Parliament

Hawke's Bay Tribune, Volume XVII, Issue 202, 10 August 1927, Page 4

Parliament

HOUSE OF REPRESENTATIVES. DEBATE ON THE BUDGET. Wellington, August 9. The debate on the Budget was resumed in the House of Kepresentatives this afternoon by Mr T. K. Sidey (Dunedin South), who. in replying to the Minister of Justice, who, spoke on Friday night, said the Minister, in referring to borrowing, had avoided the main point upon the Reform party was open to criticism, and that was thev attained office on a no-borrowing policy, whereas, as soon as they got into power, and even before the war. they borrowed at a rate far greater than their predecessors. To-dav they seemed to be suprised at their own moderation in having borrowed only £7,000,000 last vear. The Minister of Finance had been credited with a commendably accurate forecast of the financial position, out he had a surplus of £587,000 to which one was entitled to add £41,000. the amount bv which outstanding liabilities had been reduced at the end of the year, and if to that were added, not the full amount of interest entitled to be received from the public debt redemption fund, but the amount the Minister had budgeted to receive from that fund, and also by wav of recoupment from the discharged soldiers settlement account, his surplus would have been over £1,100,000. The Minister had explained that the increased Customs receipts were due to the industrial disturbance in England. He hoped the Minister in reply would show how he arrived at that conclusion, because from an examination of the goods imported in 1926 it appeared as if such explanation was overstated. REDEMPTION OF LOANS The Minister was taking his cue from the Old Country in the matter of debt redemption, but the conditions there were very different from those here Great Britain was a creditor country, while we were a debtor- country, requiring to borrow largely from overseas for developmental purposes. We were already sending enough money out of the country under our new debt reduction and funded debt schemes, especially during the period of adverse trade balance. Would the Minister say what was the dead weight debt . and what difference there was between loans for roads and bridges or education buildings and war loans so far as the consolidated funds was concerned, which had to find the whole of the interest? If the redemption of loans was for the purpose of increasing the revenue at the disposal of the Government, it was open to question whether that method of obtaining increased funds would provide as wholesome a check on Government expenditure and extravagance as the necessity to impose additional taxation would. TAXATION. The most disappointing part of the Budget was that under the heading of taxation, During the past seven years the Government had repeatedly acknowledged the necessity for a more equitable adjustment. It was idle to say, as the Budget affirmed, that most of the committees’ and commissions’ recommendations had ben adopted. The reduction of taxation would have taken place in anv case. The commission recommended that income tax should be based on income from all sources, including income from the land and that data should be obtainable for that purpose The Government had not even troubled to include in its returns a schedule enabling it to estimate what tax would he obtainable bv the inclusion to-day of incomes from the land with other incomes. There was probably a good deal of pressure against a change in company taxation from large company shoreholders. The estimated Toss of £1.000.000 did not appear to be incapable of satisfactory adjustment. The relief of companies from taxation w.ould give a fillip io industry. CLEAR AND CONCISE DOCUMENT. The Hon. J. A. Young, Minister of Health, said the Budget was a concise, clear and business-like document, as even the most hostile critics had admitted. Mr Sidey had assumed that in connection with our debt redemption the money was sent out of the country, but this was not so except lor portion of the Imperial funded debt, equal to about one-third. Loans for roads and bridges, which Mr Sidey had mentioned, were in a sense reproductive, but that was not the case in connection with the war debt, which we should make every effort to reduce. Dealing with the trade balance, he said that when the Prime Minister spoke in 1925 there was every prospect of good times before the country. He justified the Government's attitude on company taxation. The maximum income tax had been reduced from 8s 9d to 4s 6d in the £ and exemptions had been widened, which resulted in those intersted in companies being much more satisfied Relief also had been given to farmers in the matter of income tax, and these concessions represented a schedule of relief for which the Government was entitled to every credit, because the people were not now in a position to nav such large tribute to the State. Mr Sidey now demanded a further reduction in taxation, but in the face of the increased demand for social services those demands could not be granted. The people could not have increased public facilities and reduced taxation at the same time It was most encouraging to know that our last loan was well received in Britain, and there was no doubt that it had been wisely allocated. The speaker then proceeded to deal with hospital finance (reported elsewhere). CHILDREN’S COURT CRITICISED Mr G. R. Mason (Eden) said he was sorry to hear the Minister of Health stress so much the people’s reduced capacity to pay tribute to the State, because that might be the reason for the economy about which the Minister of Education had been emphatic of late. He would very much regret that drastic economy should come into the Public Health Department because hospi- ' tals were needed and especially was there a great need of expenditure in extending our mental hospitals, about which be regretted that the Minister had not said anything at all. The speaker then proceeded to criticise the administration of the Children’s Court, contending that it was not in the best interest of the children that thev should be brought

