PROTRACTED DEBATE

Timaru Herald, Volume CXLIII, Issue 20894, 25 November 1937, Page 12

PROTRACTED DEBATE

FINANCE BILL INTRODUCTION OF NEW CLAUSES AIM OF ONE TO PROTECT TENANTS By Telegraph—Press Association WELLINGTON, November 24. In the House to-day urgency was accorded the passing of the Finance Bill. The second reading debate was continued by Mr S. G. Holland (Nationalist, Christchurch North), who compared the Government’s pre-election statements with its actual legislative actions. He gave instances of hardship imposed under the graduated land tax, and asserted that the Government’s guaranteed price proposal was the greatest political confidence trick which had ever been played upon the country. The Government, he said, never had the slightest intention of putting into effect the promises with which it had wooed the electors. Dealing with the purchase of Picot Brothers, Mr Holland said the Minister had side-stepped giving information about the transaction. When the Government wished to enter the internal marketing business it knew it could control Picot Brothers, so why was there any necessity to throw away good public money in purchasing the Business? Why, he asked, had goodwill been paid for the business? They had yet to get a reasonable explanation of the reason for the purchase. If it meant the first step by the Government in entering private business, the public had a right to know. Why did not the Minister come out in the open and tell them what the reason for the purchase was? It might almost appear that there was something to hide. Mr W. M. Denham (Labour, Invercargill) likened the Opposition’s policy of protecting profits in business to that of the usurers whom Christ evicted from the Temple with a whip. The supply and issue of money should be

the prerogative of the State; it should be a national service to meet a national need. The financial arrangements this year would assure another year of prosperity in 1938. Alleged Evasion of Taxes Mr W. A. Bodkin (Nationalist, Central Otago) held that a case could be made out for the Minister having the right to veto the findings of the Hardship Committee under the graduated land tax provisions. Referring to the clauses of the Bill dealing with the Waihi and Martha Gold Mining Companies, Mr Bodkin said he had no sympathy with the Waihi Company, and he wished to congratulate the Minister on his action so far as it was concerned. The Minister was quite correct in his action in making provision that similar evasions should not occur in future. It was futile for the Waihi Company to say it had acted within the law. There had been a definite weakness in the law and it was only right that it should be rectified. He believed that the Minister had acted immediately the matter had been brought beneath his notice. However, he would issue an appeal for those shareholders who had bought their shares in all good faith after the tax evasion had taken place. It would be unfair to place an imposition on these people, and the Minister would find it difficult to justify retrospective legislation which would cause suffering to innocent persons. He thought the Minister should take statuory authority to protect such people. Mr Bodkin said he thought the Government could afford to be generous in the taxation of the racing clubs of the Dominion, and any relief he could give racing clubs was likely to be returned fourfold. Industrial Insurance Dr. McMillan (Labour, Dunedin West) said they were looking forward to the time when people who spent money on industrial insurance in this country would get a fair deal. There was no question that the relatively well-to-do person who invested money in life insurance was getting a good return for his money, but the poorest members of the community who were inveigled into putting their money into sickness and Industrial insurance re-

ceived a very poor deal. In 1935 the amounts paid out on account of death or policies maturing totalled £300,000 and the expenses of the companies amounted to £307,000. Claims met totalled 7120, and no fewer than 37,844 policies lapsed and the premiums paid on them were retained by the companies. Administration expenses accounted for 31 per cent., but he was sure that when the Government established its insurance scheme it would budget for administration and management expenses of 4 or 5 per cent. Mr K. J. Holyoake (Nationalist, Motueka) asked if the Government’s

