PARLIAMENT

New Zealand Times, Volume XLII, Issue 9730, 4 August 1917, Page 9

PARLIAMENT

YESTERDAY’S SITTING HOUSE OF REPRESENTATIVES DEBATE ON THE WAR PURPOSES LOAN BILL FURTHER CRITICISM. The* House of Representatives met at 2.30 p.m., the Speaker (Sir F. W. Lang) ii i he chair. MEAT TRUST COMMITTEE. On the suggestion of Mr Lee (Oamaru), the name of the Hon. A. T, Ngata was added to the Meat Trust Committee. .Mr Anderson (Mataura) protested against the fact that Otago was not represented on the On the suggestion of the Prime Minister, Mi Anderson’s name was also added to the committee. LOYALTY LOAN BILL. DISCUSSION IN COMMITTEE. Shortly after 3 o'clock the House went' into committee on the War Purposes Loan Bill. „ ... , , Dr Newman (Wellington South) asked what was going to be done in regard to the conscription of wealth it the loan did not prove a success. > Sir Joseph Ward-. "That cornea down in the Taxation Bill." Mr T. M. Wilford (Hutt) suggested that in regard to the taxation, proposals the House must consider the introduction of taxation on men who were over age and could not go to the front, hut retaainod behind in receipt of high salaries or incomes. He had w ks mind two cases—one a man, a bachelor, just over 46, and in receipt of a salary qr £I3OO a year, while next to him in position was a younger man with a wife and two children, and receiving £ooo a year. The younger man would lose his .£SOO a year' and take hia 5s a day, or whatever might be allowed the Second Division men; and the hon. member urged that the first man should be specially taxed so as to secure that he also underwent some sacrifice. Sir Herbert Samuel had made such a suggestion at Home. , , Sir Joseph Ward said that he had heard Sir Herbert Samuel make the suggestion in the House of Commons, and he would bear it,in mind. In reply to the Hon. D, Buddo, the Finance Minister said that under the proposed inscription of stock, the first time that it had been, done in New Zealand, everybody's stock would be made absolutely safe.- A record would be kept in the Treasury, and the stock would be protected. in every way. Dr Newman: "Who will pay the cost of that?” Sir Joseph Ward: "At present- it is not intended to iave any cost at all.' 4i PER CENT, or ,£7 63 6d PER CENT. Mr J. McCombs (Lyttelton) said that the majority of those who had spoken the previous night were definitely against the giving of interest at the rate of 4i per cent, free of income tax. The clause, therefore, did not accurately express the mind of the House as then revealed. Hg repeated, his contention of the .previous evening that 4J per cent, free of income tax meant to the man who would be liable fq an income tax of 7s 6d In the £, not 44 per cent, but .£7 6s 6d per cent. And if they got that rate of interest on the War Loan, they Would want it for other investments also. Sir Joseph Ward said that the money must bo raised, and it was no good try ing to make water run. up hill. "The Iron, member can’t make it run up hill.” he added, "nor can I." . Companies, argued the Finance Minister, also adopted the "free of income tax" system. They paid their dividends free of income tax. although many of their shareholders, not being liable to income tax, did not benefit by it- , He knew of no way to equalise the position of the rich investor and the poor investor in regard to the loan, except to make the rich man a poor man or the poor man a rich man. so as to put them on the, same level. It was just like expecting a young man starting life oh .£75 a year to keep racehorses and motor cars, g<l to the theatre every night, and so on, as a man settled in business, with .£2OOO a year, could do. Mr McCombs; “What do you mean by making water run up hill? What is the practical application of It?" .Sir Joseph Ward: "It is where tnere is an ascent in the land, and you try to m’ake the water tun up' it.” (Laugh-, ter.) If, he added, they wore to issue the loan not free of income tax. they would, in his opinion, require to bring the loan out at 6i per cent. A BAIT OB AN INDUCEMENT. Mr Wilford: “Then, it is a bait.” Sir Joseph Ward: "It is, an inducement to people to subscribe to the loan." Britain, the United States, Canada, and Australia had had to offer the same inducement: and they were doing it in New Zealand because they wanted an unprecedented amount of war expenditure and they were bound to get :t. When 4i per cent, free of income tax was offered those who take up the loan realised that, whatever changes