PARLIAMENT IN SESSION

Dominion, Volume 3, Issue 903, 24 August 1910, Page 6

PARLIAMENT IN SESSION

THE PUBLIC DEBT.

EXTINCTION PROPOSALS. CRITICISM BY OPPOSITION MEMBERS. . CONTROL OF EXHIBITIONS. No? sitting of the Legislative Council was held yesterday. In the House, the principal business in the afternoon was the election of Chairman of Committees (reported elsewhere). There were two candidates, Mr. Colvin, M.P. for Buller, and Mr. Fraser, M.P. for Wakatipu.- TJpon a division, Mr. Colvin was. elected. The second reading debate of the' Public Debt Extinction Bill was then continued. ' Interesting criticisms were contributed by Mr. Allen, Mr. Hemes, - Mr.' Fraser, and others, and the Prime Minister replied at length. Subsequently the Exhibitions Bill was dealt with in Committee.

SINKING FUNDS SCHEME. CRITICISM BY MB. J. ALLEN., Continuing the debate : on the Public Debt Extinction Bill in the House yesterday, Mr. JAS..ALLEN (Bruce) said.ho was in favour of the principle of creating sinking funds for tne purpose of redeeming loans.. He proposed to iriect; the argument that a borrowing country should not adopt such a scheme. If the principle was right, it was right.whether a country was.a borrowing or a nonborrowing country. We were a borrowing country, and we should borrow afas cheap-a rate as we could. If, we - show.ed that we were providing- out of revenue for tho repayment of our public debt we should bo able to borrow in London at a. cheaper rate than we would otherwise have to do. ; An' Ainoricau'.writer, Hamilton, had said that any country which-pro-vided for the extinction of its debt out of surplus, revenue'rendered its . credit immortal. What more did wo want? It was right to make provision l for the extinction, of the- public debt, and; thus create an immortal credit for ourselves. Another reason, notwithstanding, tho fact that we wero ■ a borrowing country, was the fact .that we had to provide not. only the interest, but'the. sinking funds out of the taxpayers' pockets.. This was,'.or should be,'a check upon unnecessary borrowing. The arguments used against tho Bill were not'against the use, but against the abuse, . of- sinking funds. No country had' done more tu übusc sinking funds than this Dominion.-, "

Referring to" the details .of the scheme, Mr. . Allen said . he objected- to. it' because of . the :wayin which the' sinking . funds were proposed to be made up. In regard to His scheme, the Premier' proposed to, seize the sinking funds in . connection with the loans to- local bodies. As.• a matter of fact, he could not do that unless he .repealed the clause.in the Act relating to the provision* of sinking funds for those; loans. He. objected ■to the proposal, not! onij because it was proposed to seize those funds, but' because, it), was .proposed to extend the payment of those,'loans' to years,, when after forty-two years the Government would be/getting, nothing, from the local bodies. It was doubtless n' scheme jto place the burden on posterity. The sinking funds.' of. local bodies would have ultimately to be paid out of the "Consolidated ]?und. In committee ,the Premier .should not seek to fake away from the Public Trustee the interest on'tiie''ji'c , cnmu!ations of.the sinking .funds" tb' loans- to local bodies, sic hoped that, the Premier would.* not seek to. place'the loans" to .local bodies under the scheme: - ; The balance of the public debt could be met by sjnking funds at.the rate of j£2230. for every million. ■ As regards the war. .loans the Premier proposed to'break his word, for it was provided'that they shbuhl'bc paid off in thivty-fivc or forty years,, whereas under his scheme they would not be met fpr ■ seventy-live years..."

MR. MALCOLM OPPOSES THE BILL. Mrj MALCOLM (Clutha) considered that a borrowing Country 'should not - take, the steps urged, in the Bill. . The .best way in which we could establish a sinking fund was to refrain from borrowing. If we could.. arrange, our finance so as not to require to borrow, . the , position would be met. The arguments, in favour •of,the Bill were founded.on the assum'ption that in twenty - years we would cease .borrowing. This was altogether unwarrantable. New /Zealand' was really a huge industrial concern, .and was.taking 'on fresh .ventures yearly. There was no mention in. the Budget Speech this year,'for instance, of-'the proposed ferry service .mentioned last.year, but. as time went'on New Zealand would engage in', many great and warranted schemes which 'could only . be carried out by the use of borrowed, money.' That being the case, if we did not stop borrowing within twenty years, this Bill must fair to the ground.-' The .whole proposal was based on an assumption wholly, unwarranted. -It was, in a sense,' gambling' with -the future:,- 'The., Bill would, he . urged,-be a screaming farce it we could not cease; borrowing. ■ .'■.

