BUDGET PROPOSALS

Otago Witness, Issue 4039, 11 August 1931, Page 21

BUDGET PROPOSALS

THE DEBATE OPENED REFORM PARTY’S ATTITUDE. VI ELLINGTON, August 5. The Budget debate was opened by tne Leader of the Opposition (Mr J. G. Coates) when the House of Representatives resumed at 7.30 p.m. He prefaced his remarks by referring to the decisu n ot 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 b° 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 ea deavour to ascertain whether it was possible to make further economies and thereby avoid a certain amount of th? harshness involved in the taxation pro posals. The careful policy of the Governments in recent years had resulted in substantial reserves having been built up, and it was fortunate that the countrv had these reserves on which it could call in its hour of need. He agreed that it was essential in the interests of the countrv that tlie 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 £lB 13s 6d. or 77 per cent.; £BOO a year, £2B 17s 6d to £46 16s, or 62 per cent i 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, a P ? n addition to increasing the cost ot living, it increased the cost of production. It was a serious matter to increase the cost of production in any way. It "as essential to allow the fanner to produce at a cost that would enable him to compete in the world markets. He urged the I rime 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 ot education had been promised during the short session, but the Prime Miniad no *' so ar se t U P a committee. He had, however, stated in the Budget flint 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.

lhe Leader of the Opposition then referred to the proposed increases in expenditure on railways and road construction and asked what wag the reason for the loan money being used increasingly in these quarters. Mr Forbes: 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. lie 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 roading expenditure in half and spend the remainder on the development of land? Mr T. W. Al’Donaid (Wairarapa): Roads 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 ail 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 (Rangitikei): How many men would that employ? Mr Coates: As many as the same amount of money would find employment for in roading 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 the 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? Air Coates: Yes, and I believe the motorists would be quite prepared bo assist the county ratepayer in this way. Mr J. W. Broadfoot (Waitonio): But the Highways Board is depoliticalised. Air Coates declared that the board Had the capacity to assist, and its actions and the country’s welfare were inseparably bound up. Air Coates expressed regret at the position that had arisen in respect to Canadian trade, and said that the two Dominions seemed to be getting as far apart as the poles. He again wished to impress on Air Forbes the gravity of the situation. Only the other day there was tba spectacle of an American vessel coming to this country and endangering the trade that ha'd 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. AIR RANSOM’S ADDRESS.

The Minister of Lands (Mr E. A. Ransom) 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 to know that the Reform Party approved cf tlie 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 (Palmerston): 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.— (Laughter.)—Mr Ransom said the problems of the primary producer at the present time must receive more than ordinary consideration, and he wanted to 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 lead 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 countiy to gee 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 I cut there unless it could be shown that education could be continued without sacrificing what had been built up in the past. Dealing with income tax increases Sir 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 1400 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 ot f departments had been referred to and the question whether or not it had resuited in a saving had been asked. In the case of the departments over which he had control a very real saving had been made. Two under-secretaries had been retired. , . , , . , Replying to the claim that borrowed money should be spent on productive works, Air 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 ct spending money on roads, but he wanted it spent on laud. “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 labour. Mr Ransom remarked that some of the critics of the Government had veryshort 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 bv the taxation proposals. 'Mr ll.' 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. Al. 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 improved. 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 were concerned.

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

MR H. E. HOLLAND'S CRITICISM. WELLINGTON, August (>.

The debate on the Budget was resumed in the House of Representatives this afternoon by the Leader of the Labour Party (Mr H. E. Holland), who, referring to the speech of the Leader of the Opposition (Mr J. G. Coates), said it must have been a relief to the Government to know that it had nothing to fear from the official Opposition this session. Mr Coates had insisted on this and that avenue being explored, and Mr Holland considered he might live in history as the “explorer of avenues.” It had, however, been impossible to ascertain from the speech of the Leader of the Opposition what line of action his party proposed to take in the event of the Prime Minister (Mr G. W. Forbes) refusing to take notice of its representations. A Reform member: That is another etory.

