LABOUR GOVERNMENT'S POLICY

Hawke's Bay Herald-Tribune, Volume 81, Issue 53, 25 November 1937, Page 3

LABOUR GOVERNMENT'S POLICY

— Press Associatfon.)

Information on Picot Deal Still Sought THE WAIHI COMPANY TAXATION

(Bj Telegraph

WETjLINGTON, Last Night. Discnssions arising from tho Finance Bill, wliich embodies a variety of subjects, occnpied practically the , whole of this afternoon's and to-niglit's sittings of the Honse of Representatives. The clause in the Bill making retrospective the right to collect ineometax from the Martha Goldmining Co. (Waihi), Ltd., came in for ' some searehing eriticism by the Opposition on the grounds that it was a dangerous precedent Jto enaet legislation imposing retrospective liabilities that involved persons who bad acted in good faitb and had not offended against the law. The Minister of Finance, • the Hon. "Walter Nasli, traced the operations of the Waihi Co., of which the Martha Co. was a continuation, and insisted on the right of the Government to impose retrospective taxation. Opposition speakers opposed the principle of retrospective taxation and said that persons who had suhsequently bonght shares in the eompany would be xinjustly penalised. The purchase of Picot Brothers was again the subjcct of critical comment, Opposition members twitting the Minister with failing to reveal details of the amoiuit paid for ' goodydll, hook debts, etc. ' Objection by Mr Polson to an extension of thne for Mr Nash's speech led to a little rally, Mr Polson 's aetion obviously having relation to Mr Forbes's speech having been cut short the previons evening. Gnaranteed prices of dairy produce and the hardship effects of land taxation were all diseussed. "Urgency having been granted for the Bill, it was put through all stages.

[ Speaking on tke second reading de* I -bate ou which Mr. S. G. Holland (Opp., 1 — Christchurch Horth) compared the ' Government 's pre-election statements i with its actual . legislative actions, he ' gave instances of hardship imposed under the graduated land tax and | asserted that the Government 's guaran- : teed price proposal was the greatest | political confidence tripk which had i ever been played upon the country. The Go\*ernment, he said, never had the , slightest intention of putting into effect the promises with which it had wooed the electors. Dealing with the purchs»se of- Picot Brothers, Mr. Holland said the Minister had side-stepped giving ini formation about the txansaction. When the Government wished to enter the internal marketing business it knew it could control Picot Brothers, so why was there any neeessity to throw away good public monev in purehasing tho business! Why, ho asked, had goodwill been paid for the business! They had yet to get a reasonable explanation of the reSson for the pixrchase. It l-i meant the first stejj by the Government in entering private business the public had a right to know. Why did not the Minister come out dn the open and tell them what the reason for the purchase ; was? It might almost appear that there was somtthing to hide. JHr. W. M. G. Denham (Govt. — ■ Invercargill) likened the Opposition 's policy of protecting profits in •business to that' of the usurers whom Christ cvicted from the temple with a whip, The supply and .issue of money should be the prerogative of the State. It should be a national service to meet a national need. Tha finaneial arrange-, ments this year would assure another year of prosperity in 1938. Mr. W. A. Bodkin (Opp. — Central Otago) held that no case could be made out for tho Minister 's having the right to veto the finaings of the Hardship Committee under the graduated land tax provisions. Referring to the clauses in the Bill dealing with the Waihi and Martha Goldmining Companies, Mr. Bodkin said he had no sympathy with the Waihi Company and he wished to congratulate the Minister on his action , so far as it was concerned. The Minister was quite correct in his action in making provision that similar erosion should not occur in the f uture. It was futile for the Waihi Com^my to say it had acted within the law. There had been a definite weakness in the law and it was only right it should be rectified. He believed the Minister had acted immediately the matter had been brought beneath his notice. However, he would issue an appeal for those shareholders who had bought their shares in all good faith after the tax erosion had taken place. It would be unfair to place an imposition on theso people and the Minister would find it diffieult to justify the retrospective legislation which would cause suffering to innocent persons. He thought the Minister should take statutory authority to protect such people. Mr. Bodkin thought the Government could alford to be generous in the taxation- of lacing clubs of the Dominion, and any relief he could give racing clubs was likely to- be returned fourfold. Dr. D. G. McMillan (Govt. — Dunedin West) said they wero looking forward to the time when tho peopio who spent money ou industrial insuranee in this country would get a fair deal. There was no question that -the relatively weli-to-do person who invcsted money in lile insuranCe waS getting a good return for his money, but the poorest members of the community who were inveigled into putting their money into sickness and industrial insuranee reeeived a very poor deal. In 1935 the amounts paid out on account of death or polieies maturing totalled £300,000 and the expenses of the companies amounted to £307,0.00. The claims met totalled 7120 «acl £0 fewcr ihan 3^844 .polieies Ifipsed

