THE BUDGET DEBATE.

Dominion, Volume 3, Issue 832, 30 July 1910, Page 3

THE BUDGET DEBATE.

MR. HERDMAN ON FINANCE. FAVOURS ENCOURAGEMENT OF LOCAL INDUSTRIES. SPEECH BY HON. T. MACKENZIE. RETRENCHMENT AND TAXATION. The debate on the Financial Statement was continued in the House yesterday. During the afternoon the proceedings were not very inspiriting, but early in the evening Mr. Herdman, M.l'., for Wellington North, revivified them considerably. Among tho various matters which he touched upon in the course of his vigorous speech were the question of finance, and the necessity for encouraging industries. He was followed by the Hon. T. Mackenzie, Minister for Agriculture, who defended the administration of the present Government at length. The debate will be resumed on Tuesday afternoon. NEW BILLS. When the House resumed yesterday afternoon three new , Bills were introduced by the Hon. J. A. Millar, and rea-d a first time. They were tho Shops and Offices Act Amendment Bill, the Inspection of Machinery Act Amendment Bill, and Kauri Gum Industry Bill. Mr. Millar stated that tho Bills would be referred direct to the Labour Bills Committee. The Woodville Borough Drainage Loan Empowering Bill (Mr. Ross) was also introduced and read a first time. FINANCIAL DEBATE. VIEWS OF MR. E. H. TAYLOR. Mr. E. H. TAYLOR (Thames) maintained that the.endowments should not bo sacrificed. A referendum should bo taken before they wero disposed of. Twenty years ago ho had suggested that Education Boards would only have a limited life, and lie thought that before long inspectors and teachers would be under the direct control of the Education Department. An experience of 25 years had convinced him that there were boards which were not more qualified to do their work than the average committeeman. There were men on the borough and county' councils quite as qualified as the men on tho boards. Until he saw the Minister's proposal ho |would neither commend nor condemn it, but he thought some change was necessary. Referring to the land question Mr. Taylor asserted tliat the freeholders of Taranaki were letting their lands at exorbitant rates, sweating the leaseholders, and sweating their children.

MR. WILFORD ON SELF-RELIANCE. Mr. WILFORD (Hutt) prefaced his remarks by a reference to the Death Duties Act which he described as one of tho best pieces of legislation evei 'put on the Statute Book in New Zealand. He went on to say. that owing to overvaluations it was doubtful whether many people who had bought property in Wellington, for instance, during the past two years could to-day easily secure ,a quid pro quo for their outlay without taking into account interest, etc. There was (ho continued) no want of confidence in New Zealand, so far as the lenders wero concerned; but the want of confidence and scare and funk was in the pcoplo themselves. A lot of trouble'was caused through the speedy manner in which legislation was passed. What had caused 'thatmore than anything else were articles in certain newspapers which unfortunately were leading public opinion. All the newspapers in this country—no matter what their political faith nor which party was in power or was going to get into power —should preach a policy of self-reliance and a capacity to do. He strongly advocated the setup of a Royal Commission to investigate the possibility of trade development. In his opinion there should be a policy of exchange with other countries prepared to deal with New Zealand. The Royal Commission should consist of experts in tho products of this country.. If Now Zealand did not enter upon bargainings with countries who were prepared to bargain with her she would be left in a position to trade solely with the Old Country, which' had already declined to meet her half-way. If New Zealand began in a way he had suggested to inquire into the possibility of trado with South Africa and other countries, the statesmen ,at Home would soon come to the conclusion that she was in earnest. To his mind, Canada would ultimately be found .to be the-country which could most assist New Zealand. ■If New Zealand made no protest it must expect to be dealt with as had been the case in tho past. The theory underlying the proposal to extinguish the public debt he applauded, but its practical working out required the closest analysis and consideration. "Is it any value," asked Mr. Wilford, , placing a sum of money on. one side to extinguish a liability' if ten times what is put on one side has to be borrowed each year?" If such a fund was created it should- be earmarked for all time, independent of Parliament Governments, and everyone. Parliament could not be deprived,, however, of the power of repealing its,legislation in regard _to such funds at any future time. Administration was the axis on which government revolved, and if'they had good and careful administration, and the resources of the country were developed along safe lines, thero could be nothing to fear so far as the future of New Zealand was concerned.

