The Timaru Herald. SATURDAY. APRIL 26, 1930. THE PRIME MINISTER’S STATEMENT.

Timaru Herald, Volume CXXV, Issue 18552, 26 April 1930, Page 8

The Timaru Herald. SATURDAY. APRIL 26, 1930. THE PRIME MINISTER’S STATEMENT.

Until fuller details of the national accounts are made available it will not be possible to examine the conclusions made by the Prime Minister in the rather lengthy statement issued from Rotorua on Thursday, the publication synchronising, strangely enough, with the close of nominations for the Parnell by-election in which one of the Government’s seats is involved. Suffice it to say, however, that the national expenditure has increased during the first complete year of the United Party’s administration, by more than a million, while the revenue shows an increase of £1,759,000 compared with the previous year, which indicates, of course, that the prospects of a substantial surplus were lost, not because increased revenue was not received, but because of the growth of national expenditure under the United Party. It is interesting to recall, however, that all suggestions made during the course of the debate last session on the Budget proposals, that in doubling the primage duty the Government would be putting a very much heavier burden on people; were ridiculed by the Prime Minister who estimated that only between £200,000 and £300,000 additional revenue would be drawn into the Treasury. The Prime Minister now confesses that “customs revenue exceeded expectations by nearly half a million in excess of the estimate.” The statement shows that the Party which promised to reduce taxation actually extracted from the pockets of the people, a million and threequarters in excess of the previous year. The biggest failure of the new Administration is in relation to finance. Millions were to be borrowed without adding a single penny to what was described as the “crushing burden of taxation.” Candidates when questioned on this plunk of the United Party’s platform, said: “We are quite satisfied that Sir Joseph Ward can borrow at 4-1 per cent, and lend at 4f per cent.” Supporters of the United Party were most indignant when it was suggested that the national finance of this country would be influenced by world conditions. “Sir Joseph Ward, New Zealand’s only statesman,” they said, “can do it.” It is not necessary to go beyond the lengthy pronouncement issued by the Prime Minister on Thursday, for proof of failure. “The new loan money received during 1929-1930,” said the Prime Minister, “totalled approximately £5,700,000, including £1,620,000 in London, being the last instalment of the £7,000,000 of January, 1929, and £4,800,000 obtained from local issues.” According to Sir Joseph Ward’s pre-election declaration there were £400,000,000 of new money coming on to the London market for investment each year. It was merely child’s play for the Leader of the United Party to borrow many millions at 4J per cent., and lend it at 4f per cent. But what are the facts? It is now admitted that the Government has operated largely in the local market, while the Prime Minister who made such dazzling promises, now confesses that “a Government cannot control the price of money any more than it can control the price of butter, or any other commodity for which there is a world-wide market.” And yet the United Party pledged itself to bring into this country £70,000,000 of new money over a period of years, and make generous loans to all and sundry at 4J per cent.; without adding a single penny to the crushingburden of taxation ! During the financial year just closed, the United Party brought new money into this country totalling £1,620,000; and then further complicated the otherwise disturbed state of the financial position of the Dominion by entering into competition with the people of New Zealand who sought funds for the development of internal trade and commerce, by offering 5i per cent, for money loaned to the State. Never in the history of the Dominion has sorry failure come so rapidly on the heels of vaunting pride and reckless boastfulness; never such complete vindication of the critics who warned the eomntry that the United Party’s big promises would end in smoloe. It is clear from Sir Joseph Ward’s own statement that the Government has materially increased the burden of taxation; forced up the price of money by competing in the local money market with offers of 5$ per cent, interest; failed to provide cheap money for everybody and work for all; swelled up the annual expenditure by more than a million, and drawn something like £1,750,000 more revenue than in the previous year, from the pockets of the people; and by these collective sins of omission and commission hampered business and made it increasingly difficult for the country to bear the grievous shock of the fall in the price of our primary products. THE STATE AS LENDER. No reference is made by Sip Joseph Ward la the definite pro-

