PARLIAMENT

Dominion, Volume 11, Issue 175, 13 April 1918, Page 8

PARLIAMENT

MONEY FOR THE WAR FINANCIAL PROBLEMS THE COMPULSION CLAUSE APPEALS AGAINST ASSESSMENTS" A JUDGE THE FINAL COURT The Legislative Council met at 2.30 p.m. yesterday. Leave of absence was granted the Hon. G. Carson cn account of illness. ADDRESS-IN-RE»L.Y, The Hon. C. A. C. HARDY moved the Address-in-Reply. He said thaitile turn of events in Europe had made it necessary that the Prime Minister and the .Minister of Finance should proceed to London to take part in the discussion of imperial problems. Tho two Ministers would represent tile Dominion worthily,, and their impending departure made it essential that Parliament should make certain financial provisions. Mr. Hardy protested against carping criticism of the Government. 'llie Ministers had done their work well. The day would come when the Minister of Defence would receive the credit of tho very excellent service he had rendered the Dominion in a time of unexampled stress and difficulty. lie regretted the abolition of the school cadets. The cadet organisation had proved of great value, and it should have been continued. The demand for a reduction in the cost of living made a popular cry; but as a matter of fact the Dominion was in a most fortunate position. The people were not feeling tlie pinch at all severely, and extravagance was rampant all er the country.

The Hon. W. EARNSHAW seconded the motion. He approved of the visit of the two heads of the Government to the Mother Country. He would have liked to see them accompanied by the Minister of Defence, wlio had given splendid service to the Dominion and the Empire and deserved the honour that the Imperial authorities would be ready to accord him. Sir James Allen had been required to do unpopular things, but he ha<l discharged his duty honestly, and there was no member of tho .Ministry or of Parliament who could have done better. He urged that New Zealand should send a 'fewthousand men, unfit for military service, to work in British munition factories and dockyards. He. considered the time had come for the conscription of labour in the Dominion, in order to release fit men • for military service. Labour would stand by the Government in this crisis. He had not been satisfied with the way the Government had set up efficiency boards without giving the workers direct representation upon them. He urged that more care should be exercised in the gazetting of names of alleged defaulters. He thought it would be a mistake to take a general election before the close of tli3 war. The motion was agreed to without further debate.

The Council adjourned at 3.27 p.m. until the ringing of the bell. The Council met at 8 p.m. and adjourned until 10 a.m. to-day. THE HOUSE The House of Representatives met at 11.30 a.m. Mr. J. M'Combs (Lyttelton) gave notice to introduce the Popular Initiative and Referendum Bill. - Mr. R. A. Wright (Wellington Suburbs) 'gave notice to introduce the Maori War Medal Bill. GOVERNMENT ANNUITIES. Dr. A. K. NEWMAN (Wellington East) asked tho Minister of Finance if lie would make arrangements to support the War Loan by selling annuities. He said several people had requested him to get information on this point. SIR JOSEPH WARD said he would consider the matter before the Bill passed through tho committee stage. The House would realise' that the large insurance companies, which dealt in annuities, were making very large contributions to the War Loan. One of these companies had subscribed a sum of £400,000, and other concerns had provided monoy 011 the same liberal scale. The Government could not fairly do anything that would prejudice the business of the insurance companies at tho present juncture. THE FINANCE BILL SECOND READING DEBATE the compulsion clause.

The debate on the second reading of the finance Bill was resumed. Mr. G. J. ANDERSON (Mataura) suggested that the amount of n. compulsory contribution to the War Loan should have a definite relation to the 'contributor's income in proportion to I the requirements of the Government, iHo expressed a hope that the party | spirit displayed earlier in the debate ! W ould not be allowed to appear again. 1 The Ministers were doing their best iin critical times, and they were entitled to the support of members. He I would like to know if the Government ihad sufficient arms and ammunition in ! New Zealand to arm the population lin case of necessity. The older men j who could not serve at the front ought Ito bo organised at home. Mr. Anderson proceeded to complain that tho medical examination of ;ecruits was not efficient. Men who were not fit were ucticptod for scrvicc. iiio Go\6rnI ment was not making adequate arrangements for the employment of returned soldiers. The men should be I offered facilities to learn farming in