MRi HOGG ON BORROWING. Mr. HOGG (Masterton) : declared that the .whole scheme was a good one. \- It. was very necessary that they should provide sinking funds to meet' borrowed money. To r reduce expenditure on public works would ■be -■ dangerous. It would bring about a. state of collapse. \ If more revenue w : as needed in consequence of the huge exiienditure, why not. increase the graduated tax and the income, tax as well? He believed,we could stop borrowing if .we liked, although he did not say we. should. ' . ■ ■■■ > ..',■

'REMARKS BY MR. HERRIES. Mr. HERRIES (Tauranga) pointed out, in reply to Mr. Hogg, that' other people were earning more than the land-owneiM at present. As regards the Bill,'he'held that it was'of great importance. Nearly every country that had tried the sinking fund scheme for-"the purpose of -redeeming loans-had found it wanting.! There was another system in use in.older countries, , viz., that of terminable annuities, but it could liot be-adopted in New Zealand, as it wonld mean that the annuities would go to people outside I he Dominion'. ■■ Undoubtedly- the best system, of the kind wjis to cancel uv nmctr i.]' the Public Dobt as was possible;but of surpluses. "When the. Prime Minister wiis replying, he would like him to. lull the Housa what he considered formed part of the Public Debt. • Sir JosenhrWe. are dealing with sixtythree million'). ... ■ , Mr. Herries said he felt sure that there were a. number' of loans .in the'sixty, three millions to which it was not intended thai: the scheme should apply. There was a. clause in an Act of .1897 - tu prevent the Government .-from raking the sinking funds'for the loans to local bodies. It would appear,-however, that the Government did not intend to lake the accumulations, but only the interest. In order- to repay'the "Public Debt ..in seventy-live veai's, the' taxpayers would 1m burdened with an incrrasini: amount from'the Consolidated Fiiiid.-. Nett year a loan would be falling due, and they would sec how the scheme workeii. The whole system'was n system • of rii>ferring the payment of the loans for seventy-live- years.'- In his opinion, the worst of the-sinkini fund scheme was that the minutest details would have to be carried out. He -must' protest against the statement by the Prime Minister that borrowing would stop in fifteen yeni"=. A more absurd theory had never been held by; any statesman in Now Zealnnd. It reminded him of the prophesies of -tipsters on racecourses. No one. could tell when the country would slop borrowing. ■'.- CRITICISM BY MR. FRASEft. • Mi. FKASHK (Wakatipu) said lie could not believe that any such results as the l'rlnie -Minister urged would .bo obtained under the scheme. There would be accumulations certainly, but not to the ex-

tent which Sir Joseph'had stated. Every lime mi amount was available there should be u security waiting to absorb it. Investments should be of a liquid nature, so that the country would be able' to pay off such portions of the public debt as came due from time to time. 1 here should also be the safeguard'of. proper control. Neither of these factors was present in the scheme. That there would-be'periods', of depression during the seventy-five years no one could douiu. It the treasurer found himself in debt there would be only umull blame attachable to his action if he seized the loans, because the credit of the country'' must be. maintained. Ho would like to see the control of. the funds left to- a non-political board. .The'chief thing'in' the Bill was. that tho Prime .Minister should have the handling of the i'uuds. if necessary. .He was. interested to learn from tho Prime. Minister the other evening that no further borrowing would be required-after 15 years. For" himself ho' did not think that twenty .'millions would be nearly sufficient to provide.the uecei. sary additional' public .'works for this country. 'When the (line came for itnther subdivisions of estates', roads, etc.,: which, wero unthought or now, would be needed. Tho best way to improve the credit of the Dominion would be to show that the surplus' of revenue over expen-. diture was a .'.real I 'surplus. Stockholders did not' want their, money back; they wanted a certain , investment. What should be done was to increase the products of the Dominion. /.To ask .memben, to believe that the scheme was going, to have' any appreciable 'effect .in''the way of extinguishing tho Public Debt was asking the House to believe :.too much. . '.

VIEWSOF OTHER MEMBERS. '"■., i Mr.-. ANDERSON. (Matatiraj said that' '-. he would _support the Bill,. for> it would mean setting asido a certain i amount of. money yearly. ; He would like to see tic railways, controlled by .a board ,similar to, ' . the Advances Board.. The'proposal by. , Mr.. Hogg in regard to,'a' State issuewwa r unsound.' 'Mr. J:.C. THOMSON (Wallace) do-, scribed the scheme! as being a masterly one, which would meet with his wholehearted support.: Mr. HlNE.(Stratford) said, that he did not. approve of the methods to. be ' adopted in . connection with the scheme. \ ■'. For the start, it was, expected that only/ .-612,000 additional would .bo reguired from . the Consolidated 'Fund.'. What would be the amount, however,' which would be needed, later on?!..; Ho .would , not say- that' the . graduated tax might not be extended, but in the'matter of ordinary- land tax the settlers. should receive some consideration. It should not .be forgotten that. frequently settleM had lean years. .

