PRIME MINISTER'S EXPLANATION.

Dominion, Volume 2, Issue 482, 15 April 1909, Page 6

PRIME MINISTER'S EXPLANATION.

REVIEWED BY COMMERCIAL MEN. A MISUNDERSTANDING. On the Conferenoo of Chambers of Commerce resuming yesterday afternoon, The president (Mr. W. G. Duthio) said that in view of the remarks of Sir Joseph Ward at tho Chambor of Commerce dinner on tho previous evening with reference to tho state of tho monoy market, Mr. Kottio (whoso statements had been called in question by the Prime Minister) desired to make an explanation to tho meeting. Mr. N. Kettlo (Napier) said that he regretted that he was not present at the dinner 60 that ho conld have heard Sir Joseph "Ward's speech, and, unfortunatoly, it was not till late in the forenoon that he became aware of what Sir Joseph had said. Ho had since then read Sir Joseph Ward's speech in the morning paper, in reply to the discussion which took place at the conferenco on tho question of tho mortgago tax and the graduated land tax. He (Mr. Kettle) desired to deal first with tho graduated tax. He noticed in The Dominion newspaper that Mr. P. Heyes, Commissioner of Taxes, had been interviewed on the subject, and that gentleman. stated that ho (Mr. Kottio) had mentioned that the Department was oharging graduated tax on business buildings. Now, lie did not say that. What he said was that the graduated tax was charged on properties on which business premises were situated. That was quite a different thing to tho buildings. Ho knew quito well that tho tax was Dot collected on the buildings, but was collected on the land_ oh which tho buildings stood. He would like that to be mentioned in the newspapers, so that the Department would realise tliat a mistake had been made with regard to what ho had said. Advancos to Settlers. Now, with regard to the advances to settlers, he was glad to see from Mr. Heyes's statement that what he (Mr. Kettle) had said, viz., that the Department had no money to lend, was correct. He wished it to bo understood that he was not taking up a hostile position to tho Government ■in any way. He was merely bringing the matter_ forward in order to snow tho financial _ position which they were in in tho'Dominion at tho present ,timo., The Government deserved the thanks of tho country for bringing in cheap money and lending it out to tho settlers as they had done. No doubt the cheap money had been a great boon to the country. He took no objection to that at all. What the conference was discussing was the financial stringency and iiho want of capital. What they wanted to do was to prevent capital going out of the country. They knew that it would be a hard job to get money back again that had already gone out. But- they wanted to stop further amounts being withdrawn from New Zealand. Mortgage Tax. With reference to the : mortgage tax, he was very pleased to see that Sir Joseph Ward considered that this matter wanted attention. The Prime Minister mentioned in his speech with reference to our credit in' Australia "that he had been offered £250,000 at 4 per cent., but he refused that amount because it had to be repaid in London. He (Mr. Kettle) thought that was rather bad business on the Prime Minister's part, because it was pretty certain the Treasurer could lend out tho whole of that £250,000 at 6 per cent, within the next month or two if the money was here. But he noticed further down in the Prime Minister's speech that ho had arranged for another £200,000 odd at 4 per cent. Sir Joseph Ward did not mention whether that money was to be available for advances for settlers or what was to be dono with tho money. What ho (Mr. Kettle) contended was that the mortgage tax had driven a large amount of capital out of the Dominion. He thought that was the view that was taken by the majority of persons in New Zealand. Sir Joseph Ward talked about the 4 per cent, money that the Government could get. It was all very well for the Government to get it at 4 per cent. If .a lender in Australia sent money here at 4 per cent, he would have to pay mortgage tax; but the Government had not to pay mortgage tax. They borrowed at 4 per cent., and lent it to the settlers at 5 per cent. A private individual had to pay 5 per cent., and ho bad to pay the Government 6s. 3d. per cent, for his mortgage. So that the Government . could operate on much more favourable terms 'than private individuals.' To Bring in Capital In order to get plenty of money into this country—which we must have—wo ought to remove the mortgago tax. As he had said, he was not, in saying this, talcing up a hostile position to the Government. There was no use going mto what had happened in the past. What they onght to try and'do was to prevent further capital leaving the country. The question had been asked as to the effect of removing this tax. His reply to that was this: If a man had his money lent out on mortgage, why should ho have to pay a higher rate of taxation than a man' who.employed his money in business? That was to say: A man who had £10,000 invested on mortgage had to pay 6s. 3d. per cent., whereas the man who had his money in business had to pay much less. A Suggestion. Instead of tho mortgage tax he thought the Government should collect income lax from the mortgages-that was, on tho amount tW hTTV J h ,j Bot it was on wat that he should pay Ins tax. ■ Borrowing. He noticed that Sir Joseph Ward mentioned that he had only borrowed £500,000 from the public during the year. Of course, they were unablo to find out what the exact amount was that the Government had bor- ? t f rna %- They had not got tho r No doubt they would get the figure in duo time. All that thev knew was that tho Government had borrowed twenty millions during the last ten years. The National Debt. . Ten years ago the national debt was fortyax millions. I'o-day it was sixty-six millions, •j 7^ e W!,s this hat th6 J ha d to consider. The present stringency had come after six years of prosperity. All that money had gone in the development of the country. If our national debt had increased twenty millions in tho last ten years, how were they going to pay the Interest oh the increased aebt which we wore bound to have unless tho country was further developed, and there was capital to develop'tho country? There was no nse disguising the fact that the banks woukl have to get back to tho position they were in in 1896—they would have to get back the four millions of money. That was tho position. If. thoy took the banking records published at the end_ of every quarter, they would seo this: that if tho banks were to got back to the position thoy were in in 1896 they would have to got back tho four millions of money, or thoy would havo to get four millions more of deposits. Too Close to the Wind. There was no donbt, as Sir Joseph Ward had mentioned, the advances on wool had considerably helped tho stringency, possibly by a million and a half. If it had not been for wool going up this year as it had dono, what would have been the financial position of tho country? Thoro was no doubt about jt, the _ increase in tho value of wool had saved disaster. He thought they wore sailing too close to the wind. What they must dc was to removo all obstacles in tho way ol capital coming in for investment in this country. But even in tho case of a mar whoso monoy was taken from a largo lane estate, and when that money was invested ir other industries, tho graduated tax still fol lowed him. It followed him oven in taking up shares in public companies. That penalty that capital had to bear should bo removed (Applause.) &Ir. D. J. Nathan's Remarks. Mr. J?. J. Nathan (Wellington) said hi would like to supplement the remarks tha had fallen from Mr. Kettle. After naying i

