BUDGET DEBATE

Manawatu Standard, Volume IV, Issue 210, 6 August 1931, Page 2

BUDGET DEBATE

REFORM LEADER’S CRITICISM. NO ADVERSE RESOLUTION. Per Press Association. WELLINGTON, Aug. 5. The Budget debate was opened by Rt. Hon. J. G. Coates, Leaner of the Opposition, when the House of Representatives resumed at 7.30. He prefaced his remarks by referring to the decision of the Reform Party conference in January last to emphasise the necessity of tasting steps to meet the serious situation then developing. __ It had subsequent!-.- been announced by him that it woufd be his party's policy to help rather than hinder the Government and he could now repeat tuat such a line of action would be continued.

It was not his intention to move an adverse resolution to the Budget, but there were one or two matters concerning which the Opposition must reserve its right to explore the wide range or alternatives before acquiescing in tne Government’s proposals. Referring to taxation. Mr Coates said his party would carefully explore t?:e situation and endeavour to ascertain whether it would be possible to make further economies and _ thereby avoid a certain amount or the harshness involved in the taxation proposals.

The careful policy of Governments in recent years, continued Mr Coates, had resulted in substantial reserves having been built up arid it was fortunate the country had these reserves on which it could call in its hour or need. He agreed that it was essential in the interests or the country that the Budget should be balanced. The importance of balancing the Budget this year was more than usually urgent. It would inevitably place our credit on a very high plane, hut even if we balanced our Budget, he added, our troubles would not be over tor it would still be necessary to look for a permanent solution of the problem facing the great primary producing industries. Unless there was an improvement in revenue or further economies could be made. Mr Coates said it would he even more difficult to balance the Budget next year. He was of opinion that there was room for savings in departmental expenditure. INCOME TAX CHARGES. He urged the Government to reconsider the taxation proposals in two important respects, namely, the increase of the surtax and the lowering of the exemption as he considered both these proposals would inflict hardship on those earning lower rates of salaries. He quoted figures which, he contended, showed that a man with £3OO a year who formerly paid no income tax would next year have to pay £1 16s 2d. A man earning £350 would find his income taxation increased from £1 6s 4d to £4 Is lid, or 211 per cent. A man earning £4OO would find his income tax increased from £2 12s 7d to £6 7s 6d, or 143 per cent. Other increases would be as follow: —£450 a year, £3 13s 9d to £8 12s Bd, or 122 per cent.; £6OO ayear, £lO 17s lid to £lB 13s 6d or 77 per cent.; £BOO a year, £2B 17s Gd to £46 16s or 62 per cent. These figures, of course, made no provision for family allowances, etc. It would be seen that the taxation on the srnaller salaries would undergo a relatively greater increase because of the proposal to reduce the exemption to £260.

His side of the House regarded the proposed taxation as being extraordinarily heavy and it would hit harder and sooner than previously.' It would hit still harder when such charges as the wages tax were added. He realised that it was impossible io reduce existing taxation in view of the circumstances, but he submitted that it would be in the interests of the country as a whole if it were found possible as a result of additional savings in expenditure to reduce the proposed total surcharge of 30 per cent. and leave the exemption at £3OO. . He asked if it were posisble to reduce the surcharge to 15 or even 20 per cent. Mr \Y. E. Parry: How would you make up the balance? Mr Coates: I have already indicated that I believe there could he further economies. Mr Coates added that there was time enough before the taxation Bills were brought down for all possible means of effecting further economies to be explored. DUTIES ON FOOD.

