DOMINION FINANCE.

Hokitika Guardian, 26 June 1923, Page 4

DOMINION FINANCE.

‘IX PARLOUS PLIGHT.” EXCESSIVE COM PA XY TAXATION CONDEMNED. SIR G. WARD INTERVIEWED. WHY HE LEFT THE NATIONAL GOVERNMENT. (Special to “Guardian".) WELLINGTON, Juno 21. The Right Hon. Sir Joseph Ward, interviewed by a Hokitika ‘'Guardian representative, said ho was amazed at Mr Massey, in his capacity ns Minister for Finance, expecting the public to accept his explanation upon the material points that have been tin- subject ol controversy between them since lie (Sir Joseph) delivered a short speech at the function to Mr do la Perrelle at the Bluff on the 30th. ultimo. Sir Joseph declared at the Bluff that the Motherland had since the war decreased her Budget by over £500,000,OCO; bin the Government here in the same period had increased our borrowing by millions and these, with tlm surpluses they had used and spent, amounted to ever .C1C0,000,000.

‘■These," said Sir Joseph yesterday, ■‘were matters of fact that, in his reply. Mr Massey did not and could not deny. Anyone who reads the British and New Zealand Budgets since the war will lind that T have neither exaggerated nor misrepresented the position in any way. The statement f made at the Bluff was in essence and in fact absolutely true.

PREMIER'S .MINIMISING TACTICS. ■‘Dow does Mr Massey in lbs last reply try to minimise this truly regrettable position? He .says: ‘‘Sir Joseph Ward has, I notice, again repeated that since the war Great Britain lias paid £300,000,000 off her debt and reduced income tax, while ill this country we have increased our indebtedness. From this it might be inferred that the national debt of Great Britain lias been reduced, but since March 31st.. 1918, to March 31st,, 1922 the British national debt has been increased by £1,821,000.000.’ Does Mr Massey shut his eyes to the tact that since the war Great Britain lias undertaken the control of Iraq (Mesopotamia) and .Palestine: and that in the House of Commons and throughout England the expenditure of hundreds of millions involved in this has roused fierce criticism? Does he ignore—or expect our intelligent people to do so —the fact that the British Government has already expended scores of millions in consequence ol the unsettled position between the Greeks and Tm ks ? Does he ask the New Zealand public to close their eyes to the enormous cost of maintaining a portion of a large standing army on the Continent, owing to the non-settlement of the peace terms between Frame and Germany. It is hoped to get the cost of this back from On many; but that is. to say the least, problematical; and in the meantime Great Britain bears the whole c-ost.

‘•Can the Prime Minister, in all sincerity. seriously put forward inch a reason in justification or excuse lor the position here and in refutation of the statement i made at the Bluff? Tl he •does, then 1 afliim my piolound conviction that no sane man or women in New Zealand will accept it. New Zealand has since the war had no such obligation's to provide for as Great Britain: and it is drawing a red herring across the scent to suggest anything of the kind. I was not. when speak mg at Blidf. discussing the v hoi" taxation ui England, lo do so, to, ion rf comparison with New ZcuIniir?, we would have at the same tine ro lake uito account the respective obligation-. In addition to the above obligation:-, undertaken since the war, (In: Motheiland lias not rereived any interest or repayment of over Cl.OtH).(100.1109 lent lu lier war Allies; and she ha. still to maintain a great and costly n.ivy. Vet. notwithstanding ibis, her annual Budget has been redmed since the war. and her war in l '.one l x reduced to Is fid. cannot go on.

“But our position is quite the reverse; and the question is—-Can this cuuniry. now four years and -even months alter the war. continue to stand it, even with a further two millions of taxation taken ell. ulic'li. o! course, everyone will admit is in the light direction? 1 say unhesitatingly we cannot go on as vie are d’diig.

