PARLIAMENT

Hawke's Bay Tribune, Volume XVII, Issue 210, 19 August 1927, Page 6

PARLIAMENT

HOUSE OF REPRESENTATIVES CONCLUSION OF BUDGET DEBATE’ PREMIER’S SPEECH. Wellington, Aug. 18. The House 01 Itepcesentatives met at 2.30 p.m. to-day, and at the conclusion of the formal business the debate on the Budget was resumed by Air. W. D. Lysnar (Gisborne), who proceeded to criticise the administration of the Aleat Board. He said the board claimed to have secured a reduction in freights, which they claimed conferred great advantages on the farmers. He maintained that the freights contract entered into by the board was a distinct disadvantage to the producer, because it eliminated competition. It was this contract which shut out the farmers’ steamer, the Admiral Codrington, from the New Zealand trade. That steamer comd make two trips per year and reap a profit of £20,0110 per trip. That meant she was earning 20 per cent, on the boom price at which she was bought and that without any back cargo, which shipping inlluences prevented her from getting. He congratulated the Minister of Finance on the simplicity and lucidity oi the Budget. At the same time he regretted the necessity for the continuation of borrowing. Sir John Luke (Wellington North) said that when he was in England some years ago he heard nothing but the highest enconiuins regarding the usefulness of the Meat Board. He congratulated the board on the carrying out of a very difficult task. He believed in agricultural education and agricultural colleges, but he implored the Government not to overstep itself in the matter of expenditure in this connection. BUDGET SURPLUS. Discussing the Budget he referred to the repeated surpluses during the past few years. Out of those surpluses we had made contributions to tlie public works iuud ot £14,300,COO in the last lew years and upon that fact the Government was to be congratulated. He did not think we should stint the education of our youth, but he favoured the abolition of education boards, because that would save £lOO,OOO per annum. To take the place of boards he advocated the remodelling of the Education Council and giving greater powers to school committees. Teachers’ salaries should not be reduced and a cheese-paring policy should not restrict the efficiency of our teaching services. He strongly deprecated a policy which would divide the town against the country. , MR. COATES’ SPEECH. The Prime Minister, who rose at 4.20 p.m., said he was very pleased with the tone of the debate so far as it had gone. The members had not keen extravagant in their demands, notwithstanding the pressure which he knew was behind tiiein in matters of district requirements. It was quite evident the feeling of the House was that the Budget was a clear and concise statement ot the country’s fianance, and ths Minister well deserved the many commendations lie had received in this connection in the course of the debate. Mr. Coates agreed that for local purposes the country should depend on its own resources, but to attempt to complete railways, hydro-electric power and similar works out of local funds was absurd. Local wealth could not lie organised to do that, because we had not wealth enough. We must borrow outside the country for such purposes, but we should apply commercial priciples to such loans so that sinking funds will secure their repayment. He agreed that one of the best ways to overcome the present agricultural difficulties was cheap fertilisers, and he urged lending institutions to subsidise farmers in procuring fertilisers, because there was no better way of overtaking deterioration and there could not be too big a supply of cheap fertilisers. The Government had been blamed for not providing sufficient money for farms. They had put legislation on the Statute Book setting up a Rural Credits Board. That board was now functioning and applications were receiving every consideration- That scheme had yet to be completed by further legislation. He hoped that as they would finish it off the rural credits scheme would be of some real service to the farming community. He defended the Government's railway policy in subsidising non-paying branch railways, because that was putting them on a commercial basis. There was no waste under this system and the Government was going on with the policy, because they believed it was sound and that it would come out all right. With regard to the administration of loan moneys, Mr. Coates said he would never consent to a board supervising public works expenditure. The case was different with local bodies, And it would have been better if we had a local bodies loans control board 20 years ago, for there undoubtedly had been much local body expenditure which had been unwise. Complaint had been made that insufficient New Zealand coal was used on our railways, but the Government was making investigations as to how our brown coal could be made serviceable for that purpose. He defended the loan of £15.000 to the Broadcasting Company, on the ground that that loan ensured a vastly more powerful station, which would enable them to communicate with the whole of the Pacific. BRITISH TRADE. In discussing our trade relations with the Empire and the rest of the world, Mr. Coates said it was neoessajy always to remember that before Britain could release herself from her war entanglements, other countries which had no such entanglements, had been seeking to capture her markets, but it was quite wrong to suppose that Britain was down and out. She was working a marvellous industrial recovery, and her export trade was now in value with 1.5 per cent of her pre-war oitput. Just as British trade was recovering rapidly, so the position of British shipping was improving, being now 67 per cent, of the world’s shipping, as compared with 62 per cent, in 1013. Britain was c«Triiinly<<>>, w*--t f?r-

