Will Not Move Hostile Motion on the Budget

Manawatu Times, Volume LIV, Issue 6621, 6 August 1931, Page 7

Will Not Move Hostile Motion on the Budget

Mr Coates Opens Critical

Dehate

Agrees That Budget Should Be Balanced

Hon. E. A. Ransom's Reply

Per Press Association,

WELLINGTON, Last Night

The Budget debate was opened by lit. Hon. J. G. Coates, leader of the Opposition, when the House 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 taking steps to meet the serious situation then developing. It had subsequently been announced by him that it would be his party’s policy to help rather than hinder the Government and ha» could now repeat that 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 of alternatives before acquiescing in the Government’s proposals.

Referring to taxation, Mr. Coates said his party would carefully explore the situation and endeavour to ascertain whether it would be possible to make further economics and thereby avoid a certain amount of the harshness involved in the taxation proposals.

Substantial Reserves. Tlic careful policy of Governments in recent years, continued Mr. Coates, bad resulted in substantial reserves having boon built up and it was fortunate the country had these reserves on which it could call in its hour of need. He agreed that it was essential in the interests of the country that the Budget should bo 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, but even if we balanced our Budget, he added, our troubles would not bo over for 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 be even more difficult to balaneo the Budget next year. He was of opinion that there was room for savings in departmental expenditure. Hardships on Lower Salaries.

He urged tho Government to reconsider the taxation proposals in two important respects, namely the increase of the surtax and the lowering of tho 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 incomo tax would next year have to pay £1 16s 2d. A man earning £350 would find hts income taxation increased from £1 6s 4cl 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, ii Other increases would be as follow: —£4so a year, £3 18s 9d to £8 12s Bd, or 122 per cent.; £6OO a year, £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 smaller salaries would undergo a relatively greater increase because of the proposal to rcduco tho exemption to £260. Extraordinary Heavy. His side of the House regarded the proposed taxation as being extraordinarily heavy and it would bit harder and sooner than previously. It would hit still harder w T hen such charges as the wages tax were added. Ho realised that it was impossible to reduce existing taxation in view of tho circum-' stances, but ho submitted it would bo in the interests of the country as a whole if it wore 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 possible to reduce tho surcharge to 15 or even per cent. Mr. Parry: “How would you make up the balance? Mr. Coates: “I have already indicated I believe there could be further economies.” Mr. Coates added that there wa s time enough before the taxation Bills were brought down for all possible means of effecting further economies to be explored. Tea and Sugar. Referring to tho Customs increases, 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, but the position had to bo faced. As ho had said before, the money had to be raised. Mr. Fletcher: “What about tne oil kings?” Mr. Coates: “When we get to the taxation Bills we shall have ample opportunity to consider the question of the oil kings.” Evils of Primage Duty.

Continuing, he said the worst element in the Customs increases was the primage duty w'hicli affected all nondutiable 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 tho cost of production. Any way,-it was essential to allow the farmer to.produco at a cost that would enable him to compete in tho world markets. Ho urged the Prime Minister to explore every possible source of revenue before imposing the proposed primage tax. Education Economies, Mr. Coates considered it should be possible to effect economies in the Education Department without impairing

the efficiency of the systoin. A. special investigation into the cost of education had been promised in the short session, but the Primo 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 from tho salary cuts the Education Department had escaped scot free from the economy axe. Road Expenditure and Unemployment. The Leader of the Opposition referred to tho proposed increases in expenditure on railways and road construction and asked what was tho reason for loan money being used increasingly in these quarters. Mr. Eorbes: “ Unemployment. ” Mr. Coates: “Exactly." He considered if there had been any other reason tho Government would havo doserved castigation, but even as it was the position was serious. Ho asked whether loan money should bo spent on projects that would not return to the country tho best possible results. Was tho expenditure on roads and railways tho wisest course to follow? Would it not be possiblo to cut railway and roadihg expenditure in half and spend tho remainder on tho development of laud.

Mr. T. W. McDonald: “Roads are necessary for the development ot land.” Mr. Coates: “There aro somo that are necessary, but when it is realised that tho Government has brought in only 160,000 acres it will bo seen that all the roads aro not being constructed with a view to development.” Mr. Coates said in Ms 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 sarno amount of money would find employment for in roading work.” He did not suggest that tho money spent on land development would immediately pay interest, but in a comparatively few years it would increase production and the only thing this country could do to meet the fall in tho prices of primary products would bo to increase production. Highways Finance. Referring to the highways funds Mr. Coates asked whether the Government, had ascertained what the Board’s policy was likely to be during tho current year. Was it going to give assistance to tho rural ratepayer. Ho considered if it did not contemplate suen action there should be some arrangement whereby tho Board increased the subsidy towards rates. Mr. Forbes: “The wholo question is before a special committee.” Hon. A. J. Murdoch: “Would you support the use of the petrol tax in this direction?” Mr. Coates: “Yes, and 1 believe motorists would be quite prepared to assist tho country ratepayer this way.” Mr. W, J. Broadfoot: “But the Highways Board is depoliticallsed.” Mr. Coates declared that the 3oard had the capacity to assist and its actions and the country’s welfare were inseparably hound up.

