BUDGET DEBATE

Nelson Evening Mail, Volume LXIV, 7 August 1931, Page 7

BUDGET DEBATE

LEADER OF LABOUR PARTY

• REPLY TO MR COATES (From “The Mail’s” Parliamentary Reporter) WELLINGTON, 6th Augusl. The Leader of the La hour Party (Mr 11. E. Holland) resumed (he debate < n the Financial Statement, lie said Mr Coates had obviously been ill at ease during his speech, which was the most unconvincing speech Mr Coates had ever made in the House. Mr Coates had failed to say how the Reform Party would endeavour to amend the taxing Bills when they came down, but had merely staled that avenues should he explored. Mr Coates would become known to history as the explorer of avenues. It appeared that there was a wide divergence of opinion between the Leader of (he Reform Party and members of the parly. Mr J. A. Nash (Reform, Palmerston : “You are guessing now.” Mr Holland: “Not guessing, merely making commonplace deductions.” Mr F. Waite, (Reform, Clutlia): “Very commonplace.” Mr Speaker: “Order! Order!” Mr Holland said that the Reform Party would not stand in tho way of the country’s interests, but the country’s interests were subject to Mr Coates’s interpretation. Tins raised the interesting invitation by the Prime Minister to the Reform Party for a merger. In the first place the Leader of the Opposition said that the plight of tho country called for a National Government, and in the same breath he said that his party would have nothing to do with it. After he had definitely rejected the proposal he was keenly interested to see what tho Labour Party would do.

A DIFFERENT .MATTER Later on, Mr Coates changed Id’s ground, and asked whether Labour was prepared to discuss the matter. That was a different matter altogether. Of course Labour was willing to confer, but so far no invitation had been extended to the Labour Party and it was not likely to come. The Labour Party had always been willing to confer with other parties on national questions. Labour would be a party to no merger of parties, or to the imposition of taxation proposals which made the poorer sections of the community pay out of all proportion to the richer sections. The Labour Party would not be a party to cutting down the wages of the workers. Before Mr Coates worried about Labour’s attittire he should review his own reply to the United Party’s S.O.S. signal. Mr Coates must know as well as he knew that after the election the present Government would be the smallest party m the House.

Mr Lysnar (Independent, Gisborne): “That’s a matter of opinion.” Mr Holland: “Of .course. 1 am expressing my own.” What the Leader of the Opposition had in mind was a possibility of no party having a majority, but that his party would be stronger than the United Party, and he would say to the United Party: “Get in behind me.” If two men rode a horse one man would have to ride behind, and Mr_ Coates did,not want to bo the man behind. Mr Holland said that Mr Ransom had a comparatively easy task in replying to Mr Coates, because he was only replying to the leader of a party that was pledged to support the Government The policies of United and Reform wore identical. It was like two Australian snakes trying to swallow each other, each starting at the' tail end. The result was that by the time the process was halfway through both were dead. (Laughter).

“A JOKE OF THE FIRST MAGNITUDE Referring to the statement in the Budget that it would prove in years to come a document of great historical interest, Mr Holland remarked that that was quite true,»but it was a thousand pities that the minus quantity in the I rime Minister’s sense of humour did not see that a joke of the first magnitude was wrapped up in the statement. He predicted that the Budget would end its days amongst other curiosities in the museum. Our children’s children would wonder whether the pages were of historical or fictional interest. Mr Holland said lie did not know of any circumstances so emphatically calculated to aftect New Zealand in the eyes of the world as the heavy gloom of the Prime Minister’s public statements - regarding our economic and hnancial position. He had laid on the black paint in the Budget with a most lavish hand, and with a reckless disregard of a full measure of accuracy. The position was bad enough, but was nothing ike i.s bad as the Prime Minister would lead people to believe. Tho year 1929 was a record one as far as exports were concerned, the total being £57,154,000, which was £8,000.000 above the average for the ten years 1922-31. In 1928 there was another record year, when the exports totalled almost £55,000,000, winch was £6,000,000 above the yearly average for the decade. The same argument might be applied to imports. In 1930 New Zealand experienced her tlurcl record year for imports, the total being over £49,000,000. Last year the total imports were only £6,000,000 below the yearly average for the ten-year period. The position was not anything like rs black as the disastrous brush of the Prime Minister bad painted it. J-Ue years 1928 and 1929 had been exceedifirriy £00(1 OIICS, Jliul OXjJOlts 'l‘Ml eXCCCU - ed imports by £22,000,000. but nothing had been done in these fat years to make provision for the leaner years everyone knew would come.

TAXING THE LOWER PAID MAN Continuing Mr Holland said he did not dispute the necessity lor balancing the Budget, but he differed with the Government in the way it should be

done. United and Reform were prepared to make the lower paid men cany a disproportionate burden. Retonn Budgets in the past had been largely balanced on borrowed money and at the expense .of Civil Servants to the benefit of wealthier income tax payers. He alleged that many decreases in the salaries of public servants had been in excess of 10 per cent., and said there had been no all-round reduction of the cost of living, lie said that despite its election promises, the Government seemed determined to pile the heaviest burdens jon the man with the smallest income. I “Wage worker, small farmer, business man and public servant,” said Mr Holland, “the Prime Minister has got them all with financial headloeks, arm locks, crucifixes, and body scissors, and now as a final spectacular display, ho is endeavouring to work the back breaking boston crab. The upshot is that he will probably find himself thrown out of the ring at the end of this year unable to continue.” It always had been held that the graduation from lower incomes upwards was a sound principle of taxation, but in the case of the Budget proposals, the process was inverted. The increase would amount to more than 180 per cent, in the case of incomes of £350, and only 38 per cent, in the case of incomes ranging from £9OO to £2OOO.