MR. PHILLIPPS ON THE FREEHOLD. Mr. PHILLIPPS (Waitemata) said it was the freehold that had drawn people to New Zealand and Australia, and which was filling up Canada. For his own part, he would not lease an inch of agricultural or pastoral land, but soli it, because. no lawyer could protect his interest- if it was not considered by the tenant.. When the remainder of the country followed the example of Taranaki, the land question would be solved. It was absurd to say that the £26,000 spent- in recent years on public works was the main cause of the increase in land values. The Native Land Court should make haste to ascertain titles, aud Native reserves should be formed for the maintenance of .tho Maoris, .freo from rates and taxes. The surplus lands should be acquired for European settlement, and the Natives should' bo allowed to sell their lands, subject to a limitation of area and other conditions for the safeguarding of their interests. Ho thought that the country would strongly resist the proposal to place educational affairs in the hands of public committees. Education should bo regarded as a national obligation. An independent board should be appointed to superintend the development of the country's water-power,' for which it was proposed to spend £500,000 a year. Otherwise thero would be a wretched scramble every, year for this rmmev,.

Ho was a strong believer in the establishment of a Public Service Board, and of a Public Works Board. MR. HOCC'S VIEWS. Mr. HOGG (Masterton) asserted that the intention of the Opposition was to extinguish every valuable endowment that the people of New Zealand enjoyed. Tho important matters were to get people on the land, and to provide work for the unemployed and. homes for the\homcless. Tho Crown tenants had nothing to complain of. Largo, areas of land in. the King Country had been sacrificed to a small army of speculaTho King Country might have provide:! homes for all the landless people of the Dominion. A Royal Commission should be set up to inquire into the way in which large areas of -Native land had been leased to private persons in the King Country. He did not hope for much from the Government's scheme for extinguishing the public debt. He once knew of a company which had a substantial overdraft, yet whose directors declared a dividend of S per cent. He complimented the directors on so doing, aud was not thanked for his compliment. "There is only one way, in my opinion, to pay off a national or individual debt," said Mr: Hogg, "and that is in the first place to stop borrowing'. So long as. you. continue borrowing, and borrowing in excess of the amount you can lay aside, you are going deeper and deeper into the mire. You are in a quicksand." Mr. Hogg went on to urge the value of a State Bank for reducing the country's borrowing. SPEECH BY MR. HERDMAN. THE FINANCIAL POSITION. Mr. HERDMAN (Wellington North) said that if- the land in the King Country had been taken up in the way Mr. Hogg described, it was discreditable to the Government, and he wondered Mr. Hogg had not walked into the lobby with the Opposition to show that he had lost confidence in the Government, at all events so far as its Native land policy was concerned. The Government's financial operations of the last few years had been of an extraordinary character. In days gone by the Government went on tho London market, issued a prospectus, and ■ borrowed ruonoy there, and generally the loan was long-dated. During tho last ten or fifteen years, however, another system had been introduced. The Government, instead of borrowing through the London Stock Exchange, after issuing a prospectus, borrowed on short-dated debentures, and he thought that this system had become exceedingly inconvenient, and was probably responsible for the introduction last year of the State Guaranteed Advances'Bill. It had become embarrassing in this way, that loans of five or seven years' duration had boon raised, and Sir Joseph Ward had found himself in the position that not only had he to arrange for borrowing fresh loans for public works, but he was constantly being annoyed by the fact that ho had not provided for the renewal of the loans that wore always falling due. Increase of Indebtedness. It was astonishing to find how the public debt had gone up. At one time a request for a one million loan was the occasion for a good deal of comment. Now, oyer three millions had been borrowed in one- year without a murmur. The. total debt of tho Dominion was now ■ no less than over £74 ,000,000. The policy of the Government necessitated these largo borrowing- operations. The basic principle of the advances to. settlers and advances to workers was that only those in need should benefit. It appeared, however, that the Government now lent out money to anyone. In his opinion they should restrict these operations to thoso in need. ' If the Government endeavoured to take on their shoulders the whole of the money-lending operations of the Dominion it would be attempting an impossible task. He would like to point put how costly the system of borrowing on short-dated debentures was becoming. Every time tho Government renewed a loan it cost monev. .In 190S it cost New Zealand over £16,000 to arrange for renewals, payment of commission, etc.; in 1910 the amount for the-same purpose-had reached over £60,000. Despite the fact that tho Government said that to - criticise the finances of the Dominion was to decry its credit he considered that it was impossible to look .into them too closely. The finances affe.ctcd every branch of the Public Service; they penetrated iuto every, matter thai; related to tho position of the Dominion. Scheme to Assist Borrowing. Touching upon the public debt extinction scheme, Mr. Herdman said that he would support any real scheme having such an object. The proposed scheme, however, was not sound. It ,was rather a scheme to make borrowing easier. The Government stated that if £150,000 were put- aside every year in 75 years the debt would be extinguished. If, however, the Government transferred that sum from the Consolidated Fund to the Commissioner!, in connection with Mm extinction of the public debt it would mean that there would be that sum less for the purposes of transfer from the Consolidated Fund to tho Public Works Fund. That meant that the Government would bo really borrowing the money for the sinking funds. What the Premier should have proposed was that £150,000 should bo paid out of the Consolidated Fund, to apply to tho redemption of debentures falling due. If this country were to continue to borrow at the present rate it would mean that at the end of seventy-livo years the public debt would be £270,000,000, in addition to the debt at present over £70,000,000! Perhaps if the Premier were still Minister Tor Finance, the Dominion would be borrowing billions by that time. (Laughter.) Decline In Industries. It was timo somebody raised his voice on behalf of those who had money for investment. Ho knew instances himself of-men who refused to invest, their money in industries because of present conditions. Since the available land for settlement was becoming less and loss tho Government should do something to encourage industry. That had not been the policy of the Government in the past. Few new industries had been started of recent years, and many industries, which wero not connected with ' the primal industries, showed a decline. Between 1900 and 1005 the population increased from 768,278 to 852.462, but various industries showed a decline for that period as follows:—Iron and brass foundries, boiler works, etc., £57,000; saddlery and harness, -£6513; tanning and wool scouring,' £51,897; Venetian blind works, £6053; clothing and waterproof, boots and shoes, £61,650. In many cases whore there had not been an actual decline there had been a decline in. proportion to population. Mr. Herdman instanced biscuit manufacturing, agricultural implements, aud woollen mills. Between 1890 and 1908 imports had increased per head as follow:—Apparel, 13s. to 195.; boots and shoes, 4s. t0,55., iron and steel, 17s. to 20?.. -Mr. Luke (Wellington Suburbs): You're on a very good wicket now. "A Very Serious Position." "Surely," said Mr. Herdman, "that is a very, serious position, and there

