Labour Leader Launches Budget Broadside

Manawatu Times, Volume LIV, Issue 6622, 7 August 1931, Page 7

Labour Leader Launches Budget Broadside

Mr Downie Stewart Favours Fusion i. } i

• .4 In Powerful Contribution to Finance Debate

Per Press Association.

WELLINGTON, Last Night.

Labour should be the Government. Mr. Coates would then be able to say to tho United party: “la the best interests of tho country get in behind me. The leader of the Opposition s attitude reminded him of the old couplet An two men ride a horse Ono must rido behind. Mr. Coates was evidently determined that when the fusion horse took its preliminary cantor he would not be the one who rode behind. After referring to statements that had been issued on the subject of fusion Mr. Holland said in a recent speech Mr. Coates had said the United party had virtually adopted tho Reform policy, while on tho other hand the Minister of Lands last night had stated that Reform was adopting the United party’s policy. There seemed. to be a resemblance between this and the case of the two Australian snakes which set out to eat eacn other, both beginning at the other’s tail with the result that when tho process was half way through both were dead! Not as Bad as Fainted. Continuing, Mr. Holland declared that New Zealand’s economic position was not nearly so bad as it had been painted by Mr. Forbes. Tho Labour party agreed that it was important to balance ■the Budget, but it did not agree with tho methods proposed by the Government. Ho declared the United and Reform parties were prepare dto make the wage worker, salaried employee and people with lower incomes pay out of all proportion to those with higher incomes. He asked how the Reform party had balanced budgets in the past, asserting that it had cut public servants' salaries down and at the same time had put through legislation to enable largo sums in the form of remitted taxation to be handed to the wealthy landowner's and income tax payers.

In the House this afternoon the Budget debate was resumed by the Leatltr of the Labour party (Mr. H. L. Ho land) who referring to the speech of Mr. Coates, said it. must have been a relief to the Government to know it had nothing to fear from the officiu ■ position this session. Mr. Coates had in sis ted on this and that avenue being explored and Mr. Holland considered he might Jive in history as “the exp oiei of avenues.” It had, however, been impossible to ascertain from the Leader of the Opposition’s speech what line of action his party proposed to tauo in the event of the Prime Minister refusing to take notice of his representations. . . ... A Reform member: “That is another story.” , Mr. Holland: “The light hon. gentleman was very careful not to give us the other story.” Labour’s Terms for Fusion. Continuing, Mr. Holland said it had been asked what was the Labour party s attitude towards the proposal that the parties should confer with the object ot seeking a solution of the national problems. He declared tho Labour party had always been ready to confer along these lines, but it would not be party to any merger nor -would it be party to proposals that would make the poorersection of the community pay relatively more than the richer, nor would it be a party to a policy of cutting down the wages of workers. Mr. Holland said he interpreted the leader of the Opposition’s attitude to mean that Mr. Coates was satisfied (as ho himself was satisfied) that the United party would bo tho smallest party in the House after the next election. Mr. Coates no doubt believed it possible that when tho election was over no party would have a majority and it would be a question whether Reform or

The Niemeyer Report.

Mr. Holland asked what tho Government intended to do about Sir Otto Niemeyer’s report. Tho Budget had virtually given tho report the Government's blessing, but it had also stated; that tho report involved far-rcacning changes and it was better that the matter should not bo rushed. Ho asked whether it was to bo dealt with this session, asserting that it was quite clear tho present Government would not be able to deal with it at all if not. this session. Mr. Holland also inquired what had been tho cost of Sir Otto Niomeyer’s visit to Now Zealand. Mr. Forbes: "Nothing.” Mr. Holland: "Then who paid for it?”

Mr. Barnard: "The Bank of Fugland.”

Mr. Holland expressed tho opinion that Sir Otto Niemcyer had been sent to Australia and New Zealand by the financial interests in Britain and his report had been tho merest incident. Ho had anticipated the Prime Minister's answer that the cost of the visit had been nothing and this confirmed his belief that Sir Otto Niemeyer had been sent out by his emplayers in the Old Country for the purposes of their own financial establishments.

Mr. Holland announced the intention of the Labour party to divide the House on all the main items in the Government’s taxation proposals.

The Government, despite its election pledges, seemed determined to piio the heaviest burdens on the man with the smallest income. First of all it cut wages by what amounted to from 10 to 60 and 70 per cent. Having done that it imposed a flat rato for the unemployment levy of threepence in the_ pound “on all incomes making tho man with the small lov.y pay tho same rate as the men whose incomes ran into thousands. Then it imposed indirect taxes on tea, sugar and other articles of common use, forcing up the cost of living, ihe Government then proceeded to levy on •moderate incomes taxation increases out of all proportion to the increased charge made on the larger incomes.

