THE HOUSE

Dominion, Volume 8, Issue 2292, 28 October 1914, Page 7

THE HOUSE

. The House of Representatives met at ' £.30 .p.m. -'" The Hon. W. H. HERRIES, Minister of Railways, stated lie hoped to be able to lay the D 3 list on the' table of itho Honse thie evening. SIR WALTER BUCHANAN (Chairtaan of the Shipping and Freights Committee), in Teply to a question, said he would present the report of. the Committee to-day. The Hon. O. Buddo was granted ■leave of. absence until the end of the session on account of illness. The Shops and Offices Amendment Bill (the Right Hon. W. P. Massey), and the Puhlio Reserves and Domains .Bill.(the Right Hon. W. F. Massey) .Were introduced and read a .first time. NEW BILLS. The War Contributions Validation Bill, the Fnendly Societies Amendment Bill, the Mortgages Extension Amendment Bill, and the Patents Designs and Trade Marks Amendment Bill were introduced by Governor's Message, and read a first time. THE LOAN BILL LONG AND SPIRITED DEBATE ; FACTS ABOUT BORROWING TAXATION METHODS REVIVED. The Hon. J. ALLEN moved the : (second reading of the Aid to Publio Works and Land .Settlement Bill. It , v--as his duty, he said, in moving the ; second reading of the Bill, to explain ■ the increase in the- amount to bo bori fcro-ed. under the Bill, £3,000,000, which Was larger thau ever before. The loan S total was divisible into ■ two' parts, £2,000,000 for ordinary" expenditure, on ■; railways and other publio works, and i £1,000,000 for roads and bridges in ! backblocks districts. The expenditure on public buildings was necessarily ». higher thau usual this year on account )f the Government having to make pre-rision-for the very heavy cost of the jew Parliament buildings. Hitherto She the Government un- . tier the head of public buildings had been less than that of its predecessors, but the vote this year was a large one. There was also an increase of some £34,000 in the- amount being asked for ■ for telegraphic extension, mostly for the establishment of the automatic system. Another reason for the loan being larger was to provide .sufficient funds to carry on the Government until the end of October. This was always the aim of the Government, but it had always been found that the anfount raised was insufficient to last until that time, and the Government had been dependent entirely on transfers to the Public Works Fund from the Consolidated Fund. No one could say, especially at this time, that tliere would be available any moneys for transfers. The present Government had also discontinued the practice of paying into the Consolidated Fund the receipts from the salo' , of lands for cash and on deferred payment, and this, meant'that there was less money available for transfer to the Public ■Works Fund. Mr. Russell: You borrow more for ■ publio works and less for land settlement. What is the difference? Mr. Alien replied that the practice ■was a sound one, seeing that the proceeds of sales of land were kept as capital for the purchase of more land, and not merged in ordinary revenue. Further, it was a fact that if their pre- ' decessors had adopted the same method it would be found, that they had no surpluses at all. Notwithstanding

many shortages in revenue, owing to smallpox and the strike,, and other heavier items of expenditure than usual, the Government showed a substantial surplus. If railways had gone on normally, if revenue had kept up, and expenditure been less extraordinarily heavy, the surplus would have been £858,000, or probably it might have approached a million. Increase Only an Apparent One, Although the loan proposed was a big one, it was not so largo in fact as the Loan Bills of 1909. Taking no account of the million to be raised for backblqoks roads, the amount to be raised this year would be £2,000,000. In 1909, under the two Loan Bills brought down, the amount-borrowed was £2,250,000. / A programme of backblocks road construction was put forward by the late Government, but no provision was niado for the expenditure, the votes being simply put on the Public Works Estimates. The Government thought that this was not sound policy—to induce Parliament to enter upon a policy of this sort without letting the country know what was in progress. This million would not all be expended in one year, but. would be spent in, say, three years, and would be borrowed as required. The reason for this policy was that the country needed roading to make development possible. He did not say that a million would do all that was necessary. On the contrary, he thought four or five millions would be required to complete the work of roading the baokblocks districts of New Zealand.

