ON THE WARPATH

Sun (Auckland), Volume II, Issue 430, 11 August 1928, Page 11

ON THE WARPATH

Critics of the Government

Attacks on Borrowing and Taxation

(THE SUN’S Parliamentary Reporter.) WELLINGTON, Friday. FINANCE, land policy, and taxation were the subjects upon which critics of the Government started on the warpath in the House to-day when the Budget debate was begun. The debate was opened by Mr. H. E. Holland, Leader of the Opposition, who started by congratulating the Minister of Finance upon having considerably condensed his Budget, but he hoped the day would come when it would not be read, as was the practice now, but that the House would have a spoken statement from the Minister, as was done in many other Parliaments. He then complained that the reports and documents related to the Budget were not available to members before they were asked to discuss the financial position of the Dominion.

Mr. Holland commented on the falling off of the income tax returns. This should not have been so, and he suggested this was due to the wrong people being relieved of their just liabilities. Mr. Holland said he had been laughed at for predicting that the value of soldiers' settlements would have to be written down £7,000,000 to £8,000,000, but they now had an admission that there had been writings down to the extent of £5,750,000 and there was more to come. Mr. Holland referred to the admitted loss on the working of the railways. This statement was wholly misleading. Anyone who did not know would perhaps think the loss on the railways was only £291,452, but actually it was £781,020. What happened was that £500,000 was taken from the Consolidated Fund. Tho Prime Minister, Mr. Coates: Quite right. Mr. Holland said it would be much better to state the case as it actually stood and show the loss actually as it occurred. The present method of stating the case was absolutely misleading and should be discontinued. Referring to the State Advances Department, Mr. Holland said he had searched in vain for information regarding rural advances. Why was this so? Tho Minister of Finance, the Hon. W. Downie Stewart: I was not aware the figures were not published. Mr. Holland said he was still waiting for information as to how much of the rural bonds were taken up by the public and how much was taken up by the Bank of New Zealand. The statement in the Budget regarding Post Office Savings Bank withdrawals also was misleading. These withdrawals were due to the Government’s own policy, and ho would like to know whether the Government had to pay a higher price for money as a result of that policy. He hoped that information would be given to the House at once. Half Revenue for Debt Charges Regarding the public debt, Mr. Holland commented upon the smallness of the revenue, round about £25,000,000. yet the gross net charges on the public debt totalled £12,517,136, or just about half of our total revenue. That, surely, was a serious position. Before the Reform Party came into power it advocated a change in the borrowing policy of the Liberal Party. It pointed out that in 19 years its predecessors had greatly increased the public debt, but in the same number of years Reform had increased the public debt by over £BO 000,000. If Reform was right in its criticism of Liberal borrowing it was wrong in borrowing so much itself. The Minister of Education, the Hon. R. A. Wright, referring to Mr. Holland’s criticism of the purchase of land for soldiers’ settlements, said members and the public had forced the hand of the Government and compelled it to buy land for soldiers. The Government had no alternative but to buy land and place men on it. It was idle to say the Government should have foreseen that prices would fall. Many had foreseen this, but there was a mad rush for land and the Government could not control it. The Minister denied that soldier settlers were being driven off the land. Adjustments were still being made ai%d where men showed any aptitude every effort was being made to assist them. Mr. Wright claimed New Zealand’s financial position was the envy of the Australian States, and, indeed, of the older countries of the world. He quoted seyeral British newspapers commenting on New Zealand’s enviable position on the London market. That was a complete answer to those who said the Minister of Finance was not justified in separating the dead-weight debt from other forms of debt. Large borrowing was not necessarily unwise and wasteful, so long as the money was wisely spent. Inflated Land Values Mr. E. A. Ransom (Pahiatua) said New Zealand’s troubles arose mainly because of the inflation of land values after the war. As a result lenders were reluctant to lend money on rural securities. and it was the duty of the Government to bring down some policy which would meet that situation. Instead they raised the rate of interest to settlers, and now the banks had reduced their rates. He wondered why the State Advances Department had not done likewise. As a means of turning back investments to rural securities he suggested that money so lent should be free of taxation, or at least only subject to nominal taxation. Our taxation to-day did not prevent the aggregation of land, continued Mr Ransom. Indeed many men, who were dealing with farm produce and stock, had discovered that the farmer was a privileged person, and that while they