Referring to the Customs increase, the Leader of the Opposition said no one liked the impost on tea and sugar, but after all the money had to be found. No one liked the impost on tobacco, silk or wearing apparel, hut the position had to bo faced. As he had said before, the money had to be raised. Mr J. S. Fletcher: What about the “oil kings?” Mr Coates: When we get to the taxation Bills we shall have ample opportunity to consider the. quostion of the “oil kings.” Continuing, he said the worst element in the Customs increases was the primage duty, which affected all nondurable goods. It affected the worker and farmer and in addition to increasing the cost of living it increased the cost of production. It was a serious matter to increase the cost of production. Anv way, it was essential to allow the farmer to produce at a cost that would enable him to compete in the world markets. He urged the Prime Minister to explore every possible source of revenue before imposing the proposed primage tax. Mr Coates considered it should be possible to effect economies in the Education Department without impairing the efficiency of the system. A special investigation into the cost of education had been promised in the short session, hut the Prime Minister had not so far set up a committee. He had, however, stated in the Budget that this would be done. Mr Coates added that it seemed that apart irorn the salary cuts the Education Department had escaped scot free from the economy axe. ROADING AND UNEMPLOYMENT. The Leader of the Opposition referred to the proposed increases in expenditure on railways and road construction and asked what was the roa; son for loan money being used increasingly in these quarters. Air Forbes: Unemployment. Mr Coates: Exactly. He considered if there had been any other reason the Government would have deserved castigation, but even as it' was the position was serious. He asked whether loan money should be spent on projects that would not return to the country the best possible results. Was the expenditure on roads and railways the wisest course to follow? Would it not be possible to cut railway and roading expenditure in half and spend the remainder on the development of land? Mr T. W. McDonald: Roads aro necessary for the development of land. Mr Coates: There are some that arc necessary, but when it is realised that the Government has brought in only 100,000 acres it will bo seen that all the roads are not being constructed with a view to development. Mr Coates added that in his opinion it would be better if at least £1,250,000 were spent on the development of lands.

Mr J. T. Hogan: How many men would that employ? Mr Coates: As many as the samo

amount of money would fir.d employment for in reading work. He did not suggest that the money spent on land development would immediately pay interest, bat in a comparatively few years it would increase production and the oniy thing this country could do to meet" the rail in the prices of primary products would be to increase production. FINANCE FOR ROADS. Referring to the highways funds Mr Coates asked whether the Government had ascertained what the Highways Board’s policy was likely to be daring the current year. Was it going to give assistance to the rural ratepayer? He considered that if it did not coatempiate such action there should be some arrangement whereby the board could increase the subsidy towards rates. Mr Forbes: The whole question is before a special committee. Hon. A* J. Murdoch: Would you support the use oi the petrol tax in this direction? Mr Coates: Yes, and I believe motorists would be quite prepared to assist the country ratepayer this way. Mr W. J. Broad foot: But the Highways Board is depoliticalised. Mr Coates declared that the board had the capacity to assist and its actions and the country’s welfare were inseparably bound up. Mr Coates expressed regret at the position that had arisen respect to Canadian trade. He said the two Dominions seemed to be getting as fur apart as the poles. He again wished to impress on Mr Forbes tne gravity of the situation. Only the other day there was the spectacle of an American vessel coming to this country and endangering trade that nad been built up between New Zealand and Canada. The American line of steamships threatened to take trade that had been built up by the Union Steam Ship Company. In conclusion, Mr Coates expressed the opinion that in spite of its difiiculties this little country was sounder financially and otherwise than any other country on the face or the globe. LANDS MINISTER REPLIES.

Hon. E. A. Ransom expressed appreciation at the attitude of the Leader oi the Opposition towards the Budget, and said his remarks had been very fair. The Government had taken note of the difficulties ahead but its precautions had not been sufficient as the deficit showed. It was gratifying to know that Reform approved the Government’s determination to balance the Budget. Economies would have to be made and it was necessary to avoid hardship as much as possible. Hardship was inevitable. but the Government should trv to avoid personal hardship such as would be inflicted by the dismissal of employees. Mr Ransom said he believed the opinion of the country was tnat the Budget should ho balanced and he was glad to know Reform would support the Government’s proposals in that direction. A Reform member: Oh, no! Mr J. A. Nash: You are going too far! Labour members: Aren’t you all agreed ? .Mr Ransom remarked that the Leader of the Opposition had said the real problem would have to bo met next year, but the Government believed "it had rr.et the real problem this year. However, ii the same Government was in power next year the position would be just as satisfactorily dealt with. (Laughter).