.; ' THE PREMIER IN REPLY, Sir JOSEPH WARD, replying, said that if there were dangers under the Bill, as had- been Suggested, there were dangers without the Bill. . He was astonished at the littleness of the view of some of the critics. , One thing' in particular ,that he was surprised to near was a demand tor; a- non-political board. _ Could-., any, ~ instances be given of favouritism in con'- 1 - Motion with other Government lending , boards? Of course'not; The figures as to./ the probable amount of borrowing dur.-, ing the next fifteen years were but an,;, estimate. . There, was no'use. hiding the - fact that further borrowing would have to be done. ,- In. his opinion.- sufficient safeguards were provided ' under the , scheme. 'Upon this- subject; there had . been some. remarks which were quite from the point. . ',','' Mr..Buchanan: In'the funny.column',; "■ ' Sir, Joseph':.'-Yes, in a'leading article; (Laughter,), '..'.'■• ' / Resuming, Sir Joseph said that there was no clanger, in the . fact that the. funds would not be'of a liquid nature. Future: statesmen were not going to invest the moneys beyond the date, of maturity of-tho loans. One objection had been that there might be 'breaks in, connection...with, .the . interest-earning. .' H« had, provided against' that. His system was that in the-event-of. the .earnings, only : realising %\ per, cent, instead! of-4 •. „' per cent.,> the -balance must ",be' auto.matically ;,m'ado!-up..' to, ensure.: the' full amount being-set aside as, sinking funds. ; ' It had never been' suggested by.liiin- that the-funds were to be composed wholly of new moneys.' .At present the amount that was being earned.on investments in New / Zealand' was : 'tt per - cent. Some people quite misunderstood the position..'' The,-local ■ bodies, had -. never paid a penny piece towards the smtang funds. ' ' '."■ Mr. Mass'ev: The counties? ,-. ... . .- . ■ Sir Joseph:- Irrespective ■.. or. : the amendment under the. State Advances 'Act ■■■■.-.- • '■ ■ ?-•■'■■ ■■ i ■ As regards the' loaii: which fell duo . next year, if there was. not .sufficient money to meet it the right thing to do I would be to renew-the loan, the difference being that' the new. stock, that was given would bear an, endorsement with . reference to' 'the existence; of. the .sinking , fund. 'The-whole, system'was an. auto- - matic one. ■■' If, it were found .that, the • annual amount to bo set-aside were--too large after some. of the loans had been repaid there was provision; for the reduction of the amount.-To/tnose'who said that ■ thero' might not be any, demand at any time for : moneys r for m- ; vestment', he Iwould point ■ out that any surplus moneys.might; bo utilised to pay off debentures. If ,any--improvements could be made in: the Bill he .would be glad to see them, incorporated. :*■ _ . By way of personal explanation, Mr.: Massey quoted' from records to show that thece had been a loss of-.£116,000-on .;■ the conversion: transaction' to 'which ho -, had alluded. ; - .' '■■'!. Sir Joseph: You are quite wrong., _ "Mr. Massey: No, what I say is correct. The' second'' reading' of the Bill 1 : was then carried. '• '"' \ .'■

THE EXHIBITIONS.'BILL.: ■ 'In Committee on the Exhibitions Bill ■Mr'AlASSßY'.asked, if the- Bill-would anpiv to- industrial exhibitions held, in. connection with shows. ■ The Hon'-J; A.. Millar:..-Iso. ~' ■ \fter further discussion Mr. Millar said he was' prepared to agree to the insertion of exempting suclr exhibitions from the'operations of the 8U1...,..; ■ "jr".- RUSSELL (Avon)- thought ; some definition 'was needed to relieve the art societies from" coming under the clause. : Mr "I E TAYLOR. (Christchurch .North)-said the Bill gave power to override the licensing .commissioners of.the district There-should,.-ho thought, be / a safeguard against this. . : ■ Mr. RUSSELL- suggested that, a, clear definition of the word "exhibition, would solve the whole problem. ■ •;•■-,,- Mr BOLLARD (Eden) asked if.- theAct was to apply to baby shows, (^augnte At -this stage it was agreed - that the amendment should be, withdrawn m., view o'the fact -that the Minister had promised to have an interpretation clause ■inserted- in the -BUI. --. -.. ■•■ 'Mr T E TU'LOR moved an amendment'to'the powers to. make by-laws to prevent commissioners under the Act from Emitting persons to dispose of alcoholic liquors within, the precincts of any area under their control.-■■ '.":•,' ," 'The MINISTER said- he was not pre- - pared to -accept this .amendment. The -Gdverii'ment of the'day should- be .trusted to deal with the question.'when it,arose. . It was decided on the voices to add the P To cianso 9, providing, for. the snsr.cnsion of certain Acts on the occasion of an exhibition; tho Minister move.d-a proviso, to'the effect'that nothing in the Act shal 1 be deemed to increase the hours of labour or reduce; ordinary overtime rates The" proviso was agreed to. The Hill was then reported, with amendments. .' ■' The . Foreign .Insurance i Companies' .Deposits Bill was put through Committi -3 without, amendment. .-'■ - . ; -,'-,. ' When'the'Town. Boards .Amendment;. Bill was reached,-i 1 The Prime Minister, agreed to report ■progress: ■• 'v. -. , i - - . ,-' , ; The-House at this, stage, 0.5, a.m., adjourncd till this- afternoon.;. ... ~ .

fHE UPPER HOUSE;

It is understood tlmt thero will be ,ut lonst three - mora speakers on the. debate' on the Crimes Amendment.BUl in the Letrislntive Council this afternoon.. - Iho Attoniey-Gmieral will reply if time allows, but in the event'of the debate lasting the' whole afternoon his reply, mil be postponed until Thursday, '■„■