FINANCIAL DEBATE.

New Zealand Herald, Volume LXIV, Issue 19712, 11 August 1927, Page 11

FINANCIAL DEBATE.

REPAYMENT OF LOANS. PRESENT METHOD CRITICISED. FORMER MINISTER'S VIEWS. [by telegraph.—press association.] WELLINGTON, Wednesday. { The debate on the Finance Statement was continued in the House to-day. Mr. D. G. Sullivan (Avon) advocated more generous pensions and a pension for the blind. Mr. J. A. Nash (Palmerston North) urged greater activity on the p:«rt of the State Advances Office, particularly in the matter of building houses, which were wanted all over the country. Farmers wanted cheap fertilisers, which were becoming yearly of .great necessity. The matter was of such vital importance to farmers that he hoped the Government would without delay take some steps to provide farmers with cheaper fertilisers from Nauru Island. Sir Joseph Ward (Invercargill) detailed the steps lie took while Minister of Finance to set up sinking funds for the elimination of public lqans, and declared that by his Budget the present Minister of Finance had swept away the whole effect of these precautions. In doing this it was claimed New Zealand was following the practice now obtaining in Britain, but this Sir Joseph challenged. Policy in Other CountriesHe said the Prime Minister of Australia had recently resolved that every Australian loan must have a sinking fund, while a quotation was made from a speech of Mr. Winston Churchill to show that he'was, in his British Budget, making provision for sinking funds, while America also recently insisted upon a sinking fund being attached to an Australian loan raised last year in that country. Everywhere the system of sinking fuhds was being adopted, and sooner or later New Zealand would be compelled to go back to that system. Sir Joseph said he did not know how the Minister could expect to reduce taxation when large sums had to be found out of the Consolidated revenue to pay off loans. This was making the present generation bear the whole burden of these loans instead of leaving a portion to posterity, for whom we were preserving the country. He did not know who was responsible for altering the system of sinking funds. The Hon. W. Nosworthy: I did. Sir Joseph Ward: By the "Lord Harry" I thought so. Mr. Nosworthy: We are following the same system as Britain for the redemption of the public debt. Finances of Railways. Sir Joseph Ward: I have read Mr. Chui-chiil's statement that he had paid £16,000.000 into a new sinking fund, and to that system we will have to return. Proceeding, Sir Joseph Ward criticised the funding to the British Government of £27,000,000 which was raised,for war purposes. He had made good arrangements with the British Government and ha had never been able to find out why those arrangements had been changed. Why did the Budget not tell the House the effect of the increase in the motor tax last year ? How much did British motor-cars benefit by the alteration made ? That was what they had a right to know. The Minister of Finance, Hon. W. Downie Stewart: That information can be given when the tariff comes down. Sir Joseph Ward criticised the policy of subsidising non-paying railways. If they did this with one department, why not with others ? Why, he asked, should the railways be expected to earn a high rate of interest ? This was the most valuable department in the Dominion for promoting the welfare of the country. Perhaps 50 per cent, of the farmers were barely paying their way, and what could help them better than cheap transport ? The railways should not be expected to earn more than per cent., and any surplus should he given back to the users in the shape of confessions. It used to be done and it should he done now. Cost of Public Buildings. He said that financially New Zealand was £1,500,000 worse off at the end of this year than last year, and this deficiency would probably be made up by borrowing or by the use of Treasury bills. Sir Joseph concluded by saying he was satisfied New Zealand should provide its share of the cost of the Singapore naval base. The Minister of Agriculture, Hon. O. J. Hawken, said Sir Joseph Ward was in error in saying New Zealand s sinking fund system was different from that of Australia. It was copied from the British system and was generally conceded to be superior to the old system. It enabled New Zealand to pay its debts at any suitable date, and, although Sir Joseph V ard had complained that the sums paid off were too large, it was the opinion of the Government that the war debts should be wiped out as soon as possible. Mr. Hawken defended the public building programme of.f£Boo,ooo. Of that sum £550,000 was for schools and school houses, every one of which was wanted. plaint had been made that the soldier settlors had been harshly treated, but he denied this. Out of 11,000 soldiers farms onlv 428 were now unoccupied. The work of "the revaluation of these farms had now been practically completed, so that, the writing off had come to an end and the losses were now ascertained. Mr. M. J. Savage (Auckland West) comolained that in 15 years the public debt had been increased by the interest charges by about £4,OOO,UUU annuallv, and yet there seemed to be nothing to show for it. The Advances to Settlers Department had no money and he only tangible result was a crop of bankruptcies, of which there were 814 during the past year. Tn addition to this there were more thousands of unemployed, certainly not a very promising illustration of prosperity. The discussion was continue*! until XX.xu p.m., when the House adjourned until to-morrow. STATE BANK SCHEME. VIEW OF SIR JOSEPH WARD. [BY TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON, Wednesday. "A mistake this, country made was in not taking over the Bank of New Zealand," said Sir Joseph Ward in the House this evening, when discussing the question of the establishment of a State bank. If that had been done, he said, New Zealand would have had one bank meeting all its requirements. If the Dominion ever had a State Bank he hoped the Government would not be directly represented on the board of directors, but •that the directorate would be composed of men who would conduct the operations of the institution on a strict financial basis. , . Sir Joseph eulogised the operations 01 the Commonwealth Bank of Australia, and he went on to say that many people in New Zealand had an erroneous • idea of the functions of a State Bank. There were people who were imbued with the idea that a State Bank would , issue paper on its own name and help the small man throughout the country. No bank, State or otherwise, could exist on such a basis.