The New Policy

Evening Star, Issue 20049, 14 December 1928, Page 2

The New Policy

Sir Joseph Ward’s Announcement Rapid Railway Construction State Advances Arrears--£3,500,000 To be Cleared Off Interest Reduction Forecasted [Thom Oub Pabliamentam Repoeteh.J AVELLINGTON, December 13. A rapid acceleration of important railway construction and the quick clearing off of long-awaited State advances loan applications were tho features of Sir Joseph Ward’s financial proposals, submitted to the House tonight and backed with proposed legislation increasing the borrowing authorities for those purposes. Dealing first with the possibility of another short session, Sir Joseph Ward suggested that it would cause a feeling of uneasiness in the public mind and could bo avoided. If the House granted him the authority he was asking in the measure he would introduce at the conclusion of his speech, then he apprehended no necessity for calling Parliament until the normal time at the end of June, though there was authority to do so if an emergency arose.

IS A SURPLUS POSSIBLE? Examining the general position of the country’s finances to date, Sir Joseph Ward remarked that he was making no reflection on his predecessors, for the election campaign and cross-firing in Parliament were now behind him and his supporters. The revenue for the eight months of the year to November 30 was £12,718,476, the expenditure £13,683,090, being an excess of expenditure of £964,614, which was usual at this time, owing to the fact that income tax collections did not come in until the last quarter. The position had shown considerable improvement since the previous month, but even then it seemed doubtful if the revenue for the year would reach the estimate, and the result would depend on a sharp rise in certain items of revenue and strict control over expenditure appropriated last session. He had therefore directed that regular monthly reports bo submitted to him on this point, “ This does not suggest,” continued Sir Joseph Wand, “that 1 personally do not possess every confidence in the position of the country. My own record siiows that 1 have seldom failed to show a surplus, in many, cases substantial; but the period until the end of the financial year may ho too short to enable this to be done.” INCREASED LOANS. Sir Joseph Ward announced that, in order to ensure setting in motion the Government’s policy of accelerating the developmental undertakings so necessary for tho country’s ; prosperity, and absorbing the unemployed, he had carefully reviewed the borrowing authority available till the end of June, and legislation would bo brought forward to increase it and allow an additional expenditure beyond that already appropriated for this'-year. Mr Coates: Does it include any new work ? Sir Joseph Ward: Perhaps it would bo better to hear what I have to say, in case 1 am misunderstood.” He proceeded to point out that in his speeches he had particularly directed attention to the needs of the State Advances Office and the completion as early as possible of the principal railway trunk systems. In regard to State advances, the arrears now waiting to bo cleared up for workers and settlers totalled £3,500.000, and those arrears needed immediate attention before it was possible to consider a reduction in the lending rates, which he expected to bring about. The present rate of interest, 5i per cent,, was adopted as the outcome of higher rates paid on, the renewal of the cheap money borrowed for this department, but the interest rates to-day showed every indication of gi a dually falling. “ And I am now investigating the result on the whole of the cost of renewing the remaining cheap money falling due in the immediate future. When-1 have ascertained this I hope to begin to gradually reauoe the lending rate. It is proposed to use the existing loan authorities to raise money for lending to Maori farmers through tho Native 'Trustee and Native Land Boards.” RAILWAY CONSTRUCTION. The expenditure on railway construe tion daring the year, as provided for in his predecessors’ appropriations, restricted the total, said Sir Joseph Ward, to £984,000, and it seemed that this vote would be fully upended on the present rate of progress. It would leave no margin either to accelerate the works or make a start with other undertakings which ho considered should be put in hand. Sir Joseph Ware said ho proposed to ask the House to put through a short Bill enabling the Government to get authority to increase or supplement Public Works votes and other accounts as follows: Railway construction, £500,000. Roads, £IOO,OOO. Hydro-electric, £IOO,OOO. Main railways, £IOO,OOO. State forests, £25,000 He had laid down in his policy the immediate completion ol the Napicr-Wairoa-Stratford Main Trunk, the Westport-Inangahua, running towards Nelson (the Midland), and the South Island Main Trunk. In regard to the latter, there were surveys to be undertaken before they could actually commence, and he was advisd that it would take six months to have them completed; but the other works he proposed to undertake as soon as possible, and work would also commence as soon as the route was fixed for the South Island Main Trunk. In addition to the amounts he had named, he proposed to appropriate from revenue £500 ; 000 (foi there had been an accumulation of the surpluses which were carried forward from time to time, so that the balance of these, together with any surplus this year, would be available to supplement these amounts by £500,000. The first three railways could -be immediately accelerated by this additional provision.' COST OF THE RAILWAYS, The Leader of the Opposition had this session suggested that it would cost twenty-fpur millions to complete the railways, but Sir Joseph Ward declared that at the, time he. knew that what he was proposing -to expend was not more than ton millions. In order to relieve any misconception, he had asked the Chief Engineer of Public Works to give an official estimate of the cost of the proposed railways he had alluded to, and the reply stated that rough estimates foi the cost of completion of the lines mentioned would be in the vicinity of seven and a-half millions. Tin report stated, also: “You understand that a great deal of the country has not yet been surveyed, and consequently, close esti-:

