DEMOCRAT FINANCE

New Zealand Herald, Volume LXXII, Issue 22259, 6 November 1935, Page 15

DEMOCRAT FINANCE

r "ERRONEOUS ESTIMATES" CRITICISM BY MR. COATES EXPENDITURE AND TAXATION [BY TELEGRAPH —SPECIAL REPORTER) WELLSFORD, Tuesday "My statement that the Democrats' s programme will involve the country s in an additional expenditure of at least £22,000,000 is questioned by Mr. Hislop," said the Minister of " Finance, Mr. Coatcs, in the course of 11 his speeches in the Kaipara electorate to-day. "Mir. Hislop's defence of tjio " Democrat policy is full of erroneous H estimates and indicates nothing more than a rough guess at the cost of his party's proposals." e Dealing with the cost of restoration of salary cuts to civil servants, Mr. I Coatcs continued, Mr. Hislop had stated s that the Government estimate of the j 7} per cent increase was £300,000 nnd_ that the Democrat Party had allowed , £500,000 for full restoration. That was i mere guesswork, as the estimate of £BOO,OOO for complete restoration over and above the 7J per cent increase was based on official calculation. The Superannuation Fund Mr. Hislop stated that a further £IOO,OOO a year was more than sufficient to build up the superannuation fund. Obviously very little investigation has been made as to the position. Mr. Coates' own estimate of £500,000 was obtained from the Government actuary and had the merit of being correct. In any case, it was quite unnecessary to build up the fund, since the Government was well able to meet the annual requirements from year to year. "My estimate of the cost of the health insurance and pension schemes is disputed," said Mr. Coates. "The cost of any such scheme obviously depends on the benefits to be given and I think the best guide to the public is the report of an official committee which has been published and on which my figures were based. An interesting point in the Democrat programme is that unemployment taxation is to be diverted and used for health and pension schemes while unemployment is to be provided

for out of loan money. x Future Debt Charges "A loan of £8,000,000, presumably additional to the bed-rowing already provided for by the Government in the publie works programme, is to bo obtained, the interest and sinking fund to be provided for out of what is left of unemployment taxation. It should be noted* however, that the loan charges of about £-100,000 a year would continue for the nest 50 or 60 years until the loan has been wholly repaid. "Furthermore, the £8,000,000 is only for the first year. Is the additional borrowing to go on at the same rate? If so, within a year or two the taxpayer would be saddled with a further £1,500,000 or more of debt charges for the next 50 or 60 years. "A further point that will be particularly interesting to farmers is that the subsidy which is to take the place of the present exchange premium on exports will not exceed £3,500,000. In Mr. Hislop's estimate last season the farmers of New Zealand were better off by nearly £14,000.000 as the result of the exchange position. Benefits from Exchange "The improvement in general economic conditions since the exchange was raised shows clearly that the rest of the community has benefited as well as the farmer. The direct charge on the Budget as the result of exchange is about £1,600,000 and this has been more than covered by the increase in taxable capacity resulting from the improvement in economic conditions. The value of production alone since 1931-32 has increased from £83,600,000 to £98,800,000, and is still rising. Since 1933, wages and salaries have increased from £58,900,000 to £65,000,000. Business profits and other incomes have also increased, and altogether the Budget has benefited by at least £2,000.000 above the cost of exchange. "If Mr. Hiislop gives a subsidy to the farmer equalling the benefit from exchange the direct charge on the Budget will be at least £13,500,000, instead of £1,600,000. If he gives only £3,500.000 the farmer will he £10,000,000 worse off and there will be a direct coßt to the Budget twice as great as the present direct cost. " Impossible Promises " "Further, if Mr. Hislop is only offering the farmers £3,500,000 by way of subsidy, to be paid only to farmers who require it, this will involve discrimination. The administrative difficulties involved ajid the resentment against individual discrimination will cause thp scheme to collapse very quickly. "The alternative of a subsidy was considered fully by the Government before the exchange was raised, and was rejected as being impracticable and much more costly. The proposal to place the exchange by a subsidy will* give less benefit for a considerably greater cost, it will break down on the administrative side, and will lead to a quite unnecessary disturbance of every business without any compensating advantage—in fact, with a definite and serious loss to the farmer and taxpayer. "My statement that the Democrats' programme will leave a gap of £22,000.000 still stands, and is based upon official estimates. Electors must not he beguiled by the impossible promises of political novices."

RAOLAN CONSTITUENCY MR. LEE MARTIN'S TOUR [from ottr own correspondent] HAMILTON, Tuesday "1 am not prepared to condemn tho Government utterly, but the fact that we want to do tho right thing and that our intentions arc well meant does noc always bring beneficial results," said Mr. W. Lee Martin, Labour candidate for Raglan, when addressing a fair attendance of electors at Kaipaki last evening. Mr. Lee Martin said mistakes had been made, and in their making unforseen consequences had been brought about which had proved to be tragic circumstances in tho lives of thousands of citizens. There wero now 200,000 people in New Zealand in a condition of poverty and distress The candidate described the measures the Labour Party hoped to tnko to remedy the present position. Ho was accorded a vote of thanks and confidence. POSITION AT OTAKI MR. FITZHEIIBERT WITHDRAWS [BY TELEGRAPH —PRESS ASSOCIATION] WELLINGTON, Tuesday Mr. P. B. Fitzherbert, Independent, announces his withdrawal as a candidate for the Otaki seat in favour of the Labour Party.