in taxation may take place, they were going to have a sure 4i per cent. That was a very low rate to business men here, and in Australia. the United States, and Canada, but it was not a low rate in Britain, which for many years had been the greatest lending country in the world. At 5J per cent, after paying the 7s 6d income tax, the investor would get only a net 263 6s 6d per cent.; at 5 per cent he would get only £3 2b 6d per .cent. They were not going to get the ordinary men in this country to lend at such rates as ,£3 6s 6d and 263 2s 6d per cent. "THE CAT OUT OF THE BAG!" Mr McCombs; "Where is their patriotism ?” Sir Joseph Ward: "It is not much good talking of patriotism when you want 12 millions.’* ;llr Bayne: “Hear, hear! You never said anything truer in your life!” (Laughter.) Sir Joseph Ward: "I am very glad to hear it.’’ Mr Payne : “By Gad! You let the cat out of the bag then!" (Laughter.! Sir Joseph Ward: "Well, we’ll catch the cat and pat it back in the bag.' (Laughter.) Neither the National Government nor any other would run the risk of trying to raise the loan in any other way. He was not quite sure that they would get the money as it was, Mr Payne: "I will show you if you will sten out of office!" (Hear, hear, and laughter.) , Sir Joseph Ward: "The hon. member should rather say ‘Wait till I am in office, I’ will show yon.' We should have to wait a longtime." (Laughter.) Mr Payne: “The country is sick of you now." (Hear, hear, and laughter.) Sir Joseph Ward: "The hon. member doesn’t look sick at present; so I think his appearance belies bis words." (Laugnter.) It would be a great relief to everybody with any responsibility on bis shoulders, he added, when they knew (hat the money had been received. Mr W. U. Field (Otaki) asked the Finance Minister whether ho thought that a man with a large income would bo justified in selling a large property and investing (lie proceeds in the 'oan, -o ns to secure a safe income for himself and his family, while relieving him-

self of the trouble of managing the property. THE LAST MAN AND THE LAST SHELLING. Mr Payne: “When it is a question of getting the .. .last man the patriotic nag <ravcs in the breeze with no uncertain wavo—(laughter;—but when it is a question of the shilling the Finance Minister allows the men with the money the freedom of allocating their money Hi any othpr way than lor the purposes of war, wherein men are dying to protect these men with the money." Ho couiu not conceive that the House was going to stultify itself by putting a clause upon the statute book whereby the l° an taken un bv men lor whom the soldiers were dying would bo protected from, income tax. The Minister for Finance “talked all round the shop” aliqut water running up hill, but when challenge by the member for Lyttelton he inilea to show the practical application or u(Laughter.) When the United States entered the war they. freely and fully without terms or condition, offered nr - tain GOO millions at 3 per cent. , Sir Joseph Ward: “The last United States loan 'is free of income tax ana every other tax." ■ Mr Payne; “Then the London thieves have seen to it since then. (Laughter.) Prior to that they ottered the money without any condition.” (Hear, near.) If strangers could otter Britain money at 3 per cent, without any conditions, he asked, should they admit that they cere so weak, so puerile, so lacking in the sens© of all that constituted patriotism, that they . would . allow fnoso bloodsuckers to lend them money on conditions by which they would escape their fair share of the cost of the w ar - The banks took up the of the loan, and they wore just the institutions that ought to be taxed. The Hon. Arthur Myers: ‘ lacy do it on behalf of their shareholders.’ Mr Payne: “And their shareholders get the scrip in dividends and go tree of income tax! We know that the I’nil people aro here to protect the rich, but ive speak for the rank and file. as to the Finance Minister’s illustration of companies paying dividends free of income tax. each knew that ho paid his own Share of income tax out of profits before ho received his dividend; so that it was not a case in point at all* Ho protested against 4f per cent, free of income tax being paid to men on “blood, money” loaned to the country; hud contended that if they could not get the money voluntarily at 4i per cent, with income tax, they should get it compulsorily at 3 per cent. (Hear, hear.). , . ■ ■ .... Mr L. M. Isitt (Christchurch North) contended that a