THE BUDGET.

Taranaki Daily News, 12 November 1921, Page 5

THE BUDGET.

THE DEBATE CONTINUED. LABOR MEMBER’S ATTACK. CRITICISM OF FINANCE. By Teleerapn.—Pre«re Association Wellington, Last Night. The debate on the Budget was continued in the House to-day. Mr. 4. McCombs (Lyttelton) said the Budget presented that the estimated revenue for the year was £28,000,000, to which had to be added a cash balance of £4,920,294 from the previous year, and with other unappropriated surpluses the total revenue was set down at £34,260,962, leaving a total estimated surplus of £6,132,232, which shows that the public finances of the Dominion are in a very sound condition. It should also be remembered that the annual contribution to sinking funds for the purpose of liquidating the national debt is well over £1,000,000. There was this also to be said for the Government's Budget, that the estimated revenue for the year is likely to be exceeded. The estimated revenue from the Customs Department is £4,900,000, and for the first six months £2,800,000 has been realised. He did not object to the Government doing something to help the pastoralists of the country, who had been heavily hit by the slump in the price of wool and meat, and who, although they made huge profits during the war period, had contributed a portion of those profits to war loans, and also made' other investments, and now have not the ready cash to meet their liabilities. But if, instead of making a ten-per-cent, remission in land tax to everybody, including big landlords in the towns, whose incomes from lands on which banks, warehouses and shops had been erected, have suffered no diminution in their incomes, the Government had agreed to take back some of the war bonds held by pastoralists in payment of a portion of their land tax, the relief would have been much greater to those who directly suffered as a result of the slump. The bonds thus taken back could legitimately be paid for out of the sinking funds provided to extinguish our national debt, and the revenue for the year would not suffer.

REDUCTION OF TAXES. The Government proposed to also reduce income tax, and he agreed that there were anomalies in the incidence of the income tax which should be removed, more especially in connection with the company tax. But if it was possible to reduce taxation he thought a commencement should be made with taxes which press heavily on all the people. A ten-per-cent, remission in income tax would chiefly benefit the big man, who provides the political party funds for the present Government in power. A man with a taxable income of £lO,OOO a year would save £440, whereas a small farmer with an income up to £lOOO a year would make a very small saving indeed, because there would be £3OO of bis income exempted from the tax, plus £5O a year for each dependent child under 18 years of age, plus 5 per cent., on the capital value of his farm, and plus 15 per cent, of his income for life insurance. Take a man with the £6OOO farm already .mentioned, his exemptions are £3OO, plus, say, £2OO for four children, plus £3OO land exemption, and plus insurance exemption, £l5O. Such a man would save only five shillings a year, whereas he could save that amount and more on a single article if customs duties were removed in the way he suggested.

Tlie Budget and the Government’s policy were a Budget and a policy for the big man. A man with £5OO a year and a family would have his burdens increased, but what was the attitude of the Government towards the workers who had not half £5OO a year? Immediately after the declaration of the record surplus of £6,000,000 last April, and with a cash balance of £4,920,000 in the consolidated fund, besides other cash balances in the public works fund and other funds, the Government embarked upon a policy of dismissing men on public works, and then in some instances re-engaging on exactly the same work men at 10s and 12s a day, the award rate for general laborers being 15s and 16s a day. The Government dismissed 775 men from public works in March and April, besides dismissing hundreds more from other branches of the public service. The Government also cancelled authorisations for public works expenditure with local bodies. The result of the Government’s deliberate policy to force down wages was disastrous, not only for the workers dismissed, but for every trader and manufacturer in the Dominion. It'was true that when the Government’s purpose was served—that of a reduction of wages—some of the men had been re-engaged, but at lower rates of pay. Now the Government proposed to reduce the salaries or bonuses, which are the same thing, of men and women, in all Government services, and some of the Government’s supporters hoped that the example set by the Government would be followed by local bodies and other employers throughout the Dominion.

