Replying To Debate On The Budget, Mr. Nash Defends Restoring Of Rate Of Exchange

Wanganui Chronicle, 15 September 1948, Page 5

Replying To Debate On The Budget, Mr. Nash Defends Restoring Of Rate Of Exchange

"Never Have Living Standards Of People Been Higher," He Says

(Press Association) PARLIAMENT BLDGS., Sept. 14 In the House of Representatives this afternoon and again tonight, the Minister of Finance (Mr. Nash) spoke in reply to points made in the debate on the Budget, winding the debate up after a speech which lasted one hour and three-quarters. Mr. Nash defended the decision to restore the rate of exchange in New Zealand to parity with sterling by saying that the Government had lifted the mass of the people to a better standard of living than they had ever had before, that there was not a man or woman in the country who was not better off than in 1936 (Labour’s first year of office).

He said there had never been a Government which had worked for the masses as much as had this Government. Discussing the exchange adjustment and its effect on primary producers. Mr. Nash said the dairy producer would continue to be paid as in the past in accordance with his costs of production. The meat farmer would be as well off as before, and his costs would be recovered. I So far as the high country wool farmer was concerned, his position was one which should be adjusted inside the industry. Quoting from a table which compared 1933 (with the figure 1000 as a basis) with 1947, the Minister said that wool farmers had received a price 241 per cent, higher. Mr. Nash said dairy produce prices were 161 per cent., meat 134 j>er cent., other pastoral products 407 per cent., and agricultural products 102 per cent, ahead. Mr. J. K. McAlpine (Opp.. Selwyn): And wire has gone up 460 per cent! Mr. Nash went on to say that the overall increase for primary products was 180 per cent, and in face of that could it be argued that the rest of the community should continue to pay what amounted to a tax of 25 per cent? All the prices paid to farmers were based on costs standards used in the dairy industry. They were generous standards and costs were assessed as minutely as possible. Mr. Nash said the ablest, man in the dairy industry, Mr. William Goodfellow. had recently declared that New Zealand farmers were now receiving the highest net income of any farmers in the world. MATTERS REQUIRING ATTENTION Mr. Nash said there were two or three matters which would be given the greatest attention by the Government. One was New Zealand's trade with Australia and the islands. He had no doubt that the islands trade would recover. Another concerned primary producers, and the 1 Government was willing to go into < the question of a guaranteed price for 1 any particular commodity. The gold 1 industry was the hardest hit of the ; lot. Mr. W. A, Sheat (Opp., Patea): 1 Helping them at nine o'clock and murdering them at half-past. , Mr. Nash said that in the gold in- ; dustry only two or three companies , were likely to make losses as the re- ■ suit of the exchange adjustment, and ! something would have to be done to put Waihi in order. There was a fairly large number of people in Waihi and the State had a responsi- 1 bility to see that something was done for them. SALES TAX REDUCED No one had spotted during the de- < bate the fact that the sales tax had . been reduced by £1,250,000 in addition i to taking off the exchange, continued i Mr. Nash. Departmental receipts i would be down £250,000 -and on the j expenditure there would be a saving ( of £1,920,500 but losses in revenue - would amount to £1,500,000. The re- j suit would be a net saving of £420,- . 500. There was provision in the Bud- , get for £1,294,000 for supplementary . estimates, to which would be added ! £420.500, making a total of £1,714.500 for the supplementary estimates. The 5 savings in the loans programme 1 would amount to £1,027,000. The < War Expenses Account would save £Bl4,ooo—Government purchases of 1 steel, tin-plate ingots £274,000, pur- 1 chases by the Food Controller, mainly ( of tea, £316,000 which would be f passed on. the J-Force £213,000, which 1 was a direct saving, rehabilitation t overseas bursaries £lO,OOO. Of tae total of £814,000 only £223,000 would represent an actual saving to the Government. RAILWAY LOSSES WILL FALL The result of the exchange adjustment would mean that railway working losses would drop £545,000. The I sum of £5,500,000 less will be required I front the national balance-sheet point: s of view, said the Minister, but not, l from a State balance-sheet point of 1 view. 11 The Leader of the Opposition [r (Mr. Holland): What about the H taxpayers’ point of view? 1 1 Mr. Nash. They are so well off [\ they don't know what to do. c The Minister said that taxation li would be £3,250.000 less. Mr. Nash >, said that 125,000 people paid an in- 1 < come tax of £lO or less last year, and i would not pay any taxation this war. I, A total of 160,000 taxpayers would H receive some positive benefit through 11 the Budget provision. It meant that i 1 the personal exemption for a man if with a wife and two children was in- \ 1 creased to £470. Il Customs revenue would show a loss [ ( on sales tax, but there would be no 1 1 difference in Customs duties, which c had always been levied on the ster-1 ling value of goods. t

