THE BUDGET

Otago Daily Times, Issue 22354, 30 August 1934, Page 10

THE BUDGET

DEBATE IN THE HOUSE MR SAVAGE’S ATTACK A SEVEN-POINT CRITICISM MR RANSOM IN DEFENCE (Pes Li .mix u Pcess Association.) • WELLINGTON, August 29. The Financial*Debate was begun in the House of Representatives this evening with a speech by the Leader of the Opposition (Mr M. J. Savage) and with a reply by the Minister of Lands (Mr E. A. Ransom). Mr Savage began with a general attack on the Government’s financial policy and-with the statement that the Government had lost the cdlificlence of the people. He then proceeded to develop his seven-point criticism of the Budget. My Savage said he could not work up any sympathy over the Budget. Referring to the National Mortgage Corporation, he said it seemed to him that be was forecasting another financial tragedy. It would mean the end of State lending corporations in New Zealand and handing their activities over to a board. The present system was to be swept aside by the Government. The daily newspapers would show the price at which shares were to be sold from day to day, providing a gambling ground for those who lived on others, The Government’s policy of deflation had destroyed the foundations on which State lending institutions rested, but what the Government destroyed Labour would re-establish. Tie promised the people that State lending institutions would play a part that would enable manufacturers to progress. THE RESERVE BANK

Labour had been unsuccessful in making the Reserve Bank a State institution. The bank’s shares were rising on the Stock Exchange, and the £5 shares to-day were worth £6 10s. With only £500,000 of subscribed the bank was the proprietor of sterling assets worth £24,000,000. The net amount of sterling taken from the trading banks in London was £23,000,000. The bank would have to find £28,000,000 to complete the transaction. Where was" it to get the money from to do that? The money could only come from the public credit. He did not say it was unsound. The bank, like other banks, was a place where money could be manufactured when the proprietors thought it necessary to do so. Had the State been the owners of the bank the people would have been the owners of the London sterling ‘assets instead of a few private shareholders. He challenged the Minister of Finance to meet him in a Wellington hall or over the air to discuss the matter at any time he - liked. If the people’s credit was used for completing the bargain why were the people not the owners of the London sterling assets?, It was the greatest piece of spoliation in the Dominion’s history. The people’s credit wag the basis upon which the whole thing was transacted. If it was sound banking policy for the Reserve Bank to [create credit to meet the payment of goods exported, was it not also a good policy to create credit to make goods available to New Zealand people. Mr Savage said that the /sterling assets were still in London and were likely to remain there while the exchange remained as it was. What was the next move. in the game? The bank had no authority to pay interest on credit standing in the name of the Associated Banks in the Reserve Bank. The only way the Reserve Bank could make it available was in the credit owned by the New Zealand people. The total amount of sterling purchased was £36,000,000, or £45,000,000 in New Zealand currency, which meant that £9,000,000 had to be paid by New Zealand people to the exporters of New Why could that not have been paid direct to the exporters instead of taking the transaction to London and holding up the Dominion s trade with British merchants? Of the total amount of sterling purchased in London, £13,000,000 was utilised by the Government, which meant that the Government had to find £16,000,000 to purchase that amount of sterling. That meant that £3,000,000 hafl to , come out of the pockets of New : Zealand exporters. The Budget said the floating deot amounted to £22,000,000, as compared with £3,000,000 at the end of the previous year. There was apparent a. huge increase in the public debt. It was not clear what the increase really was. He would like the Minister to straighten that out. UNEMPLOYMENT FUND Coming to the Unemployment Fund, they were told that with the balance brought forward the amount canned forward waa £5,390,000, so they could prepare for taxation reduction. So far as special exemptions were concerned, they were on the right lines, but a reduction of 2d in the shilling should not have been made until an opportunity was given to the 60,000 men with families to earn sufficient to maintain themselves and their families. Alternative methods should have been devised to employ those men at standard rates of pay before the reduction was made. POSITION OF WAGE EARNERS Very little hope was contained in the .Budget for the average wage earner, for the man who used to have his wage fixed by the Arbitration Court. Tens of thousands of workers who had been working under awards bad had their wages rpduced. What hope was there for them? Were the men working under the Public Works Department to be classified as public servants and receive a 5 per cent, increase? There was not a gleam of hope for those men unless that was done.

