“A POLICY OF DRIFT.”

Otago Witness, Issue 3987, 12 August 1930, Page 26

“A POLICY OF DRIFT.”

THE BUDGET PROPOSALS. TRENCHANT ATTACK BY MR JONES. WELLINGTON, August 5. A trenchant attack upon the Governnent’s Budget proposals, especially in so Jar as they affect increased taxation, was made by Mr D. Jones (Reform member for Mid-Canterbury) in the House of Representatives this evening. “The Minister of Lands (Mr E. A. Ransom) accused us of pursuing a policy of drift,” Mr Jones said. “It is the Government that is drifting, and as a New Zealander I deplore it. It drifted similarly in 1908, and the result were wholesale dismissals and reductions. If the policy is pursued under present prices nothing can stop a general reduction in wages throughout the Dominion, and Labour must bear the blame equally with the Government. It would not have taken place under Reform. The Labour Party knows the position, and it has sacrificed the worker on the altar of political tactics in the struggle for office. Labour has already driven Australia into that position, and to-day it is powerless against the stern law of economics. My charge Vgainst the Budget proposals is: (1) That the Post Office must assist the general revenue. (2) That the Government for the last 20 months has not curbed expenditure and effected economy. (3) That the expenditure on railway construction without knowledge as far as Parliament is concerned is not justified when the present railways are a crushing burden on the taxpayers. (4) Tliat the Customs duties will increase the cost of living without adequately assisting manufacturing and employment. (5) That while realising the difficulty of the unemployment problem and its cost, the Government’s methods have accentuated the position and if continued must lead to disastrous results.

“ The Labour Party is the tool of the Government. There is a great division in its ranks, but its leader cracked his whip and the members of the party came to heel. Their success in restraining a candidate standing for Invercargill is but another link in the chain of evidence. Last session the Minister of Finance accused me of talking nonsense when 1 stated that the deficit would be charged to the accumulated surpluses left by the Reform Government. I was right, and there is still an accumulated surplus of over £2,000,000 left by the Reform Party. There is not a deficiency of £3,000,000, as we are led to believe. It would appear that the Treasury got so alarmed at the pace the Government was making thoughtlessly that it was forced to startle it and did so by painting the gloomiest possible picture of the future, and the Prime Minister handed it to the people. The alleged £3,000,000 deficit is purely an estimate of the future from the darkest possible standpoint. The Budget is one that protects the Government as far as this year’s revenue is concerned, but as far as the taxpayer is concerned and the Dominion in general it is indeed a black Budget. The Government knew where it was drifting to financially 12 months ago, but we have no evidence of adequate action to secure economy. The Government says that departmental expenditure cannot be reduced. That is what the departments informed Mr Massey in 1921, and he ordered a 20 per cent, reduction. After that reduction he set up a committee, of which I was chairman, and we cut down the expenditure over £1,000,000 without touching wages.” “ The Leader of the Opposition maintained last year that a large part of the profit of £525,000 on the Post Office account could have been transferred to revenue, and previously it was charged to revenue,” said Mr Jones “ That would have left no deficit apart from the interest charge that should have been transferred to the next year’s iccount. This year there is a surplus of over £500,000 in the Post Office account. Last year the Government preferred a deficit, and we claim that is the reason it failed to transfer part of the Post Office moneys. Such a system of finance cannot be justified in a private business. Some departments pay and some don’t, but they are all brought into the general account in the balance sheet. By its present policy the Government asks the country to find out of revenue all moneys required for departments that do not pay, such as the Railways Department, and charges the deficiency to the Consolidated Fund, but does not credit the Consolidated Fund with the huge surplus from the Post Office account. The Prime Minister attempted to justify it recently by stating that they must have these reserves, and indicated that away in 1940 certain things will be required. The Government’s practice does not support its policy. It is now charging many things to the Post Office that should not be charged. The new steamer service on the Bluff-Melbourne route is an example of this. This is an admission of the soundness of my argument under the Government’s present action. If the postage was increased from Id to or 2d this revenue would not come into the general revenue but would remain in the reserves of the Post Office unless we passed an Act to make certain of it. This clearly indicates how unsound is this method of finance. The capital of

the Post Office is about £10,000,000. It has a depreciation account of £3,000,000. In addition to this, the Post and Telegraph balance sheet indicates very clearly that considerable maintenance charges are paid out of ordinary revenue. How can a Government justify bleeding the country white with taxation instead of using what is really annual revenue? The Post Office is a monopoly, and for this monopoly the State is entitled to receive handsome profits from the business. The Government prefers to raid the ratepayers and the taxpayers of the Dominion rather than use the money in its own possession. I say definitely that in times like these to take the shirts off the backs of the workers and the producers of the Dominion, increasing unemployment, and creating pessimism of a most damaging kind, while the Post Office piles up its reserves and we pay the loss on other departments, is a policy that this House should not tolerate.”

Mr Jones added that, apart from the scrapping of the territorial system, the savings were not substantial. The additional burden of taxation would be about £2,000,000, in addition to between £500,000 and £600,000 to be raised by the unemployment levy. The only remission was the super land tax, but it had to be abandoned. It was quite apparent that the revenue had been underestimated, and Mr Jones said he refused to believe that taxation increases were necessary. The Government’s defence of the petrol tax failed to rcognise that this was a system of taxation which gave to our island its own allocation, and that for an agreed sum the Highways Board took over the whole of the Government roads and met other financial road liabilities. In the Budget the Government refusad to pay and repudiated its liabilities, and in addition took from the counties £220,000 per annum in subsidies. “ That is the charge we lay against the Government,” said Mr Jones. “ The new tax of £700,000 put on motorists, ratepayers, and business firms is new taxation. The Minister of Lands stated that this tax would not be passed on to the producer. It is passed on to the producer in the whole of the traffic that will go by motor conveyance from the farm to the rail (including all collections of cream), and where there is no rail it will be added to the cost of'all goods that reach him by motor. We were expecting to get a reduction in the price of petrol because of the world’s increased production. These hopes vanish now that we are saddled with this additional cost.”