RETRENCHMENT.

Taranaki Daily News, 24 November 1921, Page 9

RETRENCHMENT.

MR. MASSEY’S STATEMENT. CAUSES OF THE PRESENT SITUATION. (Our Parliamentary Reporter.) Wellington, Nov. 19. Considerable time was devoted to the discussion of economies and retrenchment by the Prime Minister during his speech in reply to the Budget debate. The principal points indicated by Mr. Massey were further and more rigid economies in the Government departments and a cut in salaries starting from the top and including members of Parliament, amounting to ten per cent. This, he said, would operate on all salaries down to a couple of hundred a year or so. Mr. Massey opened with a discussion of the causes leading up to the present financial situation. “He had heard a great deal during the past few months, and particularly in the past few days about the increase in taxation and the hardships suffered by many people, but very little about the causes of these things. The first among them he said was the war. We had done our share. It had cost us eighty million sterling, and to this must be added the capitalised pensions liability amounting to another twenty millions. The eighty millions carried interest and sinking fund charges. The interest in some cases was very high, and the sinking fund amounted to one per cent. The country had had to find increased salaries and bonuses for the public service, and to go on finding them for a considerable time to come, so far as he was able to judge. Then what about the increased cost of materials for such public services as the railways and the postal department? He quoted figures showing that the cost of iron rails for maintenance work had gone up by 200 per cent-, machinery 200 per cent., tenting 500, clothing 150, coal 105, and other items ranging from 200 to 105 per cent. These things ran to enormous sums of money and he was speaking of payments from the Consolidated Fund and not the public Works fund.

THE DROP IN WOOL AND MEAT. On top of these came the worst of our trouble, the drop in our staple products, wool down about sixty per cent., beef hardly worth exporting, lamb keeping us up, but neither mutton nor butter really doing so. The national income having gone down and the expenditure having increased, it was necessary to do what a business man would do—readjust matters to keep the expenditure within the income, and that was the duty which devolved upon them. If they were not able to /do it the country would have to face financial disaster. Quoting from a speech he made last March, Mr. Massey said that he knew this was coming, though he must admit he hardly expected it would be as bad as it had turned out to he. There was only the one course to take, decrease expenditure and increase the income. That was retrenchment. That course was being followed, and not only for the last few months. Before he went to England he had had the Economy Commission set up, and it was doing very good work. He then proceeded to quote the details of savings effected which he had given to the deputation of business men a few days ago- The savings, he said, amounted to two million pounds, and he was not going to stop there. Since then Cabinet had been considering further economies each week end. The total of these savings was £1,395,361, making a total so far of three and a quarter millions. Every shilling of that would be saved. Many people thought that this was all being effected at the expense of the public service. That was not the case, he did not believe half of it was being so effected. They were not going to inflict hardship on this country it if could be helped.

THE EFFECT OF WAR. It had been said that the fact that these savings could be effected was evidence of extravagance. Was it realised that the country had been passing through a war? The work of some departments had been very nearly doubled. and new departments had been created. The Imperial supplies department was gone. He could not say how many men had been dispensed with in the defence department. Then there was the Board of TradeMr. Lee; That has paid its way. Mr. Massey: That is so. I do not believe the Board of Trade has cost us anything. The functions of the Board, he said, were almost at an end. Some of the work would be carried on but he did not think that the staff would be required. There were quite a number of departments being reduced where services were not required. It had not been possible to start on a campaign of economy and retrenchment in the war period. It had not been possible to begin until this year. There was no getting away from that. Take base records as a case in point. Hundreds of people were employed there during the war, and he did not think its functions were ended yet. These people on the various staffs were all being dispensed with because they could not be kept on when their duties were at an end- He hoped by the time the winter came they would have found employment. The economies effected did not show right away because some of these people had had to be paid retiring allowances.

Referring to the contention that the expenditure for the June quarter had shown an increase, Mr. Massey repeated his previous explanation of the charging of railway increases to that quarter, and said the September quarter showed a very considerable reduction. That for the railway department went down by nearly half a million. Railway finance was not satisfactory yet, however. He hoped that the time was coming when it would be. FURTHER ECONOMIES. In addition to the economies already effected and those the Cabinet was considering each week end, the economies committee thought that it would be possible to ensure another three million pounds. He doubted that figure but it would be two millions besides what he had mentioned, and that was not enough. It was necessary to spread taxation more than it had been spread before. There were numbers of people not being taxed who were to contribute to the taxation. Some revenue would be obtained from the tariff, but he did not know how much; perhaps about two million pounds. FURTHER TAXES. It was not possible to stop there, for it was necessary to be on the safe side, and he was going to ask Parliament to

agree to an increase in the taxation on the totalisator. Mr. L. M. Isitt (Christchurch North) (emphatically) : Hear, hear. Proceeding, Mr. Massey said he proposed to ask Parliament to accept an increase in' the tax on amusements. He hoped in a few years it would be possible to reduce taxation in these directions. Even this would not be enough, proceeded Mr. Massey. This was the first time in forty years that the expenditure had been looked into closely. Cabinet had been going through the expenditure with a fine tooth comb, and every item that could be done away with would be. LOWER SALARIES. To come back to salaries. He would ask Parliament to agree to probably a ten per cent- reduction in all salaries, starting from the top down to a couple of hundred a year. Mr. H. E. Holland (Buller): You will not grade the reductions? Mr. Massey: That is a matter for consideration. He was very sorry it was necessary, but when the country got into difficulties, like the present, though he had absolute faith in the country, there was only one course and th'at was retrenchment". The reduction would start at the top and would include members of Parliament. It was impossible to make the cut and leave members of Parliament and Ministers outside. Bonuses and increases in salary had been given in coasideration of the increased cost of living, and as the cost of living went down they would have to disappear. They would not go until the cost of living did go down. He hoped, however, that salaries would not go down to the level of 1914.

It was necessary, concluded the Prime Minister, to get the finances of the country into a sound condition and to relieve those people who were groaning under the burden of taxation.