WAR EXPENSES

Evening Star, Issue 23383, 28 September 1939, Page 7

WAR EXPENSES

THE BILL PASSES HOW TAX AFFECTS INCOMES CPer United Press Association.] WELLINGTON, September 27. Moving the second reading of the War Expenses Bill, the Minister of Finance (Mr Nash) gave a number of examples of the effect which the 15 per cent, increase in income tax for war purposes provided for in the Bill would have. Companies having a taxable income of £I,OOO would have to face an increase of £2O, and a company with a taxable income of £50,000 would pay an increase amounting to £2,968. As far as the increases paid by individuals were concerned, he said, the man with a taxable income of £7,900 would pay an increase of £SOB, and the man with £IOO taxable income would have to pay an increase of £1 11s 3d. Married men with two children, with assessable .incomes of £7,900, would have to find an increase of £419, and those with assessable ini comes of £4OO would have to pay a 15s 3d increase. These scales of payment, lie said, were equitable, applying to everyone according to his ability to meet the extra • demands made on the country through the outbreak of war. The Bill, in establishing a War Expenses Account, created the principle of isolating war costs from all others. The Leader of the Opposition (Mr Hamilton) said there was no doubt that the Bill under discussion was an important one. He did not think it would be unfair of him if he asked the Acting Leader of the Government to present , to the House a complete picture of all the Government s proposals for the present session, so that members might know what further legislation dealing with the war was in sight. It was difficult to discuss these questions piecemeal, because they did not know what measures would be coming down next. Mr Hamilton drew attention to the steady increases in income taxation which taken place’ from time to time. (The balance of the speech is reported under separate headings.) MUST GAIN PEOPLE’S CONFIDENCE. Mr Forbes supported Mr Hamilton’s contention that there should be a substantial reduction in Public Works expenditure and he urged the Government to do everything possible to convince the country that it was prepared to do its part in the prosecution of the war. Without that evidence the Government could not expect the wholehearted co-operation and enthusiasm so necessary to the carrying out of the job. None would wish that sufficient money would not be raised to enable New 'Zealand to play her part worthily. There might be differences of opinion as to how the money should be raised, but on general principle he thought the people would be prepared to sacrifice a great deal to assist the Government in doing the job.-.as they wished it to be done. New Zedland was starting behind scratch owing to the Government’s policy of expenditure. There was no doubt that, if the Government wanted to have the confidence of the people of this country, it should remember that during its administration it had done a great deal to destroy the confidence that people had had in previous Administrations. In war-time, expenditure and economy went baud in hand, and there was a great responsibility on tho Minister of Finance, who should be 1 prepared to show tho people that he I was tacklig the job. Mr Nordmcyer contended that additional taxation and a rigid curtailment of expenditure might cause deflation which, in the long run, might cause more harm than controlled inflation. Generally speaking, he said, the Government’s proposals had been well received, and, after some of the extravagant rumours as to what might happen probably a sigh of relief spread over tho country at the comparatively small burden imposed on the community. He expressed the opinion regarding the increase in the death duties that an even more drastic increase might have been imposed without undue hardship. Mr Fraser, in the course of a brief statement, asked for urgency for passing of the War Expenses Bill, and also the Customs Act Amendment Bill. He explained that he did not propose to keep the House to a very late hour tonight, but wished to proceed as far to-night with the two Bills mentioned \ otherwise it might mean a very late sitting to-morrow night. Mr Hamilton asked if Mr Fraser would give the House an indication of the Government’s programme of business for tho remainder of the session. Mr Fraser: I undertake to give that at 2.30 p.m. to-morrow. Mr Hamilton; If the Minister gives an undertaking and also states that he will not keep us too late to-night, I see no reason for objecting to urgency. However, we would like to know what the Government’s legislative programme is. It would help us very considerably in arranging things ourselves, if we did, but we don’t know how many more Bills are to come down. Mr Fraser; Yon are no more tired if it than I am. (Laughter.) ' Urgency was granted the passing of the measures indicated, and the House proceeded with the second reading debate of the War Expenses Bill. CONSERVE MAN AND MONEYPOWER. Mr Bodkin said it was correct to say that no one could state definitely what deiiiauds would be made during the war, and consequently the Government should make all the economics possible. If tho Government created the impression that it "as dissipating the ■resources of the country, it would frighten investors. He advised tho administration to conserve man-power and money in every possible way, and contended that during the war a little m- • flation was inevitable, but it was the responsibility of the Minister of Finance to control inflation in New Zealand to the minimum by borrowing in a- normal way, instead of from the Reserve Bank. He also asked Mr Nash to include in the Bill. 11 clause to exempt from its provisions the estates of soldiers who might fall in tho present war. INTEREST FREE LOAN. Dr M'Millan suggested that the publie should be given the opportunity to subscribe to an interest-free loan tor war purposes. Wo had a large number of wealthy people, ho said, and he lelt satisfied these would welcome the opportunity to show their patriotism by subscribing to such a loan. Ho was satisfied the Minister of Finance would get several million pounds if he were