tribute to Sir Joseph Ward for his courtesy and sympathetic rccoption of' tho recommendations of tho conference, Mr. Nathan said that tho question raised by tho Primo Minister as to thero being a tax on buildingß was nqvor raised at tho conferonco. What was said was that thoro was a graduated tax on 1 business premises. Tho graduated tax had been imposed for tho purpose of bursting up largo landed estates. Mr. Nathan thon stated tho effect of tho recent amendment of tho law in respect to tho graduated tax. Wli'at was feared was what tho penal tax might bo in a fow years' Ho could givo instances to prove that, in the caso of persons or companies having over £40,000 invested in this country, tho income from such 1 -investments was sometimes taxed fivo times boforo tho residue reached tho pockets of tho investor. Any injustice to investors was not likely to be for tho good of tho country. It wak'-well known that ho was a supporter of tho Liberal party and of Sir Joseph Ward, and he offered these remarks becauso ho bolieved that thoy wero in the best interests, not only of the Liberal party, but of tho country. Nothing should bo done to penalise ouergy, industry, and capital Tho present stringency was only a reflex of what occurred in another country two years ago. After alluding to tho original intention of the advances to settlors policy, Mr. Nathan concluded by saying that he made these few remarks in the hopo that they would be of assistance to the Prime Minister, and in tho hopo that he would give what bad been asked for, namely, simple fairness and justice. (Applause.)