BUDGET PROPOSALS

Otago Daily Times, Issue 21406, 6 August 1931, Page 10

BUDGET PROPOSALS

THE DEBATE OPENED REFORM PARTY’S ATTITUDE NO ADVERSE RESOLUTION (Per United Press Association.) WELLINGTON, August 5. The Budget debate was opened by tire Leader of the Opposition (Mr J. G. Goates) when the House of Representatives resumed at 7.30 p.m. He prefaced his remarks by referring to the decision of the Reform Party Conference in January last to emphasise the necessity for taking steps to meet the serious situation then developing. It had subsequently been announced by him that it would be his party’s policy to help rather than to hinder the Government, and he could now repeat that such a line of action would be continued. It was not his intention to move an adverse resolution to the Budget, but there were one or two matters concerning which the Opposition must reserve its right to explore the wide range of alternatives before acquiescing in the Government’s proposals. Referring to taxation, he said his party would carefully explore the situation and endeavour to ascertain whether it was possible to make further economies and thereby avoid a certain amountof the harshness involved in the taxation proposals. The careful policy of the Governments in recent years had resulted in substantial reserves having been built up, and it was fortunate that the country had these reserves on which it could call in its hour of need. He agreed that it was essential in the interests of the country that the Budget should be balanced. The necessity for balancing the Budget this year was more than usually important. It would inevitably place our credit on a very high plane, but. even if we balanced our Budget, he added, our troubles would not be over, for it would still be necessary to look for a permanent solution of the problem facing the great primary producing industries. Continuing, Mr Coates said that unless there was an improvement in the revenue or further economies could be made, it would be even more difficult to balance the Budget next year. He- was of the opinion that there was room for savings in departmental expenditure. He urged the Government to reconsider its taxation proposals in two important respects, namely, the increase in the surtax and the lowering of the exemption, as he considered both these proposals would inflict hardship on those earning the lower rates of salaries. He quoted figures which he contended showed that a man with £3OO a year, who formerly paid no income tax, would next year have to pay £1 16s 2d. A man earning £350 would, find his income taxation increased from £1 6s 4d to £4 Is lid or 211 per cent. A man earning £4OO would find his tax increased from £2 12s 7d to £6 7s 6d or 143 per cent., and other increases would be as follow:—£4so a year, £3 18s 9d to £8 12s Bd, o r 122 per cent.; £6OO a year, £lO 17s lid to £18.13s 6d, or 77 per cent.; £BOO a year, £2B 17s 6d to £46 16s, or 62 per cent These figures, of course, made no provision for family allowance, etc. It would be seen that the taxation on the smaller salaries would undergo a relatively greater increase because of the proposal to reduce the exemption to £260 a year. His side of the House regarded the proposed taxation as being extraordinarily heavy, and it would hit harder and sooner than previously. It would hit still harder when such charges as the wages tax were added. He realised that it was impossible to reduce the existing taxation in view of the circumstances, but he submitted it would be in the interests of the country as a whole if it were found possible as a result of the additional savings in expenditure To reduce the proposed total surchange of 30 per cent, and leave the exemption at £3OO. He asked if it were possible to reduce the surcharge to 15 or even 20 per cent. Mr W..E. Parry (Auckland Central): How would you make up the balance? Mr Coates: I have already indicated that I believe there could be further economies. Mr Coates added that there was time enough before the Taxation Bills were brought down for all possible means of effecting further economies to be explored. Referring to the Customs increases, the Leader of the Opposition said that no one liked the impost on tea and sugar, but after all the money had to be found. No one liked the impost on tobacco, silk, or wearing apparel, but the position had to be faced. As he had said before, the money had to be raised. Mr J. S. Fletcher (Grey Lynn); What about the oil kings? Mr Coates: When we get to the Taxation Bills we shall have ample opportunity to consider the question of the oil kings. Continuing, he said the worst element of the Customs increases was the primage duty, which affected all non-dutiable goods. It affected the worker and the farmer, and, in addition to increasing the cost of living, it increased the cost of production.’ It was a serious matter to increase the cost of production in any way. It was essential to allow the farmer to produce at a cost that would enable him to compete in the world markets. He urged the Prime Minister to explore every possible source of revenue before imposing the proposed primage tax. He considered it should be possible to effect economies in the Education Department without impairing the efficiency of the system. A special investigation into the cost of education had been promised during the short session, but the Prime Minister had not so far set up a committee. He had, however, stated in the Budget that this would be done. ' Mr Coates added that it seemed that apart from the salary cuts the Education Department had escaped scot free from the economy axe.

