TIE BUDGET DEBATE.

Dominion, Volume 4, Issue 1231, 13 September 1911, Page 6

TIE BUDGET DEBATE.

SPEECH BY MR. MASSEY "IN VAIN IS THE NET SPREAD." HON. D. BUDDO REPLIES.

The debate on the Financial Statement opened in tho House of Representatives at 7.30 p.m. Full benches and galleries testified to the interest taken by members and tho public in tho. occasion. Mr. Massey, Leader of tho Opposition, said the Statement contained nothing ■that was statesmanlike or very new, but it was very long. In somo respects it was extraordinary, as, for instance, in its reference to servant girls in Saxony. What the people wanted to be told was how to mako life in this country better arid brighter, and in this the Statement would help them not at nil. Ho believed that its author would ero long realise the foTco of the saying: "In vain is the net spread in tho sight of any bird." Slany peoplo Tecognised that tho Statement was tho last appeal for votes from a Government that had outlived its usefulness, and, in tho opinion of ono who had been inside, but was now outside, had lost tho confidence of its supporters. By the Budget of last Friday evening, the peoplo woro asked to sell their votes, and not only to sell their votes, but to foot tho bill. ■ Ho was quite ■ certain that they would decline to enter into any such transaction. A Ludicrous Act. Speaking of the Public Debt Extinction Act of last year, Mr. Massoy remarked that under-the old Local Bodies' Loans Act, and by another Act passed, more recently, sinking funds were provided for local bodies' loans, and for the old war debt of many years ago. By the Act of last year, tho snm of .£922,000, which had accumulated in these sinking funds, was diverted and used as a capital fund for the purposes of debt extinction. But for the passing of this Act, loans amounting to «&U6,000 and to respectively would have been paid off. Instead tho money had been converted, and these amounts added to the permanent debt of the - country;. ■• The position was equivalent to what it would have been ;i the Slinister for Finance had borrowed the snms mentioned for tho pnrposes of the Act of laet year. • No doubt history would repeat'itself. Somo-needy Treasurer would come along with a subservient majority at his back and divert the sinking funds created .under the Act. of last year. In many ways that Act was ludicrous. By wav of'sinking fund for the enormous debt "of this"'country (amounting to .£81,000,000) there had been set apart last year the sum..',of twelve or thirteen thousand pounds. On top of this the public indebtedness had been increased last year by between six and seven millions. , . ■ The Prime Minister: "That is not correct, and tho hon. gentleman knows it!" Sir. Massey said it was perfectly correct. He sincerely hoped that the hon. gentleman would . tell.. tiro. . House ,how much he had borrowed- for the purposes, of the Public Debt Extinction Act. As to Treasury' Bills, the hon. gentleman had boasted in the Statement that the largo amount, of debt under the head of Treasury Bills had been wiped out. He admitted that, at March 31, 1910, there were VfiIOO.OOO worth of Treasury Bills outstanding, and that, a year later, this amount had been paid off. But it was also true that at the end of tho last Juno quarter there wero .£IOO,OOO woTth of Treasury Bills outstanding. - Thcro was not a hint of this in tho Financial StateMr.' Massey congratulated .the- Primo Minister on what ho proposed in connection with tho'Death Duties Act.- Ho'had made ; ' the suggestion himself. 6ome' time ago that the. Act should bo amended as was proposed 'in tho Statnicn't'. /The Tjcwspaoers of the Dominion would provo this to' bo- tho case." Much' discontent had been aroused by the death duties; It was recognised that they represented,a harassing and unreasonable form of taxation. He ventured to say that something like k£300,000 had been collected under tho authority' of tho Death Dnties Act of 1909, although originally it had been proposed to'raise only half that amount.

A Splendid Opening,

Mr. Massey expressed general approval of tie proposal to establish a farmers' co-operative bank. Remarking that ■ a reference, to family:.settlements was tho ODly allusion, in the' Budget to the land question, Mr. Massey invited the Prime Minister, to givo utterance to his views on the subject of tenure. There was a'splendid opening for any member of the Ministry in carrying out the duties of Minister for Lands. The Premier was •a satisfactory PostmasteT-Gcneral and a capable Minister for Finance, so long. as tho brake was hard on. But lie was not a successful Minister for Lands, be- 1 canso he had not had the necessary experience. A Government that did not bring forward a progressive land settlement policy was unworthy of the position it occupied, and should be romoved at tho earliest opportunity. To show that the settlement of the land had been carried on more slowly in the year 1910*11 than in tho year 1900-10, Mr. Massey quoted the following figures from official sources relating to acreage of Crown lands disposed of :— 1910,, 1911. Lands for cash 8,6-13 9,527 Occupation with right of purchase 108,151 131,001 Lease in perpetuity 1,011 1,576 Renewable leaso 8,553 5,1/7 Mining districts occupationtlease 2,067 2,686 Village settlemont3— ' Cash - 12 3 O.K.P - 2 Renewable lease 11a 38 Improved farm special settlements 33,005 5,003, Small grazing runs 2.8G7 — Total acres 1G5,02-t 155,613. 155,613 ' 9,111