Mr Holland: The right hon. gentleman was very careful not to give us the other story. Continuing, Mr Holland said it had been asked what-was the Labour Party’s attitude toward, the proposal that the parties should confer with the object of seeking a solution of the national problems. He declared that the Labour Party had always been ready to confei along, these lines, but it would not be a party to any merger, nor would it be a party to proposals that would make the poorer section of the community pay relatively more than the richer, nor would it

be a party to the policy of cutting down the wages of the workers. Mr Holland said he interpreted the attitude of the Leader of the Opposition to mean that Mr Coates was satisfied (as he himself was satisfied) that the United Party would be the smallest party in the House after the next election. Mr Coates no doubt believed it was possible that when the election was over no party would have a majority, and it would be a question whether Reform or Labour should be the Government. Mr Coates wou'd then be able to say to the United Partv: “In the best interests of the country, get in behind me.” The attitude of the Leader of the Opposition reminded him of the old couplet, “An two men ride a horse, one must ride behind.’' Mr Coates was evidently determined that when the fusion horse tool; its preliminary canter he would not be the one who rode behind. After referring to the statements that had been issued on the subject of fusion, Mr Holland said that in a recent speech Mr Coates had said the United I’aity had virtually adopted the Reform policy, while on the other hand the Minister ot Lands (Mr E. A. Ransom) last night had stated that Reform was adopting the United Paity’s policy. There seemed to be a resemblance between this and the case of two Australian snakes which set out to eat each other, both beginning at the other’s tail, with the result that when the process was halfway through both were dead.

Continuing, Mr Holland declared that New Zealand's economic position was not nearly so bad as it had been painted by Mr Forbes. The Labour Party agreed that it was important that the Budget should be balanced, but it did not agree with the methods proposed by the Government. He declared that the United and Reform Parties were prepared to make the wage worker, the salaried employee. and the people with the lower incomes pay out of all proportion to those with higher incomes. He asked how the Reform Party had balanced its Budgets in the past, asserting that it had cut the public servants’ salaries down, ami at the same time had put through legislation to enable large sums in the form of remitted taxation to be banded to the wealthy landowners and the income taxpayers. Mr Holland asked what the Government intended to do about Sir Otto Niemeyer’s report. The Budget had virtually given the report the Government’s blessing, but it had also stated that the report involved far-reaching changes, and it was better that the matter should not be rushed. He asked whether it was to be dealt with this session, asserting that it was quite clear the present Government would not be able to deal with it at all, if not this session. Mr Holland also inquired what had been the cost of Sir Otto Niemeyer’s visit to New Zealand. Mr Forbes: Nothing. Mr Holland: Then who paid for it?

Air W. E. Barnard (Napier) : The Bank of England. Air Holland expressed the opinion that Sir Otto Niemeyer had been sent to Australia and New Zealand by financial interests in Great Britain, and his report had been the merest incident. He (Mr Holland) had anticipated the Prime Minister’s answer that the cost of the visit had been nothing, and this confirmed his belief that Sir Otto Niemeyer had been sent out by his employers in the Old Country for the purposes of their own financial establishments.

Mr Holland announced that it was the intention of the Labour Party to divide the House o n all the main items in the Government’s taxation proposals. The Government, despite its election pledgee, seemed determined to pile the heaviest burdens on the man with the smallest income. First of all it cut wages by what amounted from 10 to 60 and 70 per cent. Having done that it imposed a flat rate unemployment levy of threepence in £ on all incomes, making the man with the small levy pay the same rate as the men whose incomes ran intoy thousands. Then it imposed indirect taxes on tea. sugar, and other articles of common use, forcing up the cost of living. The Government then proceeded to levy on moderate incomes taxation increases out of all proportion to the increased charge made on larger incomes. “The wage worker, the small farmer, the business man. and the public servant,” said Air Holland. “ the Prime Minister has got them all with financial headlocks, armlocks, crucifixes, and body scissors, and now as a final spectacular display he is endeavouring to work the back-breaking Boston crab. The upshot is that he will probably find himself thrown out of the ring at the end of this year, unable to continue.” Air Holland said it had always been held that graduation from the lower incomes upwards was a sound principle of taxation, but in the case of the Budget proposals the process was inverted, and as a result of the lowering of exemption to £260 the increases in the taxation on lower incomes were proportionately’ greater than those on the higher incomes. Discussing the primage duty, Air Holland said that both Reform and Labour were opposed to the principle involved. Mr D. Jones (Alid-Canterbury): You did’nt say that two years ago. Air Holland: I am afraid that won’t get the Reform Party out of its very grave difficulty’. The Labour Party then had to choose between two evils, and the primage duty was the lesser evil because the other was putting the Reform Party on the Treasury benches. In conclusion Air Holland said the Budget foreshadowed an attack on education, and it appeared that the Government was going from one attack on the country’s social services to another. The Budget disclosed no plan for the future, and it was a pity the official Opposition had surrendered the position of opposition to get behind the Government and keep it in power when it was the duty’

of the House to put the Government out of office and replace it with a Government capable of dealing with the situation.