mates cannot be made; but the figures are, roughly, as follows.—Midland Railway (Westport - Inangahua), £600,000; Gowan to Inanghua. £1,600,000; South Island .Main Trunk, £2,500,000; Napier-Gisborne, £1,800,000; Stratford Main Trunk (TaranakiAuckland), £800,000; total, £7,300,000, which was not in tho vicinity of twenty-four millions. Mr Coates: I never made such a statement. Sir Joseph Ward; I accept the hpn. gentleman’s statement, but I really recommend him to read his ‘ Hansard.’ I took a note of it. Mr Coates: I prefer my ‘Hansard.’ (Laughter.) MORE STATE ADVANCES. Continuing, Sir Joseph Ward said he found there was in existence borrowing authority for States Advances of £750,000 per annum for lands for settlement, and in order that ample funds should be available for this purpose he proposed to ask the House to increase the borrowing authority to one million per annum. As for the position of State Advances, it would take until the end of February next to clear up the loans _ authorised, amounting to £240,000, which had been passed by the board up till February, 1927, and there were three millions of applications waiting from settlers and workers since February, 1927, to date. Sir Joseph Ward made it clear that the loans would need to be preceded by valuations, and he proposed to raise the necessary money to meet these applications without delay. Mr Sullivan: Will you increase tho valuation staff?” Sir Joseph Ward: “I take it an increase in tho valuation staff will be necessary with the intention of getting this money to those who so much need it.” The annual amount required for settlers and workers was, estimated,At, between three and lour millions,.' Which would' include the amounts received by repayments, which probably totalled two and a-half millions annually. He stressed the point that this department would find the money for new homes, but not to help speculation by those who possessed homes. The heavy demand made on the State Advances Department was, in his opinion, due to the table mortgage system, and in his opinion the time would come when ail private lenders of any magnitude would require to adopt a similar system. Ho had seen a good deal of evidence that the ordinary farmer would not take short-dated loans. TEXT Gf THE BILL 'The Finance Bill provides that in addition to several amounts appropriated by tho Appropriation Act, 1928, for the sendees of the financial year ending March 31, 1929, the Minister of Finance may without further authority issue and apply the sums hereinafter specified:— Out of the General Purposes Account of the Public Works Fund, for the purposes of railway construction (vote 42) £500,000

Out of tlio General Purposes Account of the Public Works Fund, for the construction, maintenance, and supervision of roads, bridges, and other public works (vote 58) 100,000 Out of the Electric Supply Account of the Public Works Fund, for the development of water power (vote 67)... 100,000 Out of the Revenue Fund of the Main Highways Account tor the maintenance of main highways (vote 72) 50.000 Out of the Construction Fund of the Main Highways Account, for the construction of main highways (vote 73) 50,000 Out of the State Forests Account, for the purpose of the State forest service (vote 76) 25,000 Other clauses provide for extending the annual authority to borrow money for the acquisition of lands for settlement, for an increase of the aggregate amount that may bo paid to local authorities by way of subsidy on expenditure in relief of unemployment, 1 and for an extension of the duration of the existing law as to the restriction of rent until August 1, 1929. BLANK CHEQUE WANTED. “ We cannot be expected to give the; Prime Minister a blank cheque, and that seems to be what he is asking for,” said the Leader of the Opposition (Mr Coates), critising the speech of the Premier in relation to finance and railway construction. There seemed to be several omissions in the P.rime Minister’s speech. For instance, he had not saidkow much this extra, money which he proposed to obtain would cost the people of New Zealand. They had been led to believe that it would cost 4£ per cent., and hot more. They had been told, too, that the money would not, cost one penny of additional taxation. The Prime Minister was clever (continued Mr Coates), because he sheltered behind a problem he knew was there and which could not be mentioned till the proper time. Rut he could not shelter behind that all the time. It was true that Sir Joseph Ward had not been much more than five minutes .on the Treasury benches, and had really done well to produce the statement he did; but Mr Coates thought the Prime Minister would find it most difficult to get the money irom London at 4| per cent, it was to be honed we would always get our money from places within the British Empire.

