BUDGET DEBATE OPENS

Manawatu Standard, Volume LXV, Issue 225, 22 August 1945, Page 3

BUDGET DEBATE OPENS

MR HOLLAND CRITICAL

NO TAXATION REDUCTION. AN UNFULFILLED PROMISE. (P.A.) WELLINGTON, Aug. 21. In the House of Representatives tonight the Leader of the Opposition , (Mr Holland) initiated the debate on . the Financial Statement. Mr Holland . said that after six years of war it was possible this year to begin the ( Financial Debate in a spirit of rejoicing, but peace would present many : complex and exacting problems associated with the change to peace. Ho had absolute confidence that in New Zealand wo would accomplish this changeover as successfully and as rapidly as any country, provided the people had good leadership. The most important task by far was the demobilisation and rehabilitation of the 100,000 men and women from the Armed Services, together with several thousands of people who had been manpowered away from their normal jobs. The public expected that the pledges given to servicemen would be honoured fully. Mr Holland said that the war had been fought not to make permanent our temporary loss of freedom, or a system of State Socialism, of rationing coupons, licenses, and permits, ft had been fought and won that the people might be free to live their own lives in their own way, to choose their own employers or employees as the ease might' be, to work hard and to become independent and self-reliant. The people wanted freedom from the fear of having to lean on the Government and from the fear of misfortune and old age. When the original Budget was presented, the end of the war was obviously near and the people were entitled to expect the Government's plans to increase employment, but the Budget contained no such proposal, said Sir Holland. Never did the Government have such an opportunity to slash into wartime taxation as" the people were expecting it to do. STAGGERING COSTS. As nil instance of the experiences of men returning from the war to face prohibitively high costs, Mr Holland onoted the case of a man who wanted to build his own home and had been quoted £2200 foi a nveroomed house of 1150 square leet. Paths, fences, and the section were extra' The Government must accept responsibility for these high costs. The men coming home wanted a job and a home of their own, and they wanted to raise a family, yet prams, cots children's footwear and clothing, and also household items such as cooking stoves and vacuum cleaners, werfc all subject to 20 per cent, sales tax ''When we become the Government, these things will go," said. Mr Holland. „ Mr Langstonc: What about England? , , „ Mr Holland: In England the wartime Government wont out. The same thing will happen here. Sir Holland said that no Government had had an opportunity such as had been afforded the present Government this year. It bad had time to find out how unpopular Us Budget was and then it had had a whole week in which to revise the Budget, but nothing had been done to reduce taxation. Any Government worth its salt would also have gone right through all the wartime controls ito sec how many could be dispensed i" 1 ''unfair broadcasting. Mr Holland made an emphatic protest against the partiality ol the Uov- ! eminent, particularly the Prune Minister, regarding the use ot the radio m broadcasting Parliament. the midget, he said, had been broadcast over seven stations and his own speech over onlv one. A similar thing hat 'Happened in 1943. "Men he protested on that occasion, the Prime Minister had said that if Mr Hoi ami had ! raised the matter before he spoke equal facilities would have been ottered the Leader of the Opposition, this year, said Mr Holland, he had approached the Prime Minister beforehand but was refused. There seemed to be no rules regarding the grantinz of radio facilities to members, otner than rafferty rules. He thought control of broadcasting of Parliament should be taken out of the Government's hands and given to Mr Speaker. r •., , Exchanges between Mr Holland and Mr Eraser regarding the matter led to Mr Eraser assuring the Leader of the Opposition that for next year s Budget debate he would have the same number of radio stations as the Minister of Kinance. "The Prime Minister may claim the same privilege, added Mr FraseY. „ . Mr Holland said that, in spite o the fact that the Government had made provision for the rehabilitation of men above a force of 55,000, the Minister of Finance could not bear to reduce taxation. In other words, the Minister of Finance considered he was in a much better position to spend the taxpayers' money than they were. The Government, which was nine years old had lost touch with the country and was tied to Wellington. It should realise it had completed its course and was ready to make way for younger men who would take over and make provision for the people in the days to come. No taxes had been reduced Some concessions had been given but they did not go far enough and industry would not come into its own until next year. "DULL, DREARY BUDGET." It was a dull, dreary Budget. The Minister of Finance had revised the Budget and had increased the estimates for the war by £18,000,000, but what was £18,000,000 to the Minister of Finance, who hated to let go of anything he had his hands on? Originally he had asked for £105.000,000, but in his revised Estimates he was asking for £139,000,000. No details were given, although now that the war was over the country was entitled to ask for every detail. In his revised Estimates the Minister of Finance had asked for increases in accommodation, stores, repairs, maintenance, and transport. He had asked for an additional £34,000,000 to run the war, which was. over, but the Minister had overlooked where he was going to get the extra money. His object was as plain as a pikestaff; he hoped to have a bumper surplus this year, so that he would be able to make a bumper reduction next year. While the Consolidated Fund might show that there was a surplus, the other accounts would show that there was a. deficit, such as on apples and pears, which showed a substantial loss. While the Minister of Finance was dealing with these matters, h© was silent "on such matters as the Bank of New Zealand, which was exercising the minds of the people of New Zealand at the present time. He did not say where he was going to get the money to acquire the private interests in the bank or the airways. In fact, his reference to, these important subjects was dismissed in 16 words. Mr Holland said that the people had been promised a reduction in taxation as soon as the war was

over, but no reduction had been given. In fact, the finances of the country were out of balance between town and country and internationally, and no move had been made to restore that balance. TWENTYFOLD INCREASE.

