CONVERSION BILL

Hawke's Bay Tribune, Volume XXIII, Issue 67, 1 March 1933, Page 5

CONVERSION BILL

LABOUR CRITICAL mb. savage reviews proposals. Oreater use of public credit URGED. By Telegraph—Press Association. Wellington, March 1. Greater use of the public credit was advocated by Mr. M. J. .Savage (Lab., Auckland West), when discussing the New Zealand Loan Conversion Bill in the House of Representatives last evening. Mr. .Savage said that if the Government would set itself to the task of industrial development, which must be attempted in the long run, it would be doing something to deserve the co-operation of all citizens. Expanding production could not continue side by side with continuous contraction of the currency. It seemed that the State departments would have to bear the brunt of the Government’s conversion proposals. Mr. Savage said that wages had been reduced two years ago, and it was only now that Parliament was tackling interest rates. One was interested in the statement made by Mr. Coates that those who did not convert would be subject to the existing taxation and to any other special taxation that might be imposed. One wondered what just exactly the Minister meant by “any other special taxation.” “The newspapers hit the nail on the head when they declared the longer wo stayed here the more damage we did. I agree with them,” said Mr. Savage. “I say the sooner we go home the better.” THE STATE AND SECURITIES. Mr. Savage said that in view of the large percentage of the internal debt held by State departments, it was difficult to see where the benefit was to come from. It appeared as if these departments, which had always made advances on more favourable terms than private lending institutions, were now to be called upon to lead the way toward still lower interest rates. The total securities held by State departments at March 31, 1932. amounted to £146,201,115. Of that amount the Post Office Savings Bank held in New Zealand £43,950,596, and in London £3,762,739. From information that one had to gather at short notice it appeared that the banks compared very unfavourably with the State lending institutions, said Mr. Savage. The last balancesheet of the Bank of New Zealand, which was a fair sample of a private banking corporation, showed only £4,682,050 invested in Government securities and £682,370 invested in local body securities.

The Bill, continued Mr. Savage, marked one of the closing scenes of a financial tragedy which was begun not so much during the inflationary period of the war but immediately following the war, when the policy of deflation began. It was a continuation of the policy of deflation which began in earnest about 1922 with large reductions in wages and salaries and substantial reductions in direct taxation to the wealthy section of the community at the same time. Concessions in income tax alone lost to the State approximately £11,500,000 for the seven years ending 1929-30. During that period huge additions were made to the public debt. That policy had been carried on relentlessly ever since, and the Bill before the House was the natural outcome. "FORCED TO SUPPORT BILL.” The object of the Bill, said Mr. Savage, was to preserve the bondholders’ interest at a 20 per cent, reduction. Why should the bondholder be the only lender to make a sacrifice! Had the time not arrived for the consideration of the application of similar legislation to all loans, public and private! Members would be forced to support the Bill because on the whole it provided an orderly means of bringing down interest rates instead of allowing them to crash as a result of default. The present legislation had been made necessary mainly on account of liabilities arising out of the war. If the Government would set itself to the task of industrial development, which must be attempted in the long run, it would be doing something to deserve the co-operation of all citizens, but when it insisted upon continuing a policy of destruction, it was not entitled to ask for continued support. The use of the public credit was not new. It was extensively adopted during the war. It was over-done, and instead of dealing with money as it dealt with men, the State contracted huge debts, which they were attempting to scale down to-day.

Concluding. Mr. Savage said that unless Government policy were completely reversed national bankruptcy must be the outcome. The annual payments into the Unemployment Fund were sufficient to pay reasonable charges on a sum of money which would be large enough to put every willing worker to reproductive work at rates of wages sufficient to maintain a fair standard of living. Nothing less would save the situation. OPPOSITION LEADER’S VIEWS. The Leader of the Opposition, Mr. H. E. Holland, said that while the Prime Minister had appealed to bondholders to convert, the Minister of Finance had threatened to bludgeon them if they failed. He had no doubt the conversion proposal would be successful. The people had confidence in their country but not iu the Government. Mr. Holland said that reductions in interest would have lo go tuither than was provided in the Bill. Attention would have to be given to overseas debts. Unless some drastic change took place New Zealand would not be able to meet its liabilities overseas. Everyone recognised the inevitability of the Bill, said Mr. Holland, but when the reductions had been achieved Would the saving to the Budget be as

great as anticipated! The Government hoped the Treasury would benefit by £500,000. Was it not a fact that the economists had suggested a net saving of £300,000, and was it not the late Minister of Finance w'ho accepted the Treasury statement which placed a much lower figure than that stated by the economists? “MAILED FIST” SUSPECTED. COMPULSORY ELEMENT CRITICISED. By Telegraph—Press Association. Parliament Buildings, March 1. The debate on the second reading of the New Zealand Debt Conversion Bill was continued when the House of Representatives met at 10.30 this morning. Mr. W. E. Barnard (Napier) said that the Minister had appealed to the patriotism of the people in connection with the conversion, but the terms of the bill made it clear that it was a case of the mailed fist in. a velvet glove. Mr. C. H. Clinkard (Rotorua) expressed the opinion that the Government was doing the right thing. Mr. W. E. Parry (Auckland Central) supported the contention that the conversion would be compulsory and not voluntary. The debate was continued by Messrs Dicke. Mason. Connolly. Langstone, McLeod, and Howard. The House adjourned at 1 p.in.