The Budget was going to do more to divide the people of the Dominion than anything he had seen before. Did the Minister not think it would have been a more just policy to start at the beginning with the men and women who were getting the least of all? That money would go into circulation, and the men and women at the bottom were entitled to the first relief; SUPERANNUATION PAYMENT The superannuation payment looked like a red herring. Which would come first, the general election or the Superannuation Fund based bn the State being responsible for the payments? He thought •the time had come for the superannuation principle to become universal. A scheme could be devised to superannuate everybody at the age of CO. They had to-day old men on relief jobs, but there was no work for young peopic leaving school. If the Labour Party had the opportunity legislation to give effect to that principle would be placed on the Statute Book, Labour promised that to the people. RESTORATION OF CUTS The Minister said that the increases granted would immediately go into circulation and give a fillip to business. Mr Savage said the fillip would have been greater if the Government had started at the bottom. Restoration to the public service had not come too soon. The cuts should never have been made. Since the cuts made in 1931 the amount put out of circulation was not less than £90,000.000. If it had not been put out of circulation trade and industry would have been in a different position 10-day. PENSIONS CUTS All the pensions cuts, not only the old age pensions, should have been restored. There was enough money in New Zealand to restore all the cuts made and enough of the best in New Zealand to give the people the highest standard of living in the world. Ho could see the foundations for new divisions of the people. If the Government could keep the people divided it knew it had a fighting chance of returning to power. If the people stood together they could see the thing made right and that the injustices were not repeated. MR SAVAGE SUMS UP Summing up, Mr Savage said his main points were: 1. A proposal to destroy Stale. lending institutions which in the past had been

serious competitors with private banking corporations. 2. A clear statement of fact that the Reserve Bank, like all other banks, was an institution that created money within the law according to the wishes of the management to suit the interests of the owners, and when the people were the owners their interests would bb paramount.

3. The proposal to make a partial restoration of wages dealt only with a small part of the problem, and would create divisions and dissatisfaction among the various sections of the community. 4. Those who were unemployed or working under relief conditions been entirely excluded from any benefits. 5. The wage earners outside the public service were also excluded from any benefits excepting the proposal to reduce the unemployment emergency tax. 6. All the pensioners with the exception of old age pensioners, who were to receive an increase of approximately 9Jd per week as from October, were excluded trom any benefit. 7. The principle that the State should make itself responsible for the payment of superannuation to public servants appeared to be the object forecast. He assured the people that if Labour reached the Treasury benches it would take a delight in reversing the engine. MR RANSOM’S REPLY

The Minister of Lands (Mr E. A. Ransom) said he was convinced that under the careful administration of the present Government the country would be out of its difficulties before the next general election. He did not think the mortgage corporation would confine its business to the wealthy. On the contrary, it would bring it within reach of the small investor. Did the fact that Reserve Bank shares were rising show that the foundations of finance were destroyed by the State? He appreciated the point that people should be working at standard rates of pay. The Government was desirous of achieving that as soon as possible, but if relief works were made as attractive as other classes of employment there would be no inducement for men ,to seek regular work. A WONDERFUL ACHIEVEMENT The unemployment tax wag a heavy one. The people had met it heroically, but if the tax had never been made how would Mr Savage have met the expenditure of £4,500,000 annually? He was sure the civil servants would have accepted cuts rather than that a number of them should have to be put off altogether. The Budget held out no promises impossible of fulfilment, but he was sure that all who read it would realise that it set out a record of wonderful achievement over the last three years. It had already created an excellent impression, especially overseas. The fact that the Budget was balanced was of great satisfaction to the people. He thought they could look forward to the coming year with a greater degree of confidence. The revenue had been estimated on a conservative basis. Mr Ransom added that he would be very surprised if the surplus at the end of the current year did not exceed £1,000,000. It was gratifying to know that the Relief Fund Was sufficient to provide for the increased number dependent upon it. He considered that they should be proud of the men in the public service, who, despite the cuts, had carried out their duties loyally and conscientiously. No one in the Government had argued that it was not desirable to increase the spending power of the people. That would be one of the results of the Budget. It was to be deplored that the people who were least affected did the most complaining. _ Otherwise the country would get out of its difficulties more quickly. The pessimistic statements made from time to time were injurious to the Dominion and kept money tied up in the banks instead of putting in into circulation. ,

MORTGAGE CORPORATION PROPOSAL

The mortgage corporation proposal alone was sufficient reason for Parliament extending its life to four years. The corporation would provide a reliable source of investment. He was sure the fears of the Leader of the Opposition would not be given effect to under that scheme. It should be possible, however, to secure money at not more than 4i per cent, with an amortisation payment of 1 per ceut., which would allow a loan to be paid off. Mr -Ransom went on to deal with matters touching more particularly his own department. He said his department was employing 3242 men regularly and was planting 30,000 acres yearly. The Government had saved the primary producers from ruin. Hia department nad 36,000 Crown tenants, whose interests had to be to know that the improvement in -overseas trade had been particularly marked. The position could now be regarded as very satisfactory. The debate Was adjourned and the House rose at 9.30 p.m.