Hβ spoke next of the state of the Public Works Fund. On October 23, the cash balance in the Public Works Fund was £12,700. There was an investment of some £30,000, which had probably been realised by this time, and was now available. Up till this time the Government had neither transferred anything from the Consolidated Fund for borrowed from any source other than the ordinary Loan Bill to supplement the fund. Members would recollect that in putting through the War Loan Bill provision was made that part of the- money, raised' under it might be used for public works. Under that Bill £50,000 had been transferred from war expenditure to carry on public works, making the total cash available £92,500. ' Raising the Money. Where was the money to-be raised? Ho had told honourable members that since the- war had begun it was practically impossible to raise a stock loan or a debenture loan in London at the present time, and he was advised that the only method of raising money was by the issue of, Treasury bills. Fortunately Parliament had been asked, before the war crisis occurred, to authorise the issue.-of. additional,.. Treasury, bills, and;'^ms ; .provision.~.had-relievea the strain very materially. He believed that with' assistance the Government would be able to raise money for public works in London before the end of the year, but whether they could or could not he was glad to be able to say that the position of the balances in the State Advances Office was so strong that the Government could carry on public works without going on the Londoa market at all, provided he could borrow in London to redeem "the loan coming due in December, raised by the honourable Leader of the Oposition four years ago. As he had repeate'dly etated, the holders of these four-year debentures would neither convert them into stock nor renew them, but they insisted that the New Zealand Government should pay them .off in cash at maturity. If the Government could get this loan out. of the way, and local bodies and settlers would , be a iittlo patient in their demands for advances, the Government could carry on very well, he hoped. This was very satisfactory, as was also the fact that the war loan had been arranged for on terms very favourable to us. Tho Government had simply been asked to say how much they wanted , per mouth. . They had .been allocated £300,000 a mouth until December. Ho did not know whether v this amount would have to be continued or not. That must depend on the duration of the war. Mr. Russell: Why don't you say Mother England is footing the bill for us?' ■ ■ Mr. Allen: Why not? Does tho honourable gentleman object? She is footing the bill for us, aiid I am very glad .to say it. That is why we aro getting the money so cheaply. All Pledges Kept. It had been charged against the ernment that they had made certain promises which they had not kept, about the reduction of borrowing. He did not recollect any ot the present Government having said they would reduco borrowing! but they had said that they would attempt to reduce borrowing, and that thoy would at all timee see that money was spent in the most economical way possible. Sir Joseph Ward interjected that Sir. Massey-had said that he would, if returned, reduce borrowing. Mr. Allen said that it was easy .to forget what Mr. Massoy had said, but it was not easy to forget a promise, and all the Government's promises had been kept. Even supposing, however, that the honourable gentleman was right—that the Government had promised to reduce borrowing—then that promise had also beer kept. The Government had reduced borrowing. Since the Government had taken offico the total borrowings from July 12, 1912, to September 13, 1914,' the Government had borrowed £14,636,880. In a similar period immediately preceding the coming into office of the Government, the then Government had borrowed no less than £16,496,775— only two millions more! Honourable gentlomen would probably say that much of the late Government's borrowing was to renew loans falling due. To meet that argument he would analyse tho two totals. Tho present Government had raised for current expenditure £9,078,680, and the previous Government had raised for this purpose in a siiniliar period £10,031,950. For paving off loans tho present Government had raised £5,558,200, and tho previous Government £6,464,820. Credit of the Country. Ho wished to say a little about tho credit of the country, and in order to show the improvement that had taken place he would compare the loans raised by the lato Government and by this Government. In April. 1910, Sir Joseph Ward had raised a five-year loan of which the net cost to the country was £i ss. Id. per cent. On November 11, 1910, another loan was raised of which the cost was £4-11s. sd. Then there was the two-year loan of Mr. Myers, the cost of which was £5 Is. Id. per cent.worse and worse I Under the present Government the position had improved vastly. They had raised their first loan at a very difficult time at tho rate of £4 ss. 4d. Next they raised a 3J