eign trading country in the world, aad it was extraordinary how such a little country could hold her own. Britain’s people had faced great difficulties and had made great efforts to pay off huge war debts, and it was our duty to help them in their struggle. It should not always be a case of buying in the cheapest market, but of buying in the markets of greatest interest to us, and he believed the people of the Dominion generally would adopt that policy. Coming to the question of agricultural education, he said the Government’s idea was to enable the farmers to get the best possible results at the least possible cost. At the Massey College they had commenced on quite new lines and were calling to their aid the best in science and in practical knowledge to manage the college. He asked the farmers and the public to exercise patience and not to expect extensive results all at once, but as the foundations had been laid he was confident that the college would be of great benefit to the country. The Government policy, which he haj been able only briefly to outline, whs designed to promote the best interest of all classes, and no effort would be made to give sympathetic and practical effect to that policy. Mr. H. Holland (Christchurch North) said the bulk of the criticism of the Government had been from members who denounced them for increasing the national debt, while at the same time they inconsistently censured them for not borrowing enough. MR DO WAIL {STEWART’S REPLY. The Hon. W. Downie Stewart said it was impossible lor iniu to repiy to ail the <ju speeches wnich huu been delivered ill me course uf the uebalc. One oi tae subjects meuLioned during the debaie wu® the position of the Advances Department, and lie nad oeen asked to state wnai me position was. a\u douut members were being bombarded by applicants, but he un--1 uerstood that in some cases as many ns six members visited me department un tue same day in tne inteieots ox tne same applicant as well as the applicant himself, Tnty were now dealing witn Housing applications tor June of last year and witn settiers’ applications ox August last year, iurmer. in 1924 they had 7UUU appii- ( cunts for £9,50U,0UU, but in 1927 tnoie' were only 4400 applicants for £4,9uU,bbu. The experience of the department was tnat there were empty Houses in Jo low ns und in view of inis it was necessary for the department to pursue a cautious policy. He did not know way these houses hud come buck on to tne department’s hands. Vossibiy it was a case oi unemployment or that a second mortagagee was forcing tne occupants out. as matters stood the department would have to consider whetner to finance themselves into older houses than to encourage the building of new Houses.

RURAL ADVANCES AND DEBT PAYMENTS.

With regard to rural advances, there Had been no delay or holding up of applications for uunt o£ money. Of ioUU.OUU put into this fund only auout £ioU t UOu had been paid out, and they were urging tne people to get their mortgages completed so that they could issue rural credit bonds uguxnst completed mortgages. I’hc scheme fdj intermediate credits was a complicated one and tho Government was seeking to find a way by which the scheme, when put into operation, would be ox reai uv.ueai lo settuea.