The Leader of the Opposition then referred to the proposed increases in expenditure on railways and road construction and asked what was the reason for the loan money being used increasingly in these quarters. Air Foi’bes: Unemployment. Mr Coates: Exactly. He considered if there had been any other reason the Government would have deserved castigation, but even as it was, the position was serious. He .asked whether loan money should be spent on projects that would not return to the country the best possible results. Was the expenditure on roads and railways the wisest course to follow? Would it not be possible to cut the railway and reading expenditure in half and spend the remainder- on the development of land? Mr- T. W. M'Donald (Wairarapa): Hoads are necessary for the development of land. Mr Coates: There are some that are necessary, but when it is realised that the Government has brought in only 100,000 acres it will be seen that all the roads are not being constructed in view of development. Mr Coates said that in his opinion it would be better if at least £1,250,000 were spent on the development of lands. Mr J. T. Hogan (Rnngitikei); How many men would that employ? Mr Coates: As many as the same amount of money would find employment for in reading work. He did not suggest that the money spent on land development would immediately pay interest, but in a comparatively few years it would increase production, and the only thing this country could do to meet flic fall in prices of primary products would be to increase production. Referring to the highways funds Mr Coates asked whether the Government had ascertained what the board’s policy was likely to be during the current year. Was it going to give assistance to the rural ratepayer? He considered that if it did not contemplate such action there should be some arrangement whereby the board would increase the subsidy towards rates. Mr Forbes; The whole question is before a special committee. The Minister of Agriculture (Mr A. J. Murdoch): Would you support the use of the petrol tax in this direction? Mr Coates: Yes, and I believe the motorists would be quite prepared to assist the county ratepayer in this way. Mr J. W. Broadfoot (Waitomo); But the Highways Board is depoliticaliscd. Mr Coates declared that the board had the capacity to assist, and its actions and the country’s welfare were inseparably bound up. Mr Coates expressed regret at the posi tion that had arisen in respect to Canadian trade, and said that the two Do minions seemed to be getting as far apart as the poles. He again wished to impress on Mr Forbes the gravity of the situation. Only the other day there was the

spectacle of an American vessel coming to this country and endangering the trade that had been built up between New Zealand and Canada, An American line of steamships threatened to take the trade that had been built up by the Union Steam Ship Company. In conclusion, Mr Coates expressed the opinion that, in spite of its difficulties, this little country was sounder financially and otherwise than any other country on the face of the globe. MR RANSOM’S ADDRESS. The Minister of Lands (Mr E. A. Rannom) expressed appreciation of the attitude of the Leader of the Opposition towards the Budget. He said his remarks had been very fair. The Government nad taken note of the difficulties ahead, but its precautions had not been sufficient, as the deficit showed. It was gratifying id know that the Reform Party approved cf the Government’s determination to balance the Budget. Economies would have to be made, and it was necessary to avoid hardship as much 'as possible. Hardship was inevitable, but the Government should try and avoid personal hardship such as would, be inflicted by the dismissals of employees. He believed the opinion of the country was that the Budget should be balanced, and he was glad to know that Reform would support the Government’s proposals in that direction. A Reform member; Oh, no. Mr J. A. Nash (Pajmerston): You are going too far. ■* Labour members: Aren’t you all agreed ? Mr Ransom remarked that the Leader of the Opposition had said the real problem would have to be met next year, but the Government believed it had met the real problem this year. However, if the same Government was in power next year the position would be just as satisfactorily dealt with. — (Laughte’r.)—Mr Ransom said the problems of the primary producer at the present time must receive more than ordinary consideration, and he wanted t6,call the attention of the House to the fact that they had been given every consideration in the Budget, it had been suggested that further savings could be made in departmental expenditure and that was so, but it could not be done without dismissals, which would load to personal hardship, and it was for the House to say whether that should be done or not. The Economy Committee was still in existence and he believed' it would be a good thing if a committee formed from men outside the House could go through the whole of the country /to see if further economies could be made. Mr W. D. Stewart (Dunedin West): I advised that last year. The Minister said it had been suggested that £1,000,000 could be cut off the expenditure on education, but the Government was not going to make a ruthless cut there unless it could be shown that education could be continued without sacrificing had been built up in the past. . Dealing with income tax increases Mr Ransom said that income tax would still be much lower than in some countries. Various tables of figures had been published in the press of the Dominion, but they had not dealt with cases where men would receive the exemptions still in force. For instance, a man receiving £4OO a year would be asked to pay an increase of £3 9s 2d, but if he had one child the increase would only be £3 4s Id, if two children £2 0s Bd, and if three children £1 4s 7d. Then there were exemptions for insurance to be taken into account.

