MUCH OPPOSITION

Poverty Bay Herald, Volume LV, Issue 17438, 9 April 1931, Page 7

MUCH OPPOSITION

EARTHQUAKE RELIEF BILL DISCUSSION IN HOUSE INSURANCE TAX CRITICISED MORE ASSISTANCE URGED (Parliamentary Reporter.) WELLINGTON, this day. The second reading debate on the Earthquake Insurance Dill in the House of Representatives yesterday showed in its early stages the proposals submitted by the Government arc likely ; to meet with a considerable degree ot" opposition. . Practically every speaker criticised one or more of the suggestions contained in the bill, and even the few Government members who spoke bed little to say in support of it.

An indication that the bill was merely intended as a basis for discussion was given bv the Hon. E. A. Ransom, who stated that the Government was prepared to listen Mo any alternatives which might lie put forward in committee and to make amendments which were-thought desirable. Labor speakers were unanimous that the provisions proposed by the Government were totally inadequate, and criticised also the methods by which it was suggested .that relief should be granted. Some members suggested that all losses should lie covered by free grants from the Government. Criticism from the -Reform beaches was mainly directed to the methods by wbieh it was proposed to obtain the. .*r-#quir«a iLftaneo. _ The Leader of the Opposition expressed the opinion that a much larger sum than £1,500,000 Would be needed, and thought a loan should be raised for the purpose. The lion. W. Lownie Stewart, former Minister of Finance, however, drew attention to the difficulty of raising loans at the present time, and attributed this to the maimer in which the present Government had exhausted the market. The proposed insurance tax came in for much opposition, principally on the grounds of its inequity and the difficulties of making valuations and collections. On this point, all sides of the Houses appeared to lie in agreement, and even the lion. E. A. Ransom expressed doubts as to it's practicability. PREMIER'S SUMMARY jn the past, remarked the Prime Minister, the Rt. Hon. G. W. Forbes, when moving the second reading of the bill, New Zealnnders believed that visitations" of this kind were few and far between; that there was no need to make special provision against them, but with two serious earthquakes within a short space of time it had to be admitted that the country was subject to earthquakes, and some proVision should be made against losses likely to be sustained. The clauses in the measure providing for an insurabe property tax of Is 63 per cent., and a surtax on insurance policies of the same amount, suggested the Prime Minister, were justified. By general agreement there should be some form of taxation to provide against earthquake contingencies. One of the first tilings to be done with the proceeds would be to reimburse the reserve fund from which was to be taken a sunt of which would be loaned to Hawke's Bay residents to assist in their rehabilitation. Then this fund would be in a position to meet similar contingencies if they occurred again. The insurable property tax was subject to deductions, so that small owners of uninsured property would not be touched by the tax, though a small dwiicr who was insured would pay his percentage through his policy. It was a new departure, but he thought members would agree that some tax was necessary. CALL FOR HEAVIER TAX Some suggestions had been made, continued the Prime Minister, that the tax should be 2s 6d per cent., to provide enough money to meet the requirements of the district more generously, but despite the suggestion of those in the earthquake area that a larger sum could be easily collected, he thought a sufficient burden was imposed by the Is <>d tax. He did not think it wise to set out to provide complete earthquake cover. if this was required from insurance companies they asked from 8a to His per cent., which would mean a very heavy load'on people who, during the present difficulties, would appreciate taxation being made as light as possible. Mr. D. Jones: Would you classify it similarly to flood damage? The Prime Minister: It stands m a totally different position from what 'lias been clone by the Government in such cases, for an earthquake requires assistance on a much larger scale. OPPOSITION LEADER'S DOUBTS The Rt. Hon. J. O. Ooates, Leader ot the Opposition, warned the House against placing further burdens on the rest of the country during a time of depression, and he suggested that toe Government should endeavor to meet the position from day to day ratlin' •„;:.an attempt to build up a fun I by making a charge on insurable property. While it was sound to build up a special earthquake fund, experience in the past had shown that there was an inclination for governments to use special funds for purposes for Which they were not established. He thought the insurance clauses in the bill would work harshly on some people. The special tax proposed was not altogether based on the principle of ability to pay. The wider the tax Was spread, the more satisfactory it would be. If it were not possible to raise a loan at a reasonable rate ot interest thev must accept the position us thev found it, but he believed that it would be much preferable to obtain monev by loan. He anticipated that small" farmers »and some ot the biggoi eompanies which were not insured by anv means up to the full amount, would experience difficulty under the proposed tax of Is (hi in £IOO. It would be a very big charge on them and it would lie still harder tor concerns which were already finding it difficult to meet interest payments. Mr Coates said he had been informed by a hospital board that it would have an extra liability placed on it in the matter of insurance. NAPIER MEMBER'S VIEWS "I like the principle of the insurance tax,"-said Mr. W. E. Barnard '(Lab., Napier), the first Labor speaker "There may be, however, some question as to the wisdom of the insurable property tax." Mr Barnard said the funds publicly subscribed, although liberal, had proved ''inadequate, and,- in his opinion, the