railways policy criticised. Switching his attention to the Prune Minister’s remarks concerning railway construction, Mr Coates denied that he had ever said that it would take £24,000,000 to complete the railways. When he mentioned that sum he had included land for settlement, hydro-electric development, irrigation, and roading. It the Prime Minister , worked put the existing programme he would find that to be a fact, irrespective of State advances requirements. Sir Joseph Ward: You borrowed £29,050,000 in three years. Mr Coates: “ Yes, that has been constantly pointed out.” Mr Coates went on to say that Sir Joseph Ward had mentioned only five lines ol railways to be completed. He had said that Westport-lnangahua could be completed for £600,000. That was an under-estimate. Then the Midland Railway had been estimated at £1,600,000, but it would never be completed under £2,000,000. If the Minister of Works followed the rule of adding a good big fraction to the estimates he would find it work out better. Then it had been said that the South Island Main Trunk could be completed for £2,500,000. Whether it could be done for that Mr Coates would not say, but he did suggest that Sir Joseph should postpone the commencement of the work on that line till Parliament met again. The opportunity should bo given to examine the whole position, Mr Coates predicted that if that line were completed it would be for all time a charge on the country. Even if the lino were completed and the capital cost was halved it had not got a hope of paying interest. Sir Joseph Ward: That’s exactly what they said about the North Island Main Trunk. They said it would not pay axle grease. Mr Coates: There is no comparison. The North Island main line connects two big centres and passes through country largely undeveloped, but the South Island lino skirts the coast, and who would say it was capable of much more development? Mr Healy (Wairau) : 1 do. Mr Coates: Well, a little. Mr Healy: Better than Taupo. SLAPPING THINGS THROUGH, Mr Coates said Taupo had been carefully investigated. He could not understand why the Prime Minister should want to complete the Main South line without examination of the whole position. The cost was not the only factor. There was the question of development. That line could not be built for £2,000,000; it would cost at _ least £3,000,000. Were the Prime Minister and his party convinced that it was the best thing to do for New Zealand? Of course, if it was the Government’s policy to slap things through without any responsibility, well and good, but surely Parliament must consider every penny which the people would have to find. Mr Langstone: They are groaning under that policy of the past now. Mr Coates: I don’t agree. The policy of the Public Works has been satisfactory from the point of view of development. Mr M'Dougall (Mataura): No, sir, it has not. Mr Coates: This country could never have reached its present stage had it not been for railways which had been constructed, and taken by and large few mistakes had been made in this young country. What he wanted to know was what would become of the 8,000 men when the railway works were finished? Mr Nash (Palmerston North) : That will bo your job. Mr Coates: Yes, I’m afraid it will. Mr Martin (Raglan); You will want a bit more vision than you have got now. (Laughter.) WHAT OF NORTH AUCKLAND? Mr Coates thought the Midland line should have a great deal of consideration. The policy of the Reform Government had,been North Auckland, NapierGisbornc, Stratford-Auckland, West-port-Juangahua, and then work gradually on to the Midland line. Mr Coates wanted to know if the North Auckland line would be completed. Would it bo carried on to Dargavilc, and would the Taupo line bo carried through? Mr Martin: And Pokeno-Paeroa also, j Mr Coates; I have asked three questions. I wish the Prime Minister would answer me. Sir Joseph Ward: Oh, I am not making a speech just now. Mr M'Dougall: Go on with your speech, and the Prime Minister win reply all right. Mr Coates: “It is easy to see that the hon. gentleman is very new to this House.” The Leader of the Opposition con- i eluded by urging the utmost caution and a careful examination before starting work on the southern lines. LABOUR LEADER’S VIEW. Mr Holland said that Mr Coates’s attitude towards the South Island Main Trunk line was surprising, because ho ■ could remember Mr Coates promising a deputation to have a survey made, and ! the imputation went away thinking that it had got something. He (Mr Holland) advocated the speedy completion of the Westport-lnangahua line. it was surprising to find Mr Coates questioning tho accuracy of Public Works .Estimates. That he never did while at tho head of his Government. Ho (the speaker) wanted to see railways built that would carry goods to an economic market. Ho did not think that Sir Joseph Ward would have any difficulty in raising the money required. The rate at which he could raise it might be another matter. Unemployment was largely duo to the immigration policy of tho Reform Government. He agreed with tho proposal to raise . the rate of pay on relief works in tho country, and did not think there was any danger of Australian unemployed 1 coming over and Hooding the country. He regretted that the same liberal j policy was not being extended to the towns. The Bill contained nothing I now. It was made up of election pro- i mises. He saw no reason why tho money should not be raised in New Zealand, and ho could not understand why it should not bo done. Ho did not disagree with the policy enunciated in regard to advances to settlers. That was sound so far as it went, but he was bound to say that Sir Joseph Ward’s speech at Auckland had created the impression that money was to bo available not only for new settlement, but to pay off existing mortgages. He found that impression to exist everywhere, and unless that were done he was afraid Sir Joseph Ward would find that ho was not able to help himself very much. Continuing, ho expressed satisfaction that the rent restriction continuance legislation was to be reenacted. This would give breatiling time till the House could meet next year. NEW CROP OF ARREARS PREDICTED. Mr W. Downie Stewart said he did nob propose to discuss Sir Joseph I Ward’s statement from, the point of j ‘ view of. the criticism of the Leader of the Opposition, but he wanted to say ' that he was confident that when the finances of the year were completed it would bo found that the revenue and expenditure would show a well-bal-balanced Budget. Sir Joseph Ward had claimed that he used to have heavy surpluses, but that was while he was : treasurer in the National Government j when the rate of taxation was very heavy. The position was different now, and unless there was a considerable reduction in expenditure or an increase in revenue the surpluses could not again be as heavy. With regard to the arrears iu the Advances Office lie pointed out that many of these were mcrelv applications, some of which could never be granted, so there must

