FINANCIAL DEBATE

Nelson Evening Mail, Volume LXI, 11 August 1928, Page 7

FINANCIAL DEBATE

COMMENCED YESTERDAY GOVERNMENT CRITICISED BY LEADER OF OPPOSITION (By Telegraph) (From f “The Mail’s” Parliamentary Reporter). WELLINGTON, 10th August. The financial debate was opened in the House'of Representatives this afternoon by the Leader of the Opposition (Mr H. E. Holland) who suggested that there was po reason why income tax receipts should have declined. The fact that legislation had been passed relieving certain people of taxation accounted for the drop. Wool receipts for 1927 had , increased by'about £BO,OOO in the aggregate as compared with 1926, yet wealthy sheepowners paid no income tax. If taxation were paid on the amount taken by wool sales the Minister would have had a huge increase in income tax instead of a deficit. In reply to the Prime Minister Mr Holland stated- he was prepared to make large sheepowners pay income tax.

Mr Coates: “And take the land tax off?” “Certainly not,”-replied Mr Holland. Mr Holland said he had been laughed at years ago for predicting that the capital .value of soldier settlement lands would have to be written down by; about £7,000,000 on account of fictitious book entries, yet the Budget showed writings down amounting to three, and a half millions,' and he felt sure his prediction would be fully realised. He accused the Government of gambling in land values and’forcinjg up the prices of land .above the real values by-making big gifts to the wealthy original owners -of the land. -The Government should have anticipated the fall in values after the wav and shaped its course accordingly. To-day we, were paving the price for the Government's blunder, and the soldiers still on the land would eventually fall and be forced off their holdings. It was far better to cut the losses now and give the soldier settlers an opportunity, of'making good on a capital value on which they could make good.' / The Leader of the Opposition said it was misleading to state the railway loss for last year at £291,452. .. Actually it was £781,020. The Prime Minister took £489,568 from tlid Consolidated. Fund, put it through the railway account, and called it net railway, revenue.lt would be far better to show the loss actually as ii occurred. The excess of with* drawals from the Post Offive Savings Bank over deposits was the result of the- Government’s policy which drove money from the Savings Bank to privat-o banks, and left the Government in a position where it had to borrow back at 54 per cent, that which it had pijgviously had at 34 per cent. .In regard to the. Public Debt, Mr Holland said that half the revenue was going: in meeting , charges on the Public Debt. Every one must.realise what a serious position.that was. ~ »

ANSWER TO CRITICISM The Minister of Education (Hon. R. A. Wright) said he was satisfied Mr Holland had been able to find very little fault with the Budget, and that there had been little ' real ' criticism in his speech. The fall in income tax had been due to depressed incomes during 192627 owing to the general depression.. They could not go beyond a certain sbint .in tue matter of taxation as the holders would not go on earning profits ii they were to be taxed to the limit. It had to be remembered that there were many big land holders who had heavy mortgages on their properties, and that ’had.'to be-taken into consideration when r it came to the question of taxation. In regard to soldier settlement-, did Mr Holland suggest that the Government 'should .have confiscated, the interest of/the owner in the land in order to place soldiers upon it! 'Mr Holland: ‘‘l suggest it should have been bought at a fair value.” The fair value, said Mr Wright, was worked at® the market value, and the Government had no alternative but'to purchase the land at the price then ruling, although it. was high. Referring iq the railways the Minister said that Mr Holland could not object to the fact that there had been a loss on the year’s workings, but apparently he objected to the form of book-keeping used. As'a matter of fact if something were not done to meet the position many of the branch lines would have to be scrapped. Mr -Holland had stated. that the debt - charges amounted to over £12,000,000, but he did not state that over £6,000,-

000 was in respect of interest-earning concerns. .Half.of the annual charges . thus did not- affect,the taxpayer,at all.

“BORROWING NOT EXTRAVAGANCE”

Replying to the criticism In regard to borrowing, the Minister said that the raising of large sums was not necessar?i]y- an indication of extravagance. It' could not'be said that the Budget was a vote-catching one. . There was no opportunism in it. It was a statement of fact that next year would be a boom year, and the Minister of Finance-' was justified in holding out the hope of 5 being able to reduce taxation. It coulu not be charged against the Government that it had unduly increased taxation . except for War purposes. There had been careful administration. The electors would be satisfied that the Government had done all that was humanly ' possible to bring the country safely through a critical time. Mr E. A. Ransom (Pahiatua) said the Minister had made a barren speech, one lacking in anything that was likely to convince the people that the Government was worthy of support. He had given no evidence of the future outlook or of a desire to benefit the condition of the people of the country. The prospects of relief, particularly in regard to taxation, were not very bright if the Government was waiting for a boom year. Referring to loans to'farmers Mr Ransom said that the difficulty of the farmers had been caused primarily by deflation after 1 the War, in which the Government’s operations had been a contributing factor. While he believed the land tax was inequitable there were difficulties in removing it. 'He thought fanners should pay more income tax, and that if those fri receipt of over £IOOO were taxed itwould produce not less than £2,000,000. The present system of taxation encouraged aggregation.

“F*OR THE BICI MAN” ‘

Mr D. Jones (Ellesmere) said that MiRansom had been speaking all the time for the big man, although he had endeavoured ‘to make it appear that it was the small mar; he was concerned about. If the big land holders were taxed on their incomes it would he all to their benefit, and it was exactly the thing they were anxious to obtain. Mr M. "J. Savage (Auckland West) said that in recent times the Reform Party had been increasing its own re. cord* for borrowing. Over a period of eight years the Government had added £20,000,000 to the Public Debt, and during the last three years the debt had been increased by £23,000,000 in round figures. That was a record for the Reform Party itself and that was 1 not saying a small thing. In regard to the question of deadweight debt the speaker

submitted that the most costly loans should be paid off first whether they called it War loan or ordinary loan. When it came to a question of redemption he claimed that it was better to redeem a 5i per cent, loan rather than a 4'- per cent-, loan because the exemption from income lax was not a recurrent thing. He argued that the weight of tlio Public Debt was increasing. With regard to Post Office Savings Bank deposits, Mr Savage maintained that in the 1927 session the Minister of Finance had given the impression that the object of the Post Office Bill was to place him in a position to be able to compete against private banks for deposits if necessary. Was'it not necessary? In private 'banks the deposits were rising whereas in the public bank deposits were falling. It - that did not show that the real Government of the country was the associated banks, then he was a poor judge of the power that ruled. The debate was adjourned at 11.34 p.m.