£1,500,000 now offered was also totally inadequate. He did not agree that the bill .should go b«ioro a .Select Committee, because the need for relief was very urgent. The bill had been before members and the public for nearly two weeks, and any objections to the measure .should have been' aired. He wished to move an amendment to the motion before the House : "That it be a recommendation to the Government to lake into consideration, (1) The urgent necessity for obtaining and 1 publishing an estimate of the, total loss sustained" in the earthquake area. (2) Taking authority this session In borrow the sum of £4,000,000 for the purpose of completing the rehabilitation of the earthquake area. (3) The question of re-opening negotiations with the council of the Fire Underwriters' Asso- ' elation, with a view to obtaining the co : operation of tire insurance companies in the work of ascertaining the losses, and making linancial assistance available, and thereby facilitating the help which is so Urgently required. (4) The immediate completion by the L'tlblie Works Department of the work of demolishing the ruins and removing the debris in Napier, the cost of such work to be a charge upon the moneys provided under Part 11. of the bill. (5) The acceptance of the genera! rule that It >s and household goods which bad: been destroyed or damaged shall be restored by way of a free grant to the full extent of the loss sustained. (6) Tire question of assisting local authorities in the earthquake area by way of a. grant- as well as by loans. (?) The'question of making recommendations to the Ha.wke's Bay'River Board and the Napier Harbor Board, and or directing or controlling the activities of •cither body, with a. view to securing the fullest possible co-ordination in the task of restoring the earthquake area, and Napier and Hastings in particular." FR.EEI GRANTS' URGED Mr. Barnard .suggested that the Government should take power to borrow up to £4,000,000 over and above the amount covered in the bill. It was feared in Napier and Hastings that £1,500,000 would be all the. assistance that would be received, and it would have a strong psychological effect if the Government took the power suggested. .He appealed to tho Government to clear away all the ruins still in Napier, and. said he hoped the personal belongings of the sufferers would, be restored to the extent of TOO per cent, lie agreed with Mr. Coates that consideration should be taken of the financial position of sufferers, but where tho losers were workers with mortgages on their lioirtes, lie thought the. losses should be fully restored. Ho believed there were 2000 homes in. Napier which could be restored at an average cost of £IOO each, and: that if £200.000 was given as a free grant if would go a longway towards restoring Napier. Napier was faced with many big problems, and not the least of these were the river and 1 harbor.

Continuing, Mr. Barnard asked that flie losses caused by the loss of employment should be restored in part, and suggested that an Adjustment Court should be set up to deal mora expeditiously with the work. The £250,000 suggested for loan to the local bodies would probably not, cover a. fpjarter of the loss suffered by the local bodies concerned, and the possibilities of the bodies being in a. position to collect extra 'rates in the future were not verv bright. He suggested'that £250,000 should be given as a, straight-out' grant. He also "suggested that a special commission should be set up to deal with the question of the late payroenst. of income tax or its remission altogether in the case of earthquake sufferers. BASIS OF TAXATION.

Mr. A. E. Jull (United, Waipawa). suggested that because insurance was to be the basis of taxation it should also be the basis for assistance. Business risks should be charged higher than dwellings because of the greater risk of damage or destruction by earthquake and the resultant fires, lie thought the tax would be passed on as part of overhead costs, so that people would pay their fair share, while deductions would cut out 90 per cent, of those who owned homes.

Mr .lull said he was pleased the House had the Earthquake Rill before it, even though the provisions Were disappointing. He was further disappointed-with the speeches of Mr. Forbes and Mr, Coates. He. felt somewhat alarmed at the emphasis being placed upon the loan aspect in preference to the principle of straightont assistance. What was required in the devastated areas was capital and credit as well. The towns would be prejudiced for a generation in competition with other places if the businesses were heavily burdened with loans.