"The wage worker, small farmers, business man and public servant,” said Mr. Holland, ‘‘tfae Prime Minister has got them aIL with financial headlocks, armlocks, crucifixes and body scissors, and now as a final spectacular display he is endeavouring to work the back-breaking Boston crab. The upshot is he will probably find himself thrown out of the ring at the end of this year unable to continue.”

Mr. Holland said it had always been held that graduation from the lower incomes upwards was a sound principle of taxation, but in the case of the Budget proposals tho process was inverted and as a result of the lowering of the exemption to £260 increases in taxation on the lower incomes were proportionately greater than those on the higher incomes. Discussing the primage duty, Mr. Holland said both Reform and Labour were opposed to the principle involved. Mr. Jones: "You didn’t say that two vears ago.” Mr. Holland: "I am afraid that won t get the Reform party out of its very grave difficulty. Tho Labour party then had to choose between two evils and primage was tho lesser evil because the other was putting tho Reform party on the Treasury benches. ” In conclusion Mr. Holland said the Budget foreshadowed an attack on education and it appeared the Government was going from ono attack on the country’s social services to another. The Budget disclosed no plan for the future and it was a pity tho official Opposition had surrendered its position of opposition to get behind the Government and keep it in power when it was the duty of the House to put the Government out of office and replace it with a government capable of grappling with the situation. Bankrupt of Remedies. Hon. W. A. Veitch said tho leader of tho Labour party had not offered any solution of the problems of the country but had merely criticised the actions of the Government, He had criticised the leader of the Opposition for saying he would help the Government for the good of tho country, so it appeared that Mr. Holland did not believe in working for the good of the country. Referring to the fusion question, Mr. Veitch said it appeared that anxiety to preserve the parties intact had caused the other parties to overlook the country’s grave needs. Those who wero opposed to a National Party were either overlooking the economic position of the country or were placing party before country. Primage.

Dealing with the primage duty Mr. Veitch said the circumstances were so different from last session that any party would be justified in changing its views regarding taxation. Mr. Veitch remarked that the Labour party frequently asked if the Government got instructions from the Reform party and he thought he was entitled to ask if the Labour party got instructions from Moscow or New South Wales. Referring to importations of coal Mr. Veitch said the difficulty facing the Government was the lack of continuity of supplies from the West Coast. The miners would stop work without warning and very often without good reason and stoppages had the effect of increasing the price of coal in- every home in New Zealand. Unless the cost of production could be reduced in the West Coast mines they would not be able to compete with Australia. The Labour party would probably claim that that could be remedied by an impost on imports, but his answer was that reasonable continuity of supply from New Zealand mines was the remedy. Complaints were made about the Government ’s taxation proposals, but the Government’s requirement were very much less than the Labour party's would be if they were in power and tried to carry out what they suggested the Government should do. The Labour party claimed that they should restore the cuts and pay standai-d wages but to do that would require £13,000,000 more than the Government proposed to raise. Mr. M. J. Savage: “Didn’t your Government promise to pay the unemployed 14s a day.’’ Mr. Veitch: “The previous Government did.” Mr. Coates: “What Government?” Mr. Veitch: “The Ward Government.” Mr. Coates: “Wasn’t that your Government?” Mr. Veitch: “Tho late Sir Joseph Ward certainly said he would endeavour

to do that, but the present Prime Minister has never done so. Tho Houso adjourned at 5.30.

Entitled to Justice and Leniency When the House resumed at 7.30 the Budget debate was continued by Mr. W. Downie Stewart, who said that in these difficult times any Minister of Finance was entitled to receive from his critics not merely justice, but leniency and assistance. Ho agreed that Mr. Forbes was Tight in seeking to balance the Budget if he could do so by effecting economies and imposing extra taxation not beyond the taxable capacity of tho community. It was always a difficult question to decide when the taxable, capacity of the country had reached its limit, but it was important to balance the Budget this year for several reasons. In the first place, there was a danger that if we deliberately adopted a policy of deficit finance it might be, repeated in future on too small a provocation. In tho second place, deficit finance had a psychological effect on tho London money market, where it was of vital importance to maintain our credit. The value of our currency depended on our credit, and our credit depended partly on a balanced Budget. Continuing, Mr. Stewart said that next year the case for a deficit Budget might bo strengthened, either because an improvement was in sight, or because our tax system had reached its limit of resiliency. He did not assert that deficit finance was necessarily and at all times foolish. The trouble was that taxation and trade depression worked in a vicious circle. Taxation was increased to meet the difficulties caused by the depression, and the recovery was delayed by the weight ol taxation.

