TAX ON WAGES

Southland Times, Issue 21661, 24 March 1932, Page 8

TAX ON WAGES

INCREASE MOOTED SHILLING IN THE POUND MINISTER’S PROPOSALS UNEMPLOYMENT RELIEF RURAL SCHEME SUBMITTED (Per United Press Association.) Wellington, March 23. Highly important proposals for the relief of unemployment were announced by the Hon. J. G. Coates in 'the House this afternoon. These include an increase in the wages tax to a shilling in the pound. Establishment of rural allotments scheme. Extension of the principle of placing men on existing farms and moving single men from the cities to highway construction and other camps. Provision for accommodation for workers under Scheme 4A and extension of Scheme 5. Hural areas development. Land drainage of tidal Hat reclamation and reclamation of virgin land schemes. . Metalling backblock roads. Assistance to gold prospectors. Transference from Hospital Boards to the Unemployment Board of responsibility for the relief of distress arising out of unemployment. Under the proposed rural allotments plan, holdings of five to ten acres will be made available. Accommodation will be supplied and the occupant will be able to work part time for neighbouring farmers, tn the meantime he may receive a portion of the present relief allowance. Under the new financial arrangements, the Consolidated Fund subsidy for unemployment will cease. The Bill giving legislative effect to the proposals was introduced this afternoon. Minister's Statement. The ftdl term of the Minister’s statement is as follows: For the information of members and the country, I desire to review the position respecting unemployment and outline some further courses of action calculated to provide opportunity for those out of employment. In so doing, I recognize two basic considerations. It is necessary to keep in mind the effect of the burdens of taxation for it is obvious the more the public is taxed, the greater will be the decrease in spending ability which brings its own reactions in industry. My endeavour therefore is to keep a reasonable and equitable balance and thereby avoid adding to the troubles with which we are dealing. On the other hand, it is my opinion we must not merely say reasonable relief • should be grunted to those in distress, but must take every step within our power to ensure that no citizen who is prepared to work shall go short of the minimum necessities to keep together the body and soul of himself and his dependents. In reviewing the past few months, we are able to see some cause for satisfaction. .The rate of increase in the number of registered unemployed has at least been arrested in the meantime. The total stood at 51,408 on October 5. It has been reduced by 7000 and has now been fairly constant at about 45,000 for several weeks. Tho figure on March 14 was 44,390. At this period a year ago the steeply rising figures of uneinnlovment showed no slackening whatever. The registrations in fact increased from 6000 in October to 31,000 in March bust. year. The total placements of men in subsidized employment on farms is 17,(X)0. This represents some real progress. In moving the men over the fence, every care has been taken to see these men have not displaced regular employees. The number actually on farms as additional labour to-day is 7000. In October last the figure was 2000. 'lliis effort to assist at once the unemployed and the man on the land appeals to me as thoroughly sound for it is upon the farmer and the unemployed that the burden of this depression has . fallen most heavily. Our intention therefore is to extend to the utmost the means of placing men on existing farms. To some further steps proposed in this direction I shall presently refer. About 1000 single men have been moved from tho congested city areas into camps for highway construction. These camps were in the nature of an lexperiment on the part of the Main Highways Board and tho Unemployment Board and they are now to be judged satisfactory. The principle will be further extended but with the difference that the purpose will not bo confined to road work. A start has already been made in establishing camps for married men to enable them to engage :n more usefid work than they could be offered in the cities. Gold Prospecting. The marked revival in gold prospecting is due in part to the assistance given by tho Unemployment Board, co-operating with the Mines Department. With gold over £6 per ounce as compared with £3 19/10 a year ago, many workings which were not worth while have now become so. Most of the men out prospecting and fossicking are now able to earn a living without assistance and some have done quite well. Some hundreds of these men in necessitous circumstances have been given a start from the unemployment funds. The unemployment fund will be recouped to the extent of 10 per cent of all gold. Much of the Scheme 5 work has been of limited value, but a special investigation has shown that under Scheme 5, some 10,000 men are now engaged in work of a definitely productive nature, such as land drainage and improvement. 'The Unemployment Board has managed to live within its income. This has been achieved only by rigid economy, necessary owing to the limited funds at its disposal, but there are many deserving citizens whom the board has been unable to assist at all. Relief for Married Men. Although the total registered unemployed has fallen in the past five months, there is one group in which the numbers have not failecl and that is the married men in the cities, while the total of single men registered as unemployed in the four main cities has fallen from 9000 to 7000, a drop of 23 per cent. The number of unemployed married men in the cities was 11,500 in October and is still 11,200. In March there was a negligible drop of 2 per cent. This brings mo to refer to the first measure which we propose for the further relief of married men. As many men as the fanners are prepared to take will be made available under this scheme, if satisfactory arrangements can be entered into with the farmers. When a farmer,has no accommodation available for a man and cannot provide it, arrangements’ will be made to provide ft hut fmd. turn out.