Referring to the, adjustment court, Mr .lull complained that there was a possibility licit, the opinion of the Chief .lustier could be overriden 'by the opinions of the two laymen members of the court, lie would prefer to see the questions loft to the well-known judgment of the Chief Justice alone, than to envisage the possibility of bis being out-voted by other members. Mr. Jull said be understood the Prime Minister had given an undertaking lo go into the question of earthquake losses in relation to the payment of the income tax, and It was,to he hoped that there would be a satisfactory outcome. , LOSSES IN INDUSTRY.

Mr. Jul I drew attention to the losses involved in the Farming industry and in industry generally. He pointed out that duty had been paid on large stocks which had subsequently been destroyed, and he asked whether it would not he fair to remit these duties. It would not bo much use bringing people back to the area if the linns were not placed in a position to employ them, He contended that the bill did not (leal adequately with the question of rehabilitation. The Frime .Minister had referred to,assistance where assistance was required. Hid thai mean that a. man who had formerly owned a. business was to be recognised as being in need of assistance, and to be offered a job as, for instance, a clerk. That. Mr. Jull declared, was not rehabilitation.

Continuing, he said he thought The lax on insurable property might be dropped. , It would involve the creation of a,.great deal of machinery and would only apply to a comparatively small amount of property. Mr. H. M. "Campbell (Reform. Hawke's Hay), said there was every indication that damage in the earthnuake area would exceed £4,000.000. He thought the. (iovermnenl should begiin by making grants to sufferers, and should then supplement these by loans at a low rate of interest. Criticising the adjustment court, Mr. Campbell expressed the opinion that there were far ton many cases fur one court to deal witl? within a reasonable period.

! lie agreed that at least throe courts 'were required, otherwise the hearing of the cases would extend over a period of .'years. He also agreed with the suggestion that the Minister of Finance ' should, be given power to raise a loan ' for the area, adding that even if the ■ power was not used, it would he avail's able should the conditions change and 'a suitable opportunity present itself for ' raising a, loan. He thought ffve.ry ' assistance should he given the victims, ' and lie Favored a proposal vto relieve ■ I hem in the direction of the income tax. He did not, like the proposals ro- ' garding insurance and insurable property i lax. He agreed it was necessary to ,' raise money (for the purpose outlined, 1 but those purposes should bo charge;; on the consolidated fund, which should lie i enabled lo rneol them out of the revenue •■ raised by other means.

UNIVERSAL INSURANT'!

"Recent happenings in New Zealand appear to me to make out 'an unanswerable case for the adoption of a universal insurance policy against, earthquake risks, even if the State has to lead the wav and take a monopoly of the risk," said Mr. M. J. Savage (Labor, Auckland West). When it comes to the last analysis the citizens of New Zealand must stand by their fellow citizens, whatever happens. (Hear, hear.) If is only a question of deciding as to whether we are going to do it in an organised way. or wait for something to happen and let our hearts run away with our heads without, getting satisfaction for anybody. Ninety-seven per cent, of the people of New Zealand would have as lay down .something! lasting that will put the people in Hawke's, Bay, and if any other area is similarly affected in the' future, beyond tin l reach of charity. (Hear, hear.) Parliament should lose no time in laying the foundation of a. universal scheme, (hat will have us ever ready to meet anything of a similar nature that' may happen in the future.

Air. Savage added that he considered there should first be an accurate estimate of the damage and the clearing of the wreckage before? rebuilding commenced, and. when those preliminaries were accomplished, rebuilding should be made the definite objective. It was important to the .Dominion as a whole Hint, the area should be restored. The Government should, even if the raising of the money had to he spread over a number of years, set out on a complete programme, so that some guarantee wotdd be afforded the people whom it desired to induce to return to their homes. NATIONAL OBLIGATION.

The Minister of Lands, the Hon. E. A. Ransom, referred to the insurance fund as a national obligation, and it wax fortunate that the Government had a reserve fund to draw upon.

Mr. W. P. Endean: We want to meet the position nationally, not from a section.

The Minister: While people might not appreciate the levy added to insurance they recognise that the distribution of the tax is on a fair basis, and if there-is something better which appeals to the House, then members can bring- it forward.

lie considered that those', insured against earthquake risk should not be levied. Mr. Ransom admitted that the levy on the insurable value of property raised a difficult question, and agreed that in many cases the cost, of collection might he greater th,ail would be warranted by the amount raised. It had to be remembered, however, that some large firms were sufficiently strong financially to carry their own insurances, and it Avas not desirable that they should be permitted to escape the tax. Such firms should be called upon to pay an equal amount, with the others.