THE GOVERNMENT DEFENDED. The Alinister of Railways (Air W. A Veitch) said the Leader of the Labour Party had not offered any solution of the problems of the country, but had merely criticised the actions of the Government. lie had criticised the Leader of the Opposition for saying he would help the Government for the good of the

country, so it appeared that Air Holland did not believe in working for the good of the country. Referring to the fusion question Mr Veitch said it appeared that anxiety to preserve the parties intact had caused the other parties to overlook the country’s grave needs. Those who were opposed to a National Party were either overlooking the economic position of the country or were placing party before country.

Dealing with primage duty Air Veitch said the circumstances were so different from last session that any party would be justified in changing its views. Regarding taxation. Air Veitch remarked that the Labour Party frequently asked if the Government got instructions from the Reform Party, and he thought ho was entitled to ask if the Labour Party got instructions from Moscow or New South Wales.

Referring to the importations of coal, Mr Veitch said the difficulty facing the Government was lack of continuity in the supplies from the West Coast. The minors would stop work without warning and very often without good reason, and the stoppages had the effect of increasing the price of coal in every home in New Zealand. Unless the cost of production could be reduced in the West Coast mines they would not be able to compete with Australia. The Labour Party would probably claim that that could be remedied by an impost on imports, but his answer was that a reasonable continuity of supply from New Zealand mines was the remedy. Complaints were made about the Govern ment’s taxation proposals, but the Govern ment’s requirements were very much less than the Labour Party’s would be if that party were in power and tried to carry out what it suggested the Government should do. The Labour Party claimed that it would restore the cuts and pay the standard rates of wages, but to do that would require £1.3.000.000 more than the Government proposed to raise. Air Al. J. Savage (Auckland West): Didn’t your Government promise to pay the unemployed 14s a day. Air Veitch: The previous Government did.

Air Coates: What Government? ’ Air Veitch: The Ward Government. Mr Coates: Wasn’t that your Government ? < Air Veitch: The late Sir Joseph Ward * certainly said the Government would en- 1 deavour to do that, but the present Prime J Alinister has never done so. OVERSEAS BORROWING POLICY. c When the House resumed after the tea ! adjournment the Budget debate was con- 1 tinned by Air W. Downie Stewart (Dun- 1 edin West), who said that in these diffi- ’ cult times any Minister of Finance was entitled to receive from his critics not merely justice, but leniency and assistance. He agreed that Air Forbes was right in seeking to balance his Budget 1 if he could do so by effecting economies ' and imposing extra taxation not beyond ' the taxable capacity of the community. . It was always a difficult question to de- 1 cide when the taxable capacity of a country had reached its limit, but it was ! important that the Budget should be~balanced this year for several reasons. In the first place there was a danger that if we deliberately adopted a policy'of deficit finance it might be repealed in the future on too small a provocation. In the second place deficit finance had a psychological effect on the London money market where it was of vital importance to maintain our credit. The value of our currency depended on our credit and our credit depended partly on a balanced Budget. : Continuing, Air Stewart said that next year the case for a deficit Budget might be strengthened either because an improvement was in sight or because our tax system had reached its limits of resiliency. He did not assert that deficit finance was necessarily and at all times foolish. The trouble was that taxation and trade depression worked in a vicious circle. Taxation was increased to meet difficulties caused by depression, and recovery was delayed by the weight of taxation. In agreeing that the Budget should be balanced Mr Stewart said it did not follow that one agreed with all the details or the methods adopted. For instance, in regard to the imposition of an increased income tax lie thought the Government should have reviewed the position as regards single men without dependents as compared with a married man with a family. It was tiue that a married man already enjoyed concessions in respect of children, and during the past, while the exemption was so high, bis position bad not been unfavourable, but now that the exemption had been reduced and taxation increased and a wages tax also added together with increased Customs duties, he thought the relative position of the single man and the married man with a family should have been further considered. Air Stewart said there was another feature concerning which he desired to express agreement with Mr Forbes, and that was the cutting down of public works expenditure by about 40 per cent. This would be a welcome change from recent history as during late years there had been a rapid increase in public works expenditure. The Alinister of Finance had stated that the Government fully realised the necessity for reducing to a minimum further additions to the Public Debt. Apparently the need to find work for the unemployed was advanced as one reason for the increased expenditure of loan capital, but whatever merits this argument had possessed in the past it must surely’ lose weight now in view of the large funds available from special unemployment taxation. He thought it was imperative that we should make up our minds as to what our future policy would be in regard to oversea borrowing. There were two possible courses. One was to cease borrowing overseas entirely and at once. The chief objection to this policy was that it would cause too violent and sudden a shock to our economic life and would allow no time to accommodate ourselves to the new situation. Public works would largely have to close down, unemployment would greatly increase, and serious and unnecessary dislocation would take place. Of course, we might have no option in the matter. The London money market might close down on us as it had done • on Australia. It appeared as if AusI tralia had not been able to go on the : London money market since June, 1929.