Continuing Mr Ransom said that exception to certain proposals in the Budget had been taken by business men and others, but if other proposals for raising money in a more equitable way could be brought forward he was sure the Minister of Finance would be very willing to consider them. The amalgamation of departments had been referred to and the question whether or not it had resulted in a saving had been asked. In the case of the departments over which h e had control a very real saying had been made. Two under-secretaries had been retired. Replying to the claim that borrowed money should be spent on productive works, Mr Ransom said he could quote instances where borrowed money had been spent on unproductive works in the past. Mr Coates: Go on; quote them. Mr Ransom said that when the Government had proposed to put an extra Id on petrol for the benefit of backblock roads last session Reform had objected and had had it removed, and now the party.’s leader was crying out for that money. The Leader of the Reform Party had said that he was no longer in favour of spending money on raads, but he wanted it spent on land. “He is getting nearer the policy of the United Party every day,” he said. Continuing, Mr Ransom said that it was a waste of money to employ men on forming roads and then not to metal them. It was the policy of the Government when it opened up new settlements to form roads and metal them so that the settlers would not have to contend with mud in taking their produce to market. Mr Ransom said he could not agree with the Leader of the Opposition regarding the number of men who could be employed in developing the land. It had been found in practice that once the land was cleared there was very little work for unskilled febour. Mr Ransom remarked that some of the critics of the Government had very short memories. There had been long arguments against reduced expenditure, but now there were cries for more reduction and less taxation. There was a lot of talk about the need for the release of hidden capital, but where was that hidden capital? The whole cry seemed to be to hit the other fellow, and if 'they could find the other fellow who did not object to being hit they would be all right.

Mr Ransom dealt with the economies carried out and said they had left only £1,800,000 to be found from taxation. Various social services had not been touched by the taxation proposals. Mr H. E. Holland: Will they be touched? Mr Ransom: I think I can assure the hon. gentleman that he has heard the worst.

Referring to the sugar tax Mr Ransom said the price in New Zealand was still about £ll a ton less than in Australia. The increased tax on silks would assist the whole industry, he said. Mr H. M._ Rushworth (Bay of Islands): How will it assist if you are to get revenue from it?

Mr Ransom said a great deal had been done in the direction of increased production, and not only were the settlers being put on the land but the production of smaller holdings was being impro-fcfed. He referred to calf marking, rotational grazing and the activities of the Agricultural Department, and said he thought the time had come when they should have more instructors and fewer inspectors going round the farms. He believed that a commission on local body administration would lead to many of the problems of local bodies being solved. He believed the co-operation of services would lead to a reduction in expenditure so far as the counties wore concerned.

The debate was adjourned on the motion of the Leader .of the Labour Party.