a practical way under competent guidmice. Tho increase in reinforcements would make it essential to organise tile country. This work, should have been undertaken much earlier. Unfairness perpetuated. Mr. J. ANSTEY (Waitaki) said 110 was sorry to see that the measure would perpetuate some of the unfair impositions on the primary producers enacted last session. He a\as for this reason dissatisfied with tho Bill. He referred specially to the. _ taxation of companies, even co-operative companies. Ho believed in compulsory contributions to the loan, but he thought tho 'Vet should' give i.ome idea of the amounts to be required from people. He had no confidence m ihe assessment that might, be made by the Gov- , emment: In tho Board of Appeal he had 110 confidence whatever. Pie urged that before tho Government went in for a scheme of sending more men to tho front there should be a Miller organisation of industries and labour. Non-essential industries sliould bo St Mr. E( k P- (Oamaru) said he objected to what he would terni "The Indefinite Taxation Clause." He approved fullv of compelling men to contribute,.'to loans. He would go far as to sav that tho Government had' not heen 'firm enough before in this matter. But this clauso was such that it could never be enforced by any Department or any Minister. It was unfair that such arbitrary powers should bo given to any man or set of

men to impose taxation. There should' be a definite stale on which contributions could be based. Purpose of the Clause. SIR JOSEPH WARD said that the mandatory provisions asked for could nob bo a'pplied. It would ruin a lot of people. The clause was inserted to reach men who lmd not dune their duty, and to induce them to make voluntary applications for loan stock. This system would ensure that no ruin would be brought upon people who had done their duty and subscribed all they could afford. The fullest consideration would bo given to a mail called upon under these compulsory clauses— to his liabilities, his responsibilities— and no injustice would be done. He would be prepared when the Bill was in Committee to provido for another appeal from the board, or to add a Judge of the Supreme Court to the board. The Government did not want to perpetuate injustice, but unfortunately compulsion was necessary. He had always been opposed to the exemption of loan interest from income, and he had not changed his opinion. Mr. J. M'COMBS (Lvttelton) spoke of the exemption of loan interest from income tax, expressing strong disapproval of this method of raising loans. Views on the Election Proposal, Mr. C. A. WILKIiNSON (Egmont) urged the Government to organise labour in order to maintain production. Ministers would have to consider this matter if the war continued. The efforts already made had produced very small results indeed. There would be no shortage of wheat if the farmers were provided with adequate labour. The railway tariff should be simplified. The continual postponement ot the election was a mistake: The election could not be taken this year, but it could bo held in March or April next. Ho was sure the National Government would secure a very largo majority. Mr. J. C. THOMSON (Wallace) emphasised the gravity of the war news. The present was no time for party cries or captious criticism. He did not approve of the free of income tax provision of the War Loau prosjiectus. The Dominion must do its duty in the matter of reinforcements, but there' was a point beyond which tho Dominion could not go without danger. The time was in sight when America would have plenty of trained men. Here in New Zealand land was going out of cultivation because reservists had been taken into the Forces. Mr. A. HARRIS (Waitemata) said that ho could not oppose the clause to lengthen the life of Parliament. _It would b'e wickfed to hold an election while 100,000 men were out of the country, and while the fate of the Empire was in the balance. Personally he would welcome an opportunity to face his own constituents as a candidate.

An Avcnuo of Waste, Mr. L. .11. JSI'JT _ (Christchurch Njortli) deprecated tho discussion of petty points. He was glad the Government intended to take steps to prevent the raisins of rates of interest. _ Turning to the liquor question, lie said that the official .figures showed a big increase in the importations of alcoholic liquor in to the war period. Tho postponement of the licensing poll meant that the liquor trade had received a two-years' reprieve. He hoped tlie Government would see the justice of amending the law to provide that in the event of the people i-arrying Na-

tional Prohibition at the next poll, tho trade would have two years' notice instead of the four years at present specified. The "Frea of Income Tax" Clause. Mr. R- M'CALLUM (Wairau) asked if the Government could not evolve a scheme of conscripting money as well as men. He did not mean the confiscation of property. But surely it would be practicable for tho Government, through the Treasury officers, to determine what sum of money it would he fair for each individual to lend for war purposes. There would be difficulties to be overcome, but it would not be harder to conscript the money than to conscript men. Under a compulsory system the Government could organise the lenders and get away from the "free of income tax" provision, which was only justified by the present necessity for attracting investments. He would not object to the present system being maintained as far as the present loan was concerned. The £48,000,000 of War Loan already undertaken could be left on tho voluntary basis. But if New Zealand wanted another £48,000,000 a different system should be adopted. The Government, by exempting huge sums of invested capital from income tax, was killing the goose that laid the golden egg. Sir Joseph Ward: Why have Canada and the United States followed, our system ? Canada paid oj per cent, free of income tax.