Rural Allotments. Under this new plan sections from five to ten acres will lie acquired by any form of tenure which is most suitable to the case and a cottage of public works type will be erected thereon. The allotments will be distributed throughout the rural districts. The occupant of a section will be able to work some of the time for himself on his own place in providing his own sustenance, and part of the time for the nearby farmer or anyone in the locality who can employ him. It is recognized that relief workers who are thus moved out will not immediately be able to earn an independent livelihood. Some part of the present relief allowance will therefore have to be continued. Again there are many cases where a landowner could make available to the worker portion of his land and the occupant could work in the same way—that is to say part of the time on his allotment and part for the farmers in the district.

The Government now appeals to all landowners and farmers to help in this time of stress. If they will respond, and lam sure they will, an impetus will be given to production, men will be found employment, farmers will have additional labour and at least some of the men we hope will later become permanent settlers. As typical of what can be done, and something that has been done, we can picture a farmer agreeing to take a relief worker and his family on to his place with a cottage provided, the farmer setting aside a few acres and providing a cow or two, ,pigs, and such farm products as he can, while the relief worker agrees to work on stated terms on the farm.

This matter of placing the unemployed on rural allotments has been carefully considered. We are well aware of its difficulties and of its limitations. It is not wholly a land settlement scheme, but rather an emergency measure to move some thousands of persons into environment with opportunities' for the individual. At the very least it will provide shelter until the storm has passed over and is certainly preferable to keeping families in congested areas with little hope or opportunity. Transport Facilities. j The Government have agreed to recommend Parliament to provide a fund in the nature of capital expenditure to help to finance this scheme. Transport is amongst the incidental problems raised bv a scheme of this character. The Railway Board have, been consulted and I am pleased to say that they have agreed to cut the charges and to co-operate in a helpful way with this plan to which, I may say, 1 attach the greatest importance. I shall deal more fully when I speak on the Bill. Meanwhile I refer to some other work that is in hand. Land drainage offers a very valuable addition to the works to be undertaken. There arc many thousands of acres of good land which only requires draining, its carrying capacity being restricted owing to its waterlogged condition. Drainage will enable this land to be made completely productive and provide for greatly increased ■ reduction and ultimately for closer settlement. Tidal flat reclamation also offers scope for considerable development. . There may be legal difficulties in this matter, but these will be overcome by legislation. Some works are in hand and when completed will lx? immediately made available to tnose requiring small farms. Reciamction of Virgin Land. Proposals are being finalized embracing the development of Crown lands by suitable men. Proposals for land settlement not directry undertaken by the Government will be sympathetically considered and encouraged. Road work, particularly metalling of backblock roads, will enable us to give employment to a considerable number of men in providing all weather access which settlers so badly need. Gold Prospecting.—The considerable increase in the value of gold will enable many areas of gold bearing country which could not be worked at a profit at the old price of gold, to be now worked and give a reasonable return. After consultation with the Minister of Mines, I am pleased to say provision is being made for the services of supervisors additional to those already available. I look forward to a great expansion in this connection. Scheme 5. Apart from these ventures along remedial lines, some further changes are being made in connection with relief administration. Scheme 5 has in the past been used almost exclusively for the employment of men in the towns and cities. A commencement has already been made to apply this scheme to country work, with the difference that the work is continuous and there are no stand down periods. It is essential that work in the country should be carried on continuously. The policy is to direct labour into rural districts. Relief for Hospital Boards. It has been the practice for hospital boards to provide sustenance for registered unemployed, particularly in the stand down periods. Waste is caused by duplication and overlapping when the same able bodied unemployed are assisted from public funds by tho Unemployment Board and hospital boards and possibly by other social organizations. It Is therefore proposed to remove from hospital boards the necessity for assisting. This means that any relief it may be possible to give to registered unemployed, apart from wages, will be given from the unemployment fund while hospital boards will be responsible for relief to those whose distress is due to causes other than unemployment. Until such time as the payment for relief is brought under one control, it is impossible to say how much unemployment is costing the country'. It will be seen from what I have said that hospital boards will be relieved of a considerable drain on their resources and as a result of the proposed change in method and organization, hospital and charitable aid boards should be able to reduce their demands for levies on local bodies. An increase in the income of the unemployment fund is imperative. The present income is £2,500,000 a year. Outgoings at the rate of about £50,000 weekly amount also to £2,500,000 a year. The cost cannot be much reduced as long as the unemployed number some 50,00 d (as they do when men in subsidized employment on farms and gold prospectors are included). Then we are faced with the need of taking over from hospital boards the responsibility of providing for able bodied unemployed. We must move men from the cities where little work Is offering to country districts. They will be more usefully employed. They will be giving some definite return, but the initial cost will be higher than it is now, apart from any other increase. A considerable proportion of men who have been employed on public works apd paid out of capital funds must come on to the unemployment fund. Extension of Tax. It must be clear to all that the Consolidated Fund will not be able to contribute anything in the ensuing year by way of subsidy to the unemployment fund. Nor is it anticipated the amount payable this year by way of levy and special tax on wages and income will equal what was received during the present financial year from the same income avenues. The special tax for unemployment stands outside of ordinary taxation and outside of the state revenue. It is in the nature of insurance or a pool as amongst wage and salary earners who are in employment and those who are unemployed. From this viewpoint, and so long as the available funds are economically administered, I am sure that those who are in employment and in receipt of income, even a falling one, will not grudge the increase shown to bo necessary. The tax will now be expended to include women with individual incomes below £250 a year from sources other than salary or wages. At present they are exempt while women with the same or smaller incomes from wages and

