PARLIAMENT

Dominion, Volume 9, Issue 2824, 15 July 1916, Page 10

PARLIAMENT

FINANCE BILL FINAL STAGES 'IN THE HOUSE CONCERNING WAR LOANS The House of Representatives met at 2,50 p.m. ■" Leave of absence until the end of July was granted to Mr. J. H. Esfott, oil account of'serious illness. Two days' leave was granted to Mr. J* V. Brown. THE FINANCE BILL. THROUGH COMMITTEE. The consideration of the Finance Bill in Committee was continued after The Dominion went to press yesterday insSome discussion took place regarding Clause :!i, which gives the Government power to purchase land by the issue of debentures. On the motion of the Minister' of l'inance an amendment was made to the effect that the rate Of interest paid should be not less than per cent, and not more than 5 per cent. Sir Joseph A Ward stated that it'was intended to pay Ti per cent., but that tho amendment was framed so as not to conflict with the existing law. Mr. G. V. Pearce moved an amendment to give persons from whom land is purchased the option of talcing debentures as payment instead of it being compulsory for tliem to do so. This was rejected by 42 to 2 —Messrs. Pearce and Koaworthy alone supporting the amendment- r.. An amendment moved by Sir .Tosenh Ward limiting the operation of tlSs clause to twelve months after the end <:f the war was carried by 40 to 2. the noes being Messrs. M'Combs and Ell. ' During tlie discussion on the "social insurance" nart nf the Bill, Mr. C. J. Talbot urged that the maternity bonu3 to wives of . members of friendly societies should be raised from <£4 to .£6. Sir .Tosenh Ward 6aid that it was no<. possible to do this. The Bill passed its Committee siago nt 2.12 a.m. The Bill was reported and the amendments agreed to, the third readin? being fixed for next day. the House then rose. thlrd reading debate. A LOCAL WAR LOAN.

SIR JOSEPH WARD- (Minister or Finance) .moved the third reading or the Finance Bill yesterday afternoon. He gave figures $to show the iiMncial position of tho country, and said that these iignres revealed a -highly satisfactory state of affairs. No 0116 could say what the surolus of ordinary revenue would be at the end of the year, but it could not possibly be as great as it was last year. At the end of tho year 110 hoped r.o have our reserve invested in liquid pecurities in London up to six and a Imlf millions sterling. If bv timt tim© the war - was over he hoped that the bulk of that money would go towards reduction of our war loans. (Hear, hear.) Then he-hoped by providing for an increased sinking fund to arrange for the repayment of the remaining war loans in a reduced period Of y&fs. Tins would put ths Dominion in a strong financial position, enabling it to deal with the many problems that must arißft after the war. -The. country had enorniQiis assets over and above its debtedness?, making it one of the sftiest countries in the world from the point of view of the investor. lie referred, also, to the proposal .v\ the Bill for the purchase of land by (he issu? of debentures at 5 per cent. This had been inserted advisedly after mature consideration to theet unusual conditions now existing. The war loans amounted to a formidable, sum for - a younif. country like this, and it would not bo easy, as it had beoii inpeacri times, to get loans for the purchase-of land, which iiii&ht he need?d for the settlement of soldiers after the war.

The War Lean. There would be no .local/loan for-land purchase or lor iiublic works. Part «jf the war loan would, be offered for subscription locally, and a prospectus was being prepared. He would not yet declare what the amount. to -be raised locally would be. but it would not be possible to obtain tta whole amount here without doing- injury to traders, business people, and tanner-. 1 li> wi:r loan intero.it, which would be at the rate of 4} per cent., would be free of income tax. When the last loan was Issued in New Zealand inducements were offered to small investors wishing to invest from .Co upwards, but only 120 applications from such people were " received. He believed that there was no demand ill this country for an outlet for small investments, on which the return at a rate of 41 per cent, is rot considerable. He did not think it vou.ct he advisable to oiler Hie hew loan m the same Way, for it involved a great, deal of labour, and trouble, and Expense on everybody concerned. .Replying to a question, he said (hat die believed it would bo nossib'.o for the Government to make effective the proposals to nrc-vent nionev from lieing sent out rf Xew Zealand for investment.