man who • put his money into the ship of State because it would be the. last ship to sink—that was what Mr Field, had said the previous night—was not a patriotic or a desirable, character. Mr Field said that the word used before by Mr Isitt had been "despicable. Tho case he'had in, his mind did net deserve such a word, so he must have put it badly. Ho wanted to know whether members, in going through the country in support of the loan, might suggest tp men with property that they might sell out and convert it into loan stock. Ho didn't want to do it if the Finance Minister'or the House generally thought such a course would be unpatriotic. “£20,000,000 OP SHORT .CALL CASH.” Mr Payne said that if the hon. member sold a property at .£SOOO to put the money into the war loan, he would be taking .£SOOO that somebody else had available to put into the loan. Why should the .£SOOO go .into the loan, direct, not via the property? There was, he contended, *£20,000,000 of short-call' cash at Home belonging to the people, of Now Zealand on which the banks were reaping high interest,, though paying none. Ho suggested to ..the Minister for Finance that he -would be doing .a patriotic thing by the country if he brought the' money back here, compelling the banks to keep 'their short-tiaU cash in New Zealand and invest it in war bonds. Th© banks paid no interest to the people now for the use of the cash; and he thought they had d right to take that course, and not let the banking institutions go on bleeding the country as thev were doing. If it was invested at 8 per cent, the banks would get the 3 per cent, for nothing, so there was no need to talk about free of income tax. Mr Wilford"ls the short-call cash liquid or is it merely a book entry?" ■ Mr Payne: "It ■ is supposed to be liquid." Mr McCombs: "It. oan readily bo made liquid, anyhow.” , Mr Payne: ' "It is just as liquid as any of the 4000 millions that Britain has paid, for The war. Th© banks at Home at th© beginning of the war were saved by the issue of 150 millions of paper money by Mr Lloyd George. So it didn't' matter whether it was gold or paper.” THE FINANCIAL SHIRKERS. , Mr McCombs said that the .only interpretation he could place-on the remarks made by Sir Joseph Ward was that it was just as hard to make water run up bill as it was to appeal to the patriotism of the wealthy classes. It was a reflection on the financial shirkers of the country. Ho would quote from the Budget regarding making it compulsory to contribute to the loan. Mr Payne: “Good gracious, who said that?" , Mr McCombs: "Oh, the Finance Mm. ister." Mr Payne: "Well, I never, Mr McCombs: “Now, I will go and help the Finance Minister on the public platform ——" Sir Joseph : “Good Lord 1 Mr McCombs: "Yes. we will see what response we will get from the wealthy people in offering contributions to the loan, free of interest for twenty-five J€ Mr * Nowsorthy: "How much will yon start out with?” . ... Mr Payne: “Tuppence. (Laughter.) Mr McCombs: “I will start off with a larger proport ®n than you would. Mr Payne (loudly) : "Hear, hear. Mr Payne said that there was no doubt that there would have to bo a division on this question—the country would ha.ve to be shown which of their representatives protected the interests of the taxpayer. This freedom from income tax was being engineered solely in, the interest of the big financial concerns. Mr McCombs said that the freedom from income tax in the loan would mca a loss to the country of £680,000. It meant that the country would have to face in the future a loss of nearly one million, which the rest of tho taxpayers .would bare to pay for. It was a cruel and an unfair thing to tho small in Y? s ‘ tor for the Government to suggest that irettiiie 5 per cent, for money when ho was really; getting only 4i per cent, compotuid interest. , Mr Walker (Dunedin' North) did not sen- wbv the Government should perpetuate such an evil as ■ ivas proposed. It was ; evident .that the F' n ■) nc< ‘ IT ‘b ter was out to do his best for- tho big financial institutions. . • Mr Craigie (Timaru) said that if the Finance Minister could assure the House that he had absolutely done bis best with the loan and could devise no better scheme then be would vote in support of it. NO OTHER WAY. Sir Joseph Ward replied that if there were a better way for the Government to obtain this money it would be proposed to the House. Every member knew that the money was absolutely necessary. He did not know of any cheaper or better way to get the money. Mr Ell (Christchurch South) strongly supported the loan proposals. A DIVISION. Tho cause relative to exemption from income tax was put to the House, and although there were only a few noes, Mr Payne called for a division. The division showed the ayes to be forts and the noes five, as follows;

