FINANCIAL PINCH

Dominion, Volume 15, Issue 14, 11 October 1921, Page 6

FINANCIAL PINCH

HATE RETRENCHMENT URGED BY FARMERS DRASTIC CUT IMPERATIVE . TO REDUCE “CRUSHING TAXAHON” Ths farmers consider the financial situation to be very serious, and claim that unless a very great change takes place many producers will be unable to pay land and Income tax. The whole position _ was considered at yesterday’s meeting of the Dominion executive of the New Zealand Farmers’ Union, when a resolution was, passed calling on the Government to make drastic retrenchment in departmental expenditure, and urging that the Civil Service be asked toy share in the general sacrifice. It was asserted that the country was on the verge of a catastrophe, which only prompt and drastic action could avert. A point which was stressed was that as a prelude to any reduction in taxation, a big cut would have to be made in all public expenditure. Captain Colbeck broached the subject ’ by moving that the order paper be suspended, in view of the necessity for taking'drastic steps to induce the Government to go in for extreme retrenchment. A critical stage had, he said, been, reached in the affairs of the country. Receipts from Customs had fallen by about half, and not 50 per cent, of last year’s income tax would be collected. It was essential that the producers of the Dominion should take immediate steps to see that some reform was in- ' stituted, in orddr to put the affairs of the country on a better basis. Everybody seemed to think that "everything in the garden was lovely,” but he was assured that many sheepfarmers were unable to pay interest—which was being capitalised—and they would certainly not bo able to pay income tax. Times were exceedingly difficult, and it behoved the fanners to insist on the Government going in for retrenchment. Mr. J. A. Macpherson (Oamaru) seconded the mntion, which was carried without INCREASED TAXATION. Captain Colbeck went on to deal with the question of taxation and the financial outlook generally. Taxation per head of the population of the Dominion had, he said, risen from £5 10s. Id. in 1914 to £l9 17s. 3d. in 1921. Taking five as an average family, it would be seen that the taxation, per family had reached the astounding sum of £99 ss. lOd. The total taxation in 1913-14 was £5.918,000, whereas last year it was £24,208,156. As to income tax, this had risen during the same period from £554,000 to £8,248,945. In proceeding to refer to the effect of this excessive taxation, Captain Colbeck pointed out that, unlike the farmers, companies were in a position to pass it on to the public. The companies hod been lending their surplus cash to farmers on mortgage. Matters had come to such a pass, however, that if a company wanted a net return of 6J per cent. it - could not lend mouev to farmers on mortgage under at least 12J per /cent. When the fnorntorinm expired, where were the farmers going to get the necessary money to renew their mortgages? It was not possible to expect that the farming industry wodld be able to pay 12J per cent, interest. The situation was plain, ly serious. "ON THE VERGE.” Touching upon the need for retrenchment, Captain Colbeck said that the railways had cost £37,500,000, and for the first five months of this year they did not pay working expenses. The Post and Telegraph Department was practically in the same position. It was only just paying working expenses. The Railway Department’s idea of retrenchment was to cut down services; but at the same time they were keeping on the same staff, the same permanent way, and all the overhead expenses. The only difference was that the Department was saving a little bit on coal. This was an absurd procedure, and was tiot the right way to retrench. Railing something being done to meet the situation, the country would 'be on the verge of almost a catastrophe. Personally, he thought the Railway Department’s idea was the way to lose more money. As showing what was being done in other countries, ho said that in South Africa General Smuts had asked Civil servants to share in the general sacrifice. They must insist that the Government here should do as General Smuts had done. Not only must the Civil Service share in the sacrifice, but everyone else. Only one or two branches of the farming industry were paying anything at all, but the running costs remained the same. Captain Colbeck emphasised that the farmers woro absolutely "up against it,” and that it was up to the Government to retrench. Sheep farmers were getting nothing, and beef farmers were even worse off. Mr. Livingston: What is the cause? Captain Colbeck: The cause is an overgrown Civil Service, and when you consider what wo are getting for our money. It is an overpaid Civil Service. Three mon are do,ing one man’s job. COST OF CIVIL SERVICE. The president (Mr. W. J. Jolson) quoted extracts from a table prepared by the Taxpayers’ Association, showing the increase that had taken place in the expenditure of various Government Departments during the year 1920-21 (estimated), compared with 1919-20. In tho Treasury tho staff had increased by 12 per cent, and the expenditure by 91 per cent.; in the Land ami Income Tax Department the staff had increased by 5 per cent, and the expenditure by 5(1 per cent.; while the increases in the Pensions Department were 27 per cent, and 48 per. cent, respectively. In tho case of tho Department of Industries and Commerce—a ridiculous Department, which had done nothing to justify itself —tho staff h.'id increased by 69 per cent, and the expenditure by 182 per cent. In fact, in every case there was an increase in expenditure, whether the Depaitments had decreased their staffs or not. Tho figures quoted had been published in most of the newspapers of the Dominion, and it had never been suggested by any Government Department that they were inaccurate. He was therefore bound to conclude that they represented what was unfortunately tho true position. . Captain Colbeck said that, the Imperial Government had set a load which the Now Zealand Government might very well follow. One of the British Ministers of the Crown had stated in the House of Commons that, the Government w.as going to entirely change tho system Oi levying taxation. To this end they were going to trv to discover how much the country could pay, and cut down the State’s expenditure to that amount. Every Government Department at Dome had at the same time been ordered to cut down its expenditure by not less than 20 per cent. government would welcome ' PRESSURE. “Surely,” remarked Captain Colbeck, "we in Now Zealand could cut down our overhead charges by the same minimum J iaaow that it is moat unpopular to cut