COMPANY TAXATRiN. ITS BALEFUL EFFECT. “An examination into company taxation. as between our system and that in operation in England. Australia, and America, i- eiitiiely against us. I bey have all gone through the war and the slump pciiod. This system will, ii continued here, compel numbers ts' our best industrial compnuics to go into liquidation. I have before me a public .statement issued by authority of eighteen of our farm, stock, and station c mpniiies, whew lit'iin bitsine-s is trading with farmers. '1 key are all New Zealand companies, and they say publicly-—“ This will bring up the question w itii purely New Zealand c:unpanies of whether business should he continued, or whether, as a reasonable return cannot bo earned en We shareholders’ capital, the businesses should not be liquidated and the capital returned to the shareholders.’ They give a typical case of an investment of £IOOO between two farmers if m.r.’e in ;i company, and show—which I have never seen contradicted or disputed —that 24 per cent, would require to be earned by the company to pay a dividend of 8 per cent, on the CIGOO- - it all comes out of the farmers. A number of those eighteen companies 1 utve, speaking generally, been friends of ami supporters of Mr Massey’s party.

Surely it is enough to make sane men anxious as to the future. Even with the dropping of the extra Is 3d income tax, which was put on since the war ended, a reduction of a sixth would only reduce the figure above-named to 20 per cent. ; and this would still be a crusher. So it would be even if the income tax is reduced to ss. •‘The whole system unquestionably requires drastically altering. It operates similarly to all companies as well as to thes I refer to. 28.8 PER CENT TAXATION. “bet me give a further illustration of the damaging effect excessive taxation in peace time is having upon the whole country. If anyone interested will look tip the ‘Australian Banking Record' of May 1923, they will, on page 353, find the report- of the National Bank of Australasia. Its gross profits are shown as £1.114,392. and its rates and taxes are ££58,254. This is equal to 5.22 per cent of tlieir taxation. If you take the last balance-sheet of the Bank of New Zealand, March 1923. the- gross profits are £1,546.041. and its rates and taxes nte £445,071. equal to 28.8 per cent, taxation! The gross profits of the Bank of New Zealand are only about 50 per cent, more than these of the Australian banks: yet the Bank of New Zealand pays nearly eight times more in taxation. The last published balance-sheet of the National Bank of New Zealand is up to March 1922. Their gross profits are shown as £595,904, and rates and taxes £206.030. That is equal to 34.7 per cent, taxation. If you exclude their British taxation, their New Zealand taxation amounted to £143,967, or 24.1 per cent, on their gross profits. They did about half the business in New

Zealand the Australian hanks did ; yet their taxation, excluding their British taxation, was nearly two and a halt times more than that of the Australian hail it, “WHAT A BELIEF.” ‘■[f anyone takes the trouble to analyse these results they "ill find that in taxation the two New Zealand banks are handicapped to the extent ol between three-quarters and one per cent, on the rates they charge to their clients for advances, as compared with what' is payable by the Australian bank cited. What a relief a reduction in rates and taxes to the Australian level would he to this country no one can deny. The beneficial effects on all classes, in both town and country would be incalculable. I have given tile ease pf two New Zealand banks. I will adil to it the position of one of the Australian banks. One-eighth ef its total business is (lone in New Zealand; but, of its total taxation, 32 per cent, is paid to the New Zealand Government. In other words, 12} per cent, of that hank’s whole business is done in this country, yet 32 per cent, of its whole taxation is payable in this country!

THE FLOATING DEBT. SOME TRENCHANT CRITICISM. Referring to the Hunting debt, Mr Massey says:—‘‘The, statement made by Sir Joseph Ward to the effect that hi, had made provision for meeting the war advances received from the Imperial Government by including them in die loans' falling due in future years is far from being correct. A relorence to my Budget of 192!) clearly reveals the position. Thu sum of £1,131.313 had been provided lor by the issue oi debentures, but £22,298.931 was covered by a memorandum of agreement. 'lbis, in effect, left that huge sum as a

‘floating debt,’ with no fixed date of maturity; and. as such, it remained until 15)21, when, at the request of the Imperial Government, the memorandum was replaced by debentures which were included in my funding agreement completed last year, whereby definite arrangements were then made for the annual reduction of the debt. No action was taken in connection with funding this debt until March, 1921, when I received a report from the secretary to the Treasury, and T then instructed him to take the initial steps. There is no previous reference on the official files which would indicate that such a course was contemplated prior to the date mentioned.”