Loan Interest and Inconis Tax. Mr, T..jr. VIT.FQiID (ttutt) said tlwt it would be cheaper to fix the rate of interest for debentures at 6 per cent-, and collect income tax from the holders, than to pay -il P p r cent, and exempt tiie holder from income tax. As the Minister Hid said that practically the only man who would buy debentures was the wealthy man, the argument against exemption from the payment vf Income t;>x was considerably streuth.ehed Ho would have 110 compunction in taking the money cf tho'fi who youhl .lot invest it" 111 war. debentures. If the war debentures were freed from income tax, graduated, tax. and excess profits tax, who was goinjt to pay the war. taxation? He also criticised the proposal to pay the man whose land was taken five per cent., whilst pr'y i~ per cent was to !>:• paid «n the war debentures. Ail the Bills wc passed seemed to lie in favour of the wealthy man. * Mr. U. M'CATJ.IUI .OYniran) snul that I ho Minister of "Finance had handled tho qupstuin of war profits taxation, and the !>ill qenrwllv, in a masterly way. criticised the partial abandonment of tho graduation priswipln in ih* levying of tho extra income tax. TTo thought that £2,000.000 instead of «Cl, should have (been allocated for public works. Taxation. Questions. Mr. C. A. WIIiKINSOX ffiginuut) s;;id that tlie Minister of Financii had mei: the criticisms of lnembers in a very reasonable spirit, and the Bill had been tjroalh* improved by the amendment*. Ho did not aci'c-o with Mi'- "\Vilforcl regarding tho question of the exemption of interest from debentures from income tax. If they got the, money at 41 per cent, tl was alwiit «* cheap as getting it at :• per cent, with tne payment of income tax. If the money were largely obtaiivd from smalt investors, who did not pa- graduated income tax tlier would be 'rea—•• getting it at less tnan five per cent: . He thought that the basis of the graduated land tax be'revised, For instance, he thought that the present ,Csofio limit should ba raised to filfiono and that above that sum tho tax should be made considerably higher. Otherwise the object of tho tax—tho subdivision of large estates-would apt bo attained to any great degree. 1 lie remission of the mortgage tax would not benefit the borrowers; it was simply a sift to the lenders. He strongly urged the Government to encourage tho investment. of small sums in the war loan, because it was of the utmost importance that the people should be induced to save their money. He was Strongly opno=ed to the scheme of tho member tor fever T.vnn to attach for war purposes the'balances now lying at call m the banks. When the war bonus came to bo paid to Civil Servants, he hoped tlinl. the hulk of it would l>o puid to those in receipt of low salaries. In this connection he mado a strong plea for the illnaid • country schoolmaster, striving to keep a family on -€120 a yoar. Mr. J. CRAIGIE (Tiraani) deprecatod

the talk about cases of hardship in tho incidence of taxntiou, Noue of the cases wero nearly so hard as th«'so of hundreds of other men who had given up good incomes to take tlio soldier's pittanco and -to soito in tho rank*. Ho agreed with tho member for Egmont that tho minimum for -graduated land 1 tax ; should bo reduced, but that the rate and the gradation of tho tax should bo made so heavy as to compel tho subdivision of all big estates. He commended the Finance Minister on his dischargo of a most difficult task. After the war ho hoped that wo should havo a revised /system of taxation, and that the Government ivould \ako over tho Bank of New Zealand and run it, for tho benefit .of tho people of •Now Zealand.

The Fluidity of Money. Dr. A. If.- NUWMA'N (Wellington East) expressed' satisfaction with tho manner in which tho Minister had handled tho Bill before tho House._ He said, however, that he did not believe it would be,possible to regulato' tlio ratos of interest. Discounts would bo given, in all kinds of ways. The only way to have cheap money was to have plenty of'money, and if there was, a scarcity of money the price of money must be high. In tho same way it would be difficult or impossible to prevent tho investment of New Zealand money abroad. New Zealand ■ commercial concerns to whom largo sums of money were due in London for produce exported from New Zealand were leaving the money in London. Some wero piling up big amounts there, the reason was that they could get ready investment in London for the money in Treasury bills at 5 per cent. A gcod deal of -~our money, too, was boing. dragged away for tho Australian war loans. This could not be prevented by tho Minister 'of however ingenious he might be. Generally ha approved of-the Bill as likely distribute tho burden of fax-' atioir with fairness, and to placo it upon those best able to bear it Mr. J. A. YOUNG .(Waikato), argued against the exemption from income tax of the interest on war loan investments. Mr. A. WALKER; (Dnnedin North) expressed dissatisfaction with , the Government's policy in- omitting to regulate the prices of commodities. . . Mr. J. PAYNE- (Grey Lynn), spoke in favour of an increased graduated income tax on big; incomes. A Much Improved Bill. Mr. v .K. A, WRIGHT /Wellington South) 'congratulated, the Finance Minister on. the conciliatory way he had met tho criticisms of. the Bill, and on his having introduced amendments removing many of tho features to which members had objected. believed that., the Bill would 'give general satisfaction,' and that it would provo to bo equitable in working. agreed with the Finance Minister that men with, small sums to . invest would not irish to lock At'- up for twelro years in' a war loan.' Tlhey. would prefer to put it in tlio Tost Offico Savings Bank at a ltuwer rate of intoresrt. . Ho hoped that measures!would bo taken to prevent; people from sending' capital abroad for investment. But ho believed that the patriotio people of NeV Zealand would not bo anxious to send money abroad to get another: half per. cent, or to of ■ Interest. Mr. J. M'COMBS (Lyttelton) said ho could discover.no great underlying principles jii' tho■ Bill. His first.objection to the Government's policy wasthjat. tho exploiters had first been allowed to make the war profits. Now the Government proposed to take back 45 peiY cent, of them. Ho condemned the Government for having' failed to ileal with tho cost of fifing. ; Taxation Questions. Mr. G. V. PEARCE (Batea) /aid that he wished to compliment-tlio tinanoo Minister on the amendments he had introduced in the Bill. He- was opposed to tho establishing of tho principle that a man's land ooukl : bo taken, compulsorily and paid for in dobentures. '/'his was a very dangerous power to give -to. any Government. It was not fair that land should l>e taken and paid for. in debentures, which might not ba worth their face value. It was true that this power was to bo given -for the period of the war only, but ! when ' the proposal ,was first made it was to i'or the whole term of tho war. What would be said if it were proposed that the Government should: commandeer • khaki from manufacturers, and pay for it iu debentures? Has.opinion :was that, the proposal to take land, in,..this way, would tend to drive peoplo off the land, lie 'Was.still of opinion that-the Government tshould havo taxed." luxuries— amusements, beer, and motor-cars. Last year ho had urged that tho beer duty should' be raised from 3d. to Gd. per gallon. Tli© Government levied a duty under a new system estimated to increase the duty by. lid. per gallon. This estimate had proved not to be correct. The inciioase was not nearly so much. And the import duty on American motor-cars could easily have been raised to stop tlio present extravagant, expenditure on these vehicles. Ho was not in favour of tho reduction of. the incomo tax exemption to .£l5O, but ho did "not accept the Finanoo Minister's statement that only «E97,000 could bo obtained by suoh a reduction. - Ho believed, the amount to bo' obtained would be nearer a million. It might be' necessary yet' to reduce the exemption limit, but ho would not bo in favour of a" reduction below ,£2OO. He was not in favour of reduotion.' alt all for tho present., Ho mentioned' tho 'matter to show that more revenue could be obtained if necessary in this way.' He declared that he had heard oh good authority that -ji lino of steamers, had. been chartered to bring 1000 American motorcars a month to Australia and New Zealand. ' ■