In tho year ending March 31, 1910, estates totalling SG.GBS acres were acquired under the Land for Settlement Act at a cost of ,£260,793, and last year the acroa?o was only. 26,611 and tho price .£158,796, although the 'Government was authorised to spend half a million a year in this way. Any amount of land was available in this country for settlement, and legislative machinory had been provided by means of which it could bo obtained at a fair price. Someone behind had reminded him of the 50,000 acres which the Government allowed to be sold somo time ago at ten shillings an acre. It was land that the Government con-Id have acquired. On the gumfields of the Par North there wero great areas which wero worth littlo now, but would soon become valuable if they were mado available, for settlement. But when a settler attempted to get any of this land ho was denied anything like security of tenure.

Borrowing. There was no paragraph in tho Statement setting forth in plain figures and in plain words the increase in tho country s indebtedness during tho past year. In 1910 the debt of the country was .£7-1,'105,G45, and in 1911 it was .£81,078,122, on increase.for the year of .E6,CG2,177. This disclosed a rate of borrowing which tho Primo Minister must know could not bo maintained and which indicated tho unround financial methods of tho Government. Later there appeared another Wile, but it took no account of moneys borrowed for Stato guaranteed advances. This money was owing nono !h» less, and it' would have to bo paid sooner or later, and interest had to bo found yearly. The leaving out of fuch an important amount wa3 another attempt .to mislead (■lie public. Tears ago ho had advocated ■-nation in borrowing, and last year the j'rimo Minister had said that tho Governent ought not to bo pressed to increaso ihe amount of its borrowing by demands which could bo satisfied only out of borrowed money. Tho amount' borrowed tho year previons to the making of that statement was three and a half millions,-and this vear the amount was six and a half millions. Whatever wo spent the money on we must bo careful not to injure tho credit uf tho country, Jle was glad the.