promises concerning guaranteed prices had been kept. They had not. Primary products had been taken over compulsorily from farmers at fixed prices. The primary producers should have been left to control their own goods from the farm to the consumer, and they were well able to do it. He contended that the price fixed for butterfat was a “political” price, because the responsibility for it was taken by the Government rather than the committees which had advised the Government upon it. Minister’s Reply The Minister of Finance, the Hon. W. Nash, in reply, said the Opposition had contended that dairy farmers’ money was used for the purchase of Picot Brothers. There was no shadow of justification for such a statement. In answer to an Opposition question he said there would definitely be a deficit in the dairy industry' account. He proceeded to compare the payouts of Australian dairy companies with those of New Zealand, stating that the Dominion farmer got a better price than the Australian. Referring to the hardship clause, the Minister said it had been asked if the Government would make permanent provision for such a clause, but it intended to amend the land and income tax law some time before the session finished in such a manner, it was hoped that would obviate the necessity for a hardship clause in future. Speaking of the Opposition's criticism of the provision to refer the decisions of the hardship commission to the Minister, Mr Nash said the principle in the Bill was exactly the same as that in the legislation by the last Government for writing off rents by Crown tenants and also that under the Discharged Soldiers’ Settlement Act. The Opposition had merely fastened on that aspect of the case in order to mislead the public. He thought the Government had the right to say what portion of its revenue should be given away to anyone. The next point referred to was that of dairy prices, the Minister stating that he had been considerably surprised at the Hon. Adam Hamilton’s reference to the surplus in the cheese account of £258,000. The Leader of the Opposition had failed to deduct sales costs from this amount, and when these were deducted a total of £12,647 was arrived at. Waihi Company’s Action There had been a lot of opposition to making the proposed legislation in reference to the Waihi Company retrospective, said Mr Nash, who outlined the history of the company, stating it had paid in dividends since its inception a total of £6,263,801. Tile Minister stated tffat he had been astounded at the defence of the company put up by the Opposition the previous night, and he was proceeding to deal with the operations which had led up to the necessity for the present legislation when the bell rang, indicating that his time was nearly up. At this juncture an incident occurred which arose out of the action of Mr D. McDougall objecting to time extensions being granted to the Rt. Hon. G. W. Forbes and the Rt. Hon. J. G. Coates on the previous evening.

Mr Forbes rose to move an extension of time for Mr Nash, but when the motion was put by Mr Speaker it was objected to by Mr W. J. Polson and lost. Mr Nash: It seems as if the honourable member does not want the story to be told to the House. The Minister of Education, the Hon. P. Fraser: It was done in a very rotten way

Mr Polson rose to a point of order, saying he had heard the Minister of Education refer to his action as “the very rotten way hi which he had done it.”

Mr Speaker ruled that the remark must be withdrawn. Mr Fraser did so and replaced the word “rotten” with the word “unfair.” Mr Polson: Is that Parliamentary? Mr Speaker: Yes. Mr Nash continued his speech. He pointed out that the return showing the Government’s transactions concerning the purchase of Picot Brothers had been tabled in the House two months ago and a copy had been supplied to all members. Mr Holland: But it does not show the price for the goodwill. Mr Nash: Oh, no. You can’t get out of it that way. The return has been there for two months. Mr Nash was proceeding to deal with the decision of the late Sir Francis Bell regarding retrospective legislation when Mr W. J. Broadfoot (Nationalist, Waitomo) remarked that the Minister was securing a pretty good extension of time. He was called to order by Mr Speaker, who said that it was Mr Broadfoot’s duty to point out to Mr Speaker if he had noticed that an extension of time was being inadvertently given. He advised the Minister that his time limit had expired. Second Reading Passed The Bill passed its second reading without a division and entered the committee stages, Mr Hamilton stating that he was sorry about the difficulty that had arisen. Perhaps, he added, the matter had got a little out of hand. Mr Nash: I quite understand. It is a personal matter. Mr Hamilton: Oh, no. I don’t think that it was personal. It arose from incidents last night. Mr Fraser pointed out that the member who was responsible for the refusal to grant extensions of time the previous evening was out of the House at the time. He added that Mr Hamilton could not take the responsibility for what had occurred. Tire chairman of committees (Mr E. J. Howard): Order. This Is not in the Bill. Mr Coates asked any lawyer in the House to justify the retrospective taxation provision in the Bill or the naming of any particular company or person in a Bill of such a nature no matter what they might think personally of the action of any company in evading taxation. Mr J. A. Lee (Labour, Grey Lynn): What about McArthur? Mr Coates: That is a remark which deserves the severest censure. The actions of the McArthur companies could be in no way compared with those of the Waihi company. Legislation Justified Mr Nash explained how the Waihi company had distributed its profits overseas where they could not be taxed unless the present legislation were passed. In May, 1935, when the Waihi

