'SOOTHING SYRUP'

Evening Post, Volume CXXII, Issue 33, 7 August 1936, Page 5

'SOOTHING SYRUP'

LABOUR'S TOiNIC

MR. COATES'S CRITICISM

Mr, Coates said that ever since the present Government assumed office it had been delivering almost daily doses of 'soothing syrup to the people. There was an attempt to lull people into a ■ sense of security^: Some form of political anaesthetic liad:; been devised to deaden the pain caused, by the application, of the knife of Socialism. The following were some of the terms the peoplehad got used to: "We want your co-operation"; "We are builders, not wreckers"; "We are going upwards and onwards with the brakes . off"; "We want to serve all sections of the community"; "There is no need to fear"; "We are working on common-sense principles." .■ ; , Those were the hopeful messages that had been produced ad inflnitum. They appeared day by day and week by week. The country should look at what had been done."The' number of unemployed had increased and the rates had been raised.- He had been informed that the number of sustenance was seven out of ten in Auckland. Railway projects had been resumed which in his opinion were of a doubtful character. It was doubtful whether operation costs could be paid apart altogether from.;interest on capital ex-, penditure. Private enterprise had been restricted in a number of important directions. The Government intention appeared to be reckless expenditure. It believed there, was some form of social credit to arise to get it out of its difficulties. He believed that the Government - dicl not "care- whether industry was ruined or not. (Murmurs ot, dissent from : the Government benches.) A burden had been imposed on industry which made it impossible for them to maintain. He,.with many others,; believed that industry was the' mainstay .of-employment.^ Tneipioducfl. of the farmers had been commandeered at a price that did not bear the slightest relation to the law ol! . supply and demand." Rising costs were ignored. The man who produced for the markets of-the 'world was' penalised" and before long many would be forced out of business altogether. The Government had that.;costs would not rise arid its reply to such charges was that a.Magistrate would be appointed to control, rising costs. A Government member: Some job! EXPENSE INCREASING. Mr/: Coates said that productive and national incomes were being ignored. Expense was increasing by leaps and bounds, and he believed that the coun-. try should be made aware that just round the corner inflation was in store for the people. Thqj there was the Budget with its promises from one end to the other. It was the same old story: "There is nothing to fear." Was six months prosperity worth anything to, anybody? Surely there could be only one view and that was permanent prosperity.' Immediate prosperity was a flash in the pan and that was the end of it. He believed that in s. few months there would be a complete reaction. He hoped it would not be a complete collapse. That was not beyond the bounds of possibility. The Budget showed increased expenditure from twenty-six millions to thirty-one millions,. ah increase of over five millions'in one year. The way the money was to be found was referred to by the Minister of Finance. It meant a drain upon the Consolidated Fund and reserves. It was a strain upon the resources of the taxpayers" Referring to the strain placed upon the Minister of Finance Mr. Coates said that one man should not be overloaded. The Government should not be like the Portuguese Government— all generals and no soldiers. Referring to the Marketing, Bill, Mr. Coates said that the guaranteed price was to be announced on August 1, but it had been delayed until August 4. Was that not significant? There were the two dates—August 4, 1914, and August 4, 1936. The Government had procrastinated. He believed the-rea-son was to avoid criticism. The promise was made that the farmers would ba taken into the confidence of the Government, but they had not. been consulted. The war had begun. A barrage would fall upon the Minister's head if he thought he could avoid criticism. He would get that criticism. BANK APPOINTMENTS. Mr. Coates asked why there had been delay in appointing directors to. the Bank o£ New. Zealand. The Prime Minister had to bring down legislation to get the Minister of Finance out of a difficulty because he had not made the appointments last March. The Hon. P. Fraser (Minister of Education):. Very thin. Mr., Coates: Thin or not, that is the position. Continuing. Mr. Coates wanted to know why the Public Service Commissioners had not been appointed.-. Mr. Fraser: Why did not the last Government make an appointment? Mr. Coates: The Minister must take his gruel. The appointments have not yet been'made. '•■ ■;; PUBIJP WORKS PROGRAMME. Mr. Cb'jates quoted from the Budget the reference to the fact that the moneys required for this financial year for an expanded ■ public works programme were available without.' any' loan issue, and said this was in itself evidence that the financial resources of the Dominion had not been utilised lo the fullest extent. He said that it rested with the_ Minister of Finance to explain that a little more. Did it mean that balances in the hands of the Post Office nnd other/departments .were to be used 1o carry-but public works, and. that

