DOMINION'S POSITION.

Taranaki Daily News, 10 November 1922, Page 6

DOMINION'S POSITION.

REVIEW BY PREMIER. IMPROVEMENT IN FINANCE.. BETTER PROSPECTS FOE PRODUCE. OPTIMISTIC NOTE SOUNDED. SPEECH AT NEW .PLYMOUTH. Torrents of rain which fell yesterday afternoon and at intervals last evening in no way detracted from the warmth of the welcome extended to the Prime Minister (the Right Hon. W. F. Massey, P.C.), at the Coronation Hall, New Plymouth, last night. The meeting was an enthusiastic one, and the Prime Minister’s address was listened to attentively throughout, frequent outbursts of applause punctuating his speech. The Coronation Hall was crowded practically to its fullest extent, the attendince numbering about 1500. The accommodation arrangements were well-arranged in the form of a horseshoe stadium, with additional seating provided within the oval, while the Prime Minister spoke from a dais in the centre. The arrival of Mr. Massey at five minutes to eight was the signal for an outburst of applause, which was renewed when he took up his position on the platform. “For He’s a Jolly Good Fellow” was spontaneously taken up. followed by three hearty cheers. On the platform were many prominent citizens with their wives, the Mayor (Mr. F. E. Wilson) presiding. The stage was prettily decorated with fernery and flowers, . In introducing the Premier, Mr. Wilson spoke appreciatively of the honor of having the Prime Minister to speak to the people on the political questions of the day. That appreciation had already been shown by the warmth of the welcome accorded Mr. Massey. (Applause).

ENTHUSIASTIC RECEPTION. Mr. Massey was again enthusiastically received on rising to speak. Before dealing with politics he said he wanted to express the pleasure it gave him to meet such a large gathering, especially on such a stormy night. He remembered speaking to another very large gathering in that very hall some years ago. and ° since then circumstances 'had altered. For some years past he had not had an opportunity of seeing very much of New Zealand, except Wellington City and an occasional visit to his own constituency. The reason was- that four times in five years he had been called upon to represent New Zealand in Imperial Conferences in Great Britain, and he had on one occasion represented the Dominion at the Peace Conference, on which occasion 'he was away about eight or nine months. With the time he had had to spend in Parliament and at his work in Wellington they would see that he had not had much opportunity of getting round the country. However, the position had changed again, and he hoped that they would be able to look forward to a "comparatively easy period of peace and the resumption of their normal occupations. He did not need to remind them that during the past, two or three years they had been passing through a very difficult period of reconstruction which always followed a great war. and he traced the parallel between the similar period after the Napoleonic war and that just gone. There had been the boom and then the period of depression and the drop in prices. When he returned from England at the beginning of last year he and his colleagues had seen that they were faced with a period of depression, and arrangements- were made as far a-s possible to meet it. When he returned the .slump was upon them. The national income had dropped very seriously. Tn the year ended March 31, the Customs had fallen by over £3,000,000, the income tax revenue by over £2.000,000. while minor items -made up another £1,000,000 of the fall, so that they had to face, not exactly a deficit, but a lower revenue over the preceding year of some £6,000,000 ou £‘7,000,000. But that was not all. On the other side there was the fact that their products had come down in the world’s markets by 60 per cent. The people in Taranaki, he continued, knew the position well, and he had been glad to hear that ni.clit that Taranaki was the most prosperous province in the Dominion. (Applause). He hoped that prosperity would continue. FACING THE POSITION.

Reverting to the fall in prices. Mr. Massey said that he could remember that in March of last year New Zealand butter was worth 240 s in London, but in nine months it had come down to 11-Bs-. After that, however, it had begun to improve. Beef at that time was not worth selling, while mutton and lamb, which had been worth in the prosperous seasons 255, was not worth in the New Zealand market anv more than 6s or 7s-. The outlook had been just about as’ dismal a« it was possible to bo.

It was not worth whining: the position had to be faced, and they had -Tone in for drastic retrenchment in an endeavor to make ends- moot. (Apnlanso). Their policy in that respect had boon endorsed by the bulk of the members of Parliament and that section of the communitv which took an interest in public affairs. Tt was an unpleasant task, and he hoped he would never have to face such a position again. They had out down everything that thov possibly eoiild without imposing unnecessarv hardship in order fn keep the national expenditure within (ho national income. (Annlawso).