Mr. Hansom said he did not agree with,those who argued that all losses should be made good, but be considered that the assistance given should be sufficient to enable the district to rehabilitate itself. Hawke's Bay was a district with great possibilities, and provided it enjoyed sonic good seasons, it would, with a reasonable measure of help, be able to reestablish itself on a sound footing. He was sure that the people of Hawke's Bay did not desire to "be regarded as bankrupt and helpless. WEALTHY MEN EXEMPT. The Minister said he thought it was desirable that, if possible, one. court should deal with all the adjustment cases, so that uniformity could be expected. Another factor in favor of one court was that it would involve the least possible administration cost and leave more money for relief. The Hon. W. Downle Stewart (Ref., 1 Dunedin West) suggested that & 2,000,000 worth of Bank of New, Zealand shares held by the Government might lie deposited in London as. a, temporary reserve to meet the do-' hcieney in the reserve fund. This would give time to consider the most equitable method of taxation to replace Hie London reserve.

"It, really amounts to a property tux placing the burden on the people who invested their sayings in a particular form," lio .said. Jt failed to discriminate between the man who invested in houses and buildings, and another getting a princely income from other sources absolutely untaxed under the bill. The proposal should be exhaustively discussed by the committee of the House, which could' ascertain what alternatives had been considered by the Government. Mr. Stewart said the Prime Minister and Mr. Hansom had dealt with features of the bill which anyone reading it- could find. What the. House Wanted to hear was tho other things relating to the-' bill, such as what representations had been made to Cabinet, and how far it, was intended to go in building up the, reserve fund again, lbs agreed that the reserve fund should be used if it were not. possible to raiso a loan, and said the reason why a loan could not In- raised was because the Government had raised over £9,500,000 on the local market during the short, time it had been in office, A large part of thai had been for redemption purposes, and the. Government had'the advantage of localising that amount, butthe Government would have been wise to have avoided exhausting the local market.

"CLUMSY AND INEQUITABLE" Mr. F. Langstone (Lab., Waimarino) said the Government should iirst find old the extent of the losses, and then state how much of the losses it was prepared to finance, lie added that ho would like to see a clause in the. bill prohibiting" insurance companies from raising their tariff. Mr. C, A. Wilkinson (Tnd., Egmont) said the tax might be eliminated because it would be found objectionable to all who had to pay it. The Government had not indicated whether the insurance companies had been consulted. He suggested that the whole of the £1,500,000 could be collected without cost- to the Government, and that the 1 Government should undertake minting! of its own silver and copper coins.

Labor members: Would that not be repudiation ? .Mr. Wilkinson : No.

Mr. E. A. Anscll (Ref.. Chitha) strongly opposed the insurance fax, describing the proposal as clumsy and inequitable. It was contended by Mr. It. T. Armstrong (Lab.. Cbristchurch E.) that the payment of the insurance surtax should

guarantee that property owners were covered against earthquake losses. Mi-. D. Jones (Ref.. K'aiapoi) .staled that as no worker could afford to leave his '..dwelling liarinsutfeM, ail workers' dwellings would be subject to the insurance tax. He was satisfied that the wrong method was being adopted tc Jind the money. Why not stop unprofitable railway construction,' turning the money into the useful channel oi earthquake rehabilitation. THE DEBATE ADJOURNED Mr. Jones supported the plea that the bill be sent to a Select Committee. There was nothing to measure the liability of the State in the bill, he said, and it was the duty of "Parliament to control the purse-strings of the country. As far as the bill was concerned, control was left, to the court. The House should lay down the laws, and the court should carry them out. The method of levying the tax. would put many • fanners in an unjust position. Even if it took the Select Committee a month to make a good bill of the measure it would be worth the loss of time. Mr. Barnard:. What'will the people of Hawke's Bay do in the meantime? Mr. Jones: We have money and we can authorise its expenditure. Mr. W. P. Endean (Kef., Panic}!). described the taxation proposals as inequitable. Those who were not insured; would get. off scot free, and people would be discouraged from taking out insurances. The burden was being placed on those wfio had taken out insurances. t ■, \

Mr. 11. M. Rushworth (C.P., Bay of Islands) referred to the fact that a largo area of land near Napier had been lifted and reclaimed,.and asked if it was possible for that country to be inundated again. He believed that that was possible, and' if .so it. would be useless to rebuild Napier and Hastings on the present sites. It might be better to build elsewhere. Mr, Barnard: That is unnecessary. M'r. Rushworth: Has the hon. gentleman any assurance of that? < The debate was continued by several other members who criticised various phases of the bill.' The debate was adjourned till this afternoon.