any necessary adjustments were to be made to those balances by borrowing from the Beserve Bank? These were points that the country was entitled to know. Was the Government drying up all its reserves in order to carry out the public works programme? These moneys were to be spent to construct railroads, mainly, and roads where it was known that there would be difficulty in making operating costs, apart altogether from interest on the capital invested. "I understand that the Minister of Public Works proposes to handle somewhere about 20,000 men," said Mr. Coates. "I do not think that ten and a half millions will look at 20,000 men." Mr. C. A. Wilkinson (Independent, Egmont): It is not one year's wages. Mr. Coates: Well, it may be a little more, but wages represent only about half the cost. The other half has to go into material, and equipment. He wanted to know exactly where the Government proposed to draw the line between men and machinery: He pointed out that there were occasions where machinery could be a most expensive form of construction. There still remained the old wheelbarrow and the old shovel. .'; RECIPROCAL TRADe! Mr. Coates turned his attention to the question of reciprocal trading, and quoted the following extract from the Budget: "Our natural advantages make for an efficient and economic agricultural industry. On the other hand we could produce motor-cars and other goods, but at a very much greater cost than Britain. If, however, our efficient agricultural industry is deprived of an overseas market and we cannot purchase overseas, the efficient British manufacturing industry . loses, its market, and trade between the- two countries .suffers. On, the other hand, the more we can sell abroad' at an economic price the more we can buy. Our efforts will, therefore, be directed to making reciprocal trade agree-1 ments." ' ' ' | Mr. Coates wanted to know whether that statement referred to trade with the United. Kingdom. Was it the intention to say to the United Kingdom, "Very well,; if you do .riot give us what we want we will build our own motor-cars, irrespective of whether they will cost more or whether it fits in with our. financial .economy?"' Mr. Nash had a good deal/Jo .;think about. . The United Kingdom on the subject of bilateral agreements' had already replied to New .Zealand, and that reply was clear and should be understood. It was to the effect that before the United Kingdom would consider the question of discussing bilateral agreements, the subject was one that first of all must be discussed, at an Imperial Conference..-, TKe, Minister was not in a position to make any bilateral agreements between'the Dominion and the United Kingdom. Supposing the question .were discussed, would trade -per head enter into, it or the volume of trade?.. Compared with the volume of trade of other Empire countries New Zealand was a very, small dot. This country had far better stand by with a policy that fitted in with the policy of the United Kingdom. It had far more to gain that way than in any other. The Minister had made a "fetish of this question of bilateral agreements, and they said it could not be done. All evidence was against it. . There was one consideration that stood in front of, the statement in the Budget, and that was. the effect it was likely to have on the Dominion's credit overseas. ■■■•-.■.-. PROMISES TO FARMERS. During the present session of Parliament, said Mr. Coates, many attractive promises had been held out to.the farmers. He would ask what was a guaranteed price. Surely it was a minimum price. If the produce of the farmer made more than the guaranteed price, then surely the farmer was entitled to the increase. He maintained that the country from one %nd to the other really believed that. They did not believe that what would happen was that a fixed; price would be forced on the farmer after his produce had been taken away from him. In his opinion, the present arrangement could never redound to the benefit of the farming community. The dairy farmers had believed that the Government intended to give them something more than the world price for their produce, and the question now arose whether they were getting the world price. There was no more deserving man in the community than the dairy farmer, and he had battled against tremendous odds.' He was a very hard-working ar;d reliable citizen. .Referring to the .price that the Government had agreed topay, Mr. Coates said that it was hot a question of whether the" farmer was satisfied or not.'but it was a question of determining whether the price was a fair and reasonable one on the basis of the Government's promises. "I think there is a catch in this price," said Mr. Coates. "I am sure there is. I ask the dairy farmers to take particular note of the point I am making:. While it might be arguable that the Government has kept the promises it made to ihe letter, it is certain that it has not kept its promises in the spirit. That is putting it very mildly." . . Mr. Coates suggested that the dairy farmer had lost a large proportion of the exchange benefit he had obtained. He quoted figures to show the average price over the years, and said the Government had obviously taken the f.o.b. price in New Zealand currency. Was that fight, or was it fair? It obviously could not be. In some ,of the years on._which■ the price had been based there had .been no exchange benefit. The London price had not been taken, and that was where the farmer had been taken in. The; farmer should actually be receiving about 14"cl per pound, whereas he was going to receive just over 12Jd. That meant that the Government was taking about 2d per pound f.o.b. out of the exchange benefits that should still accrue to the farmer. There was only one way in which the price could be fixed, and that was to take the London price over the