into contact with policemen in uniform He also objected to subnormal children growing up in ordinary schools, when the>« were schools for them. With regard to the balance of trade he did not regard the position so seriously as some members did. BEST IN THE WORLD. Mr A, Hamilton (Wallace) congratulated the Government upon the service it had rendered to the fruit industry. The Budget showed that it had helped to the extent of £82,619, ami this subsidy granted had placed the fruit industry in one of the most favourable positions of any industry in New Zealand. As far as the Budget went the criticism had been of the mildest character, showing the Government how tittle there was to fear. It was a straightforward balance-sheet of the country’s finance and we had come to the end of the year with a good deal on which we should congratulate ourselves. The country's credit was the best in the world, and that was something for which thi Government served to be complimented, for it was not every Government that could maintain so good a position. Mr Hamilton deprecated building so many houses in cities, because the population was certain to drift back to the country. There was no country in the world where wealth was so evenly distributed. Discussing land values in New Zealand, he said that with £20,000,000 more of exports since the war the farmer was getting less. This was what reused land values Mr Hamilton said this was a new set of conditions which the Government was going to put right. Mr H. T. Armstrong (Christchurch East) said the last speaker deprecated public expenditure on houses and other public utilities. If the Government wished to bring about disaster the best thing thev could do would be to follow the advice of the member for Wallace. He condemned what he called his “peculiar economies.” and then proceeded to say there was nothing in the Budget to excuse the Government for the state of stagnation at present existing in New Zealand. Dealing with education, he commended the work of the Minister, who had done very well with the money at his disposal. It was not a question of whether we were spending too much on education. but a question of whether we could afford to spend less. To improve our education system he advocated the incorporation of wireless into our schools. The country was all right, only the intellectual misfits were controlling the country..

NOT THE GOVERNMENT’S FAULT.

Mr J, G Elliott (Orua) said it was not the fault of the Government that the farmers were in financial difficulties. That was more largely the fault of individuals. The farmers’ troubles arose out of the high costs of farming, deterioration of lands and inadequate and unsatisfactory schemes of rural finance. To remedy these disadvantages the first and most important thing was large and regular supplies of phosphatic fertilisers. He predicted that before long New Zealand would require annually 400,000 tons of such fertilisers. He was not satisfied we wre getting our proper share of phosphates from Nauru Island. Dealing with rural finance, he Hamed the moratorium for, in a sense, weakening the lender’s faith in rural securities, but a far greater factor in bringing about the financial stringency was the orc- of land speculation which followed the high nrices obtained for farm produce during the war. Through the operation of the moratorium and the fall in prices rural securities became unpopular. At present about 10 per cent, of the farmers in the North Island were in a hopeless position, and the remedy he maintained, lay entirely with the mortgagees, who should cut their losses and release their stranglehold on the farmer. The Government, however, could render assistance bv a system of long term mortgages The State Advances office was doing good work, but was short of capital, and he considered the Government should seize every opportunity to raise money for use bv tills department. The department should also be authorised to accept money on deposit at short call, up to five or six millions. Private financial institutions should be induced to adopt lending on the amortisation principle and that inducement might be in the direction of concession in taxation on incomes derived from these loans. Besides these thin there were other attributes necessary to restore propsrity to New Zealand. These were the attributes which character-' ised the pioneers of this country—hard work, economy, goodwill and cooperation. On the motion of Mr F. Waite the debate was adjourned and the House rose at 10.30 p.m. till 2.30 p.m to-morrow.