THE DOMINION’S FINANCES

Otago Daily Times, Issue 18850, 1 May 1923, Page 8

THE DOMINION’S FINANCES

PRIME MINISTER’S STATEMENT. , REPLY BY MR HOLLAND. THE GOVERNMENT CRITICISED. (Per United Press Association.) WESTPORT, April 30. Mr H. Holland, Loader of the Labour Party, to-day replied to Mr Massey’s Windsor speech. . . He said he was sorry that his mild criticism should have perturbed the Prime Minister to the extent that he deemed it necessary to have recourse to his old method of calling names. With respect to the public service reductions, he pointed out that during the debate last year both the Labour Party and the present Speaker had conclusively showed that both wages and bonuses were to bo reduced. At no time hid the bonuses granted to the public servants equal the rise in the cost of living, and now as a result of the reductions the average public servant was in a far worse position than at the outbreak of the war. Indeed, man y of the State employees were quite unable to maintain their wives and tamilios on wages they were now receiving. Mr Massey’s statement regarding the agreement between the Government and ttie public servants was misleading, as a reference to either Hansard or the official journals of the various organisations of the public service would show. Mr Massey had not denied that the money Voted by Parliament for necessary public works had been withhold, but he had argued that that fact could not affect the surplus. ,At his Pukeuri meeting the Prime Minister had told his hearers that during the financial year 1922-23 a sum of £3,850,943 had been exnended oil public works as compared with £5,286,687 in 1921-22. The difference between the two amounts, ho said, was due to the fact that 1921-22 was an exceptionally heavy year owing to post-war accumulations. But what Mr Massey had not disclosed was that the Estimates for 1922-23 provided for an expenditure of £5,1)85,798 on works, all of which were regarded as urgent, nor did ho mention that of the amount so approved by Parliament the enormous sum of £1,236,750 had not been made available for expenditure. That sum nearly equalled the year s alleged surplus. It was" quite clear that if it had not been withheld the/Government would have had to find nearly a million and a-quarter more for works than was spent, whether it was borrowed or taken out of the Consolidated Fund. Mr Massey’s statement was, in effect, that if they had authorised the amount they would have used borrowed money, and therefore his statement of the financial position would have been exactly the same as at present. It was quite true that if the work had been done and Mr Massey had used borrowed money in doing it ho could liQ-ve ndded tlio amount to the public debt, and still claimed to have a surplus of one and a-third millions 6n the year’s operations. Mr Massey might evou have found it possible in such R case to contend that there was nothing inconsistent with his conception of honest finance to jiU'Ol current liability wfch bon owed money, and then present the amount so “saved” as a portion of the year s surplus. But in his oninion a surplus so obtained would be as much a “paper surplus as the oats (which never had an existence and were yet sold by northern grain gamblers) were “paper oats.” With four and a-ha.f millions of the previous year’s cash balance in hand and with a prospective cash balance of more than a million and a-quartor on the year's operations statesmanship might be expected to bo able to avoid loading the country with an additional interest bill of nearly £IQCO a day. _ In the face of hostile criticism from the Labour Fartv, Mr Massey had first buried his financial head in the loose sand ot the Government’s borrowing policy, and then indignantly proclaimed that his critics wore cither ignorant or dishonest if they refused to admit that they could not see as much of him as, politically speaking, was not under the sand. Mr_ Masseys denial that the heavy increase in Customs taxation would materially affect the rank and mo of the people 'wag half-hearted and Jus promise to reduce certain of the impositions was an indication that he recognised the strength of the Labour Party s objection. He (Mr Holland) had not suggested that the surplus was derived from kind and income tux concessions, but he was waiting to hear how Mr Massey would explain away the divergence between the iininitcsimal relief in the form of reduced taxation to the small farmers and the huge sums represented in the relief accorded to men with large estates and immense inC °Mr S Massey had been somewhat reckless when he implied that he (Mr Holland) did not know that tno major portion of the accumulated surpluses was invested in soldier settlement lands. In the House, with Mr Massey present ho had declared that much of the accumulated surplus was fictitious for this very- reason. The Government had bought land at the inflated prices of war years, and now it was faced with the fact that sooner or later the capital values of many of the soldier settlers’ lands would have to be written down by well on towards 50 per cent. When this happened a large proportion of the accumulated * surpluses would have disappoured with <m honest strode of the P6D. In his criticism of Mr Masecy s speech ho had not once suggested that the accumulated surpluses were wholly in cash. ho one with a knowledge of the dominion s coin and bullion and State guarantee banknotes would be foolish enough to do that. But even Mr Massey would admit that, whatever the real amount of the surplus was it must be in values, and if there was a bona fide surplus in values there could be no real difficulty with respect to the currency, always assuming that we possessed statesmanship capable of organising the nation’s credit and controlling its finance. Mr g-iatham had once declared that “we never could get the Government to* do one statesmanlike act during the war, and it -would be a thousand pities if in these postwar days the Government should persist in endeavouring to live up to that reputation.