•‘This (declared Sir Joseph Ward) is one of the most remarkable and absolutely extraordinary statements that lias probably ever been made bv any man bolding the responsible position id Minister for Finance. It is contrary to fact. Fur proof I refer anyone to Mr Massey’s own budget ol 15)22. in which he says, under the heading. ‘Funding Imperial Government Advances’ •

“It will Im remembered that in the war years the Imperial Government met a- portion of our liabilities in Europs by advances on a'luuiil cl v-.u expenditure and loan redemptions. The gross amoniii. so advanced was £25),(>23.073, made up of £2(1.310.2 !■> bir war purposes and £3,282.828 lor loans redemption. “The following are the particulars: 3! per rent. £1.000.099. due March Ist. 1928, or March Ist. 15)23, or after on giving six months’ notice. If per cent., £7.414.1-1 I. due December Ist. 1»45. or I):«'iii!«’l' Ist. logo, or alter on giving six months’ notice. ■ > per cent. £11',100.903. due June Ist. 19-J7. or June Ist. 1929, or alter on giving six months’ nutue. ■ 1 i pel rent., £!).!)!>!>.0911. due Hopomlter Ist. 1928. 3.1 per cent.. £108.421. memorandum of security. •> per cent.. £!•:;.311 memorandum of .-ocurity. lotal £25! 023.073.

“The question of placing the debt on an improved basis lias engaged my attention for some time past, and I am now pleased to announce that an arI'iiiigemenl satisfaetiov to New Zealand has been made. It has been decided to fund £27.332.101 on a (i per cent, annuity basis, which will have the eflect of automatically discharging this sum from the public debt ol New Zealand in about, thirty-seven years; this leaves aside £2.090.5)119 State Advances’ debt redemption as that ollicc lias its own provision for ••inking In.ml. I he , "tidition- ineliido the conccs.-ioli that llf whole or part of the funded debt- may be redeemed at any time, thus enabling advantage to be taken ol any future reduction in interest rales. FROM HIS OWN BUDGET.

"It will be at once seen from Mr Ma.-sov'.s own Budget that, a> I have already publicly stated. I put till lb’‘ debts due to the British Government into war loan- when I vva ■ in England. This Mr Mn.-sey clearly shows in blown .1922 Budget which 1 quote above. They were not left ‘as a. floating deb! with no fixed term for maturity.' 'I be first (for £1.090.090 at 35 per cent), was due in 1928 nr earlier (with ca<-h man at our option). The second. .07,-11 LI! I at 4 5 per cent, in 1945; the third, for £11.000,009 at 5 per cent, in 1947: and the fourth, fur £9.000.(100

i: l. 53 per cent, in 1928; a total of £251,114,141. There are only two comparatively small items, amounting to £298.932. under ‘memorandum of >ecurdy.' and ilie.-a. in all probability, are for amounts that have arisen alter I bad left the Government. 1 do net reddled any sui b items; but I think it will be agreed that it is immaterial as it does not materiallv affect the point at issue. I contemplated, when money again became cheap, converting the whole of these loans into I or 4 5 per lent. Inscribed Stock.

“The loans above mentioned wore all arranged by me in London, as | have already stated, for a period of years t , i over our whole indebtedness (incurred l,v the British Government on belinll of New Zealand) for war purposes; and no nor!ion of the indebtedness to the British Government was left as a floating liability by New Zealand to be paid to the British Government. Therefore no form of emharrassmeiit or difficult v iii connection with our indebtedness to the British Government for war purroses was left, by me while Minister for Finance in the National Government. I instructed Mr ('opus, the capable officer at the head ut the finance hrancli ill the High Commissi,pier’s office to carry them out ; and lie did so with his customary efficiency. Since then the New Zealand Government has funded those loans. 1 make no comment on the opera (ion, or on their right to do so. It neither alters no! weakens my statement that the whole of the war debts incurred by the British Government on belinll of New Zealand during the war were arranged bv me in the wav I have stated. “SHOULD HAVE BEEN BIG ENOUGH.”

