PROTESTS REGISTERED

Taranaki Daily News, 27 July 1934, Page 7

PROTESTS REGISTERED

METHODS USED BY MINISTER MEMBERS SEEK AN EXPLANATION. ACCUMULATED FUNDS IN LONDON. CRITICISM OF THE FINANCE BILL. By Telegraph—Press Association. Wellington, Last Night. Mr. M. J. Savage (Leader of the Opposition) registered protests against the methods adopted in the passage of the Finance Bill in the House of Representatives. He said a measure of that kind needed some careful examination which it had not received. It was impossible for any member to follow what the Minister A private banks was to be guaranteed for all time by the State according liability to the Consolidated Fund, Mr. Savage said. The provision relating to Treasury Bills was also important. The Government was in a muddle in London and now those bills were to be met by Reserve Bank bills. The Minister should have used the credit of New Zealand for the farmers of New Zealand. Why was State credit not used in the first place, Mr. Savage asked, instead of raising the exchange rate and fattening those who were already fat? After having spent millions which landed the country in a blind alleyway in London the Government was now coming to what it should have done at first. Labour said previously that the exchange was not increasing the money in the country one pennypiece, but was only shifting it from one pocket to another. If the Government increased the exchange to £l3O or £230 it would not increase the volume of money in the country. HOUSE WITHOUT KNOWLEDGE. The House was asked to place the Consolidated Fund behind the Reserve Bank without knowing what the accumulations in London were. The Government had accumulated £23,000,000 in London and had to issue Treasury bills to use it. It was now going to redeem them by the use of Reserve Bank bills. The issue of Treasury bills and their redemption by the issue of Reserve Bank bills did not dispose of the accumulations in London. He was concerned about the banking transaction because public credit was asked for under cover of that Bill to get them out of that blind alleyway. . Mr. F. Langstone (Lab., Waimanno) sSd the Government had to pay £28,750,000 to get that £23,000,000 in London and it had to pay 5 per cent, to the banks on that £28,750,000. The Government had to give the banks £5,500,000. He thought currency should-be entirely separated from sterling. He attacked the G ivernment for bringing down such an important' alteration as part of the Finance Bill, when it should be-an amendment to the Reserve Bank Act. Mr. R. A. Wright (Ind.,. Wellington Suburbs) said Mr. Coates’ carefully prepared explanation did 1 not tell members what they wanted to know. They were still , left in doubt as to what exchange had cost the country up to the end of last year. The Minister said he did not know. As far as Mr. Wright could make out it was nearly £4,500,000, and there was nearly another £1,000,000 in interest payments in London. Where was the money to come from? Would the Reserve Bank issue notes to make it good, or would the Government raise a loan? If the Minister took the country into his confidence he would straighten? out his own position. Was the Government preparing the way for permanent currency depreciation. The trouble in New Zealand to-day was lack of confidence. STERLING STILL IN LONDON. Mr. W. Nash (Labour, Hutt) said the fact that the Reserve Bank was paying the Government so many notes in New Zealand to take over a certain sum of credit in London did not in any way alter the fact that £23,000,000 in sterling was lying in London. He thought each country Should have a Reserve Bank, but it should be entirely removed from private interests. The Government had not saved the working farmers by its policy. The only advantage was that some farmers received money from the people of New Zealand to pay some of their debts. The farmer was entitled to help and Mr. Nash thought the farmer would realise the townsman must also be helped to the sajne extent. Mr. F. Lye (Coalition, Waikato) said the British importers carried the burden of the additional exchange. Currency depreciation was in progress in every country of consequence in the world to-day. The advantage of the Reserve Bank was that the Government could get finance through the bank and any profit, after interest on the £500,000 inscribed capital was paid, would go to the Consolidated Fund. The coSt of public finance would be a mere administrative cost. There had been no loss on exchange and there could be no loss while the rate was maintained. Mr. H. T. Armstrong (Labour, Christchurch East) said the raising of the exchange rate lowered the standard of living of the people without giving benefit to the exporting farmer. Mr. A. J. Stallworthy (Ind., Eden) asked the Minister if local bodies were aware of the provision in the Bill regarding the sinking fund, and if any opposition had been expressed by them. It was a serious matter to many local bodies and placed an extra burden on the ratepayers. Local bodies should have been given an opportunity of expressing an opinion if they so desired. Mr. Coates said the Government intended to issue £29,000,000 worth of notes, but they were tied to sterling, which was in another country. That, he said, was not inflation. Replying to Mr. Wright Mr. Coates said New Zealand’s finances were sound. He said New Zealand 1940 bonds were giving a return of £2 19s. He had never defended the rate of interest paid on Treasury bills, but the trading banks demanded that rate. The rates were higher than those paid in other countries. The Government did try to have the rate reduced. He claimed that the farmers had benefited from the higher exchange but admitted that if local bodies had large external debts the position was hard for them. The Bill was read a second time.