FARM RELIEF. Mr Ransom said the problems of the primary producer at the present time must receive more than ordinary consideration and he wanted to call the attention of the House to the fact that they had been given every consideration in the Budget. It had been suggested that further savings could be made in departmental expenditure and that was so, but this could not done without dismissals which would lead to personal hardship, and it was for the House to say whether that was to he done or not. The Economy Committee was still in existence and he believed it would be a good thing if a committee formed from men outside the House could go through the whole country to see if further economies could be made. Mr W. Downie Stewart: I advised that last year. The Minister said it had been suggested that £1,000,000 could be cut off the expenditure on education, but the Government was not going to make a ruthless- cut there unless it could be shown that education could be continued without sacrificing what had been built up in the past. Dealing with the income tax increases, Mr Ransom said that the income tax would still be much lower than in some other countries. Various tables of figures had been published in the Press of the Dominion, but they had not dealt with cases where rnen would receive the exemptions still in force. For instance a man receiving £4OO a year would be asked to pay an increase of £3 9s 2d, but if he had one child the increase would only be £3 4s Id, if two children £2 0s Bd, if three children £1 4s 7d. Then there were the exemptions for insurance to be taken into account. . In Australia taxable income of £220 would bear £4 14s Id.

Continuing, Mr Ramsom said that exception to certain proposals in the Budget had been taken by business men and others, but if other proposals for raising money in a more equitable way could be brought forward he was sure the Finance Minister would be very willing to consider them. The hmalgamtion of departments had been referred to and the question of whether or not they had resultod in a saving had been asked. In the case of the departments over which ho had control a very real saving had been made, two under-secretaries having been retired. Replying to the claim that borrowed money should be spent on productive works, Mr Ransom said he could quote instances where borrowed money had been spent on unproductive works in the past. Mr Coates: Go on, quote them! TAXATION OF MOTORISTS.

Mr Ransom said that when the Government had proposed to put an extra penny on petrol for the benefit of baekblock roads last session, Reform had objected and had had it removed, and now the party’s .leader was crying out for that money. The Leader of the Reform Party had said that he was no longer in favour of spending money on roads, but wanted it spent on the land, “lie is getting nearer the policy of the United Party every day,” he said.

Continuing, Mr Ransom said that it was a waste of money to employ men on forming roads and then not metal them. It was the policy of the Government, when it opened up new settlements, to form roads and metal them, so that the settlers would not have to contond with mud when taking their produce to market. Mr Ransom said he could not agree with the Leader of the Opposition regarding the number of men who could be employed in developing land. It had been found in practice that once land had been cleared there was very little work for unskilled labour. Mr Ransom remarked that some of the critics of the Government had very short memories. There had been

long arguments against reduced expenditure. but now there- were ert-es i for more reductions and less taxation. There was a lot of talk about the need for the release oi hidden capital, b'nt where was that hidden capital? The whole cry seemed to be! to hit the other fellow, and if they could find the other fellow who did not object to being hit they would t-e ali right. Mr Ransom dealt with the economies carried out, and said they left only £I,BOO/X0 to fee found from taxation. Various social services had not been touched by the taxation proposals. The Leader cf the Labour Party: Will they be touched ? M Ransom: I think I can assure the hon. gentleman that he has heard the worst. Referring to the sugar tax, he said the price in New Zealand was still about £ll per ton less than in Australia. The increased tax on silks would assist the wool industry, he said. Air H. M. Rushwcrth: How will it assist if veu are to get revenue from it ? Air Ransom said a great deal had been done in the direction of increased production, and not only were settlers being put on the land, but the production of smaller holdings was oeing improved. He referred to calf marking, rotational grazing and the activities of the Agricultural Department, and said he thought the time had come when they should have more instructors and less inspectors going round the farms. He believed that a commission cn local body 'administration would lead to many _of the problems of local bodies being solved. He believed that co-ordina-tion of services would lead to a reduction in expenditure as far as the counties were concerned.

The debate was adjourned on the motion of the Leader of the Labour Party, and the House rose at 9.45 p.m.