Thev had not been altogether iinsnoeossful. On March 31 they were not. very fa r off making the aeoounts lial-! BPoo end had thov been allowed tn tal-ei pll their stores intn account, wir’oh wes!

the accounts would have come out on the riglit side. Speaking on the purchases of coal, Mr. Massey said that at that time he was Minister in charge of the railways, and, prior to going to England on the last occasion, he had been worried throughout the year by the statement from the general manager that they ihad not sufficieiit cool to last a fortnight or so. The freezing companies and the gas companies had also asked him for coal, and before leav : ng he had I given instructions, for which he took full responsibility, to lay in sufficient I stocks of coal to keep the country going for three or four months. (Applause.) He wanted to say. however, that, if in the future they obtained all the coal the country wanted for the railways fyid ifor industries from the Dominion’s mines, he would pledge his word that he would not go outside the country for one ton of coal. IMPROVEMENT OF REVENUE. Since March 3], Mr. Massey went on. the situation had improved and the policy of economy had been followed. Right up to October 1 the revenue was gradually falling—slowly, but still coming down. Then had come a change, and tihe revenue up to October of this year had increased over the same period of last year by nearly £400,900. On the expenditure side they had also made a greater saving, and the expenditure was lower during the 7 months of the current financial year by £7,000,000. He had often spoken optimistically when he had not felt like it, but that night he was optimistic because he felt so, ' and if they carried on like that for the ! next 5 months he did not think they I would have very much cause for anxiety.

He did not need to toll them that during the past few years, especially since Armistice Day. prices had gone up. When speaking of prices he did not mean only the cost of living, but articles which the Government was required to purchase for its departments. And those prices had gone up by from 100 to 300 per cent. The revenue had to bp raised to meet the position and because these prices had gone up it was impossible to reduce ta.x-aiion. He was glad to say that during the last three weeks he had been able to reduce taxation by about £1,000,000, and he hoped and believed - , that during the next year he would be able to make a further reduction. He did not need to remind the people how heavy taxation interfered with the business of the country, and he pointed out that the taxes were passed on by the men in business, who were heavily taxed, to the customers. The business community were not philanthropists and their businesses were not philanthropic institutions. They had to tax the financial institutions and they had passed the taxes on to their customers by charging a higher rate of interest for loans and mortgages.

The unemployment of the past winter had been severe and he thought that a large measure of it was due to money being so dear and so scarce. Tn Taranaki and other parts of the Dominion there were numbers of men who were in the habit of keeping their hands on right through the winter, but who could hot get money last winter to do it, and they had to" let their men go. Last year he honestly believed that 90 per cent, of the land tax was paid out of capital. It was a very serious state of affairs that land caused such a situation. WOOL PRICES UP.

The official returns for the last four months of last year had shown that the number of sheep in the country had been reduced by 4.000 000. and he believed that the numbers had been reduced because the sheepfarmers required the price of the sheep to make end-? meet. Having had a good spring, he hoped that during this year they would he able to increase the number of sheep and make up to some extent, the loss they had suffered in the past four

years. Prices for wool had. now gone up and he repeated what he had said when ne had come back from England, that with reo-ard to crossbreds and merinos, and particularly crossbreds, they were found to increase in price. The prices had increased and would go still fiirthei. There would be a continuous rise in the price of crossbred wool during the. next four months, and perhaps longer. The reasons were obvious. The. number of sheep in. the .world had gone down by manv millions during the past- 10 years, and the Imperial Government had managed to get rid of the bulk of the accumulated wool. Prices for beef should also improve. Lamb, he said, was selling well and he thought it -would continue to do so. Mutton was the same and the same conditions applied to cheese. The outlook, he thought, could therefore bo considered good at present. This was due to the fact that Siberia was not producing, but they must not forget that both Australia and the Argentine were increasing their outputs, and New Zealand would have them to compete with in years to come. However, Now, Zealand (butter had a splendid reputation on the English market, and he hoped that reputation would be main tained. As long as sie quality of New Zealand produce was kept up they would get a better price for it. (Applause). There had been a slump in the bacon industry in New Zealand though the demand for pork in England had been greater than it had ever been. However, it was not possible to get the pork away to the. English market, and in this connection he wanted to see the people interested in pork and ibacon get together and evolve some scheme whereby the surplus bacon can be got out of the country. As far as bacon was concerned there was a splendid demand in Australia, and particularly in Queensland. He did not want to expend Government money, but he knew the difficulties with swhich they were faced, and if some satisfactory arrangements could be made which he, or rather his advisers, considered satisfactory, he was quite prepared to assist on behalf of the Government. (Applause).

CHEAPER MONEY. Another reason why he considered the outlook appeared good was because there was a prospect of money becoming cheaper. He had several times dining (lie last, few months called together the representatives of the associated bank* and discussed with them the .possibility of getting a reduction in the rate of interest on overdraft, and the last time they had met they had agreed to a reduction of i per pent, as from January Ist. This did not appear much, but it

would make a tremendous difference to people with big overdrafts. A difficulty that confronted country people was that at present mortgages on country lands were not popular. This was not difficult to account for, because during the boom period land had gone, up to very high prices, and now many people were not able to pay their interest promptly, and in some cases not at ail. Locab bodies were borrowing in all directions, and in this connection he wished to sound a note of warning. It was quite right for local bodies to do all possible to develop the country, but they must gqard aoainst going too far, and he was afraid some were going or had gone too far. Men with money, therefore, preferred to purchase local bodj r debentures in preference to lending on broad acres, as they recognised the security was much better, and consequently fanners had difficulty in getting their mortgages renewed or in arranging new mortgages. He thought this was passing £ He had referred to the necessity of retrenchment, which was a difficult and unpleasant duty. People were apt to forget the demands caused by the growth of population, which, despite the war, had increased by 300,000 during the past ten years. There were also the automatic increases of salary to be met and a lot of leeway had also to be made up. He pointed out though they borrowed at 5 per cent, net, every million borrowed meant an increase in taxation of £60,000 per annum. Last year the amount .paid in interest and sinking fund was £540,800 more than the previous year. People asked, why don’t you borrow? He was scared of borrowing, becaused it piled up taxation. The scales of increases in salaries meant an additional £200,000. There had also been an increase of 7000 school children, necessitating 200 additional teachers. The. Old age and widows’ pensions cost an additional £25,000, subsidy to local bodies £7OOO, justice, prisons and mental hospitals £40,000, baking altogether an additional £952,000 per annum, which had to be overtaken before they could save a single shilling.