Mr. M'Callum said New Zealand was not a rich country, and could not be compared with other lands. Too much of the Dominion's limited capital was being exempted from taxation.

Mr. R. FLETCHER (Wellington Central) said that he was disappointed that the Government had done nothing to give effect to the recommendations of the Cost of Living Committee. In particular the Government might havs procured trawlers and organised the fishing industry in order to give cheap food to poorer people. He thought that the Government might db more for the returned sick soldiers, especially those suffering from tuberculosis. Mr. R. A. WRIGHT (Wellington Suburbs) said that he would suggest to the Ministers that tliey make inquiries about the rejection of some of our men in Britain after their training was complete. An ' eye-witness had told him that out of two recent reinforcements 600 men had been rejected, i but this was perhaps an exaggeration. 'They might inquire whether the physical standard required in Britain was higher than that fixed here. Referring to the Bill he said that no member of tiie House would object to the proposal to compcl subscriptions to the loan, but the clause as it was in the Bill

appeared to need certain safeguards. One of the suggestions made by the Minister —to put a Supreme Court Judge on the board —had seemed to be a particularly good one. It would give the -public complete confidence in the judgment of the board. New Ministers Wantod. Dr. THACKER (Christchuich East) expressed disapproval of the National Government. He said he saw no reason why Ministers should be retained in oHice merely because they were in oilice. Mr. Asquith . had been put aside. : So had Admiral Jellicoe, General Joflxo, and Mr. Winston Churchill. Why, then,'should it bo considered necessary in New Zealand to retain Min-, isters who had proved highly unsatisfactory? He returned to his well-worn

topic of local camps, and criticised tho policy of centralisation adopted and pursued continuously by the Government. It was most unfair to reduce

payments already authorised by the Financial Assistance Board on account of tile increased separation allowance. Tho policy of this board was niggardly and moan. The Government had said last year that 110 Second Division reeervists would:leave New Zealand before the question of allowances had been further considered by Parliament, but this promise was not being redeemed. About Private Webb. Mr. J. PAYNIS (Grey Lynn) said ho wanted the House to know that intlie early days of the war Mr. P. 0. Webb had wished to enlist. But he had to consult the. miners who had financed his election campaign, and his support-

ers had been indignant at the idea of his joining tko Forces. They said they had sent Jiim to Parliament to protect miners' intercuts and luey expected him to stay there. Mr.'Webb was not a slacker or a shirker. He was bowing to the wishes of his constituents in asking for exemption. Other men had been exempted oil much slighter grounds, and the electors of Grey had been entitled to ask that a man who was the sole practical representative of an important industry should be allowed to stay in Parliament. Mr. Webb had resigned his seat after being balloted and had been re-elected. The Government lmd chosen to flaunt tho wishes of the electors. Mr. Payne added that lie spoke as a man who iiad four brothers and a sister serving in the Forces. ,It was at least as desirable to exempt the representative of the miners as it was to exempt tho last man on a farm or the head of a financial concern. He thought that as a matter of common honesty the general election should be held as soon as possible. Mr. Payne charged the Munitions Department with allowing itself to be deceived by dishonest contractors, lie said faulty hoots had- been accepted.

The Hon. A. M. Myers: They are the best boots in tlie whole campaign.

Mr. Payne: "They are now." Tho Department had been deceived for a long time by glucose-loaded leather. Tho Minister and the officers of his Department were not experts. Mr. Myers: I admit that, but I employ experts. Mr. Payne asked for a strict audit of war expenditure.

Mr. I'. 15. GLOVER (Auckland Central) protested against the exemption ot reservists merely beeausc they were rich or represented big financial inter-' ests. There was 110 man who could not be replaced. Air. G. J. PARR (Eden) said he did not leel disposed to discuss petty' local affairs at a moment when tho fate of the Empire was being decided on the battlefields of Flanders. Ho did not approve of locking-up capital by means of a "free from income tax" provision. The argument that it was necessary to attract investors was not sound, since the Government had powers of compulsion. lie knew that wealthy companies had already taken advantage of the provision. Big investors were getr ting rid of gilt-edged securities in order to buy U. per cent. War Bonds. Sir Joseph Ward: How do you ac- 1 count for the fact that bonds have been sold oelow par? Mr. Parr: 1 am not aware that is the case.