| and tho premiums paid on them were | retained by the companies. The I administration expenses accounted for ! 31 per cent., but he was sure when the Government es'tablished its insuranee ■ scheme it would budget for administra- ; tion and management expenses of 4 or I 5 per cent. ; Mr. K. J. Holyoake (Opp. — Motueka) ' asked if the Government 'is promises 1 concerning guaranteed prices had been ! kept. They had not. Primary products 1 had been taken over compulsorily from ! farmers at fixed prices. The primary I producers should have been left to coni trol their own goods from the farm to ; the consumer and they were well able ; to do it, He contended that the price ; fixed for butterfat was a "political" price because the responsibility for it ■ was taken by the Government rather j than the committees which advised the j Government upon it. i The Minister of Finance (Hon. Waii ter Nash) in reply said the Opposition | had contended that the dairy farmers". j money was used for the purchase of | Picot Brothers. There was no shadow | of justification for such a statement. In j answer to an Opposition question he said there would definitely be a deficit' m the Dairy Industry Account. He proceeded to compare payouts of the Ausfralian dairy companies with those of Hew Zealand, stating .that the Dominion farmer got a better price than the Australian. Referring to the hardship clause, the Minister said it had been asked if the Government would make perinanent provision for such a clause, but it intended to amend the land and income tax law some time before the session finished in such a manner that it was hoped would obviate the necessity for a hardship clause in future. Speaking of the Opposition 's eriticism of the provision to ref er the decisions of the hardship commission to the Minister, Mr. Nash said the principle in u-e Biii was exactly the .saine as that in legislation by ipast Governments for the writing oi! oi rents by Crown tenants and also that under the Discharged Soldiers' Settlement Act the Opposition had merely fastened on that aspect of tho case in order to mislead the public. He though the Government had the right to say what portion of its revenue should be given away to anyone. The aext point referred to was that of dairy prices, the Minister stating he had been considerably surprised at Mr. Hamilton 's reference to the surplus in the cheese account of £258,000. The leader of the Opposition had failed to deduct the saies costs from this amount and when these were deducted the total of £12,647 was arrived at. There had been a lot of opposition to the making sf the proposed legislation in reference to the Waihi Company retrospective, taid Mr. Nash, who outlined the history sf the company, stating othat it had paid in dividends since its inception a total of £6,263,801. The Minister statsd that he had been astounded at the 'lefence of the company put up by the Opposition on the prefious night and he was proceoding to deal with the operations which had led up to the necessity for the present legislation when the bell rang, indicating that his time was nearly up. At this junclure an incident oceurred which arose out of the action of Mr. McDougall in objeeting to time extentsions being granted to Mr. Forbes and Mr. Coates on the previous evening. Mr. Forbes rose to move an extension of time for Mr. Nash, but when tho motion was put by the speaker it was objected to by Mr. J. W. J. Polson (Opp. — Stratford) and lost. Mr. JSTash: It seems as if the honourable member does not want the story to be told to the Ilouse. The Minister of Education (Hon. P. Eraser): It was done in a .very rotten wajr, -

Mr. Polson rose to & point of order, saying he had heard the Minister of Education refer to his action as "the very rotten way " in which he had done it. The Speaker ruled that the remark must be withdrawn. Mr. Fraser, in doing so, replaced the word "rotten" with the word "unfair."' Mr. Polson: Is that Parliamentaryf The Speaker: Yes. Mr. Nash continued his speech and pointed out that the return showing the Government 's transactions concerning the purchase of Picot Brothers had been tabled in the House two months ago and a copy had been supplied to all members. Mr. Holland.-" But it does not show the price for the goodwill. Mr. Nash: Oh, no, you can't get out of it that way. The return has been there for two months. Mr. Nash was proeeeding to deal with the decision of the late Sir Francis Bell regarding retrospective legislation when Mr. W. J. Broadfoot (Opp.— Waitomo) remarked that the Minister was securing a pretty good extension of time. He was called to order by the Speaker who said that it was Mr. Broadfoot 's duty to point out to the Speaker if he had noticed that an extension of timo was being inadvertently given. He advised the Minister that his time limit had expired. The Bill passed the second reading without division and entered the Committee stages, Hon. A. Hamilton stating that he was sorry about the difficulty that had arisen. Perhaps, he added, the matter had got a little out of hand. Mr. Nash: I quite understand. It is a personal matter. Mr. Hamilton: Oh no, I don't thinls that it was a personal matter. It arose from the incidents last night.. Mr. Fraser pointed out that the member who was responsible for the refusal to grant the ex.tensions of time the previous evening was out of the House at the time. He added that Mr. Hamilton could not take the responsibility for what had oceurred. The Chairman of Committees (Mr. E. J. Howard) : Order. This is not in the ' Bill. Mr. Coates (Opp. — Kaipara) asked any lawyer in the House to justify the retrospective taxation provision in the Bill 0r the naming of any particulai compafiy or person in a Bill of such nature, no matter what they might think personally of the action of any company in evading taxation.

