenue, and this instead of being over estimated, was under the estimate of the actual revenue received, by £119,370. Further, last year tho Minister Budgeted for £1,287,000 hi terest on public moneys. If the Min-instc-r deliberately excluded certain of these moneys from his accounts he ought also to have eliminated them from his estimates. As he had not done this, it was right that to £119,370 there should bo added £540,000 outstanding interest, when it would be found insead of overestimating his revenue by £8630 os stated in the Budget he underestimated it by £659,370. After dealing at some length with tho question of exports and imports Mr Sidey proceeded to discuss the reduction in national debt, contending it was a striking com me ntory upon the reduction which was claimed for the past two years, tiiai» the interest and sinking fund charges last year were greater than two years ago by £147,000, and although the payment of interest showed a small reduction last year of some £26,000 on tho expenditure side, there was over £IOO,OOO less interest on public moneys on the revenue side after allowing for an outstanding £540,000. The country never had been able to obtain exact information as to the actual cost of Government borrowing an land on tho market until after two years had elapsed.

“A BAD BARGAIN.” Referring to the last loan, the Budget stated the interest yield to investors was £4 14s 9d, but that did not disclose as much information as might have been given. The London Times stated the total average yield would be £d 18s Id, and when all charges were properly added it was quite clear this money could not ho loaned out by the Advances Department at 4£ per cent., and it might not even he profitably employed at si) per cent. The fact that the Minister was now talking of seeking a reduction in annual charges under the heading of funded debt, might be taken as, an indication that he had made what might soon becomo a very bad bargain. It would depend on the terms upon which the whole funded debt could be redeemed. There was little doubt the Government had made a bad bargain in exchange of 5J per cent, debentures for 44 per cent, free of income tax. Mr Sidey referred to the prospectus of the last loan, 'ind noted the criticisms he had made on previous prospectus had borne fruit. He had on more than one occasion drawn attention to misleading statements on financial matters. The "Budget contained the same pious warnings against over-borrowing and extravagance that had characterised the Prime Minister’s utterances r.r r ' his pre-office days, with just as littie euclerjce of any indication that he would practice what he preached.

WHAT WILL BECOME OF FARMS AFTER MORATORIUM P IjHEI HOUSING PROBLEM. Mr F. Jfi Rolleston (Timaru) following up Mr Sidey’s criticism of the figures in the Budget said tne more important points raised by the member for Dunedin South wwiid have to be answered by the Mmi*. •tors concerned. Discussing the <,uv*»

tion of the moratorium he submitted there was more iu it than interference with private contract. There was the great national question ol what was to become of tho larms from which the cultivators had to walk. If this happened to any great extent there was going to be a loss in production, which was a matter which gravely concerned the whole o'‘entry. He thought tho present method of dealing with the housing question was not economically sound and would he much better managed by local committees. There was an idea abroad that when money was coming from the Government there would bo delays in getting the progress payments and as a result an extra price was always put on by contractors. Consequently the price of building went up. Housing was one of -the most important the State had to deal with, and he regretted more was not being done in. this direction. On the general question of public finance he thought tho time to exercise economy was not when things were had, hut when . things were good, and it was something of a commentary on our present position that almost on top of the order paper was a Bill to grant a greater number of permits to racing clubs. He had not criticised tho financial proposals in a hostile spirit. Ho thought finance was above party and ho had endeavoured "So discuss it from that point of view.

LABORLTE OBJECTS TO' REDUCED TAXATION. WILL MAKE LOT OF POOR MORE DIFFICULT. Mr Armstrong (Christchurch East) said that most members of the Labor party could agree with what Mr Rolleston had said regarding the Taxation Commission, hut for what he had said he was afraid Mr Rolleston would find himself ostracised by his own party. Tho Taxation ConV missiou was set up solely for the purpose of taking a responsibility from the Government and the House, which they should rightly boar. On the subject of income tax ho pointed out that in New Zealand wo were paying just about half that paid in Australia and England. He proceeded to condemn the failure of the Government to provide more houses for tho people, while the Government was steadily aggravating the trouble by their immigration policy. Taking tho new arrivals, with the natural increase in the population, it was absolutely impossible to overtake the shortage, in houses at the present rate of limiting. He emoted figures to show how the trading of the Dominion was increasing, and argued from this that the people were never better able to pay the taxation which the country required, but the Budget announced a reduction of taxation to tho extent of one million which merely meant that tho burdens were going to he taken off the rich, and so make the lot of tho poor even more difficult. Tho Reform party had in 1911 denounced the Liberal party for its borrowing policy, but if they were asked to-day for a remedy for our present financial difficulties their reply was, "Borrow more.” Dealing next with the position of mortgages, ho declared it took practically the whole of the returns from the dairy industry to meet the interest charges on mortgages. This was largely the result of gambling in land, and it was time some party came into power courageous enough to put a check on 'land gambling. It simply meant that if there was a small drop in ‘’the price of our products, the farmers’ interest in his land disappeared. The Reform party said the remedy for this was more production. He believed in more scientific methods of cultivation and cheaper shipping freights to give farmers better returns, hut tho first tiling to lie done was to eliminate the speculator and the policy of The Labor party alone would do that.