In agreeing that the Budget should he balanced, Mr. Stewart said it did not follow that one agreed with all the details of the methods adopted. For instance, in the imposition of increased income tax he thought the Government should have reviewed the position as regards single men without dependants as compared with the married man with a family. It was true the married man already enjoyed concessions in respect to children, and during the past while the exemption was so high his position had not been unfavourable; but now that the exemption had been reduced and the taxation increased, and the wages tax also added, together with increased Customs duties, he thought the relative position of the single man and the married man with a family should have been further considered.

Mr. Stewart said there was another feature concerning which he desired to express agreement with Mr. Forbes, and that was cutting down public works expenditure by about 40 per cent. This would be a welcome change from recent history, as during late years there had been a rapid increase in public works expenditure. Tho Minister of Finance had stated that tho Government fully realised the necessity of reducing to a minimum further additions to the public debt. Apparently the need to find work for the unemployed was advanced as one reason for tho increased expenditure of loan capital, but whatever merits this argument had possessed in the past, it must surely lose weight now in view of the large funds available from the special unemployment taxation. . Stop Oversea Borrowing? Mr. Stewart thought it imperative that we should make up our minds as to what our future policy would be with regard to oversea borrowing. There were two possible courses. One was to cease borrowing overseas entirely and at once. The chief objection to this policy was that it would cause too violent and sudden a shock to our economic lifo and would allow no time to accommodate ourselves to the new situation. Public works would largely have to closo down, unemployment would greatly increase, and serious and unnecessary dislocation would take place. Of course, we might have no option

in the matter. The London money market might close down on us as it had done on Australia. It appeared that Australia had not been able to go on tho London money market since June, 1929. He considered we should revert to the policy he had laid down some years ago of steadily curtailing our annual requirements, so that at the expiry of a short term of years it would no longer be part of our policy to draw loan moneys from overseas. Evils of Over-borrowing It was well-known that the history of all tho borrowing Dominions was that periodical crises were caused by the irregularity of the flow of loan capital. In times of prosperity overseas lenders were inclined to tempt us to borrow more capital than we could efficiently absorb. Largo importations of capital led to heavy public works expenditure, land speculation, inflation of land values, artificial increaso of imports and exports, and a general appearance of prosperity. But then came the contraction of credit, the reduction or cessation of imports of capital, falling prices, reduction of exports in quantity or value, falling revenues,- falling land values and so on. These cycles of prosperity and adversity would occur in any case, but they were accentuated by the policy of borrowing overseas. If we could free ourselves from this disturbing factor we would render these fluctuations less violent and disastrous. Mr. StowaTt declared that while New Zealand’s public finances were heavily strained, they were still sound, and with care and economy the position could be coped with. He considered that the problems of the day could not be adequately dealt with by a minority Government, and he still considered that all sections of the House should be invited to see whether they could evolve a common policy to meet the danger. He wished to make it clear in this connection that he was speaking entirely for himself and not for his party. In a brief reference to the tea tax, Mr. Stewart said that tea importers had told him that instead of bringing in £92,000 a year as estimated, it would bring in £140,000. As the tax and surtax would amount to about 3Jd. they would have to pass it on, but if the Minister of Finance would reduce the tax to 2d. they would endeavour to bear it, and the Government would still realise over £IOO,OOO. Helping the Farmer Mr. Stewart expressed regret that the Government had not yet given a clearer indication as to whether anything further was contemplated in tho direction of assisting the primary producer. He personally considered it ’ was becoming necessary, in view of the changing conditions, for tho suspension of a number of rigid conditions in Arbitration Court awards so far as they affected the farming industry. He feared that unless an allowance was made for greater flexibility, the whole system itself would be endangered, i Mr. H. G. R. Mason said he considered that valuable results could be obtained from a reformation of our banking and currency system. It was true tho value of our porducts in the outside markets was a serious factor in the present situation, but the position ! could be greatly improved internally by banking reform. Mr. W. J. Poison said he was not interested in party wrangles. It seemed that invitations for toe formation of a National Government were hardly necessary. In view of the country’s difficulties it should have been patent to every party that the time had arrived for a mutual understanding in order to grapple with the problems of the day. Mr. W. Lee Martin: Every party except the Labour Party. Mr. Poison: The Labour Party is undoubtedly entitled to be consulted, but I am not satisfied that the Labour Party is anxious to, or can, join- in any agreement with the moderate sections of the House. Tho debate was interrupted by the rising of tho House at 10.30 p.m. •