WAR FINANCE

Evening Star, Issue 23697, 3 October 1940, Page 7

WAR FINANCE

OPPOSITION HIGHLY CRITICAL TOO EARLY ABSORPTION OF CAPITAL •• NO COMPULSION—IF THEY PAY " [From Our Parliamentary Reporter.] WELLINGTON, October 2. It was made clear in the debate on war expenditure in the House tonight that the Opposition members of the War Cabinet had no part in determining the conditions of the war loan. References by the Minister of Finance to this subject were made to the accompaniment of a running commentary by Opposition members, who emphasised that it was conscription of capital, though Mr Nash insisted that there was no compulsion unless, as he added amid laughter, people did not subscribe according to their resources. He expected to raise £8 million in this way, and there would be no hardship on lowerlevel incomes. The National Savings scheme, which would be announced within a week, would give opportunity to this class to use their savings for the war effort. A procedure was being worked out in connection with the war loan under which persons who suffered hardship could appeal, and a committee would be set up for the purpose of hearing appeals.

When Mr Nash expressed the opinion that there was a general desire to help in the war effort, ho was asked why the loan was being made compulsory. His reply was that tins made everything fair! Nobody should lean on the generous people. Mr Doidge: Why say everyone, when you are only tackling 20,000 taxpayers!’ Mr Nash; These are the people who receive a large proportion of the national income. He reminded the House of the terms of the compulsory war loan in 1917 — three times the amount paid in income tax. Mr Holland: That was not a free loan. Mr Nash: Everyone is saying they should not be paid for patriotism. Wo are not proposing to issue a loan free of income tax. “ Any compulsion in tho National Savings scheme P” asked Mr Holland. “No,” retailed Mr Nash. “ bub tlmv will pav. There is no compulsion anywhere. if thev pay.” (Laughter. ) Stressing the importance of meeting war costs from production, with a minimum reliance on borrowing. Mr Nash referred to the magnificent effort of the farmers, .which enabled all ships to he loaded to the full extent, while, to make income available for war nuvposes, imports were, restricted to the value of the resources at the country’s disposal. Mr Holland; Go on; hardship everywhere, businesses wiped out by the dozen.

Mr Nash: He wants to issue more licenses than we have money at our disposal. Mr Broadfoot: How many millions have you squandered? Mi- Nash: Every penny of our overseas funds has been used for importing necessary goods and war material. Luxuries are not coming.

Mr Doidgo : Steel for the Homer Tunnel ?

Mr Nash: You run talk lo tin; Louder of the Opposition about whetlior the Homer Tunnel is necessary or not. (Laughter.) * Mr 'Wilkinson inquired whether the banks would assist to finance loan investors.

Tho Minister replied that he realised there would be difficulties for some individuals and firms, and the question what could ho done to help them was being worked out. It was desirable that the maximum amount of the loan should como from current income. OPPOSITION VIEWPOINT. The Opposition viewpoint was first put by Mr Coates, who devoted much attention to tho war loan, explaining at the outset that there was some misconception regarding the part played by himself and the Leader of the Opposition in War Cabinet matters. “ Wo have nothing to do with the financial policy,” he declared, “We are concerned with war expenditure, but never have been asked to discuss the question of how tho finance is to ho raised,-whether by taxation, savings, or a Joan. These points have never been discussed in the War Cabinet. Mr Dickie: Mow about the emergency regulations? The Prime Minister; What the rigid, honourable gentleman says is correct. The Opposition representatives have no responsibility for raising the money. Mr Coates: We have nothing to do with the method. Mr Semple: That was a condition of entering tho War Cabinet. Air Coates; No, the question of regulations under the War Emergency Powers is not the concern of the War Cabinet, which lias too much to think about in other ways. He suggested that the times were ton serious to ho concerned about theories or "passing the buck.” - Omvever, lie believed that if the Government gave the people a rough outline of the objective which was desirable, Ihev could be trusted to do Iheir part. Only if they failed should oilier measures bo tried.

“ 1. say to the Minister of Finance.” he continued. “ that if ho asked the peonlo to make a voluntary contribution of £8,000,000. not only those with incomes over £SBO, hut a thousand and oilier cil izeus would he proud to contribute to the cause.”

Mr Nash: They can subscribe to (hr mil iornil savings scheme. Mr Coates- That's rather different. The es,poo. ooo loan is compulsory, Mr Doiilgc: Conscription!

Mr Coates: Ves. fam not preaching, but can reasonably issue a warning. The* Government possesses theories of I'manee anil political economy, hut all (hoorics micht be landed on the scrap heap to-morrow. While they may think their theories will work. T doubt it very much when we are faced with a ruthless Power which if it could would make us slaves and subject us to its will. 1 doubt whether theory counts for much in the face of real danger. People in the last five years, lie continued, had been encouraged by the Government to consider that there was a fairy godmother who could give them healthier and happier times, and that by its administration it could give them everything. Mr Speaker intervened that Mr ('nates was going outside the scope of the debate.

The member for Kaipara conceded that lie was on thin ice. He proceeded, to stress the importance of modifying our standards if that were needed for the maintenance of the war effort, and asked if the Minister of Finance hail considered the effect of a compulsory loan on taxable income. It might be a long time before the war finished, and the early years might be the heaviest financially, as these included expenditure on capital equipment, buildings, etc, EATING INTO CAPITAL. The Government’s present method of financing was definitely in his opinion eating into capital. It should have attempted a loan on a voluntary basis, and not adopted a system of compulsory acquisition of capital. Mr Semple: Applying the same principle to capital as to men. Mr Coates added that the effect was going to be very serious on companies, particularly, while the farmers and others in business would have to go to the banks for assistance. They would pay the bank overdraft charge, but receive no interest on the loan which, it was safe to say, would be worth only £BO per cent. The money would be taken out of production.

WEALTH BEHIND WAR SERVICE. The Prime Minister- made a contribution to the debate for the purpose of discussing the element of compulsion which Opposition members were stressing. The Government, said Mr Fraser, had told organisations which were historically opposed to conscription that if it imposed conscription of men it would also conscript wealth. Now they were meeting with opposition. Mr Bodkin: Why not take the idle money, first, not the money which is working? Mr Fraser: The Government was convinced that nothing short of placing the whole man-power, the whole wealth, and every ounce of property behind war service was necessary.

Mr Poison : Tt has not come to that yet.

Mr Fraser; The Government considers that it came to that when conscription was introduced.

He paid a tribute to the War Cabinet, which had worked efficiently and in a most co-operative spirit. He felt grateful, he said, to them for the way they had helped in the solution of most difficult problems. It, was evident when tho adjournment time came that many members desired to participate in the discussion, and therefore the Prime Minister agreed to its resumption at the next sitting.