Mr. Coates expressed regret at tho position that had arisen in respect Lo Canadian trade. Ho said tho two Dominions seemed to be getting as far apart as the poles. He again wished to impress on Mr. Forbes the gravity ot the situation. Only the other day there was the spectacle of an American vessel coming to this country and endangering trade that had been built up between New' Zealand and Canada. Tne American line of steamships threatened to take trade that had been built up by tho Union Steamship Company. In conclusion, Mr. Coates expressed the opinion that in spito of its difficulties this little country was sounder financially and otherwise than any other country on tho face of the globe.

Government’s lieply Hon. E. A. Ransom expressed appreciation at the attitudo of the Leader of 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 tho Budget. Economics would have to be made and it was necessary to avoid hardship as much as possible. Hardship was inevit-

able, but the Government should try tc avoid personal hardship sacU as woulc be inflicted by the dismissal of employees. Mr. Ranson said he believed the opinion of the country was that the Budget should he balanced and ne was glad to know Reform would support the Government’s proposals in that direction. A Reform member: ‘‘Ob, no!” Mr. J. A. Nash: “You are going too far!” Labour members 1 “Aren’t you all agreed?’’ Mr. Ransom remarked that the Leader of tho Opposition had said tho real problem would havo to bo met next year, but tho Government believed it had met tho real problem this year. However, if tho same Government was in power next year the position would be just as satisfactorily dealt with (laughter). Primary Producers First. Mr. Rausom said the problems of the primary producer at tho present time must receive moro than ordinary consideration and ho wanted to call the attention of tho 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 it could not be done without - dismissals which would lead to personal hardship, and it was for tho House ta say whether that was to be 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 wholo country to see if further economies could bo made. Mr. Downie Stewart: “I advised that last year." The Minister said it had been suggested that £1,000,000 could bo cut off the expenditure on education, but tho 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 tho past. The New Income Tax. 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 liad not dealt with eases where men would receive the exemptions still in force. Eor instance a man receiving £4OO a year would bu asked to pay au increaso of £3 9s Sid, but if ho hau ouo child the increase would only bo £3 4s Id, if two children £2 0s 3d, if three, children £1 4s 7d; Then there were tho exemptions for insurance to be taken into account. In Australia taxable income of £220 would boar £4 14s Id. Continuing, Air. Ransom 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 suro the Financo Aiinister would bo very willing to consider them. The amalgamation of departments had been referred to and tho question of whether or not they had resulted in a saving had been asked. In the case of the departments over which he had control a very real saving had been made, two under-seerctarics having been roti reel.

Replyiug to tho claim that borrowed money should be spent on productive works, Mr. Ransom said ho could quoto instances where borrowed money had boon spent on unproductive works in tho past. Mr. Coates: “Co on, quote them!” That Petrol Tax Mr. Ransom said that when the Government had proposed to put an extra penny on petrol for the benefit of backblock 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 tho land. “He is getting nearer tho 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 to 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 contend with mud when taking their produce to market. Mr. Ransom said ho 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 v T as very littlo work for unskilled labour. Short Memories 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 cries for more reduction and less taxation. There was a iot of talk about the need for the release of hidden capital, but whoro was that hidden capital? The whole cry seemed to bo to hit the other fellow, and if they could find the other fellow who did not object to being hit they would be all right. Mr, Ransom dealt with the economics carried out, and said they left only £1,800,000 to be found from taxation. Various social services had not been touched by the taxation proposals. Has Heard the Worst! Tho loader of the Labour Party: Will they bo touched? Mr. Ransom: I think I can assure the hon. gentleman that he has heard the worst. Referring to tho sugar tax, he said the price in New Zealand was still about £ll per ton less than in Australia. Tho increased tax on silks would assist the wool industry, he said.

Mr. Rushworth: How will it assist if you aro to get revenue from it? Mr. Ransom said a great deal had been done in the direction of increased production, and not only were settlers being put on tho land, but the production of smaller holdings was being improved. Ho referred to calf marking, rotational grazing and the activities of tho Agricultural Department, and said ho thought the time had come when they should havo more instructors and less inspectors going round the farms. He believed that a commission on local body administration would lead to many of tho problems of local bodies being solved. He believed that co-ordination of services would lead to a reduction in expenditure as far as the counties were concerned. Tho debate was adjourned on the motion of the leader of the Labour Party, and the House rose at 9,45.