!to adopt this suggestion. Members of the Opposition had shown some anxiety about inflation, and he contended that inflation was much more serious for the capitalistic sections of tho community than others. However, in New Zealand they could withstand a big increase in credit without inflation oocurring. NO LEADERSHIP. Mr Holland complained that, so far, during the progress of this war there hud been an entire absence of leadership by tho Government, to which the country was entitled. For three weeks people had been left in the dark, and they felt that essential information was being withheld. He alleged that soldiers in uniform were being sneered at in the streets of Wellington and other cities of the Dominion, and even returned soldiers were receiving white feathers. Some people wore saying: Why should we be involved in a capitalistic war? But the present was a war for personal liberty and freedom. Mr Holland advocated that public works and relief allocations should be cut in half. SHOULD END WAR WITHOUT DEBT. Mr Lee said ho realised we would not solve our problems by bringing everyone’s income down to 7s a clay. Such was the stupidity of our financial system, he continued, that during tho last war, apart from huge wastage of life, the people of Great Britain actually enjoyed a higher standard of living than ever before, but after the war came deflation. We should end this war without debt, so that we could avoid a similar deflation, which had caused so much misery and want, not only among civilian populations, but also among the returned soldiers themselves. We had a duty to win this war, and wo had a duty to conserve everything which made this civilisation worth fighting for. Ho appealed to the Opposition not to take the Government to task because they had not been told the exact target for which we were aiming. That would come in time.

Mr Atmore said the first charge on production in New Zealand must be the women and children, and unless the Opposition could prove that the suggested diversion of money from public works, etc., would not affect them, then its arguments must fail to convince anyone. Mr Hargest said that in the last war we had made the mistake of sending overseas such n large expeditionary force. The danger of sending away too many men was that production was affected, and also that the men who were sent overseas were often too young and could not stand up to the strain there. He appealed to the Government to see that it obtained value for the money it spent on uniforms, boots, etc., and allowed no exploitation in this direction. GOOD STANDARD OF EQUIPMENT. Tho Minister of Defence, Mr Jones, said the Standards Institute was taking an active part in seeing that the uniforms came up to specification, and ho felt sure our men would have well-fit-ting, smart uniforms. The same applied to boots, and he briefly outlined what was being done in the formation of tho various military camps throughout the country, both as rar as the troops’ health and comfort were concerned.

On the outbreak of war, said Mr Jones, the first job was to man the coast defences and vital points, and the returned soldiers and Territorials had done splendid work in this connection. Detailing the expenditure on the equipment of the special force which was at present being recruited, the Minister stated that the first eschelon of 6,000 men would be a charge on this financial vear for a period of six months; the second of 5,000 men would be a charge for four months, and the third, also of 5,000, for two months. Altogether, 12,000 men had to be provided with uniforms at a cost of £lO per man. The remainder would have Territorial equipment. Tho total pay would be £1,575,000. _ The Minister also referred to the establishment of a man power committee consisting of representatives of several interested departments, which controlled recruiting, and decided which essential industries must bo earned on, and which men in key positions should be retained in their jobs. This committee reported to the Defence Council, and the Government members of the House, he concluded, would appreciate that, although the Government had asked for a fairly big sum, it could account for everything it had spent, and was carefully watching every penny.

The debate was continued by Messrs Combs, Wilkinson, Grigg, and Coates, and the Minister of Finance (Mr Nash) was replying at 1 a.m.

The Bill passed its second reading, was put through committee, yas given its third reading, and passed ; and the House rose at 1.30 a.m.