Mr Holland -said the increasing toll of taxation on production was shown by the fact that in 1914 State taxes took £5,200,000 out ol' a coial production of £55,000,000. In 1944 taxation was £100,000,000 out of an estimated production of £175,000,000. Production had increased threefold in that period, but taxation was up 20 times. Despite what the Minister ol Finance had said the present time was ideal for reducing taxation. Apparently we had to wait until August, 1940. when the country would be in the throes of election, before the Government's plan would be known. If taxation were reduced, it would obviate the need for increased subsidies and would arrest the spiral of wages chasing after prices. That taxation could be reduced was shown by the fact that the Government already had £10,000,000 in the "kitty"—a surplus of £9,000,000 in the War Expenses Account and more than £1,000,000 in domestic finances at the beginning of the present financial year. The Opposition advocated reducing the wages tax, increasing wages for home- helpers to give assistance to mothers of families, and the removal of the sales tax from housing. The anomally of a tax upon taxes, whereby people paid twine for one benefit, should also be eliminated. The Minister of Supply (Mr Sullivan) said that no other country could show healthier finances after six years of war than were revealed by the Budget. Mr Holland's whole argument had been for a reduction of taxation, yet the Leader of the Opposition knew that nearlv every item of the additional expenditure in the £34,000,000 of the estimated increased expenditure in the War Expenses Account would necessarily go into the pockets of servicemen. These items included £18.000,000 for the payment of gratuities and £5,000,000 for deferred pay, while the amounts lor rehabilitation and pay and allowances had also increased. The header of the Opposition had devoted scarcely a minute to these important matters and had failed to indicate which of these items ho would like eliminated from the Budget. EXTENT OF EXPENDITURE. Mr G. H. Mackley (Nat., Master ton) : How long will this expenditure be spread over ? Mr Sullivan said that these revised Estimates of war expenditure were not until the end of the financial year only; they represented a "complete clean-up" of the war expenditure as far as it was reasonably possible to see it at the present time. An Opposition voice: Then why tax for it all in this financial year P Mr Sullivan : Because most of it will fall within this financial year, although there will be substantial amounts that will extend beyond the end of the financial year by two or three months.

Air Mackley : Docs that apply to the gratuities? Mr Sullivan said the Opposition were in a cleft stick. The Government had made provision for gratuities, deferred pay, rehabilitation, and other assistance to the men to be demobilised. The cost of all that added up to a certain sum, and the Leader of the Opposition objected to that. The Minister said that, despite the Opposition's protests, the Government would go on with its programme and would honour in entirety its pledges to the returning servicemen. TAXATION AMENDMENTS. Nevertheless, added Mr Sullivan, there would be amendments to the taxation law this year. "We have to see where we are, first in regard to the amounts which will come to charge this year. This money has to be found. It is not until a way can bo seen clearly as to the amount which is to come to charge this year that we can say whether it is possible to bring about a reduction of taxation this year. But I can say on behalf of the Government and of the Minister of Finance that, as expenditure falls.

so will taxation. ''Special provision will be made in the amending taxation laws this year for a reduction of taxation following any reduction in expenditure." v Mr Sullivan said the House could absolutely be assured that taxation would not bo reduced to a point of endangering Social Security or the proper provision for servicemen in conformity with the Government's pledges to them. ft was the more unfortunate sections of the community and the soldiers who had served an well who were entitled to the first consideration, and these priority obligations would he kepi in view by tile Government in making provision for reducing taxation. ABOLITIOX OF CONTROLS. Discussing controls, Mr Sullivan said they would be abolished when they were no longer needed. There was no intention of carrying wartime controls into peacetime. However, the Opposition surely did not advocate at the present time the abolition of price control and stabilisation. It' those particular controls were abolished there would be an immediate clamour for their restitution. The sales tax had been questioned, but it was the Opposition that had first put it on food and the Government had taken it off. As far as the Government was concerned, the sales tax had been used for war purposes only, and of .£.13,500.000 collected by the sales tax £9,500,000 had been used for war purposes, so it had been purely a war tax. The Leader of the Opposition had referred to the deficit in the apple and pear account, but if he bad objected to the Government subsidy to the fruitgrowers when the export market was closed the only logical deduction was that he would ruin rhe fruit growers or ask the consumers to pay high prices. The Government had done a magnificent job in maintaining the countrv's economy on a satisfactory basis. The Government, had protected the country against inflation; it had taken steps at the outbreak of war lo guard the people against inflationary tendencies, and had succeeded admirably. COST OF WAR.

Mr Sullivan said the cost of the war up to the end of the last financial year was £507,000,000 but the amount owing was onlv £230.000,000. or less than half of the '. .penditure. That was a magnificent record and the people of the country would get the benefit of it as they would not have heavy repayment costs to meet overseas, only 18.9. millions being borrowed outside of New Zealand. The Government could feel pride and gratification at the way in which the war finances had been managed; it was also gratifying to note that every year during the war revenue had exceeded expenses to the extent that the financial position of the country throughout the war had been belter than the people had imagined possible. Referring to the Department ol Scientific and Industrial Research which was under his control, Mr Sullivan said that all the department's resources, including those developed during the war, would be made available to industry during the days of peace. lie described in detail the 'method of financing research in various industries and said the Government was not neglecting industry, but on the contrary was taking every step possible for industrial development, including the establishment of the Organisation 0 for National Development, which at all times was examining the possibilities of existing and new industries. Speaking of the immediate future the Minister said food rationing would have to be continued until the food situation in Britain and Europe had improved, and it would also be necessary to maintain tyro and rubber control until the rubber supply became more plentiful. The debate was interrupted by the adjournment at 10.30 p.m.