down salaries and staffs, but something must be done. I believe myself that the Government would welcome pressure in order to force their hands. Tn 1914 our total revenue was 12 millions; now we get 34 millions. Do we get better service?” Mr. Leadley: Worse, in some cases. Captain Colbeck: “It is costing nearly three times as much. Wo can’t avoid paying interest on the money we borrowed and interest on pensions; and that amounts to .£12,000,000. but this country is going to rush into bankruptcy unless tho present rate of expenditure is reduced. . . . Tho companies have not got the money to pay the taxation demanded, and if the Government forces them a great number of them will go into bankruptcy.” Another point made by Captain Colbeck was that tho producers should certainly insist on the Government sharing in the general sacrifice. “SHOULD APPLY TO ALL INDUSTRIES.” Mr. ,1. Livingston (Dannevirke): "It seems to mo that we are striking straight at the Civil Service. They were the last body to have a rise, and they worked well during the war. We should clean our own house first with regard to our labour. Freezing works, coal miners, and wharf labourers are all receiving far too high rates of pay. We are in a sense just a little bit unfair." Mr. Livingston added that “sacking Civ.l servants” would do no good, as other work would have to be found for them. What was wanted was a out in the salary list, qpd this should be made to apply to every industry* in the Dominion as’ well. (Hear, hear.) > Mr. R. D. Duxfield (Auckland): Wo are not in a position to do anything, because the Arbitration Court has fixed tho wages. The farmer is up against it. Whether the Civil servants or others like it or not, wo are doing what we consider is in the interests of best business principles. Tho position has got to bo faced. I, for one, can’t understand the optimism of the Prime Minister. I would like tho Prime Minister to take a mob of cattle to the sale and then see whether he would be optimistic. To go to a sale to-day is more like going to a tangi. With regard to the Civil Service, that is the only service tho Government control. We are not advocating sacking tho -men. There are two alternatives: either bring down wages or reduce staffs.' The position <Tf many business firms to-day is that they must reduce staffs because the Arbitration Court says that they must pay a certain wage. The better way is to reduce wages, rather than staffs. The farmer has, despite his losses, still got to pay the same taxation. Last week I took some choice Shorthorn yearling bulls to the sale, and all I got was £1 a head. If that is not farming at a loss, what is? Mr. .1. A. Macpherson (Oamaru) said that the producers had no particular “set” on the Public Service, nor did they desire to injure its members in anyway. He recognised that the public servants of the Dominion had stood loyally by the country, and had held off longer for an increase in emolument than any other section of the commiuiity. The Farmers’ Union should impress upon the Government the necessity for reviewing the Arbitration Court anil its practice of making awards flxrag salaries for long periods. Retrenchment was necessary, but tho producers did not wish to differentiate between any section of the community, whether Civil servants or not. but being helpless they must call on the Government to help them, and in doing so *eip itself. “WAGES MUST COME DOWN.” Mr. R. Dunn (Aurca) said that to re-' duce tho cost of living they must get at the cost of production, and if they were going to bring down the wages of Civil servants alone, they would not decrease the cost of production, as they were nonproducers. Wages must come down generally throughout tho country. Tho Government would have to be approached, and the whole position put before, the Court of Arbitration. Awards had been made covering Jong periods, and they could not break these contracts. A delegate interjected that he thought ihat under tho War Legislation the Court had power to review wages. Mr. Dunn maintained that the Government should give the country a lead by starting in with a reduction of the salaries of the Governor-General, the Prime Minister, and the whole of the members of Parliament. THE LIMIT REACHED. Mr. W. W. Mulholland (Dnrfield) said that to some extent the over-staffing of the Public Service had been caused by tho re-engagement of returned soldiers, whoso positions had been left open for them. Meanwhile other men had been engaged to carry on during their , absence. While stating that tho producers could not very well ask for the dismissal of these returned men, Mr. Mulholland said that the Government should be asked to go into the whole position very carefully, and to reduce its stalls to tho minimum necessary to carry on the business of the country effectively. Some of the. Civil servants who were unnecessary were drawing very high salaries. and probably if they were retrenched and given a pick and shovel at .£1 per day they would not cost the country so much ns at present. In the reduction of wages generally the employers had been able to pass it on. They now found that tho limit of passing on had been reached, and they were asking for ft higher tariff to save them from the necessity of reducing prices.