million loan, a part converted, aiid a part unconverted. The unconverted portion with a curroncy of ten years cost £4 Bs. 6d. per cent., and the converted portion £4 3s. 3d. per cent. And tho Government's Inst loan, subscribed sovoral times over, had cost £4 Is. 3d. per cent. The Government had prooured loans' at rates that wero continually improving, £4 ss. 4d., £4 3s. 3d., £4 Is! 3d. Every loan showed an improvement. On tho other hand every time the previous Government raised a loan tho rates went up and up. The improvement -under tho present Govornment was'undoubted evidonco that tho credit of New Zealand stood highor in London than over before. Now no country or no Dominion could securo its money on bettor terms than Now Zealand could. The Government had reduced borrowing, and improved the credit of tho country, and if this was not satisfactory to the honourable members opposite it would bo satisfactory to tho country, and cortainly to the members sitting behind the Government, who had so loyally supported the Government in the most trying times any Government in New Zealand had ever come through. Smallpox, strikes, and war. the Government had survived them all, and doalt witii them all, and the pledge to reduce borrowing had been carried out to the fullest extent. Incidence of Taxation. The Government had reduced tho Customs taxation last year. It was quite true, on tho other hand, that taxation per head had been increased. The Government had increased the graduated laud tax in order to burst up the big estates. This was in accordance with one of the promises, which promise also the Government had kept. In further refutation of Sir Joseph Ward's contention he quoted figures to show that the Customs duties were less per head now than they had been when the Government came into Dower. In tho case of land tax, the figures proved something very different. In three yoars previous to the Government taking office the land tax was 13s. per head, 12s. 7d. and 12s. Bd. respectively. That was under the Liberal regime. An hon. member: Bursting up I Mr. Allen: Bursting up! Humbug I' Ho went on to give the figures for the years of tho Massey Government administration. They were: For 1911-12, 12s. Bd.; 1912-13, 13s. lid.; 1&13-14, 14s. 3d. These increases were partly due to tho increase in the graduated land tax imposed for the purpose of oarrying out the Government's policy of "settlement, more settlement, and still more settlement." In regard to income tax, the figures for the late Government in three years were: 6s. 6d., Bs. 2d., Bs. 10d.; for the Massey Government, Bs. 10d. and 10s. 2d. In death duties the same increases wero shown: For the lato Government, 3s. lid., 6s. 6d., 7s. Id.; for tho Massey Government, Bs. 9d. and Iβ. sd. These ligures, all certified by the Government Statistician, showed conclusively that tho Government had increased direct taxation, and reduced taxation through tho Customs. He hoped that what he had said would induce honourable members to pass the Bill before the House without amendment, ■ believing as ho did that it was urgently needed 'by the country. Sir Joseph Ward. SHI JOSEPH WARD said that he was amazed when he heard tho hon. member saying that the taxation had not been increased, and the specious way he dealt with the Customs revenue. He quoted the Government's table for the last two years, and showed an increase of 6s. 2d. for Customs taxation, and 17s. Id. per head increase for tho two years' taxation. He. deprecated tho.use of fOOjOOO.out-.o'f the 'war : loan for the Public Works Fund. He was also surprised to hear that tho 1909 loan was larger than the loan the,hon. member proposed now. He had turned up the Bills for 1909 and found that the loans were over £3,000,000 loss than introduced this year. Regarding the credit of the country and the cost of raising loans, he pointed out that a Government return showed that tho average rate of interest on loans outstanding was less during his term of offico than during the present Government's term. Since the Government had been in power the settlers had been screeching out for money, workers had been crying out for money, and local bodies had been crying out for money. He quoted a statement from the Minister of Finance's last Budget in support of his contention that the Minister had promised to'reduce borrowing. He referred to the Public Works Statement. For tho building rote £710,000 was proposed and the' Minister of Finance tried to justify tho building expenditure by saying that the Parliament Buildings wero responsible for it. He spoke strongly against tho fact that the amount for public buildings should be so large in comparison with the expenditure for ordinary railway construction and backblocks roads. The expenditure as far as back-blocks and\ railways was concerned was a snare and a delusion. Tho one outstanding item was the huge expenditure for public buildings, and tho hon. member tried to excuse the amount by referring to the new Parliament Buildings. The increase of taxation was undeniable, while the Government wanted to go further and impose a metor tax. The extraordinary developments which were going- on seemed as if the microbe of almost financial madness ■ had got hold of the Government. Hβ objected to the fact that every time ho began to criticise tho poeition someone asked: "How much when you wero in offico?" It was not necessary when ho was dealing with important matters of that kind to say somqthing wna done under a former Administration. Ho said that it was absolutely plain from tho_ figures that the expenditure was rapidly increasing, and that tho honourable memher was not looking after the revrauo in the same way as ho was looking after tho expenditure, and was getting in difficulties. As far as he could judge over £700,000 wae available in the Consolidated Revenue when the Minister of Finance got into office. In the meantime expenditure had gone np £2,000,000, and loan moneys had gone up. He defied any man to find a parallel in the history of Parliament for loans that footed np to such aji amount. Sound Financial Position. The PRIME MINISTER, (the Right Hon. W. F. Massey) said that he hardly thought tho speech of the Leader of the Opposition could be called a satisfactory reply to the Minister of Finance Despite what he had said, the figures of tho Minister sliowed that the country was in a sound financial position. He differed from the member in reCard to his remarks about taxation. Ho had said that the Government had ■increased taxation. He hnd said that tho taxation had increased by £709,000. Could tho honourable member show a single article where they had increased tho Customs duties? There was no doubt tho amount of Customs collected must increase as tho population increased, but the way the honourable member put it to the country was to make it appear that Customs taxation had increased. Tho Government had reduced the Customs taxation by tho abolition of tho tax on discounts, which was an irritating tax, and in another way had taken off an irritable tnx. The honourable member said that there had bneu no reduction in taxation, and had made a speech later to the effect that in theso strenuous times ho would not bo aarcenhle to a reduction, even if tho Government brought down such proposals. He (Mr. Massey) said that the country would suffer very .little from the war if the people kept their business going as before The honourable member had said the Government had increased tho direct'taxation. The only way, they had increased