Messrs Payne, McCombs, Walker, R. A. Wright, and Dr Newman. ONE PER CENT. BROKERAGE. In speaking to the next clause of the bill, Mr McCombs said that it was most unfair to the taxpayers that they should be asked to pay the 1 per cent, brokerage paid to the banks in respect to the loan for the guarantees they made. Sir Joseph Ward said that it would neither be prudent nor desirable for the Government to run any risk of the loan being unsuccessful, and for this reason ho had arranged for a guarantee for four million to be subscribed to tho loan and for guaranteeing this before the loan was floated it was only fair' that the banks should he paid ,1 per cent. The same would be done this time. It was a heavy responsibility for these institutions, and they were the only ones who could give it. BAREFACED ROBBERY. Mr Payne rose and said that he hoped the House would not permit this bane-faced robbery of the people. There was no need for the Finance Minister to resort to such a puerile way of getting money when there was a State-aid-ed bank in the Dominion. He was also going to • haye a division on this point so that it would be down in black and white which members were protecting the ratepayers. Mr McCombs said the banks should be put on the same footing as all other institutions in the country. The one per cent, commission was really a bribe to th© banks. Sir Joseph Ward said that neither of the two speakers know what they were talking about. The banks were not merely guaranteeing to . get the money hut were guaranteeing the money before the loan was raised. If this amount were not raised the Government would bo in the position of tho British Government who had to float their loan at 5 per cent, discount. If the Dominion Government had done this it would have cost the country £600,000. In face of this they were now told it was robbing the people, Mr Payne; “So it is—barefaced robbery.’’ ' Sir Joseph Ward replied that it was ‘hardly robbery when the banks were being paid a very low rate of interest for guaranteeing certain money. If any person came along now and guaranteed £500,000 b© would be pleased to grant him tlha same interest. There was a ohanc© for Mr Payne. (Laughter.) The last loan was by far the cheapest loan that the country had ever raised.On the motion that th© bill be read a third time Mr Payne painted out that the loss last year on the. war loan through the income tax exemption was £123,750 and the country stood yet to lose £848,750. Mr Payne spoke of loans 'floated in Britain, and said New Zealand must be careful to avoid getting into the clutches of these financial vultures. New Zealand should have a State bank investing its capital in war bonds. The Government would then bo able to avoid going round among the people with cap in hand begging for money. With such a scheme th© income tax exemption could bo left out and the I, per cent, brokerage to the banks saved. He wished to place it bn record that the House was being run absolutely in the' interests of the big men —the big financial institutions. "INDUCEMENTS 1" Mr McCombs said that; when they had suggested that an appeal' should be made to tho patriotism of the financiers of tho country in regard to the loan he had said “What would bo the use?” So the Government asked th© House to offer ’them "inducements"' —“inducements’ ! to put their money into the loan. When last session the Labour members, to help to save the' voluntary principle, had urged that inducements should bo offered to the men to volunteer by making full and adequate provision for their wives and families, they were told they were "mercenaries” —"mercenaries”! If they were "mercenaries” what then, were the financiers who needed "inducements ’ to get them to lend their money to the State to pay the men who were risking their lives to defend tho lives and the property of the financiers ? (Hear, hear.) The men who were called upon to fight were offered 5s a day, half their ordinary pay; and they responded in thousands. (Hear, hear.) Why, then, should not the financiers be treated similarly and be called upon to find the money - needed for the war at half the pre-war rates of interest? (Hoar, hear.) Why