must bo some influence to account for >t, some influence that is slowly sapping the industrial- life of the colony." Laws had been passed for a number of years which interfered with tho employer right and left. In saying this ho was speaking as much for tho working man as for tho investor, because the more money that was invested in industries and the more factories that were started, the greater would bo the demand for workers, and the more prosperous would they be. But if the policy of restriction was adopted and of taxing continually the man who had money and was prepared to invest it, if they made that man's life unendurable and drove him to take his money elsewhere, it was a bad thing for the whole community, but a specially bad thing for the working man: This was a problem of immense importance to the community. The Ministry, if they were alive to their responsibilities today, should seriously consider whether they ought not to alter their policy, and endeavour to induce men. to come into tho country with money for investment, to stimulate industry, and to improve the condition of all classes of the community. Management of tha Country. Mr. Herdman referred to the statement made by the General Manager of the Bank of New Zealand in regard to tho feeling of want of confidence throughout the country. "From one end of tho country to the other," said Mr. Herdman, "there is a lack of confidence in the method of managing tho country." Ho went on to say that ho could give a number of instances where investors had left the Dominion without investing their money. Although the A.M.P. Society had a much greater volume of business in New South Wales than in New Zealand, it paid £13,191 iu taxation in New Zealand as against £3510 levied against them in South Wales. That was an institution which had done an. immense amount of good in this country. It was his opinion that people were being taught in New Zealand to depend ujxin the Government for everything. Sooner or later New Zealand would be called upon to help the great nation to which it belonged. Therefore he would advocate for a Government under which the people would be taught to work hard, to fight for themselves and not to lean on the Government whenever any difficulty arose. THE HON. T. MACKENZIE. RETRENCHMENT AND TAXATION. Tho Hon. T. MACKENZIE (Minister for Agriculture) stated that the industries of New Zealand had gone ahead at a greater rate than in any other country in tho world. Between 1901 and 1906 tho number of factories in New Zealand had increased from 3680to 4186,. whilst the number of workers and the amount of wages had increased correspondingly. Did that show national decay? The Farmers' Union platform included a plank to the effect that taxation should only be levied for revenue purposes. Would that be fair to the woollen and other industries? It had to be remembered in connection with the increase in the cost of Departments that £140,000 represented increases in the Railways, Postal, and Education Departments. There could be no doubt but that tho retrenchment scheme had been very real. As regards the public debt, he took exception to statements in which the increase in revenue was omitted. It was true that the public debt had increased, but tho money had been necessary, and had been properly invested. One million, for instance, had gone to pay for the : Manawatu line, which was now giving a greater return than the amount of interest on the money.