country's credit, had recovered from the i shock administered to it by tho flotation * of tho five million loan of last year. Jlo i mentioned (in spite of challenges irom ; the Prime Minister) that tho credit of ' tho country had been seriously shaken by i tho flotation of that loan. When tho < loan was floated seven per cent of it only was taken by investors and 93 per cent ' was left to.the underwriters. Yet, speaking on finance a short' time ago, the I'rimo Minister had said that it would lip bad • borrowing for any country to raise a large.loan, and leave a largo amount of it in the hands of tho underwriters. Ho did not know why the loan had not been subscribed readily, but ho did know that leading English papers, a dozen of them, had condemned the issuing ot tho loan on tho market in its then condition. A Government member: "Was one paper TiiE Domixiox?" Another suggested that the comments had been "cabled Homo from here." "And Parliament Submitted." Continuing, Mr. Slassey said that although ten months had elapsed the I'rimo Minister had not taken'the representatives of the people into his 1 confidence to tho extent of telling them, what the loan had cost. And Parliament submitted; tliis was tho worst of it. Then it became a matter between members and their constituents, and when the electors were asked to cover up tho mistakes of the Government, the electors would speak } with no uncertain voice. He challenged I tho Minister to tell tho people the cost of the loan. Concessions were offered to investors; so much was known, but the people did not know how many took advantage of tho concessions. If they were informed they might bo shocked with the knowledge. Ho thought tho Prime Minister recognised that he had made a mistake in'the manner of floating the loan, and he would not repeat it. Ho did not object to borrowing, but lie did object to borrowing at the rate tho Government had borrowed during the last year. And it wasnot so much tho amount of the borrowing that was wrong as tho Government's financial methods. The Prime Minister: It is only you who says that. People in England don't say that. Mr. Massey thought that perhaps this was becauso they had not investigated the matter. ■ Too Much State Control. Tho Government were 'attempting to control all the financial operations of the country, whereas their proper course 'was to do everything they could to encourage tho investment of outside capital in the development of the country's resources. On the contrary, capital was being sent out of tho country tor investment aljroad. Hon. T. Mackenzie: Why not? Mr. Massey: Because there is no field for investing it here. Mr. Mackenzie: Because they are getting eight or ten per cent.' for it. -Mr. Massey replied by twitting Mr. Mackenzie on having betrayed a little annoyance, saying jocularly that he had a tender regard for a.man who had sat on his sido of tho House. Mr. Mackenzie: I never. left you. Mr. Massey: No, you ran away. . . Referring to the Government, dealings with the funds in the Post Office Savings Bank, Mr. Massey said that over two millions sterling had been borrowed, and at.a rate of 3} per cent. This was surely unfair to the depositors, for the rate, at which we could borrow in the London market,' instance .the five million loan, was 'much more than three and a ■ half per'cent, when all the costs of flotation were paid. The Railways. The increase.in the earnings of the railways was accountable to tho increases in fares which- had been made last year. He did not agreo that the railways were making 'a profit, or wero repaying interest on their cost of construction, because when money was borrowed to build railways, tho interest was not charged to tho 'Railway Department until the railways were actually completed and handed over. However, he did not think the railway account should bo burdened, for railways were partly for developing the country. Now the Minister proposed to reduce tho fares to benefit a small section of tho people using the railways—those travelling ■ 200 miles or more—whereas he might do much more good by reducing suburban fares. The town-planning idea could never .be achieved, otherwise,,.,and.he believed that a very great deal fco done to further the scheme.by the development of a suburban railway service. State Notes. . The most startling paragraph, in tho Budget was that referring to the Stato note issue, and ho congratulated Mr. b on tho adoption of his scheme by tho Government. At present tho banks paid a tax on their note issito of 3 per cent., and thoir total issue was about .£1,000,00(1. Now, under tho Governments proposa the notes will be issued by the Stato and sold to the banks at their face value. Tho Government would, therefore, lose tho tax, and they would then have to establish a reserve. In Canada the reserve was 25 per cent of the issue. It was in the amount of the reserve' that tho clement of danger came in. There was nothing very startlingly wrong about the paragraph as setfoTth, but the danger was that some day or other the Treasurer might ask Parliament to do away with tho reserve of gold behind the notes, or he might ask for authority to issue notes for purposes other than sale to tho banks -for instance, to pay for services rendered to the State. This would be perilously near tho establishment of a State bank. He sincerely hoped (in reply to the Minister's assurance that nothing in the nature of a paper currency was contemplated) that tho Government would go no further than the proposals outlined in the Budget paragraph.

Taxation. Among tho interest-bearing items set out were the public buildings, and wo were also expected to believe that the money invested in Native lands was in-terest-bearing. Both of thesa items of expenditure were wrongly considered as interest-bearing. Even tho railways only partly raid the cost o£ construction. Many o"f tho humanitarian proposals, which might make for the good of th* country, would have,his hearty support, but he did not agree with the Minister when he said that the country did not feel tho burden of its taxation. Tho Minister knew that the people wero staggering under the taxation they were tearing, (ironical cheers from, tho Government benches.) Times wero good and prices wero high, and the outlook for the future was gocd, but we ought not bo living at a ral'o to absorb all our resources. Depression must come, as it assuredly would, and we ought to preserve our credit so that in less happy times wo might keep our population employed and avoid serious loss to the country. A Tremendous Increase. In tho last three years there had been a tremendous increase in taxation and in tho cost of living, so that people had far more difficulty in making ends meet than they had three years ago. . There had also been an increase in the cost' of government out' of proportion to tho population. On tho other hand there had been a falling off in land settlement—a fact which accounted in large measure for tho feeling of unrest which had been given expression to (luring the present session. The country was all right'—good land, good climate, an industrious population, everything necessary for tho welfare of mankind. There was only one thing wrong and that was the Government of tho country—a Government which had outlived its usefulness. (Applause.)