be a heavy writing-off of these. He did not. favour wholesale loans for houses, for the shortage was nearly caught up—not, perhaps, in Wellington and Auckland, but elsewhere there was practically no shortage of houses. He did not agree with Sir Joseph Ward’s estimate of what was necessary, to keep the Advances Office going, especially the rural credits branch which had been established, but Sir Joseph Ward had not said how he proposed to co-ordinate the operations of these two departments. He agreed that new loans should iiave preference, but Sir Joseph Ward did not say that when the arrears were wiped out the interest was "oing to be reduced to |ls per cent He predicted that a new | oiop of arrears would grow upas soon as tho old one was cleared off, and | they would never catch up if it was i known that the department was going to try and provide for everyone. Some thought that the cure for this was to pour millions into this department, but he did not agree with this In view of the heavy commitments in other directions he had tried to keep down loan expenditure. The policy outlined by Sir Joseph Ward was the first departure from the cautious policy followed by the Reform Party which had done so much to keep the credit of tho country in London so bright. If Sir Joseph Ward was not going to borrow more than tho Reform Government had borrowed then the people had been misled, and if he was going to do so then he (Mr Stewart) did not agree with him. Mr J O’Brien (Westland) said ho was disappointed wit! l the statement made by Sir Joseph Ward. It bad none of the old Liberal ring about it, and nothing was heard of increased pensions or a better standard of living. Relief works pay in the towns should be increased as well as in the country. If loans were not given to pay off existing mortgages Sir Joseph Ward would find more men walking off tho land than lie could put on it. Mr D. Jones (Mid-Canterbury) said that Sir Joseph Ward was asking tho House to give him a blank cheque for six months, and he did not think the House should do so. Sir Joseph Ward’s speech was disappointing, because it did not bear out his election promises. His promises had won the election for the United Party, but what had become of his millions for settlers at 4£per cent. ? Moreover, he was not going to help the man with an existing mortgage, because both the new and the old mortgage could not be found at once. The borrowing policy of the United Party had been absolutely repudiated by its loader’s speech that rdght. Mr M. .J. Savage (Auckland West) put in a plea for the unemployed in Auckland. There were 700 men out of work in that city, he said, and it was only three weeks from Christmas Men employed on relief work in the towns should receive the same rates of pay as men employed in the country. Mr A. Harris (Waitemata) said that when the first proposals of the Government fell far short of its election X-ledges the question was at one - raised whether other planks of its platform would he given effect to. He asked l S:r' Joseph Ward to redeem his pledge to give the people £60,000,000 at 4$ per cent, without cost to the taxpayer. Mr D. G. Sullivan (Avon) said that while Sir Joseph Ward was evidently sympathetic witli the unemployed his proposals were inadequate. What did he propose to do in the meantime to provide employment while his officers were preparing his largo public works scheme ? Air J. T. Hogan (Rangitikci) urged the necessity for providing money to j keep the farmers on the land as well | as new loans for new settlors. Re- j finance was as important as now ; finance. i Air F. Waite (Clutha) declared that the United Party was evidently finding | some difficulty in materialising the I money of the wild promises made on I the platform. Tho “wizard of finance” was evidently not equal to the oeca- I sinn. The d-hate was carried on by Messrs C H Chapman (Wellington North), E. J. Howard (Christchurch South), and F. Langstone (Waimarino). who supported the Bill, and by Mr TI. S. S. Kylo (Riccarton), who gave it qualified support The debate was proceeding at 2 a.m. when the telegraph office closed.