LOCAL BODIES WILL GAIN Some local bodies in New Zealand would make tremendous savings as the result of the exchange adjustment. The volume of goods available for consumption in New Zealand had gone up by 41 per cent, between 19444o and 1946-47, while the national income had increased by 17 per cent. It was that gap which had to be closed. He affirmed that the percenttagc of taxation out of the national y as le i ss las t >' ear than in 11 social security pensions ard unproductive interests were deducted. Mr. Nash, who was granted an extension of time, was interrupted by the tea adjournment at 5.30 p.m. WORLD PARITY PRICES. Several Opposition members had urged that New Zealand should insist on world parity prices for her exports, but how did that reconcile with helping Britain? asked Mr. Nasi., continuing his 'reply when the House resumed at 7.30 p.m. World parity prices were built up in the United States, but how could we expect t<» sell our produce there and buy our imports from Britain. Prices paid bv Britain for New Zealand meat wen, until recently, the same as those pai< I to the Argentine. British farmers received higher prices than New Zealand farmers, but their net retur i was less. In Denmark, although higher prices were rec<. <cd froi i Britain, the Government sail had t> subsidise farmers. Several members of the Opposition had calculated surpluses which the ■ claimed existed in the public accoun s although they were not shown a * such, but no figures had been hiddei.. In addition to the declared surplus o' £l, <86,000, £4,000,000 was drawn froi.i revenue for debt repayment, £2,000.000 to purchase frigates, and £3,300. 000 received from the sale of war assets was used for further debt repayment. What better uses could the mon ev have been put to than that? Mr. Nash said there had been no objection Io setting aside £1,000,00-» out of revenue to purchase aircraft for defence. He could, therefore, se • no valid ground for an objection which was raised during the debate t paying £2,000.000 out of revenue to buy frigates for the Naw.

Other points made by* Mr. Nas'i were that all salaries and wages had been appreciated through the return to.parity, that the balance in the Socie L Security Fund at the end of the las . financial year was just enough for two months’ outgoings, and that ne hoped to keep a similar surplus in the fund at the end of the current year. OVERSEAS DEBT Discussing overseas debt, Mr. Nash said the present Government, had reduced the overseas debt by £50,000,00(i At the end of the last financial year it was £109,000,000 against £160.000,00 > in 1936. In addition, during the current year a small sum of about £1.000,000 had been paid off and another £16,000,000 had been converted, although we were obliged to take u*» half of this latter sum ourselves. Sino then, however, investors had hee.i clamouring for these securities and of the £8.000,000 taken up by the Reserve Bonk in July £2,000.000 had since been, sold at a profit bringing a better net price than it would have at the tim * of the conversion Mr. Nash said he believed the member for Piako (Mr. Goosman) ha I made out a good case for the checking of unauthorised expenditure, but it should be remembered that under that heading £1,000.000 was for the maintenance of vital public works jobs.

If New Zealand had not gone back to parity with sterling in one move, then all the peop’e would have been wondering when the next move would be made—it was that uncertainty which would have been so devastating. I The availability of goods for consumption per head was 11 per cent, 'above the pre-war figure, and was 'largely due to the huge imports of Hast year. In goods physically and in ; money financially we were netter off than ever before. The Government, 'had reduced the overseas debt, the volume of production was higher than ever and more people were living in [their own homes. The exchange procedure taken was right, and the case for reducing the overseas debt was unanswerable. The Government had ’lifted the mass of the people to a beliter standard of living than they ever I had before, and there was not a man. or woman in the country who was no*; better off than in 1936. Never in a Igiven period had there been any Government which had worked like th* I Labour Government in the interests of the mass of the people. I Mr. Nash spoke for one hour and three-quarters.