should war profits be left untouched to be invested St profitable interest ill the war loan? “THEY ARE HEROES!” Mr H. G. Ell (Christchurch South) contended that this year, as last, under the war tax legislation practically all the money was raised by taxes on the wealthy—the income tax and the land ■tax; and so on. Only 8000 or 9000 person® paid in coni© tax, and. only a sinaii section of tho community paid land tax. Mr Payne : “The- workers pay land ;t8 Mr Ell: "There is tho £SOO exempU Ut Payne: "They all pay it in their rent, etc!” . .. . . .. Mr Ell: "That is according to the text-book, but we know it won’t bear •examination,” The Finance Minister had taken from the wealthy last year £2,000,000 more than was required to meet expenditure; and this year he proposed to get a surplus of £4,500,000. Yet the wealthy people had never said one word of protest. They had paid their taxes. , Mr Payne; They are heroes! (Laughter-) . , . .. ~ As a matter of fact, said Mr Ell, many of the rich men in the community had complained that the Government had not come down heavily enough in the matter of taxation. (Hear, hear.) With the exception of tea there was no attempt to put any of the taxation on the workersMB MASSEY AS A BOOMERANG. Mr A. H. Hindmarsh (Wellington South) said that they had just heard a very conservative speech from tho radical member for Christchurch South. (Laughter.) The member for Grey Lynu said that the workers all paid land tax, but the fact remained that th© Labour parties all over the world — in the Old Country, in America, Canada, in South Africa, in Australia, and here in New Zealand—strongly supported the laud tax. (Hear, hear.) When Lloyd George proposed his land taxes in 1009. the Tories in the Old Country denounced him bitterly, but they did not attack tho income tax. And it was tho same everywhere else, the Tories accepted the income tax but fought the land tax as hard- as they could.; Thai should be sufficient indication to the workers as. to what-was their true interest. (Hear, hear.) For his part, therefore, he welcomed th© proposal to .make the loan free of income' tax, because the- more wealth ■ there was free of income tax the more*they-would be compelled to. tax land values. (Hear,, •hear.) He congratulated the Prime Minister on being a kind of boomerang to the Tory party of New Zealand. (Hear, hear, and laughter.) The Prime Minister was now supporting the exemption from income tax of a very large sum of money, and in that way he w-ould ultimately increase tremendously the tax on land. (Hear, hear.) For his part, he would like to see the tax on land increased. Mr Payne; “I would not.” PUT TAXATION ON THE LAND. Mr Hindmarsh: “I wish my friend from Grey Lynn would read a few books on political economy.” (Hear, hear! Hear, hear! and laughter.) Tho Labour and Radical parties all over the world, he added, were fighting for the taxation of land " values. For generations the Tory party in the Old Country had supported the income tax, but land tax—never 1 It was tho same with the Tory parry in New Zealand; and he said that it was the duty of the Labour party to

do everything they could to put the taxation on the land. Mr-Ell: "Hear, hear!" They all knew, said Mr Hindmarsh, that the price of land was so high that there was no chance for the young won on the land. Any young man who left his lather’s farm to make a start on h's o>vi\ account found that he could get the land, tho price was so high. Professor Ely, of Columbia University, when in New Zealand some time ago had told him that Illinois, which used to he a State of small farmers, was now practically all in the hands of the wealthy i'ew. lie asked the professor why that was so, and Professor Ely said that the land had become so high in value that only the few could hold it. That was the struggle in America—the struggle .against land monopoly; and that was the struggle here; and therefore they should support everything that would help on the land tax. (Heal, “hear.) The income tax in many cases was passed on to the consumer, but the land tax conld not be nassed on. All economists were agreed that the only tax they could not pass on was the tax on unimproved values, and that was whv the Tory party opposed it., (Hear, hear.) For the reasons given he would support the "free of income tax proposal (Hear,, hear.) Mr Walker said the bill brought down was a perpetuation of a great evil. There was a man present in the House that evening whose son had been awarded the D.C.M.. and 'who had been granted the miserable pension of .