BILLS TO BE CHALLENGED All the main taxation items would be definitely challenged when the Bills came down, and the House would lie given an opportunity to vote on all of

them. The Reform Party would have to decide what line of action it would take with regard to tea, sugar and other commodities, and with regard to the graduation of direct taxes. In conclusion he referred to the Bud-' get of last year which was described as the Black Budget, and applied the term Black and Blue Budget to this year’s document. It the Government had had full appreciation of their- own position when they found they were apparently helpless, and that it was necessary to jettison almost every item of policy on which they had been elected, they would have tendered their resignation and gone to the country.

HON. W. A. VEITCIt IN REPLY The Hon. W. A. Veitcli declared Mr Holland had made not a single constructive, suggestion. They might take .it lie was anxious to hinder rattier than help, as he had criticised Mr Coates for saying exactly the opposite. The position oi the country to-day made any change of opinion on taxation proposals justifiable. Conditions had changed rapidly since last year, and one would have thought everyone would have divested themselves of party considerations and helped in liinlmg a solution. There were no eases where wages had been reduced contrary to law. lie expressed amazement at Labour’s protest against borrowing, especially as Labour was continually asking for increased social services and standard wages on relief work. Those requests could not be granted unless taxation was made so heavy that it could not be gathered, or unless heavy borrowing was indulged in. They were entitled to know Labour’s borrowing policy. It would be fine to be able to stop borrowing altogether, but his experience had shown him this was impossible. A sudden stoppage of borrowing would prove so disastrous that it would not be worth the money saved. He favoured a gradual reduction of bor--1 owing until it reached vanishing point. Mr Veiteh said he would like to be able to share Mr Holland’s view that high wages would make for prosperity, hut he could not see the virtue of such opinion. Labour apparently believed that ail revenue required should be made up of income tax, but that Would have, involved an increase of 60 per cent. If Labour carried out its commitments, it would have to borrow thirteen millions instead of the £1,800,000 the Prime Minister was finding.

THE FAIR THING 'I he Hon. VV. Downie Stewart fßeioi'm, Dunedin West) said that Mr Holland had criticised the Leader of the ' Opposition for the mildness of his attack on the Budget, but what Mr Holland overlooked was that in the present exceptional times, any Minister of Finance was entitled to receive, not merely justice, but leniency and assistance as well. With the Leader of the Opposition and other speakers lie believed the Prime Minister was right in endeavouring to balance the Budget if ne could Jo so by effecting economies and by imposing extra taxation not beyond the capacity of the community. The reason why the Budget should be balanced was that the temptation to budget for a deficit might be succumbed to.

LONDON MONEY MARKET Another reason, said the speaker, was the psychological efteet on the London money market whore it was necessary for them to sustain their credit. It was true it was held in some quarters it would be better to immediately stop overseas borrowing and so prevent the creation of further interest to debt charges. However, even if that course was followed, it was necessary they should maintain their credit in Case it became necessary for them to renew loans. Tie was not laying down any cast iron rule as to what should happen in any particular year. Next year it was possible a deficit would be much more justified than it was this year. It might be, they would begin to see daylight next year, and in that case it might be advisable to accelerate recovery by giving taxpayers a little relief. I he burden of recovery might be spread for a year or two.

Mr Stewart observed that the difficulty of imposing extra taxation when times were bad pointed to the wisdom of building up reserves when times were good. .Although lie agreed with the principle of balancing the Budget it did not follow he approved all details of the methods proposed to bring that about. He intended to deal with the taxation proposals when relevant Bills were before the House.

TEA TAX Mr Stewart said lie had been advised by telephone from Dunedin on Wednesday night that in the opinion of a representative group of tea merchants there that 3d a pound duty and the surtax proposed to be imposed on tea would, according to their calculations, yield a revenue of between £140,U00 and £150,000, instead of £92,000, the estimate given by the Budget. It was stated, also, that the taxation, iii its proposed form, would be hound to be passed on to the consuming public, but that if the Finance Minister reduced the duty to 2d a pound, merchants could probably carry the impost themselves. Continuing Mr Stewart said that while the question of mortgagors relief was dealt with in the Budget, the references only touched the fringe of tlio farmers’ problem. The cardinal feature of national policy must be to keep farmers on the land. He knew of cases where private mortgagees had gone on to farms and seen the difficulties under which the farmers were operating, and had helped them by reducing interest to whatever they could stand. He went on to say that people on Crown lands were in a worse position and it appeared to be of little use telling them their rent would be suspended for twelve months and that they would be charged 10 per cent, on arrears.

Speaking as a city man, Mr Stewart said he could not help thinking that if the present position was continued into next year, tile Government and Parliament would have to seriously consider suspending awards so far as the farming industry was concerned. '

Mr Stewart went on to stress the need for determining a definite policy for the future in the matter of oversea borrowing. There were two possible courses. One was to cease borrowing overseas at once, and the other was that of tapering oh borrowing, as the Reform Party was doing before it went out of office. The House adjourned until 10.30 tomorrow.