mise he gave to the electors to help the development of the country by providing cheap money in abundance. It is clear, however, since the Government has borrowed very largely in the local market to provide funds for the State Advances Office, that no loan money at 4f per cent, has been made available. The statement issued by the Prime Minister makes no reference to the rate of interest. But the particulars given show that since the Government assumed office on December 10, 1928, up to March 31, 1930, about 11,800 applications for loans were received totalling £13,350,000, and the loans actually paid over amounted to £8,070,000. Do these official figures mean that at the conclusion of the short period of new Government’s operations—a trifle over fifteen months—applications for loans representing £5,250,000 have been either rejected and have not been paid over. Sir Joseph Ward has persistently made a great fuss about the alleged accumulation of applications. When the United Party assumed office, he said he found that there were several thousands of applications on hand involving an amount of about £4,000,000! Obviously there was some explanation for this apparent hold-up. Would it not be just as reasonable at this juncture, for the country to assume from Sir Joseph Ward’s own figures, that at the end of the financial year just closed, there is an accumulation of aplications representing £5,250,000? It is clear, however, that authorised loans amounting to nearly £1,500,000 had not been paid over at the close of the year. Some criticism has been levelled at the policy of the Government in its dealing with the applications from cities and towns. It has been suggested that ample finance is available in the centres to meet the requirements of home buyers, and that the Government ought to look with more favour of the needs of the people on the land. The following table, covering the term of the new Government’s operations, indicates the relative treatment accorded the two classes of borrowers: Loans Authorised. Amount. No. £ Settlers 4336 5,195,000 Workers 5170 4,354,000 These figures do not carry the full significance of the policy of the Government. It will be discovered on further examination, that 4336 settlers received loans averaging £1172 per authorisation; whereas each of 5170 workers was accommodated with a loan averaging £B4O. It is nevertheless significant that in less than eighteen months, £4,354,000 has been provided out of the State purse for the purchase or construction of homes for the people. It is just as well, of course, that the Government should closely examine the operations of the Advances Office in this connection, since any marked depreciation by way of slump in house property, due to overbuilding, would immediately destroy the State’s equity in securities, where anything like 95 per cent, of the value had been advanced on loan. So far as the advances to settlers are concerned it is obvious that, in the main, financial assistance, if cautiously given, should yield a handsome dividend to the national prosperity more particularly if the man on the land is encouraged to regard applied science as one of the handmaidens of agricultural and pastoral pursuits.

HOW LABOUR ASSISTED! It is interesting at this stage to call attention, in view of the Labour Party’s obvious difficulty in squaring its performances last session with its professed principles, to the additional weight of indirect taxation the Labour Members of Parliament assisted the United Party to place on the shoulders of the people. Thanks to Labour’s violation of its election pledges and one plank of its published policy, the Government was enabled to collect, as indicated in Sir Joseph Ward’s statement, customs revenue which exceeded the estimate by nearly £500,000! What does this mean? Speaking in the House of Representatives when the question of doubling the primage duty was introduced, the Leader of the Labour Party said:

I want to say, that with respect to the proposal to increase the primate duty by 100 per cent., that it is absolutely wrong in principle.

“The right honourable gentleman, if I understand him correctly, said that he expected to get £200,000 a year from this tax. I venture to say that if he gets £200,000 from the tax, it will mean that by the . time it reaches the consumers in this country it will mean a tax of £400,000 at least. All my experiences in the past goes in that direction. Thus then we see that the Labour Party by its vote in the House helped to impose a heavier burden by means of indirect taxation, not merely representing the Budget estimate and the half a million in excess Sir Joseph Ward has confessed he received, but if Mr Holland’s computation is correct, then double that amount “by the time it reaches the consumer in this country.” The customs were estimated to produce £8,400,000; if then Sir Joseph received £500,000 in excess of the estimate, the country has had to find nearly £9,000,000 in Uxa ,

tion through the indirect channel of the customs. Thus the violation of principles by the Labour Party made it possible for the Government to levy this heavier toll on the people, notwithstanding that Labour has always professed to stand for “reduction of indirect taxation for the purpose of removing the present burdens on family incomes,” Who can accurately estimate the full weight of the additional burden the Labour Party assisted the Government to place on “family incomes,” by voting for the doubling of the primage duty, which has yielded nearly £500,000 in excess of the estimate? This has meant, if Mr Holland’s estimate is accurate, a deeper dip into the pockets of the people, representing something like an extra million, in excess of the very, large additional revenue the Government had estimated to receive through the levy the United Party and its Labour allies made on the community by increasing the primage duty by one hundred per cent.