£lO a year. When they knew of such- cases it was painful to find such loan proposals as were now proposed. FINANCE MINISTER’S REPLY. Sir Joseph Ward, in a vigorous reply, said .the members who opposed the bill wished to prevent soldiers at the front from, getting their pay, they were going to vote against the men in the hospitals being attended, they were going to vote against men getting their pensions. These were the lion, gentlemen who were declaiming against the heinous crime of raising a loan at 4) par cent, free of income tax. Did these Labour members know that the Labour Ministry in Australia had brought down a similar loan free of income tax? In England, m the United States, and in Canada similar, loans had been brought down. The member for Lyttelton bad had the baxe-faced political audacity—(laughter)—to say that the Government proposed to rush the bill through, yet they saw him and his political associates take up Fours discussing the bill. If the whole House had discussed the proposal in ' the same way it would have taken sixteen days to out the bill through. . , Mr Payne made frequent interruptions, and Sir Joseph called on the Speaker to prevent these interruptions. Mr Payne continued, and the Speaker warned him that if he did not desist ho would .have to take other, steps.’-’ ; _ Continuing Sir Joseph Ward said that while the Labour members had taken two hours to discuss a clause that Was merely to validate what occurtwl a year ago they had totally neglected the most important clause. Sir Joseph Ward pointed out that while the cost of raising the loan on the English market was 11 per cent, the whole of the, loan of New -Zealand last year only, cost i per cent. "AN IDLE PARADE." THirl any one of the members who had advocated the compulsory taking cl wealth for the loan without .paying *nterest on it spoken in that strain at the elections, when they, were totvirnod to Parliament? Not one, he ventured to say; and he contended that they baa no right to bring in. a scheme which would touch the very vitals of the people of thee country, and for which.they had had no mandate at the general election. (Hear, hear.) To advocate such views as the bon. members had done was simply an, idle parade ot something that could not be put into operation. {Hear, hear.) They could not on such’ lines as those suggested deal with the situation with anything like strength for tho country as a whole. They required the co-operation of the banking institutions of the country m regard to such big financial operations, and when, four millions were guaranteed for the last loan by the banks, they were bound to pay them the commission of one per cent, for the service so rendered. It might be necessary this time to carry out a similar arrangement to make sure of the success of the Joan. (Hear, bear.) And it was hard lines that those with the responsibility on their shoulders should nave tp sit and listen to snob suggestions and imnu r endocs. (Hear, hear.) A 24 million loan for this country was 1 a tremendous sum, and a 10 millions ■ loan last year was an. enormous effort: but the country had not slackened in py way, and would not slacken, in its determination to do all that was necessary to win the war. The prolongation of the war had thrown a great strain upon the. Mother Country, and had made it undesirable for this country to attempt to lean upon the Imperial Government for any money required for the war; and it was necessary for this country to find the wherewithal for tho war. It was not possible, as’had been suggested, that they should take the balances of the various departments in this country and invest them in the v’r bonds. The balances ■were required to P&y for certain cxpenses and supplies. And, as to the bank balances of the Government, they ■were earmarked for different purposes, and they received interest on them up to So much for the ad captandum” statements and suggestions that had been made, with which two or three members, getting up one after the other, had wasted four hours of the time of tho House. Members generally, however, had helped the passage of the biU by their silence. They had, he must say* sh.o’wn, preat self-restraint and forbearance. (Hear,, hear.) . , On a division being taken the third reading of the Bill whs carried or 40 votes to 4, the ."noe-s" being Messrs McCombs, Payne, Walker, and Webb. At 10.2 p.m. the House adjourned till 2.30 p-m. on Tuesday next.