COST OF LIVING. The apologists for the raid *on the workers’ wages gave as an excuse the reduction in the cost of living, and quoted the food groups figures in support of their contention. In vain he tried to get from the statistic department, through .the Government, what is known as the “all groups” cost of living percentage, covering the whole of a family’s budget expenditure. In a country where food is produced in abundance it was natural that the prices in this group should fall more rapidly than in other groups. As the result of the Government’s immigration policy, and for other reasons, rents were still rising. The speaker then proceeded to analyse at length the cost-of-living figures, contending that the statistical department’s rent index numbers were absolutely unreliable. With a view to showing that there was no justification for a reduction in wages, he alleged that the statement that the finances of the country would not stand the strain of maintaining wages at their present level was mere camouflage. The Budget, on present expenditure, provided for a carryover surplus of £6,132,232. It was true this included a cash balance of £4,920,294 carried forward from the previous year, as well as other surpluses, but it was entirely right and proper to use revenue surpluses created in a fat year to help over in a lean year.

His opinion was that the revenue for this year had been underestimated, and the expenditure overestimated, and it was probable we would not have to use any of the accumulated and unappropriated surpluses. Compared with last year, the first six months of this year shows a falling away of £3,600,000, but the Minister of Education showed that allowances have been made for the mountains of coal held in stock and other allowances totalling £1,000,000, reducing the amount to £2,600,000 for the six months, as compared with the year which produced the £6,000,000 rsaGril surplus. While the public fife*

ahces were perfectly sound, the country was undoubtedly passing through difficulties, which would not best be relieved by a reduction in wages. Business men* wholesalers and retailers had been loaded with stocks as the result of the sudden fulfilment of orders when the war closed, but the right way to meet the financial difficulties thus created was surely not to reduce the spending power of the people temporarily. The unfavorable trade balance was created by heavy importations; but, taking the whole period from 1914, the trade balance was very much in our favor, and was x improving month by month. Taking the: whole period from 1914 to date, our exports exceeded our imports by £40,000,000. For the first eight months of this year the total exports had been £34,600,000, as against £31,000,000 for the corresponding period last year, and as against the total imports for the same period of £32,600,000. Our exports for 1919, 1920, and 1921 totalled £151,400,000, as against £63,700,000 for 1911, 1912, 1913. Tbere was not a country on the face of the earth that was as prosperous as ours. Panicky legislation and maladministration might create difficulties, but there was no sounder country in the world than New Zealand to-day. “MILD PROTECTION” Sir John Luke (Wellington North), discussing the tariff proposals, advocated mild z proteetion to encourage local industries. Farmers were already comfortably protected in several lines, and would, no doubt, oppose further increases in duties, but all industries should be treated alike. At the same time he urged that any protection given local industries should be under sufficient control. Much had been said regarding company taxation, and greatly as he would like to see something done to give relief in this direction, he could not fail to recognise that any change in the system* would result in increased cost of collection, and he thought they should not do anything at the present, juncture which would increase the cost of administration. Mr. C. E. Statham (Dunedin Central) criticised the Government’s relations with the Bank of New Zealand, contending that the country was not getting the full benefit of the arrangement made last year, when “rush” legislation was put through at a single sitting. He contended that the profits of the bank were being hidden away by writing down premises and carrying sums forward, instead of being distributed, the country thereby being deprived of onethird of the share promised when the “rush” legislation was put through. The whole position was a cogent argument in favor of a State bank. Mr. Statham criticised the estimates of expenditure, contending that the Government was asking for £1,800,000 more this year than was asked for last year.

The Premier interjected that if the legislation he proposed to bring down was passed a great part of that sum would not be required. His scheme was all prepared. Mr. Statham urged that they should have had the scheme first. He asked how taxation could be reduced in the face of the fact that the appropriations this year exceeded last year’s by over £1,000,000. Referring to customs, Mr. Statham said the Government had announced that it was not a protection measure but a revenueproducer. What was the use of talking of reducing land tax and possibly income tax if the money to meet the Government’s needs was going to be taken out of the people’s pockets through the customs? Mr. W. D. Lysnar (Gisborne) urged consideration for the producers by assisting them in the matter of finar.cia‘l advances for development work. There was too great a tendency to utilise available money for local bodies’ works, to the detriment of those engaged on the extension of primary and secondary industries. The debate was continued till 11.13 pm., when the House adjourned till 2.30 pm. on Tuesday. r