held no farm they had to pay income tax on their business transactions, but so soon as they acquired a small farm, and put their transactions through their farm books, they escaped income tax, and this was what they were doing- Graduated land tax had not broken up the big estates for settlement. It may have resulted in subdivision among members of a family. He commended the system of post office certificates, mentioned in the Budget, and which he claimed to have advocated in 1924. Discussing income tax he pointed out that, while the financial position of the people had improved by £13,000,000, the amount of income tax had fallen off further. The Minister had said that he did not expect that income tax would beenlit much from the improved trade position. This was a serious admission, and it was an admission of weakness on the part of the Minister that more of this money was not finding its way into the Treasury. Company taxation was not being paid by shareholders, but was being passed on to the public, and so those who were least able to bear the burden were being overtaxed, while those best able to pay were getting off scot free. In the same way taxation was not hitting the rich but the poor, and it had been truly said that after every great war the rich were richer and the poor were poorer.

Mr. D. Jones (Ellesmere) said that the whole of Mr. Ransom’s speech was in favour of the big man. His plea for tax-free mortgages on rural securities was simply a plea in favour of the big landowner, and leaving the small man without any assistance at all. The Leader of the Opposition had blundered as badly as the member for Pahiatua. This was understandable, because the Leader of the Opposition knew nothing about land or taxation. Mr. Ransom, however, was a farmer, and should know something about both. The Leader of the Opposition had said that the farmer paid no income tax, but income tax was just what the big landowner wanted to pay in preference to land tax, which in its graduated form was doing so much to break up the big estates. The Leader of the Opposition had quoted a who owned over 100,000 sheep, and paid do income tax. No such man existed. What Mr. Holland had done was to take several men of the same name, and add their sheep together. Again, he spoke of a farm producing an income of £90,000, but in that calculation he had made no deduction for working expenses. This was the class of mistake that the supporters of the Government were called upon to correct. Railway Losses “The Government will have to get a move on if the railways are not to be absolutely annihilated,” said Mr. M. J. Savage. People will ride n conveyances that give them the best service. He admitted that the Governments of today had to face greater financial hurdles than the Governments of 20 or 30 years ago. He would not advise this Government to do as some Government 30 years ago did, nor would he even advise it to do as the Soviet did. Mr. Coates: I wish you would. Mr. Savage: I know you do, but I’ve been too long at this game to say what 1 don’t mean. The real Government of this country, said Mr. Savage, was the associated banks. Mr. Downie Stewart: You want to pay hundreds of thousands in interest to keep an extra million in deposits? Mr. Savage: That’s the shallowest remark I’ve ever heard. The Government’s promises in family allowances showed again that it said one thing and meant another. Mr. Coates: Oh no. It showed that fewer than we imagined needed assistance. Mr. Savage said that something like 500 had been turned down. The Act was bristling with conditions. A man whose earnings for three months averaged a shilling a week above the minimum was disqualified, even though unemployed for the rest of the year. “It is quite plain the law is not what people suppose it to be, nor what the Minister promised it was going to be,” said Mr. Savage. “It relieves a handful of people and shuts out a lot more. It would be all right if the law were sympathetically administered, but it’s not” Discussing the reference in the Budget to tax-free debentures, he said it was little wonder people were refusing to surrender them, because it was a financial proposition, and no one would surrender these debentures unless they were going to derive some benefit from their surrender. Toyfind out what the Government was going to do about it they would have to “wait and see,” since that was the invariable reply to inquiries by the Opposition. Generally, the Budget contained “a good deal of moonshine.”