FINANCE BILL

Southland Times, Issue 19025, 22 August 1923, Page 5

FINANCE BILL

£4,000,000 FOR PUBLIC WORKS OPPOSITION CRITICISES BORROWING PROVISIONS (Per United Press Association.) , WELLINGTON, August 21. In the House of Representatives, Mr Massey moved the second reading of the Finance Bill. He remarked that it contained 40 clauses, no two dealing with the same subject. It might, therefore, be regarded as a Financial Washing-up Bill. Amongst the borrowing proposals the following are of more importance:—Public Works £4,000,000, State Advances (Settlers’ Branch) sum not exceeding £3,000, 000, in any year State Advances (Workers' Branch) sum not exceeding £1,500,000 in any year. The former limit, on annual loans, by the State Advances Department were £1,500,000 in respect to Settlers’ Branch, and £750,000 for the Workers’ Branch. Additional power is also given to borrow £50,000 for Hauraki Plains Drainage and £50,000 for Rangitikei Land Drainage. The promise made by the Prime Minister that the existing local body and company debentures, shall not bear a higher rate of taxation than provided in the annual taxing Bill, is redeemed by the inclusion in the Finance Bill of a clause, stating that unless expressly provided in the annual taxing Act, for any year, the income derived from these classes of debentures issued, before the passing of this Act, shall be levied at a rate of 2/6 in the £. Other financial provisions include the authorisation of payment by the Finance Minister of a sum not exceeding £375,000, in payment for 375,000 preference B shares in the Bank of New Zealand. Another clause states that gifts made for charitable trust purposes, shall not be included in the final balance of the donors’ estate, noth withstanding that he may die within three years after having made the gift. This section is to be retrospective. A grant of £5OO, is to be made to Miss Ida Fraser, daughter of the late Sir William Fraser, in recognition of his public services and an annuity of £l5O, per annum, is also to be paid to her. The travelling allowance of the High Commissioner is to be increased to £2 per day, while travelling in the United Kingdom, or £2 10/-, if travelling abroad. The maximum will be, if travelling abroad, £4OO in any year, instead of the former limit of £250. Other clauses were explained in detail by the Premier. Mr Wilford said the Bill was really a “washing-up” Bill under the title of Financial Bill. There was no warrant for what was being done. The Washing-up Bill was coming down, and many clauses of the Bill should have been reserved for that measure. The public indebtedness of the Dominion now amounted to £219,000,000, and this Bill gave power to borrow a further £8,000,000, while there still remained unexhausted, authorities to raise loans amounting to over £26,000,000. He said the time had arrived when they must stop and take thought of their borrowing. It might be a long time before Europe was reconstructed and before their markets were fully restored. Further, they must look to serious competition in dairy produce from Russia, which may, any day, be aided by American capital. Their secondary industries had not made the progress they might have expected. If the Premier proposed to raise a loan in Britain, while he was there, he hoped he would bring back more than the receipt. He did not believe that the Advances Department would be able to cope with the necessities of the people, when the moratorium expired. His belief was that the real remedy lay in rural banks, and he asked the Premier, when in Britain, to make full inquiry into the latest development in this connection. Commenting on the proposal to provide £35, 000 for the Main Highways account, he expressed the opinion that sufficient money to carry on the Main Highways, would not be obtained through the tyre tax. He complained of the absence of information regarding how £4,000,000, proposed to be raised for public works, was to be spent. It was not fair to ask the House to pass huge sums en bloc, in this way. A proper schedule should have been prepared and the fullest information should have been prepared, and the fullest information should be given to members. He reiterated his warning against excessive borrowing, and urged a revision of their system of taxation, on a strictly scientific basis. The Hon. Ngata criticised the administration of the funds held under the Native Land Settlement Account and put in a plea for better use of that money in the education of youth of the Maori race. Mr Lysnar ridiculed the idea that New Zealand’s dairy industry was in any danger from Russian competition as indicated by the Leader of the Opposition. The Hon. J. A. Hanan complained of the want of information, given in the Bill, regarding purposes for which borrowed money was to be applied. Tfcat was a point on which the Premier was very strenuous when he was in Opposition. To that extent he was not consistent.

The Hon. W. Nosworthy said that there was no country in the world in a better financial position than New Zealand. In no country was there less unemployment, and which could borrow money at such a low rate of interest. Fault had been found with the borrowing policy of the Government, but it was the Opposition which had prepared the way for all the big public works, including hydro-electric schemes. If they did not want these things, then the manly course was to stand up and vote against the Government’s proposals. Mr McCombs complained that the “hardship” clause in the Public Expenditure Adjustment Act had practically become a dead letter. That was a breach of faith op the part of the Government. Mr Veitch wanted to know how it was the Government was asking for authority to borrow £8,000,000 when already they had unexpended authorities to borrow amounting to £26,250,000. This surely was extravagant, even if it was popular finance.

Mr Holland said it was deplorable that within two or three days of reducing taxation they had a Bill authorising borrowing, while at the same time the wages of public servants were reduced to such an extent that many of them were not able to keep their homes and families in decency. Further, scarcely any cases of relief under the hardship clause were on record. He strongly deprecated endangering local body finance by high taxation on debentures. The Premier, in reply, said that the outstanding feature of the debate was pessimism. It mattered not what the Government did, it was, according to their critics, wrong. With regard to the unexhausted authorities to borrow, referred to by Mr Wilford, he admitted that the present system of dealing with these authorities was wrong and had this been a normal session he would have altered it. A great many items on the list of authorities were “duds,” and ought to be cancelled. What he thought should be done in future was that the whole of the Government’s borrowing proposals should be put in one Bill, not as at present in several Bills. Mr Wilford had referred to the tyre tax. At present the accumulated tyre tax amounted to £125,000. This might not make many roads but it would be very useful as it was their intention to use the tyre tax to pay interest on moneys borrowed to make roads. He did not think Russia would be a serious competitor in dairy produce, but he did expect competition from South America. He was afraid they were not so particular in preparing dairy produce as they used to be, but if we desired to hold the mastery over the British market, then greater care must be exercised in maintaining the high standard of past years. The Labour Party objected to borrowing but it was utterly impossible to provide money for public works out of revenue. That would not be done for many years to come, but he reminded the House that the completion of the Otira tunnel reduced the interest charge on nonpaying lines. Practically the whole of the money being borrowed was interest-bearing. So long as our borrowed money was profit-

ably invested there was no loss. It was when borrowed money was spent on unproductive projects that there was reason to complain. The Bill was then read a second time and the House went into committee on the measure. At one o’clock the Committee was still discussing clause B, fixing the rates of income tax on income derived from company and local body debentures, which the Labour Party was strenuously opposing. Mr Sullivan moved to amend the clause in the direction of making the tax on local body debentures, issued both before and after the passing of the Act 2s Gd. This was lost on the voices and the clause was passed unamended. Th remainder of the clause was agreed tn without alteration. The Bill was read a third time and passed. The House rose at 1,40 auxu i