He considered we should revert to the policy he had laid down some years ago of steadily curtailing our annual requirements so that at the expiry of a short term of years it would no longer be part of the policy to draw loan moneys from overseas. It was well known that the history of all borrowing by the dominions was that periodical crises were caused by the irregularity of the flow of loan capital in times of prosperity overseas. The lenders were inclined to tempt us to borrow more capital than we could efficiently absorb. Large importations of capital would lead to heavy public works expenditure, land speculation. inflation of land values, an artificial increase of imports and exports and a general appearance of prosperity. But then came the contraction of credit, the reduction or cessation of imports of capital, falling prices, a reduction of exports in quantity or value, falling revenues, falling land values, and so on. These cycles of prosperity and adversity would occur in any case, but they were accentuated by the policy of borrowing overseas. If we could free ourselves from this disturbing factor we would render these fluctuations less violent and disastrous.

Air Stewart declared that while New Zealand’s public finances were heavily strained they were still sound, and with care and economy the position could still be coped with. He considered the problems of the day could not be adequately dealt with by a minority Government, and he still considered that all sections of the House should be invited to see whether they could evolve a common policy to meet the danger. He wished to make it clear in this connection that he was speaking entirely for himself and not for his party. In a brief reference to the tea tax Mr Stewart said that tea importers had told him that instead of bringing in £92.000 a year as estimated it would bring in £140,000. As the tax and surtax would amount to about 3’d they would have to pass them on. but if the Alinister of Finance would reduce the tax to twopence they would endeavour to bear it. and the Government would still realise over £lOO,OOO. Air Stewart expressed regret that the Government had not yet given a clearer indication whether anything further was contemplated in the direction of assisting the primary producers. He, personally, considered it was becoming necessary in view of the changing circumstances, for the suspension of a number of the rigid conditions of the Arbitration Court awards so far as they affected the farming industry. He feared that unless allowance was made for greater flexibility the whole system itself would be endangered. BANKING AND CURRENCY SYSTEM.

Air H. G. R. Alason (Auckland Suburbs) said he considered that valuable results could be obtained from the reformation of ou r banking and currency system. It was true that the value of our products in the outside markets was a serious factor in the present situation, but the position could be greatly improved internally by banking reform. It would, for instance, be a substantial achievement if the thousands of people who at present were in enforced idleness -were enabled to find a place in productive employment. Air AV. J. Bolson (Stratford) said he was not interested in party wrangles. It seemed that invitations for the formation of a National Government were hardly necessary in view of the country’s difficulties. It should have been patent to every party that the time had arrived for a mutual understanding in order to grapple with the problems of the day. Air W. Lee Alartin (Raglan): Every party except the Labour Party. Air Polson: The Labour Party is undoubtedly entitled to be consulted, but I am not satisfied that the Labour Party is anxious or can join in any agreement with the moderate sections of the House. The debate was interrupted by the rising of the House at 10.30 p.m. THIRD DAY. WELLINGTON, August 7. Air W. J. Polson (Stratford), resuming his speech in the Budget debate, said that if the Government had estab lished some years ago an agricultural bank the farmers would be in a much better position now, and would be able to be helped out by credits. Air D. Jones (Alid-Canterbury): You went back on the agricultural bank. Air Polson: I did not. The member for Mid-Canterbury has never grasped properly the agricultural bank system. Air W. J. Broadfoot (Waitoino) com mended the Government’s action in using the reserves which bad been built up for use in lean times. Reform had wrongfully used those reserves in times of prosperity to provide for the writings off on soldier settlements. He urged pooling the resources and knowledge of fertiliser works for the benefit of farmers.