HOW TO MANUFACTURE SURPLUSES. TRUSTS CONDEMNED. Mr de la Perrelle (Awarua) said the Premier was becoming an adept at manufacturing surpluses, which was clone by the simple process of overestimating the expenditure and un-do:-estimating the revenue. He regretted there was nothing in tho Budget premising tho suppression of trusts. New Zealand was steadily becoming a land of trusts and combines, but tl.ii was not surprising, ‘‘since it was generally understood that if you handle a combine you bruise a Reformer.” A still further reduction in the cost of telephones to backblocks settlers was urged, and a larger subsidy to the Imperial Navy advocated, fie' was definitely in favor of having two-cruisers in New Zealand waters. The speaker proceeded to extoll the natural resources of Southland. There was ample room .for a larger population. Land values were not inflated mi a therefore the southern province offered the fairest field for new settlement in he Dominion.

AVOIDING SERIOUS PITFALLS. PREMIER’S REMARKABLE FORESIGHT. Mi Hawken said ho considered Mr Wilford had failed to make an effective attack upon the Budgt, which revealed 'that the country was in a thcicughly sound position. Reviewing the policy of the Government as diseased in the Budget, he said the first task the Government had to face was tho repatriation uf soldiers, and this had been carried out in a manner not equalled by any other country in the world. The housing problem had been tackled in a, most effective manner, and he believed we had almost, reached the stage when the housing shortage would be overtaken. Public works had been carried cut in a most energetic way, and that without/ dislocating the finance ot the country.. Indeed,'the credit of the country never stood higher than it di i at the present moment. A hat the Government had done in the nu.fr ter of granting educational facilities was greatly to their credit. It was true that ’we did not have all we might have in the matter of agricultural education, but tho position of the settlers in the backblocks was immensely improved. In fact the Minister of Education had done wonders in this respect, as had also the Postmaster-General in the matter of country telephones. Not alone had he Government great achievements to their credit but they had avoided serious pitfalls. Two of these were State shipping and the or currency. For avoiding these mistakes, which had been so disastrous to other countries, he believed credit was due to the Prime Minister, whose 'foresight in these directions had been remarkable. He favored more money being available for settlers and the establishment of agricultural hanks, which would help to relieve the pressure on the Advances Department, and at the samo time teach farmers some idea of thrift and practical finance. Any housing scheme which did not encourage r-ung people to pay off the cost of their homes and have them rent free, was net in the best interests of the country at large. He favored the building of houses but he wanted to see people own their own homes. He advocated support to the minor industries through the judicious use _ ot the Customs tariff. We formerly imported £40,000 worth of egg pulp, but since the tariff was put oil we imported none, but were now m a position to export about the same valuo in eggs. He also urged the immediate planting of third-class lands in trees. Tf we did tins our national debt would disappear in

forty years. Perhaps the Government had not found as much money for this purpose as they might have done.

OVERCROWDED SCHOOLS. PLEA FOR SEPARATE UNIVERSITIES IN N.Z. Mr Lee (Auckland East) condemned what he called the shameful over-crowding in our schools. He dicl not blame the Minister for Education for this condition of affairs, because he believed the Minister had fought hard for the best interests of liis department. Considering tho depreciation of the purchasing power of money since the war ho did not believe the Education vote had been greatly increased, and so the school buildings programme had come to a standstill. Tho result of this was that many schools were most improperly congested. It had been said that four feet of air space was necessary to properly rear a duck, but some of our schools only provided seven feet of air space in which to rear a child. The enlargement of some of our 'schools was of more importance than the provision of a second cruiser. We handed the child to the teacher and told him to expand its mind, while wo put that child in a building which could have no other effect than to cramp its body. He urged most complete medical assistance for children, and protested against unauthorised religious observances in many schools. Continuing after tho supper adjournment Sir Leo’ put in a plea for separate universities in Now Zealand as an act of justice to Auckland where students attending the engineering and dental classes were severely handicapped because the time spent in these classes did not count in tho Christchurch School of Engineering or at tho Dunedin Dental School.

The debate was adjourned on the motion of Mr Edie and the House rose at 10.25.—P.A.