the direct taxation was on the graduated land tax. Tlie credit of New Zealand would now comparo favourably with any of His Majesty's Dominions. This was shown by comparison witli t'lio loans raised by Now Zealand and other parts of the Empire. The honourable member talked about a muddlo and a moss. . If ever there was a financial mess and muddle it was the condition when the present Government eamo into office.

Tho Ward Government had refrained from raising a loan when the opportunity offered, and when tho Maekenzio Government camo into power the Treasurer, Mr. Myers, was forced to borrow on a bad. market at a ruinously high rate of interest, the loan, being probably tho dearest loan raised on account of New Zealand for a very long time. Tho Massey Government had not only had to borrow to find money for the State lending Department, but it was faced with the necessity of finding within a period of three years -£9,830,865 to repay short-dated loans falling due. The position was so Berkms that Mr. Allen- had had to go to London, where ho was fortunate enough to raise sufficient money for our requirements. Not Electioneering. The finances onco established, the Government had carried on the State Advances Office on sound aaid yet liboral lines. As much money per month had been lent as ever had been lent previously. Of. course he was not comparing tho advances of tho present Government with the jcckless squandering that went on prior to last election. None of the advances were being made for electioneering purposes. Hβ considered that tho Government of New Zealand were especially fortunate in being- able, at a timo when the country was at war, to lend any money at all. He was glad to say also that the Finance Minister had been able to increase considerably the position of the State .Guaranteed Advances Office. But the advances were not being made after the plan of the late Government, who had used the State Treasury and the State lending Departments for electioneering purposes. Large sums were lent to wealthy counties and wealthy towns, so that there was nothing left for advances to settlors and workers, and smaller local bodies. -In answer to the statement that the Government had found a iveH-fiUed'treasury when they took offico, he read a memorandum from the Secretary of the Treasury, showing that far from the balance in hand being £807.000, as the Opposition claimed, the balance had dwindled down to £188,000 before the present Government oame into power. Mr. C. W. Russell's Views.