Mr. P. C. WEBB (Gray Lynn) spoke strongly against the Government, for lusglecting tihe cost of living question,, aud failing to fix prices for certain commodities in Now Zealand. : Sir Jbseph Ward: When does the lion, gentleman propose to discuss the Bill? Air. Wsbb: When the lion, gentleman gives '.us sufficient timo to discuss the' cost of living. (Laughter.) "Ignorant Arrogance," Mr. L'. M. ISITT (Christchurch North) devoted a few? minutoa to entering a vigorous protest against the "ignorant arrogance" that, tlicy had to listen to night after night from onb or two Members of •the Labour B'arty.- Becauso they would not identify •themselves with men who gloried in everything German and discredited everything British? and talked a3 though Groat Britain, were the,most unhappy couiitry that any man could, live in , ' Mr. M'COMEIS rose to a point of order, but Mr. Isitt &ai<l this reference was to men outside th>a House. Ho went on to say that because members of tlio House would not identify themselves 1 with these men they were held up night after night as men who hied ceased to have tho interests of the people at heart. They had the member for Grey patronising the member for Hittt and other members. "When I told tlflß"member for Grey,"'ho said, "that ho Was talking unadulterated blether ho was very irate. I was referring not to his arguments, but to his blatant arrog'anco.' I say it is time that men who ■tire just us earnest in championing the'interests of tho people and in .improving - the economic condition of tho masses should protest. ... They havo read a few books, but altogether fail to realiso that tliey are suffering from mental dyspepsia and distorted vision." Mr. A. 11. HINiDMARSH (Wellington South) defended tfco indignation of the member for Grey because of tho delny of tho Government producing, the Rent Bill to relieve Eonely distressed l people in Wellington. The Minister's Reply. SIR JOSEPH. WARD, in reply, said that it must bo adimitted that to begin with the remission (of tho mortgage tax. ivould bo a concession to mortgagees, but when a concession wias mado this sort of argument could always be raised.' Until such time as its true elfeot can bo observed the remission of tho mortgage tax would seem to favosar the Later, when new mortgage contracts were being mado, its effect would bo to help the poor, struggling mortgagor,- and ho that the abolition of the tax would be a good thing. He referred to the"arguments against tlio exemption from income lax of tho interest on war loan stock. He recognised that there was weight in the arguments,- but there woro weighty considerations to the contrary. The first essential was to get the money we needed, and, if there were no of taxation there would bo difficulty or uncertainty about getting llio money. Nor did ha almit that this remission offered better iirms to tho rich big investor .than to thi poor small iu-

vestor. Tho Labour Government in Australia had;made a liko concession. Ro ferring to 'tho question oi reducing the income tax exemption to .£l5O, lio said that tho statement of tho member for' Patea that we could raise a million by iliis means was incorroct, and ho insisted that tho amount to be collected toiii the 130,000 new taxpayers to be Irawn 'upon would be about ,£97,000. In iny case, ho "would never contemplate raising a million from people receiving ncomes between .£l5O arid .£3OO. Mr. Poarce: I said I was opposed to it. Sir Joseph AVard said it was a very •ejrcttable tiling that a suggestion should xs made that the amendment of tlio dauso in the,' Bill relating to tlio pur•liaso of land with debentures was in tho nterc-st of largo landowners, to tho detrinent of soldiers' needing land. This tatemont, which was quite. incorrect, lad fen made by tlio member for Lytelton, and member for Grey. Tho Bill was read a third timo on tho •oices, and passed, Tlio House adjourned at : 11 o'clock till .30 p.m. on Tuesday.