j ten years. If the mean average was taken, together with the exchange, it meant that the Government was putting,into its own pocket 2d a pound that rightly belonged to the farmer. The farmer would be far better off if he retained his own produce and marketed it himself. He agreed that if the price was low the farmer was entitled to ask the Government for assistance. The Minister of Labour (the Hon. H. T. Armstrong): He was asking you for a long time and didn't get it. Mr. Coates: He did get it, and it wili take the Minister all his time to refute it. The Minister shows that he knows nothing about it. I Mr. Armstrong: You know mighty little the way you are talking. Mr. Speaker suggested that in view Of the fact that the speeches were being broadcast there should be the minimum of interruption. The statement made by the Minister, in the Budget referred to the fact that increased costs were being provided for in the price, said Mr. Coates, but the price the Government was going to pay out was infinitely less than it was last year when the Government had nothing to do with the price. COST OF PENSIONS. The additional cost of pensions would be £2,280,000 in a full year. That was in addition to the existing charges for pensions, and for the nine months the cost would be £1,700,000. So far as the Opposition side of the House was concerned it was ready and willing to give those unable to protect themselves and had given the best years of their lives to labour and the development of the country, recognition in the form of pensions. But the basis of calculation on which they worked must be on sound economics. It was a question whether a sound economy could sustain the increases that were to be made. The Minister said they were desirable, and so they were. The oldage pension was to be increased by 2s 6d a week and the widow was to be given 10s extra. So far as" the oldage pensioner was concerned the increase amounted to 12J per cent., and the cost of living had risen more than that already, and it was a rising market. So far as the increase for the widow was concerned —if the country could afford it, well and good. Regarding the pension for a deserted wife and family, Mr. Coates said that in some other countries where a pension was given to a wife and children* who had been deserted by the husband it was found that it could lead to all kinds of excesses and created tremendous difficulties in encouraging compacts between a wife and her husband so that the wife and children could get the pension. THE RETURNED SOLDIER. Where did the returned soldier come in? Mr. Coates asked. It was true that the Government intended to increase the economic pension, but the Government was returned on a promise that it would restore the whole of that pension, and all that was being done was a partial restoration. Who deserved more consideration than the returned solider who had suffered? All over the country they could' see men who were suffering from the ravages oi! war. : - Mr. H..M. Christie (Government, Waipawa): You are pretty late in seeing itReferring to income tax, Mr. Coates said that the table given by the Minister in the Budget did not reveal the position correctly. He had eliminated I altogether the fact that in New Zealand an -unemployment tax of 8d in the £ was paid, and that there was a 33.1-3 super tax where it affected so called unearned incomes. Comparing the enormous difference between the New Zealand and British systems of taxation as regards the tax charged on companies, he said that in Britain they had had a longer experience, of. income tax than -any other country in the world, and there they adopted the principle that a graduated income tax should be charged according to the size of a person's income, and not because of the source from which it was derived. Companies in Britain, in ■ effect, paid tax only on their undivided profits. Their dividends were taxable in the hands of their recipients. The result was that British investors could go into any joint stock enterprise, knowing that the income derived from their capital would only be taxed at the same rate as it would be if it> were invested in, say, Government securities. In New Zealand, on the other hand, a small investor's capital provided little or nothing in the way of income tax. when invested in Government or local body securities, but it was taxed almost 10s in the £ if invested in a large company enterprise. TAX ON COMPANIES. . The tax on all large companies was now 7s 6d in the £. There were certain expenses which every company had to meet that were not deductible for taxation purposes. That made the effective rate more, than 7s 6d in the £. In addition, large companies now had to pay the extreme graduated land tax of 6d in the £. "In the old days of the graduated land tax a deduction was made from taxable' income of 5 per cent, of the unimproved .value of the land taxed, and this compensated to- a certain extent for the land. tax. Now the land tax was a clear addition to the income tax that a company had to pay. The proportion ,of land tax to income tax, said Mr. Coates, would vary from company to company, but adding the two together, most large companies would now have to pay • the equivalent of from 8s 6d to over 10s in the £ of their earned income. That was a rate that would make it very difficult for many, companies now in existence to carry on, and it was almost an effective, bar to new enterprises. Carrying such a heavy tax meant that either the return to the shareholder was too low to interest him in large joint stock enterprise, or else the service the company rendered became too costly. The capital of large-scale company enterprise was ' mostly provided from a large number, of small investors, who would' expect a -substantially higher rate of dividend than the interest rate obtainable on Government and local body loans. This was necessary to meet the increased risk of the company enterprise. In addition to the dividend rate, a company must earn something to put to reserve each year. Companies that did not do this failed under the stress of adverse circumstances. Under the new budgetary taxation, before a company could'pay this dividend and provide'for its addition to the reserve, it must'earn'an almost equal amount to pay the income tax of 7s 6d in the £ and the land tax of 6d in the £. In most cases this, necessary scale of earnings, would make the services the company was organised to render too costly. INDUSTRIAL DEVELOPMENT. In the Budget, said Mr. Coates, the Minister said: "Progress towards full employment must be made through the extension of our • secondary industries and development of new industries and services."