Mr. J. A. Lee (Govt.— Grey Lynn): What about McArthur? Mr. Coates: That is a remark which deserves the severest censure. The actions of the McArthur companies could in no way be compared with those of the Waihi Company. Mr. Nash explained how the Waihi Company had distributed its profits overseas where they could not be taxed ^ unless the present legislation were passed. In May, 1935, when the Waihi Company was not actually carrying out goldmining operations in the country, a dividend of £91,866 was distributed While the payment, was being made the Commissioner of Taxes had advised the company that in vicw of the standing of the company no advance assessment of taxation need be made in conneetion with the dividend, but when a latei assessment was made the Commissionei had been informed that the company had gone into liquidation. The Martha Goldmining Company (Waihi) Limited was practically a continuation of the Waihi Company and practically the same persons were shareholders. No one would deny that tho payment of taxation was due. With respeet to the retrospective legislation the Minister quoted cases where it had been used in cases of gift and stamp iduties when persons or companies were evading taxation which should be paid. The Government was entitled to take measures to secure it. There had never been a clause more justified than was the present one.. Because the company yras not carrying out goldmining operations when the dividend was paid it had evaded taxation. Mr. S. G. Smith (Opp. — Taranaki) said the Minister had not given the full details of the purchase of Picol Brothers' in tue r-.am lapicu m He House. He asked the Miflister was it not a faet that the valuation of the business was fixed by a Government official who had not a single bit of experience, and was it not also a fact that the firm liad not asked for goodwill but were told to put in for it. He asserted that the failure to give full particulars concerning the purchase of Picot Brothers was causing suspicion throughout the country. Mr. W. A. Bodkin (Opp. — Central Otago) said in the case of the Martha Company 198 people had bought shares after the dividend referred to by Mr. Nash had been paid. These people wero entitled to protection which would not be given by the present legislation. At 9 p.m. the Prime Minister moved the closure on the short title. This was 'Jorced to a division by the Opposition nad was carricd by 4S votes to 17, the sh u't title being passed. llon. A. hamilton asked the Minister if h.i did not think it advisable to bring tho Statc Advanees Corporation accountf- back into the public accounts. Tho corporation - handled £50,000,000 "and had a staff of possi'oly 1000, but the House did not have an opportunity of discussmg the Estimates. Mr. Nash said if it were going to jo advantageous hc saw no reason why voting on the Estimates should not come before tre House, but there were reasons for keaping the corporation iccounts separalt. Eour more clauses were passed vrith jut discussion and tn? Eousc adjournec at 9.30 fcr s; r,-'t'\ Mr. II. M. Hushwortli (lnd., Bay of Islands) moved an amendment to clause XI. to the effect that the £6,000,000 to be borrowed for public works should be borrowed only from the Reserve Bank. The chairman of committees, Mr. E. J. Howard, ruled the amendment out of order, because it must neccssarily involvc an appropriation. On the motion of Mr. W. A. Bodkin this ruling was referred to the Speaker who upheld the chairman's ruling. The House had passed ten of 61 clauses in the Bill by midnight. After the fluppei adjournment two

amendments to the Bill were brought down by Governor-General's Message. One of these places a restrictiop. on the eviction of tenants when a dwejlinghouse is sold if alternative aecommodation is not available, provided the rent has been paid and the tenant is not letting part of the house for profit. The House continued the discussion of the clause validating the purchase by tho Government for the purposes of the Primary Products Marketing Department of Picot Bros., Ltd., and also of Picot's, Palmerston North, Ltd. At 2.10 a.m. the closure was carried on the clause by 47 votes to 14 and the clause itself was passed by 48 votes to 13. " j Ilapid progress was made after the passing of this clause, and the 61st clause of the Bill, the last in 'the original measure, was passed by 2.53 a.m. The first new amending clause of tlie Bill', providing that returned soldiers holding decorations should not have the payments made in respeet of those decorations computed as income when consideriiig sustenance payments or veterans' allowance, was passed without amendment. The House then passed to the discussion of the amendment preventing the eviction of tenants from dwellings. After some debate on the tenant-land-lord relationship the clause was passed. The Bill was put through the committee stages at 3.10. It was then read the third time and passed. The House rose at 3.12. •