Air A. E Ansell (Chalmers) said he agreed that every reasonable effort should be made to balance the Budget, and individuals should do their utmost to reduce expenditure. He mentioned, however, that in using its reserves NewZealand was living beyond its income. He emphasised the need for placing the primary producer on a sound basis. He said his side of the House was not prepared to accept the Government’s taxation proposals. That was putting it plainly enough. Air D. G. Sullivan (Avon) criticised the lack of policy and hope in the Budget, in which no mention was made of the development of secondary industries. He suggested that a committee of business men, Labour representatives, and the primary producers should inquire into the economic situation of the Dominion through losses on the Home market. He asked if it were not possible in future to establish a depression fund to avoid the initial loss from a fall in prices.

Continuing the debate at the afternoon session, Air W. A. Bodkin (Central Otago) said the course adopted by the Prime Alinister was one which required grit and determination. It was a good thing for the country that certain reserves had been built up to meet the depression, and perhaps in future those reserves should be greater. The Prime Alinister was entitled to the cooperation of every section of the com-

munity. Stressing the need for economies, Air Bodkin declared that the public works system could not be continued as at present, and it might be necessary to reduce the department to a board of architects and engineers. There had been too much reckless expenditure in the past. He approved of a thorough overhaul of the education vote, and said he was satisfied that thousands could be cut off without impairing the efficiency of the system. Th<-re was unnecessary duplication, waste, and extravagance. Great care should be exercised not to interfere with the primary schools. At least half a million could be saved in education administration costs. Air Bodkin emphasised the serious position of the farmers, and said the Government was making an honest attempt to afford them assistance. The time was not far distant when there would have to be a revaluation of lands, but the time was not yet because most farms were a liability rather than an asset just now. Prices must be stabilised first. A better policy in the meantime was to postpone the rent of the Crown tenants. There should be greater elasticity in the State Advances Department. There would have to be a writing down of both capital and interest, and the Government, if possible, should reduce the rate of interest in the State lending department. Mr A. Harris (Waitemata) said that Air Bodkin’s speech would have come very well from the Reform benches. He endorsed the view that the greatest economy should be exercised, and he asked what the Government was doing about it. The Government had had two years to give effect to the economy recommendations of the Education Committee. Where was the need for extra taxation when all the Government had to do was to carry out the committee’s report? In the matter of interest rates he suggested that the redue tions should be retrospective, affecting all mortgagors alike. The Budget staggered him with wonderment. The Government talked about a strong lead, and gave it by increasing taxation £1.800.000. The economies referred to in the Budget he described as a hollow sham. Not a single economy had been effected since last April when the Prime Alinister declared further economies were about to be made. The Government had taken the line of least resistance to balance the Budget. The small business man and the salary earner suffered a staggering blow in the income tax increase. There was a crushing addition on salaries between £.300 and £BOO. He estimated the aggregate taxation this year at £3.840,000 more than 1 last year, and that the United Government had imposed £7,898,000 additional taxation since it came into office. The ■ Budget should be decorated with a deep black border in keeping with its contents. He believed there was a feeling throughout New Zealand that the oniy way to restore public coufidence was to return the Reform Party to power. Painting the blackest possible picture of our troubles only aggravated the position. Air F. Langstone (Waimarino) referred to “ this political humbug ” between the Reform and the United Parties, and declared that they had no intention of forming a National Government. The Financial Statement was a “ Snatchers' Budget.” “They are snatching at tea and sugar, and even the linos, off the floor,” he said amidst laughter. The position to-day had not come about in five minutes. It had been coming for years. It was the result of profligate borrowing and extravagant expenditure, and Reform could not escape its responsibility in the matter, “ How they can have the courage and the effrontery to face the electors.” he said. “ I don’t know. They have more hide than a rhinoceros.” Air Speaker: Order.

Air Langstone: A political rhinoceros. ■ —(Loud laughter.) He described the indirect taxes as the most harmful and vicious form of taxation. There was no other part of the world where the income tax was more liberal than in New Zealand. Air _C. A. Wilkinson (Egmont) : In America. Air Langstone: I doubt it. There is n® lighter income tax in any other British dominion, and no more liberal exemptions. Mr Langstone said he knew of one man paying £750 a year in premiums to the A.AI.P. Society in order to dodge the income tax. Neither the present nor the previous Government had come to any proper taxation basis. In conclusion, Mr Langstone advocated increased death gift and estate duties, and 10 per cent, additional on higher intomes to bring in nearly £6,000,000. The debate was interrupted by the rising of the House at 5.30 p.m. till 2.30) p.m. on Tuesday.