•Sir Joseph Ward had suggested that Australia was making butter effort.' to pay off her debt t.nau we are, and he mentioned the fact she has arraug ea a sinking fund on the £3OO 000,Ouo <ebt. As a matter of tact her sink

jug fund is more tnun £3OO 00U,G0b ua it covers ali the Commonwealth' debt, but for some reason Sir Joseph suggested that we were not carrying guu a similar scheme, and in fact at one stage he suggested tnat we nad nu unking iunu. under the Public uebt Extinction Act, J9lO, provision was made lor the repayment of the public uebt by a sinking fund, wnich natf to accumiate at compound interest for 75 years. This scheme was regarded as satisfactory at the time but experience has shown certain disadvantages attached to it. It meant that a huge sinking fund, was accumu luting, wnich would all fall due at a speciued date and involve a vast scheme of realisation. Moreover, apart from surplus revenue there wat no money available to redeem loans that matured in the interim, so as to enable the Treasury lu take advantage of any favourable offers of buying stock below par before maturity loans had to be renewed from time to unic, although there were actually sinking funds in existence to redeem them, This meant a loss through the unnecesary loading of loans with two or three charges, The problem of debt reduction had. of course, been greatly accentuated by the big increase in tne national debt during and since the war period. While the usual sinking fund was quite a suitable and sound method of repaying a relatively small and specific loan, and it was now clearly seen to be impracticable us a method for reducing the public debt. The repayment of Public Debt Act 1925, w’as designed to overcome these difficulties and obviate the weakness of the Public Debt Extinction Act. It was modelled exactly on the British system and was an almost exact copy of the Australian National Debt Sinking Fund Act. 1923. FURTHER EXPLANATION. In a speech made last November in London, the Prime Minister of Australia explained the working of their sinking fund, which provides, as our does for a half per cent every year out of the consolidated fund on the debt which falls under this scheme. The sinking fund was used to repurchase loans on the market and the stock was then cancelled, but in terest on cancelled stock was continued at fixed rates and paid into a sinking fund to represent the accumulated interest that would have occurred had no reduction taken place. As in Australia, so in New, Zealand, the inud had cniefiy been used for the redemption of the war debt, as a debt against which no tangible assets had been created. The accumulated sinking fund was thus included in the redemption fund amounting t,o £ll 250,’ 4)00, and also an amount of £13*500,000 advanced out of the consolidated fund for the .settlement of discharged soldiers, and the interest earned on these capital sums enabled us to re deem tho debt with a lesser charge on

the taxapyers than in Australia. Un der our present system the debt wouiu be redeemed in GO years from its in ecption instead of at the expiry of 7., years under the old system. In effect tho new system means that tho debt will be rcpaitl under un annuity plan after fho manner of a table mortgage. The annual charges will bo practically i tho same, but there will be less interest and more principal paid or repaid each year. The Government had been criticised for not proposing a decrease in taxation and for not decreasing expenditure. There had bean very Jit tie constructive criticism and no one had show them how taxation could be reduced and expenditure lowered. He "-ould reduce the burden of Customs taxation by increasing duties .to such an extent as to stop imports, and then claim that taxation had been reduced. The fact that wo had a revenue of £8,000,000 from the Customs did not necessarily mean that our duties were high. So far as land tax was concerned, the men on top ot the scale were paying fairly high and in other cases nearly, the whole of their revenue was being eaten up in local rates, and if land taxation was to be reviewed this position would have to be taken into consideration. Income tax would come up for review when the annual bill came down. Here again the people at the top were paying pretty high and it was wrong to say that recent remissions in taxation were all in favoua»of rich people. On the general question as to whcth er land tax was preferable to income tax, his impression was that small land owners preferred the land lax, while large land owners would prefer the income tax. Company taxation could not be reveiwed at this stage, because there was a danger of loss of revenue, but he was keeping an open mind on' the merits of the cotending views regarding this subject. The Minister thanked the members for their favourable reception of the Budget. The motion moved by the Minister of Finance at the opening tho debate, “That tho House do go into Committee of Supply,” was then put and carried.

In the absence of the Chairman of Committees through indisposition, Sir George Hunter was voted to the chair. When the first item of tho Estimates was brought under review, the Prime Minister said it was not proposed to go on with the Estimates that night, but they would be taken to-morrow afternoon.