Sir Joseph Ward: It is the case. So many have been sold that I am asking the House not to allow that to count as an investment in the War Loan.

111 - . Parr said that the United States had abandoned the "free of income tax" provision. He did not see how the provision could be a good thing for the country. It would make difficulties iu the future. . The -new compulsory clause was not a sound one. It gave Public Servants the right to impose money burdens on citizens.' Taxpayers could not discover from the clause as drafted what they were expected to do. He objected to financial assistance being withdrawn from the defendants of soldiers because the separation allowances had been increased. This was in effect a breach of agreement. Mr. .J. CRAIG IE (Timarn) said the 'ivar situation was too serious t'or criticism of the Government on minor points. Mr. Massey: Hear, hear! Mr. Craigie approved of the visit of ■Mr. Massey and Sir Joseph Ward to London. There had been much clamour in the country for a general election, but people changed their minds on this point, when they considered the positiun. If an election was held now the National Government inevitably would be retained in oJlice since there was no alternative. The war was involving New Zealand in enormous expenditure. He iiad stated last year that he was in favour of the conscription of wealth, as the natural corollary to the conscription of men.' A levy of o per cent, oil the capital value of New Zealand would provide about £30,000,001), which could be invested to provide a permanent revenue for pensions. He still held that a scheme of this kind was desirable, and ho had been pleased to find that he had some of the best minds of the Mother Country with him. He objected to the free-of-income-tax provision of the war prospectus, It was not fair or reasonable that men who had invested ac-

cumulated wealth in war bonds should be relieved from future taxation. The compulsory clause siiould make it unnecessary to offer special inducements to the investors to lend their money. The Government had not hesitated to conscript men, and it should not ! fear to conscript money. A Matter of Proportion. Mr. T. A. H. FIELD (Nelson) spoke first on the amendment of censure 011 the Defence Department which had been proposed. He had voted against the motion of censure, although he hud often criticised the Defence administration. It seemed to him that by voting for the motion or amendment he would have been losing the proportion of things. The Defence Department had shown genius in doing the wrong thing in the wrong way, but he believed that the desire of the Government and the Department had al- ' ways been to do the right At this time of crisis the desire of the Government had been manifest, and it did not seem proper to call their conduct 111 question. He had always been opposed to the postponement of the elections, and he thought the elections should be held as soon after December next as possible —say, in March or April. If he had ail opportunity to vote for this next session he would do so. With regard to the calling up of Second Division men, 110 said that many of these were occupying responsible business positions, and the summoning of thern a month earlier would involve hardship in some cases. He suggested that the group commanders should be give a discretionary power to extend the period of notice to these men for another month. The group commanders would know all the circumstances and would be able to discriminate between the deserving and the undeserving cases. Mr. C. J. TALBOT ('1 emuka) said

lie' was strongly opposed to tlio ho dill cr of nn election m this war Period. jlr \ WALKER (Dunedm North) supported Mr. Payne in hi* defence of Mr AVobb, stating that Mr. Webb was not a shirker, but had noted from conscientious motives. He was going to test the feeling of the. House hy moving for leave of absence for Mr. Webb. Sir Joseph Ward Replies, Sill JOSEPH WARD, replying, spoke first of the criticism oil the ''freedom-from-income-tax" inducement to loan investors. His argument was that if one per cent, more interest was allowed and income tax charged upon the total the return of revenue would not be anything like equal to the in-

creased interest the country would have to pay. He said that in Committee on tlie Bill he would make provision for a. Supreme Court Judgo being the final court of appeal against tho assessment of the Department as to what any person's contribution to the loan should be. There was 110 reason why there should not be a minimum amount stated to give an indication of what men in different circumstances should be required to pay. His own idea was that tho maximum should not be more than six times the amount of laud and income tax payable. But against those who were shirking their responsibilities in regard to the War Loan, he would not hesitate for a

N j moment to put the compulsory clauHS into operation. In Committee Ou th§ ; Bill lie would ask the Jlouse to amend • ■ the compulsory clause to Is lve power ' to the Tax Commissioner to take proceedings if necessary for the recovery , of the amount any person might bo required- to contribute. -j The second rending was agreed to on the voices. The Bill was comni't- -• ted and the first clause passed. 'The House rose at 1.30 a.m. ,•