salary are subject to the tax. This anomaly will be removed. It is necessary to ask Parliament to increase the ■ wages unemployment tax to 1/- in the £. . PROVISIONS OF BILL SETTLEMENT ON LANDS. \ FORMER ACTS AMENDED. (From Our Parliamentary Reporter.) Wellington, March 23. The Unemployment Amendment Bill is divided into two parts. The first deals with the settlement of unemployed workers on cultivable lands, and the second with miscellaneous amendments of former acts. The purpose of the first part is_ to make provision for the settlement of unemployed and their families on areas to cultivable lands and to alleviate the distress resulting from unemployment by affording an opportunity by this means t 6 provide in part for their own sustenance. If persons so assisted are unable to provide adequate sustenance for themselves and their families, they may receive allowances out of the Unemployment Fund in accordance with section 20 of the Unemployment Act 1930, or may be provided with necessities in accordance with section 15 of the amending Bill. Section 20 of the Unemployment Act authorizes the payment of a sustenance allowance out of the Unemployment Fund, but it has so far not been put into operation. In accordance with the Government’s policy of providing relief work rather than payment of money without, an alternative proposal made by the Bill is that the money may be spent from the Unemployment’ Fund for the purchase of food, clothing or other necessities for the benefit of persons qualified to receive a sustenance allowance. Lender section 20 of the principal act, for the benefit of persons employed on refief works or for the benefit of their families or other dependents, the board may purchase supplies of foods, clothing or other necessities and arrange for the distribution or it may arrange for the issue to qualified persons of dockets which will be exchangeable for such necessities. In accordance with the prescribed conditions these dockets will be redeemed by the board with payment out of the Unemployment Fund. Dealing with the question of the acquisition of suitable lands for settlement by the unemployed, the Bill authorizes the Minister of Unemployment, acting on the recommendation of the board, to enter into agreements with owners or occupiers for the occupation and cultivation of areas by the unemployed. Tills agreement may provide for the occupation of land by any persons approved by the Unemployment Board, either with or without a formal license to occupy and for the erection of any dwellings or other improvements. The lands to which this section refers include private lands, areas vested in or administered by the Crown or Department of the State, or by local bodies. Where in any case the board is unable to enter into an agreement for the occupation of any suitable land, the land may be acquired by the Crown under the Public Works Act, or Land For Settlement Act. All moneys payable in respect of the acquisition of land ’in this manner shall be paid out of the Unemployment Capital Account in order to make lands available for occupation. The Minister on the recommendation of the board, may order the erection of buildings and the provision of water, light, drainage and other necessities. Any buildings or other improvements may be at any time removed without liability for payment of compensation to the owner oi land or any other person. All moneys required for the purposes of this section up to £500,000 may, without further appropriation, be paid out of the Public Account to the credit of a separate account to be called the Unemployment Capital Account. Any additional expenditure must be appropriated by Parliament. The Bill deals with the new basis of unemployment finance indicated in the Minister’s statement. The clause in the principal Act providing for a pound for pound subsidy from the Consolidated Fund on the board’s expenditure, is repealed. The increase in the emergency unemployment charge from one penny in every six shillings and eightpence to threepence in every five shillings will operate from May 1, 1932. It Is provided that by Order-in-Council, the rate of the emergency charge may be reduced if the proceeds are found to be more than sufficient to meet the reasonable requirements of the Unemployment Fund. The emergency charge was limited by last year’s legislation to July 31, 1932, but it is now proposed to extend liability for the tax indefinitely. The emergency charge imposed in respect of income other than salary or wages derived for the year ended March 31 shall be due and payable by equal instalments on the first day of May, August, November and February. Section 15 of last year’s Act defining the liability of women for the payment of the emergency charge Is repealed. That section made women with incomes of £250 a year and over derived from sources other than wages or salary, liable to the charge. It is now proposed to include women with such incomes exceeding £2O. The board may on the ground of hardship exempt any person from liability to pay the emergency unemployment charge.