MOTION CARRIED. Replying, Captain Colbeck said that thcro was no question but that the Arbitration Court situation would have to be dealt with. He then moved the following motion: — That tho executive of the New Zealand Farmers’ Union urge that owing to the difficult times through which wo are passing, it is essential that taxation should 'bo reduced, and as this cannot bo done without reducing the cost of administration, drastic retrenchment he made in Departmental expenditure, and that the Civil Service he asked to share, the general sacrifice. Air. Leadley thought that the motion should be confined to a protest against the crushing burden of excessive taxation. It was purely- the province of tho Government to decide how this should be accomplished. He declared that at the present time thcro was no incentive to increased production and increased wealth of the country. Mr. J. 11. Joll (Hastings) did not think the motion went far enough. If the Government were asked to reduce the salaries of the highest-paid servants of the people, it could not then be said that they had not started at the right end. Tho position to-day was that, producers were losing 50 per cent, on all produce except butter. The president: And that is a very moderate estimate. SITUATION DESPERATE, The president also said that it was time that thefe was a decided scare in the country. He went on to state that during his recent tour of the South Island lio found the situation desperate with regard to a very large number of producers. Tho country did not realise the seriousness of tho position, nor did the Government. Not only could many of tho producers not pay their interest, but this applied to their taxes as well. AVas tho Government going to put itself into the position of confiscating their land if they could not pay? This was. ho asserted, the position of 90 per cent, of the producers. Concluding, he asked: “What is the use of asking for a reduction in taxation if the expenditure is not reduced? To* my mind, tho motion cannot lie too strongly worded." The resolution was carried unanimously, -and arrangements were made for approaching the Government on tho subject to-day by way of deputation.