BUDGET DEBATE

Chronicle (Levin), 24 August 1949, Page 3

BUDGET DEBATE

Press Association) .

No Encouragement /Given People, Says fflr. Holland

(Per

WELLINGTON, August 23. This year's Budget had disappointed and disillusioned those who sought relief from tax burdens, eri-i couragement to produce more, some example of economy, some appreciation of hard work and some reward for savimg, declared the Leader of the Opposition, Mr. Holland, when he opened the Budget. debate in the House of Representatives tonight. It was an electionlosing Budget, he said, lacking the bold lead which people had expected of it. World prices ooi whiclx New Zealand depended so greatly, were at or past their peak and the capitalist American was begixxning to f eel the strain of keeping Soeialist countries going. If a buyers' market had not yet arrived, the ' seller market had gone. New Zealand 's prudent course, in face of the sterling area crisis, wras to increase production thereby maintaining prosperity even if world prices fell, and to reduee production and living costs to xxxeet the ne.w situation which appeared to be developing. The Budget ' appeared to be completely- barren of any ideas to meet these changing circumstances. There was no thought for aiding production by a programme j of rural housing, by tax relief or other concessions to farmers. The Government was deternxined to continue its present inflationary policy which meant costs would inevitably rise further. Prime control, which was iu elfect proiit control, had faiied to curb costs, lnstead of economiraing, the Government — acting as if present produce prites would continue for ever— was increasing departxnental expenditure by £8,000,000. Taxation could and must be cut without 'cutting social security or wages. The people should be treated like British people and given their freedom. Many of the controls still in force were completely unjustifxed. La&t year's surplus was actually far beyon-d the £2,(500,000 stated in the Budget but the Governxxient was too greedy to relinquish any of the taxation it' had imposed and acted on the absurd obsession that the Minister of Finance could spenJ the money better than those who earned it. The Government's stocks were decliuing with the resignations of Messrs Laugstone, John Roberts and others, with the withdrawal of Mr. Kilpatrick as Parliamentary candidate, with the disintegration of Labour branelxes, ' ahdv with." tlx'e no-confidence motions of trade union branehes. Now came the cruellest biow of all — an election losing Budget. The Dollar Loan. Mr. Holland said the Budget faiied to reveal New Zealand 's comnxitinents or the Government 's intentions in face of the sterling area dollar crisis. The dollar loan proposal was a complete volte face from everything Mr. Nasli had advocated for the past 14 years. The American people had made'a magnificent contribution to world 'reco very but we should approach the question of a dollar loan from the United States with the grea.test caution. Such a loan could be raised only for capital expenditure but even then how would we repay it aixd on w'hat terms? It would be very dangerous to negotiate a dollar loan directly between the United States and New Zealand. Any loan should be on. an Enxpire basis and be a loan between the dollar area and the sterlixxg area which had its lxeadquarters in London. The Budget gave no sign of helping to expand New 7ealand's dollar earnings. There was a ready Ameridan market for rugs and other woollen goods for which New Zealand was world famous yet because labour had been teiupted from the woollen mills to newer industries, we could not even make enough woollen goods for our own needs. Mr. Holland said he slept at niglxt under Australian blankets and that was a reproach to New Zealand yet the labour force in the woollen nxilis was still shrinking. Concealing Tactics. Mr. Holland said the total of direet taxation was £30,600,000 and of indirect; taxation £42,495,000 which, with death and stamp duty, made a .grand total of £132,711,000. That was tlxree and a half times the 1939 yield ana £8,000,000 above the wartime peak. The Minister of Finance disclosed a surplus" of £2,631,000 l'or the last financiai year which the Opposition had constantly declared was, an underestimate but when the Minister found the balances were too high, he transferred amounts to other accounts and thxis concealld the true position. Would the Minister, if what he did was right, allow a taxpayer or compaxiy to do the saxne? Would- the Minister allow a company shoAvxng £1500 profit to transfer £500 and deciare a surplus of £1000,*for iucome tax. purposes? There was a true surplus of £11,247,000, continued Mr. Holland, which could and should have been used to reduee taxation. The man in the street wanted to know why there was no tax reduction. "There is only one answer — the Minister never lets go once he's got his mands on the money, '' Mr. Holland said the . Government' gave no thought for tlxrifty people. Mr. Doidge: It lxates thexn. Mr. Holland -said that the reward for thrift liad been increased costs and higher taxation and yet the Minister of Finance had the temerity to usk the people to save. Those people whp had saved all their li'ves received no reeognition frorn the Minister. They were the forgotten people of the land. Mr. Holland said the Minister of Finance, announcing in the Budget the continuation of the £10 income tax re-

bate, knew perfectly well that the £320,000 the rebate was estimateid. jto cost would be well covered byv.thq 4iff f erence between the, actual* hnd. • e^Jfci-', mated amount of income tax- to; be eotlected — the difference of £8,200,00Q above 'the estimate. ' Mr. - Holland attributed many of the troubles in the country to the poliey of in/lation followed by the ' ' Governf ment and quoted the -Minister of Finance as saying ih .1944 that it was a crime of the first magnitude at that time to create any credit. ' Way to Disaster. , V v Mr. Holland said the Minister i)a(h continued to pump money into . circulation without it being supported" by goods and that policy had made livillg costs rise. In every country inflatipn of that type had led to disaster. and there was no escape for us unless mended our ways. He said that vi. ;ious transactions did not appear .in ..oht; Reserve Bank Teturns as ' 'advancps 'toState ' ' and were hidden • xn aixdther) column under "ipvestiiients'-'' fo ddn-. ceal the true position. ThfpfmatIdm;haM' also been concealed on ' ho-^ the.. Go-y i ernment raised £20,000,000! as v;.tixe( rS-; sult of the exchange aiteratioh4,-iii-fact the Reserve Bank abstract omitted^ the inf ormation " because -of ,sga,d6 'cdh;. siderations. " ' Another example of how the! tfhd: position was concealed, appeared.'.iii ithe social security . accpiinth Whieh; hP^a^; 'the year 'with £5,000)000 fh'.investmenis! and ended with £8,000,000; -Blsewherie.an investment was sKowjx as'!£1^0 1-Ok '9d which .was one 'per c'entv in.tefeSt" OiT £5,000,000 for one day. ' , ;-'I Mr. Bowden: WindoW dressiixg'. Mr. Holland: Of course it is. The/ night befOTe the end of -the yeaf .th'pre. was a deposit of £5,000,000 and the next day it was.- drawn" ' oVt--a&d- f h'e; Reserve Bank liad to -pay. vTlj^t'a trickery and nothing else. ,t , 0 Mr. Holland, said that wlie'n, the 'GoVernment was faced wiih tke heces'sity of repaying money, it.. had, borrowed, from the producers ' stabilisa-tiPn' accounts. It would "water the milk?'' by. raising further credit. On MY. Nash's own statements the moixey supply had x'isen from 1939 to 1946 by 83 per'cent. yet- goods had declined ih the. • saine period by 25 per cent. . That way lay disaster. ' Last year's appreciation of New Zealand rurrency to sterling pari'ty, hiad not brought the benefits so extrayaj gantly claimed at the time. • Sdme.;.ita-, ported goods Were ciheaper but bthers' were dearer. The farmers ■ had - lost£30,000,000 in income yet had. to- presV1 Britain for more money because theCr costs were still rising. The value oi savings had not increased.. Taxation was constricting business expahsion. The Government stood convictej hfy failing to reduee taxation' 'to provide incentives. It had faiied to CQiitroi' prices, to curb inflation and to giVq 'an example of economy and leadershxp. 7 "!