"I think," said Mr. Coa'tes, "the progress towards the development of industries and the employment of men will be very seriously curtailed and many companies will go out of business as a result of this increased taxation. X think that members of, the Government do not fully realise the effect of. the imposition they are placing on industry."

Mr. Coates asked the Prime Minister to make provision for a hardship j clause in the case of the land tax. He said he was not asking for exemption from the tax, but that cases of hard-» ship could be placed before a tribunal. ;He read telegrams he had received from people who wished to come to Wellington and place their cases before ' | the Government. | QUESTION OF DEFENCE. ! Dealing with defence, Mr Coates said that every member on the Opposition side of the House desired to approach the question of national defence in a non-party, non-political spirit. There was no question that should occupy their minds earlier. The question might be asked, Why did not the last Government provide more adequately in that respect? It was only about twelve months ago that the clouds really appeared on the hc>rizon. The wind was blowing them in all directions and they might come our way. The people of the British Empire enjoyed greater advantages than any other section of the world's population. Because national defence was referred to that did not necessarily mean war. He hoped that it would be possible to reconstitute the League of Nations so that it could become a powerful factor in the settlement of national disputes. That was the view of the Opposition. By the League's reconstitution it would be possible to bring about a reconsideration of international problems. The Minister of Finance had said that nations did not necessarily go to war, that war now came to the nations. That was true. Were we prepared if conflict did arise? While some might say that nothing could happen to New Zealand he thought it safe to say that the Dominion was just as likely'to be involved in difficulties if there was a war as any other portion of the Empire. He asked whether New Zealand was prepared even for its own defence. In the Budget it was proposed to spend approximately £250,000 more than in the previous year. He was not finding fault with the Minister. It was essential to get the best results from the sum voted; "I would say without hesitation to the Prime Minister and his colleagues that as far as it is possible for the Opposition we offer our ready assistance on this one question," he continued. "We. will assist cither separately or collectively for tha purpose of seeing that we get the best results from the amount of money voted for defence." Mr. Coates said that there must be thorough protection of Empire routes; Great Britain had taken definite steps in respect to the Air Force, the Navy, and internal defence. Was New Zealand to stand by and see Great Britain making these preparations and not feel that there was some real reason for it? The British Commonwealth of Nations was willing to do its best within its. resources to maintain the principles tha,t the Empire stood for. New Zealand should co-operate as far as possible with the United Kingdom and with Australia in an endeavour to evolve the best possible policy in respect to the air, the Navy, and internal, defence. BEST TO BE PREPARED. Mr. Coates said that he did not think it could be denied that if trouble arose now there would be difficulty in getting transports through areas where submarines, or air forces 'operated. Was it not best to take time by the forelock and be prepared and that was the reason that the Opposition had offered to co-operate in an examination of the defence forces of the Dominion. Mr. Coates referred to the New Zealand Air Force and asked whether it was satisfactory. He wanted to know whether it would be possible to get more modern machines from England of the battle patrol type. Would New Zealand be prepared'to send men up in the machines that New Zealand now possessed? Every returned; soldier knew what had happened to pilots that had gone up in the old type of machines. Many a heart had sunk when witnessing an "old bus" being brought down without a scrap. He paid a tribute to the Volunteers and Territorials who had been soldiering' against great odds.