“I felt at the time rather proud of having carried out the matter, and do so -till, as I was the only War Finance Minister in the Empire who had cleared olf the whole of the war loans and other liabilities incurred on our belinll by tlio British Government. Instead of carping and inaccurate criticism over four years afterwards, Mr Massey should have heen big enough to acknowledge that it- was a good piece of work. REDUCING TAXATION. A REFORM METHOD! 1 “Does Mr Massey seriously ask any intelligent person to swallow the suites incut r(int taxation per head ol the European population lias during the past three years been reduced from £lB 9s to £l2 7s 9d per capita Dees he not know that the peoples’* ability to pay income tax alone lias notoriously fallen by some millions more than the Is 3d reduction accounts for-: According to Mr Massey’s view the fall in income tax represents a reduction of taxation. It won’t stand examination. If jt were possible for no income tax to be collected, then, according to such a theory, the taxation per capita would further tall! It is no use arguing on such a basis. The figures per capita cited by Mr Massey have little or no ben vine on the point. It would be just as ludiernu- to say that if the teal revenue , f the railways fell by loss of trade, that it represented a saving of so much per head to railway-users. But that only has to be mentioned to be flouted.”

LIABILITIES IN NEW ZEALAND. “Having dealt with our liabilities to the British Government, T now deal with those in New Zealand. Mr Massey quotes from Sir James Allen’s hudget of 1919 in a most disingenuous way to show lie had to provide for ‘new’ requirements totalling £30,323,000 and he asks “how can Sir Joseph Ward take < redit for fully providing for till war liabilities incurred in New Zealand?” fu doing this lie suggests most unfairly that 1 am to be held responsible for the policy for new requirements of a Government of which I was not a member. It lias no bearing whatever on my statement that 1 had provided for the war liabilities before I left the National Government, because 1 hud.

I was strongly opposed to the important new proposals in Sir James Allen’s budget involving an expenditure of millions. In proof of this 1 quote from my speech in the House oi Representatives on September JJtb. 1919: “1 appeal to the lion Gentleman nut to try to drive two years’ land settlement into one. and by that means cause die value of land to go up in this: country to an amount that i- going to prove disastrous to soldiers and to civilians who go upon the land. Such a policy is not to the future welfare of the country.” I have never at any time said or suggested there would not arise further liabilities in New Zealand after I left the National Cabinet, because ol course there would until the final payment was made. The total amount of war loans raised under the loan authorities except Sir James Allen’s loan obtained from the British Government were obtained by me. The total amount of war loans raised was £81.339.8.>,, ol which £31.733,403 was raised in _New Zealand, and the balance £2!).7!b. 1.i2 in England. In Sir .James Allen’s budget. two items of new proposals alone amounted to £14,5(10.(3)!) for soldiers’ settlement and land, bow can Mr Massey or anyone else say that it is a liability left by me; on the lace of it, it wiiiiid lie an absurdity to .-uggest it. WOULD CREATE A LAND BOOM.

“In addition to which, while I was in favour ol doing all iiossible to settle soldiers on the land. I was positive the policy followed would establiGi a land boom, with all the dreadful < oic-c----quelices of in tin led hind valve-, and I told the House so. as tlm above statement made by me at tlie time conclusively proves. A large operator in land within a year to spend such an enormous sum as £ !-1,500,000 would send values up to prices that made their profitable working to settlers impossible., and were certain, as I. publich predicted, “to prove disastrous to mildiers and to civilians wlm go upon the land.” Could it- have been avoided? In inv opinion it could. II was a positive calamity to take the accumulated surpluses for land buying. In my speech in the lionise on Septemb'W 30th. I urged the Government nut. tu do so but without, avail, and quote from Hansard of that date:— “ ‘Mere let me say that the surplus the I gentleman proposes to take o! £15.009.999 sterling will bring tins imintrv each year at least £,50.009 sterling- and if fortuitous circumstances had enabled me with the gentleman with whom I was associated m the Nathiona! Cabinet to have got- and 1 would have pressed it -another £5.000.0i)O. £29.(;'■:) 090 would have brought in £1.000,999 a year or so. ... I prul"n>c that Ihe total amount ol inteiest | r oiii the sinking fund should he used for advances to soldiers, to setileis. to workers, and to local public bodies. Evorv penny piece of it. Let u earmarked for that purpose. and tlm! purpo: :• only. If I had my way I would have onr-maeked that money a- 1 did tlu> ordinary sinking fund. - > tbm no OtivoriinH'iil would Cout h it.*