SPEECH BY THE HON. D. BUDDO. LAND SETTLEMENT AND FINANCE. The lion. D. Buddo was applauded as he rose to reply. Legitimate criticism, he stated, was always welcome, but that of the Opposition was inspired by a dusiro for office. Mr. liuddo proceeded to traverse tho Opposition policy in detail. Incidentally ho stated that Native lands were being brought into occupation as fast as nionev could be obtained to develop them. Mr. I'.nddo next road the various attractions to tho electors listed by Sir Joseph Ward in his Budget. The Leader of the Opposition had said that very little land was being ma<lo available for settlement. As a matteT of fact tho Land Deport showed that something like two million acres had been settled last year. He admitted that a good deal of this was land that had been ccttled before. Mr. Buddo quoted figures with a view to showing that land settlement was carried on less rapidly in New South Wales than m New Zealand Mr. Massey had also said that tho Land for Settlement Act was not being vigorously administered. There was now, however a Land Settlement linancc Act, and tliq segregate, settlement under this

and the older Act had practically equalled what had previously been accomplished under tho Land for Settlement Act. The principal difficulty encountered by the Government iii the prosecution of settlement was tho high price demanded for estate.;—lie was not going to contend that values were too high. Tho Leader of tho Opposition had said that the Government had ret aside last year only twelve or thirteen thousand pounds. The sum actually taken from the Consolidated iund last year for sinking funds was ,£U4,BOS. Sir. ilasiev invited .Mr. Buddo to road the paragraph in the Budget in reference to sinking lands. Sir. Buddo read a portion of the paragraph, lint declined, amid laughter, to read it to the end. lie stopped reading and declared heatedly that Mr. Massey was intent on misleading tho House.

The Five Million Loan. Dealing with the five million loan Sir. Buddo quoted tho London "Standard as saving that tho flotation of the loan had not been a failure, but that it had merely dropped one-half per cent for a few hours and immediately afterwards risen to par. Mr. Massey had said that capital was leaving the country, lie must recognise that water would find its level and tlyil monev would go where tho highest rates could* be obtained. Tho Government had provided cheap money. He was pleased that the Leader of the Opposition approved tho Stato Note Issue. Mr. Massey: I did not say that. Mr. Buddo said that paper must always be a form of money and a State Note would supply the best possible security. He regretted that anyone who knew anything about political economy should state, as Mr. Massey had, that tho people were staggering under a load of taxation. In three yeaTs the Government had taken dC1.G21.157 "oil' the breakfast table." Tho Prime Minister: And upon what item has taxation been put on? Mr. Buddo: And-on what item, affecting tho daily life of the people, has taxation been put on? Increases that had been made in taxation had been made deliberately with an eyo to the interests of tho people. Tho Leader of the Opposition had said that there had been tremendous increases in the cost of living, in the Public Debt, and in the cost ot government. Could anything be more depressing? The cost of government was bound to increase as population increased. Mr. Buddo said he wanted to know how tho cost of living had increased and mentioned that the Government had recently remitted a tax on sugar. The increase of the debt was an inevitable result of the demand for roads and railways. Mr. Buddo denied that the Government was bad and .quoted various returns as showing that the country was prosperous. A Much Discussed Paragraph. Mr. Massey stated in personal explanation that Sir. Buddo had misrepresented him in regard to the Public Debt Extinction Act. Sir. Slassey read tho paragraph from the 'Statement' to which reference had been made, mid declared that his statement had been exactly in accord with it. Tho paragraph reads as follows :— "The amount will bo made up as follows: Saved to the Consolidated Fund by the discontinuance of the contributions to, provide a. sinking fund for extinguishing old war and defence loans and for the repayment of moneys raised for lending to local bodies, ,£92,308. Interest to be received from the Public Trustee on the sum of .£092,292 held by him and set aside under the Act as a permanent endowment to assist in the repayment of tho whole of our public debt,' .£'39,691. Amount to be paid in addition out of tho Consolidated Fund, J312.586. . Thus, for an additional payment of ,£12,886 out of the Consolidated Fund more than was paid last year the whole of our present debt not provided with an internal reserve or sinking fund for its repayment will be entirely extinguished' in seventyfive years." Sir. Buddo remarked that the lion, gentleman had confirmed what ho (Sir. Buddo) had stated. Sir. Slassey. "You refused to read it anyway." The Primo Stinister now suggested that tho debate should be adjourned until 2.30 p.m. to-day. Sir. Slassey remarked that opportunity should be given for the discussion of questions on the Order Paper, and said ho did not think the Prime Slinister should tako ■ afternoon for Government business as he now proposed. Tho Prime Slinister insisted that ho wanted to avoid any further delavs and to get on with tho business of the session. The House adjourned at 9.30 p.m., with the understanding that tho Budget debato should be resumed this afternoon.