Mr. G. W. RUSSELL (Avon) said that the House was asked to pass the Public Works Statement on the samo old methods which were to such an extent by tho Government when the Liberal Party was in power. Tho Government had not brought in their promised comprehensive Local Government Bill, to lomedy the existing method of assisting looal bodies. Tho Minister of Finance had given the promise that the Government was going to introduoo a. Bill to reduce tho Customs taxation on some of the neeesaries of life. Where was that Bill? It was another instance of tho broken promises of the Government. He referred to the statement read by the Minister of Finance with regard to loan flotation, and said that if ever a statement was deliberatelv -unfair, it was that statement in connection with loan flotation. How did tho ordinary finance of the country stand in this much-boomed sound financial position? He found that during the two years the Government was in office, down to March 31, 1914, the revenue of the country had increased by £1,240,105. During tho samo two years tlie oxponditure had increased by_ £1,485,495, representing an increase in two years of expenditure ovor and abovo tho increaseof rovonuo of £245, 390. The Minister of Finance had said that they shouldccur.r r . tail borrowing. In 1912 tho Publio Debt was £82,li)2,000. By 1914 it had grown to £91,689.000, without including tho floating debt or Treasury bills current at the present time. He chalenged the Minister to say what tho floating dobt and Treasury bills amounted to. He contended that tho people had been humbugged over the public "works votes for roads, bridges, otc., which the Government did not intend to oarry but. . Mr. A. M. MYERS (Auckland East) referred to the unexpended sums of amounts voted for public works. They showed conclusively that there was a very great difference between the promises and the results. No ono could contend that the promise to reduce borrowing was carried out. Nor, had expenditure been reduced. Tho Minister of Finance had said that the credit of New Zealand was hotter than that of any of the other colonies, and said that the fact was entirely duo to tho present Government. Figures showed that South Australia had raised a loan on as good terms as tho New Zealand Government. Tho fact that New Zealand had epent past loans on reproductive works and had introduced a sinking fund was responsible for tho good repute of New • Zealand on the London money market, and the present Government could not tako all the credit. He asked where was tho Town Planning Bill which was promised? Ho was not unmindful of tho alteration in the law that had been niade, but if that was the Government's last, word with regard to Town Planning it-show-ed thoy had a good deal to learn. No Slowing up of Works. Tho Hon. W. FRASER (Minister of Public Works) said that the Rentlemeii of the other side had laboured hard to show with what sins the Government was weightod. Their cry was all about brokon promises and so on. Ho had also listened to statements that he had stopped public works when ho came into office. This statement he absolutely/ denied. When ho tcok chargo of publio works he had taken tho precaution, in view of the straitened condition of tho finances, to cut down authorisations, but as soon as there was a good prospect of the loan being floated he increased authorisations again. In the year that he was supposed to have Gtopped publio works ho had spent £-168,972, and in- tho next year £493,616 upon, roads and bridges. Those figures were higher than any in tho provioue eix years, with tho exception of tho two years prior to tho elections. The Government had been accused of being half-hoarted in their desire to piit through the Local Grants and Subsidies BTil. But he would ask honourable members how tho Government could possibly carry through their programme of legislation in view of what had been going on right through the session—ono night, ono Bill. Any Bill of only ordinary importance occupied the House for a night, and it was obvious that all tho talk was for the sole purpose of wasting time.' Member after member got up to say ditto-to those who had preceded him. The object was too palpable, even to a casual observer, and the people of tho country knew it. With regard to the preparation of'the Statement, he had stated that it was his intention to prepare tho Statement as if thoro were no war, and his announcement had been greeted with applause from tho Opposition. They said, •'Take all tho authority you need and keep tho works going." Ho had taken authority so that in tho event of his being ab'lo to secure the money ho could go on with works that wore necessary. Now members of tho Opposition said, after ho had taken the very course thoy hud said was the proper one, that in tho circumstances his Statement revealed scalier-cash squandering proposals. Did those honourable gentlemen who criticised tho proposed loan for back-blocks roads realise that the expenditure was urgently necessary? If the war ended as they all hoped it • would-in the course, of a few months, and money waa procurable nt a reason-

able rate, lie would press the Treasurer to j go ahead with the raising of the loan. Then he would be able to givo tho sottlora who had been crippled for laoji of roads tlie access for winch they haa waited so long

Mr. W. D. S. MACDONALD (Bay of Plenty) said that none of the members of the Opposition were against tho borrowing of £3,000,000 or even £6,000,000 for public works. What they did objects to was tho kind of statements tho members of the Government had mado boforo they took offico. Absolutely no advanco had been mado in reading some of the back-blocks' districts. Thoro was no question that oven tlie Government did not know tho position they were drifting into with regard to finance. Mr.-T. K. SIDEY (Diinedin South) said that three years had passed but no attempt whatever had been made to niter tho system of grants for roads and bridges under tho Public Works Estimates. Tho Government was seeing that no alteration was to be made to damage their prospects at the coming elections. Tlie second reading was agreed to on the voices, the Minister having foregone his right of reply, and the Bill was put through Committee without amendment. The third reading wae agreed to on the voices. PUBLIC WORKS ESTIMATES. The House went into Committee on tho Public Works Estimates, and progress wae reported after tho first item had been passed without debate. The House rose at 1.25 a.m.