••Could my proposal to keep WJo.irm.r;)3 oi surplus have been accomplished." I ’ in. Host loin Id v it could. IT KCH ASK OF LAND WITH CGVKRN.ME.NT STOCK. "Mv intention was to pi.ivnu-o all binds required for soldiers by Government stock bearing H to 5 p- r cent, interest taxpaying stack— ala! all the laud required could have been acquin d. and d would have prevented a land Imill. We could no! have borrowed loans on the open market ill England at (bill iieriod. as the British I reaMirv during the war reserved the market for their mvu requirements, but I ascertained in London that we could have got advances against our £29.0()1).0fi<l surplus if we required i! until such time as the bar again-! bur rowing was removed and it is a lacl that it was soon alter lilted. That w c • idu have invested I miii surplu.se> SJOJ.W.IMtft is. cf r.uii-r beyond ail quest ion. as at .March 31 >l. 1921. tin cumulated stirplu u according to the financial statement was fl23.fi, 1.20.).

A IT FIT. TIDN. I,AN!) LiKIM AND DEI’I! ESSH )N. WHY SIR .ItiSEi’ll WARD If ESP : N ED. •‘However, the policy for pun-ha-iug bind 1 1 r ,:i- b had a Mindly I art ,'d on a large scale before ! returned to New Zealand on l lie bpq , - cti.-iou. rad a* 1 believed it would remit di-a-t rouslv i called the l.iboi;:! Mini-ter- luge, humid to! I Diem i !ml. i.u my opinion, it would ivs'ili in a I Mid I ":m red bar a-

ci;il :|i|fi, ulties, and lhal I would not adept I'n* n-pop-iliibty for it. and that Hi" only ecuc-e was for me to resign. I'.ciy i,in- ol mv l.ib-wal ,■ ileagiies knew that this was s«. and, wlieth'-i - 1 was right nr wrong. I lifted upon mv judgment at the lime, and I look the course indented. 1 i auii-ii he accused bv anyone q viying now. ’I told you SO. nri-i Li: • P di-v to u hi, I) | wa- imposed bad been tried lor nearly four years.’

“1 a -ted quite loyally t" n!l my eu! ioagtfs I 'll •ughinil the v' 1 ole time I was in llir* Nr.tii.mil Gavi i imieiit. and none :P them can >ay to the contrary. Every one of lho Ministers - Reform and Liberals, alike did their utnio-1 t , earn on Hie ut during a time

of trial and dilfictiliy, n'd. mi the whole, they succeeded line nnnmidy well. To be fold now that I am in any wav responsible tor anything that accrued aft r r resigned fmm the Govcrimieiil: and to have a ih.ubt cast on piv having put ike whole tif our indebtedness to the Jir into war loans is to say the hint, unexpected and ungenerous.

“A SURPLUS OF MILLIONS” WHEN STR JOSEPH WARD RESIGNED. x:>w citrsiirxc taxation. <- lt cannot Dc; trutlifully asserted I>y anyone that' there was any failure on my part in financing the war. Our finance, when I left the Government, was strong and clear, with a surplus of millions that no part of the Empire had similarly provided; there was a sinking fund provided for ottr whole indebtedness.

“I have spoken recently ahout the liuancial position, and I do so now solely because ] am more than anxious about the future. I have, and have always had. the greatest confidence in the country, but with the present population, and thc> extraordinarily heavy taxation, burdens bearing upon the industrial world now. four years and seven months after tile war. is having a far-rcnching effort upon the whole country. ‘Expediency,’ and ‘assertions that, all is well is not going to prevent further difficulties presenting themselves within the next lew years hence.”