BILL DISCUSSED A DROWSY DEBATE. LABOUR OBJECTIONS. (From Our Parliamentary Reporter.) Wellington, March 23. Although Labour made a spirited objection to the provisions of the Unemployment Amendment Bill when it was introduced and read a first time in the House this evening, the discussion on the whole was lacking in lustre and Government members were plainly drowsy. The Bill was introduced by Governor-General’s Message just before 5.30 and the House adjourned till 7.30 when consideration was resumed. There was a very thin House at this time, not more than 30 members being in the Chamber. The Leader of the Opposition, Mr 11. E. Holland, claimed that judged on the statement, there was nothing new in the measure beyond the shilling in the pound wage tax. Mr Holland said he thought the flat tax very unfair, but no one would object very much if a shilling in the pound were the basis and the scale were steeply graduated. As it was, the tax would fall more heavily on the man on low wages than on those on higher incomes. Mr J. McCombs (L., Lyttelton) claimed that the country would be very disappointed at the long awaited statement and the unemployed would feel that their last hope had been dashed to the ground. The amazing thing about the statement was the smug satisfaction of the Government at the proposals. It was a starvation scheme. Married men could not live on 7/6 a day, less the cost of food. He agreed with Mr Coates that the scheme was “over the fence,” but in a different sense from what the Minister meant. The proposals meant that local bodies would receive no assistance in giving relief. Discussing the Christchurch means of relief, Mr McCombs said that the Christchurch scheme of paying full rates to the unemployed had helped every trade and industry in the city. The Christchurch City Council had put an extra £200,000 into the trade of the city. Mr McCombs was not objecting to the shilling in the pound tax, stiff though it was. It should, however, be graduated and based on ability to pay. Mr D. G. Sullivan (L., Avon) wanted to know the intentions of the Government regarding women. The workers’ tax he described as an imposition on the women of the country and the Act an injustice. The whole proposals were unjust, giving men and women insufficient means of living through the Government’s actions. Such tremendous hostility was arising against it, that it would either be compelled to resign or recast its policy. Mr H. T. Armstrong (L., Christchurch East) characterized the legislation as that of the most tyrannical Government NewZealand had known. There was nothing in the scheme to indicate a permanent solu-1

tion of the. unemployment problem. No mention was made of work for women. Every Act the Government had passed had increased the number of unemployed. Mr Armstrong said that if one searched from one end of the world to the other and found a collection of men to place in control of the country, one could not find a more incompetent crowd than that on the Treasury benches to-day. No one could have made a more unholy _ mess of the Dominion’s affairs. Other Labour members spoke in this strain but the House was not very interested in the Labour contributions to the discussion and just before the supper adjournment there were 19 members only in the Chamber. After all the Labour members present had spoken, the House went into Committee on the message at 10.15. “Abusive Remarks.” Answering Labour questions, the Hon. J. G. Coates deprecated the absence of constructive criticism. The attitude taken was one that could not be called anything but abuse. Remarks'had been made about kicking the Government out, but Labour members well knew that they were not in a position to do so. Mr Coates claimed that the Unemployment Board had put up a good performance in placing 17,000 men in farm employment since October last. Also, 7,000 of those men had found permanent positions. Mr Coates defended the land settlement proposals on the grounds that keeping the unemployed in urban areas would really lead to payment of the dole. Dealing with the problem of married men, Mr Coates said that the fear of the majority of married unemployed in the cities was lack of opportunity in the cities for their children, therefore they desired to go into the country. This was a good idea, for by that means the men could assist in maintaining production which was essential to the Dominion.

Regarding the building of accommodation, Mr Coates said that the Unemployment Board had options over timber at prices it did not dream of 12 months agp. In say three years time, Mr Coates hoped that most of the unemployed would have made a good start on land with a comfortable little home.

Mr R. McKeen (L., Wellington South) took strong exception to Mr Coates’ criticism of the Labour attitude. He claimed that Labour was in the House to help. Mr P. Fraser asked Mr Coates if he would refer the Bill after Easter to a Committee of the House which he was sure would bring down proposals providing completely for the unemployed. The House came out of committee at 11.5 and the Bill was read a first time.