Taxation In New Zealand. ■ The statement made recently by the president of the Bank of New Zealand was most serious. Ho (Mr. Mackenzie) did not, however, read it in tho same way as Mr. Hcrdman. A noted financier who visited Canada not long ago said that the exaggeration of .political partisans frightened people who were unable to think for themselves. In some respects the same remark would, continued thellimster, apply toNow Zealand. What had been done in New Zealand as regards alterations in taxation was with a view of making its incidence fairer. There was, however, no such increase in taxation as should alarm anybody. If the taxation on ten or twelve articles had been retained at the same rate as was the case a few years ago, no less than £350,000 more Ustoms duty would be collected now. He would like to ask Mr. Herdman where were tho venomous' attacks on capital. If anyone quoted the increase in tho Public Debt it should be added that as regards the money borrowed for many years past more interest was being obtained from its investment than was being paid in interest on those loans. Money was needed for further development of this country. He thought that the Government's Public Debt extinction scheme would prove very satisfactory. Very Real Retrenchment. In the matter of retrenchment the Government had done as much as was reasonably possible. So faT as his Department was concerned, it would be found that nobody had since been appointed unless their services were required, and they were properly qualified. Mr. Buchanan: You have lost the best man.

Mr. Mackenzie.: I havo heard tUai before, first of all, it is- not correct. Secondly, we have as good men in our service as evor there were in the history of this Dominion.

Continuing his remarks, Mr. Mackenzie declared that Mr. Massey had changed his opinions somewhat on tho land question.

Mr. Massey: Have you always occupied the same position? (Laughter.)

Mr. Mackenzie: A man who never changes never corrects any of his mistakes.

Mr. Massey: Well, I never voted against the freehold like you did last night. Mr. Mackenzie: I am too old a bird to be caught by any of your lines. Mr. Massey: What about the division last night?

Mr. Mackenzie: We take no exception to the way some Government members voted last night, for members are here to record their votes in accordance with their principles. ■ Resuming, Mr. Mackenzie said thai when Mr. Massey alleged that there w : as Tammaimsm' i" this country ho did not quite' understand the meaning of the word. Tammanyism included interference with the. judges. Mr. T. E- Taylor: And tampering with police officers. Mr. Mackenzie: that will be put all right. The Nead for Population. Mr. Mackenzie (proceeding) said that there' was a need for building up the population of tho country districts of Now Zealand. Of course tho open spaces had to be settled, but settlement was proceeding as fast as was reasonable. The regrettable fact in connection with the population of New Zealand was' the decline of the birth-rate. He differed with Mr. Trcgear on many points, but he considered that in his recent poem on "Tho White Peril" ho struck one of the truest chords in connection with the Empire that had been struck for many a day. It was a mistake for anyone to think that by bringing population for the country districts the Government would be paralysing the industries of the towns. 'lie wished to remind Mr. Herdman that the Govern men I was not trying to injure capital: it was doing everything that was consistent with what was right. Returning to the use of the

term Tammanyisra by Mr. Massey, he would say that if any term applied collectively to- Ministers it would apply to them individually,-' 'Could Mr.'.Massoy apply such a. term.to any. of ..tho.Ministers? Then, again, it had been said by Opposition members that no one could got into the Public Service without political influence. As a matter of fact girls and boys were taken into tho service in succession in order of merit. Fewer young people were appointed last year than for.jnany:ycars.;owing to tho fact that the Goyerunienb-wero trying to carry on-with smaller staffs, than formerly. CHALLENCE BY MR. DIVE. Mr. DIVB (Kgmont) said ho would challenge the Minister for Agriculture to say that thero were not a great many incompetent men in the emploj of tie Department... "* Sir Joseph Ward: I deny that absolutely. - Mr. Divo said that he recently visited a State farm and found the men engaged clearing tho drive of piuus iusignis needles in view of the visit of the Minister. He contended thia was not a useful work. Mr. Dive denied that there was child slavery in Taranaki, as alleged by' Mr. E. H. Taylor, and, referring to imputations of rack renting, he said a : great many men had come into Taranaki poor and gone out wealthy.' The Government had made-blunders in tho purchase of estates —for instance, the Nainai settlement near Wellington. The Spottiswoode estate in Taranaki was bought on the eve of a general election to buy votes for the" Government candidate. Sir Joseph Ward:' AVho mado that statement? ' Mr. Dive: I make it. Continuing, Mr. Dive complained of Government extravagance, and said that tho economics said to have been effected were merely fictitious, quoting 6gurcs to prove his contention. At a time when retrenchment was being spoken of £5000 odd was paid to two Native Laud Commissioners, in addition to their salaries. Mr. Dive commented adversely on the appointment of Mr. Dinnio as chairman of a Maori Land Board after he had had to resign another post. More information should be given to the country in reference to the dismissal of Mr. Heyes. The salaries of the highly-paid. Civil Servants had been raised, and not the rank and file. He did not object to borrowed money being spent so long.as it was expended judiciously, but he was satisfied that at present the country was not getting 16s. or 17s. in the £ for its expenditure Tho debate was adjourned at LI.IO p.m., and the House rose.