company was not actually carrying out goldmining operations in the country, a dividend of £91,866 was distributed. While payment was being made the Commissioner of Taxes had advised the company that in view of the standing of the company no advance assessment of taxation need be made in connection with the dividend, but when the assessment was made the Commissioner had been informed that the company had gore into liquidation. The Martha Gold Mining Company (Waihi), Limited, was practically a continuation of the Waihi company, and practically the same persons were shareholders. No one would deny that the payment of taxation was due. With respect to retrospective legislation the Minister quoted cases where it had been used In cases of gift and stamp duties. When persons or companies were evading taxation which should be paid the Government was entitled to take measures to secure it. There had never been a clause more justified than was the present one. Because the company was not carrying out gold mining operations when the dividend was paid, it bad evaded taxation Purchase Of. Picot Brothers Mr S. G. Smith (Nationalist, New Plymouth), said the Minister had not

given full details of the purchase ot Picot Brothers in the return tabled in the House. He asked the Minister was it not a fact that the valuation of the business was fixed by a Government official, who had not had a single bit of experience, and was it not also a fact that the firm had not asked for good will but were told to put in lor it? He asserted that the failure to give full particulars concerning the purchase of Picot Brothers was causing suspicion throughout the country. Mr Bodkin said that in the case of the Martha company 198 people had bought shares after the dividend referred to by Mr Nash had been paid. These people were entitled to protection which would not be given by the present legislation. At 9 p.m. the Prime Minister moved the closure on the short title. This was forced to a division by the Opposition and was carried by 48 votes to 17, the short title being passed. Mr Hamilton asked the Minister if he did not think it advisable to bring the State Advances Corporation accounts back into the Public Accounts. The corporation handled £50,000,000 and had a staff of possibly 1000, but the House did not have the opportunity of discussing the estimates. Mr Nash said if it was going to be advantageous he saw no reason why the voting of the estimates should not come before the House, but there were reasons for keeping the Corporation accounts separate. Four more clauses were passed without discussion.

Two Amendments Included Two new clauses amending the Finance Bill were introduced by GovernorGeneral’s message. Mr Nash, explaining the provisions of the clauses, said one stipulated that payments to returned soldiers who were holders of decorations, would not have the payments which were made under the award of those decorations included In income when the latter was computed for purposes of sustenance or veterans' allowance. Mr Coates: Does that include the V.C. and D.C.M.? Mr Nash: Yes, all decorations of that class, some sixpence per day. The second amendment, said Mr Nash, prevented the tenant of a dwelling house from being evicted from that dwelling unless some alternative accommodation were available. In the event of the house being sold, the purchaser could not get possession of the house unless the tenant had alternative accommodation. There was however, a provision for referring the case to a magistrate where hardship was inflicted on the purchaser through not being able to secure possession of the dwelling. In that case the magistrate would be required to adjudicate on whether the greater hardship was being Imposed on the purchaser or the tenant. The whole Idea of the clause was to prevent tenants from being turned out of houses when they had nowhere else to go and where the rent was paid, the tenants were not being a nuisance to the neighbours, and were not letting the premises. Mr H. M. Rushworth (Independent, Bay of Islands) moved an amendment to clause 11 to the effect that the £6,000,000 to be borrowed for public works should be borrowed only from the Reserve Bank. The chairman ruled the amendment out of order because it must necessarily involve an appropriation. On the motion of Mr Bodkin, this ruling was referred to Mr Speaker. Mr Speaker ruled that the clause involved an appropriation and supported the ruling of the Chairman of Committees. Clauses 11 to 19 were passed without discussion. Opposition Amendment Mr Hamilton moved an amendment to clause 20 deleting the necessity for the Committee set up to consider hardship to refer their findings to the Minister, and also to widen the definition of serious hardship. The amendment was lost by 47 votes to 16. (Left Sitting)