C’OST OF PENSIONS. Old ago pensions cost £744,000, widows’ pensions £186,000, Maori War veterans’ .pensions £37,000, miners disease pensions £71,000. war pensions £l, 726,174 (and they must never go back on’ their promise to provide, the last shilling of that), epidemic widows £65,000, and there was a new pension providing that the widow of a policeman killed on duty should have the same pension as a soldier’s These totalled £2.791,000. In addition there were subsidies to the Public Service superannuation fund £86,000, teachers’ superannuation £68,000, railways superannuation £75,000, maternity allowance to friendly societies and the" National Provident Fund £73,000, making a total in pensions and superannuation subsidies -of £3,093,078. He believed that the time had arrived when some more satisfactory and businesslike arrangement would have to 'be evolved, and he had asked his officers to draft a scheme for submission to Parliament last session. Owing to the closing of Parliament on account of the elections, this, with other matters, had been dropped, but would be brought forward next session.

COST OF LIVING. Turning to the cost of living, Mr. Massey -said that mo doubt reduction in taxation would bring a reduction in the, cost of living also. During the month he had been able to announce a. reduction in two items. The price of sugar, which during the war was lower in New Zealand than in any other country outside the producing coun-, tries, was to-day 3%d a lb wholesale, as>

compared with 5d and 6d in Australia.; The Government purchase of wheat had ended last year, and a reduction of £2 10s had now been made in flour. 'This would mean a reduction of a penny on thg four lb loaf. “When wp ’want money we can get it without the slightest trouble,” continued the Premier, “but it. must be remembered that every ipillion borrowed adds £60.000 or £7-0,000 to taxation.” Now, the Government wanted to a-ssist producers to reach the best markets, ft would be recollected that on January 1 of this yea-r it was almost impossible io sell at a remunerative price. The meat producers were desperate, and he had met farmers’ representatives of the whole country at Wellington, when an organisation was set up tor the purpose of securing a better meat market. It was partly a Government organisation, but the Government did not interfere with its working. There were two Government representatives on the board, one of whom had been made chairman. It was a -strange coincidence that from that very day the price of New Zealand meat went went up and continued to rise steadily till it reached a fairly good price, at which price it stood to-

In passing, Mr. Massey spoke appreciatively- of the good work the board had dpne. Mr. Jessop (the chairman) had gone to England, and during the last month had met the shipping companies, with the result that a -reduction of £62'5,000 per annum in shipping freights had been secured. He had also been able to arrange better storage at a lower price. “We have always looked to London.”

said Mr. Massey, “but we have got past that now.” He went on to refer to the other big centres, such as Liverpool, Manchester, Bristol, Cardiff and Hull, which were asking for a share of New Zealand’s business. This was a splen-, did thing, because instead of there beingi competition on the London market (and this had happened during the war with a lowering in the price of our produce) such would not happen. “The board has done very well indeed,” ho added. Tt had found better markets and -had regulated the supply so that there would be no glut on the market or any scarcity so long as New Zealand was able to maintain her production.

BUTTER AND CHEESE. Butter and cheese production was, next commented upon by the Prime Minister, who referred to the many requests made last session to form an organisation on the lines of the meat control. He admitted there had bcm a difference of opinion on the question, but he made the assurance that ti e Government wanted to help the prodilc. to market thfcif dairy, produce te

better advantage. (Applause). Some had said that the G-overnment wanted to tax cheese, but there was no trutu m that statement-. The Bill did not get through the House, and he felt it unwise to push the matter at present. He thought the producers should agree on the. matter first and come back to the Government with a scheme next session, when he would ask Parliament to put the Bill on the Statute Book. To his surprise there were thirty against the Bill on the first division, so he could see the Bill would take at least a week to put through, hence he had said: “Let it go back to the people.” No guarantee had been asked for trona the Government; the Meat Board did, but had not used it. Competition would be keener, but New Zealand would have extended markets. The population, of England was immense, and he could guarantee that though Manchester was not nearly as big as London, yet a circle with a radius of 20 miles drawn with Manchester as the centre would enclose a bigger population than a similar circle drawn round London. Besides being huge, the English market was our natural one. “Compare England with America,” said Mr. Massey. “In America we would have to pay Customs duties on all our produce, while Britain took all the produce from countries in the Empire duty free. (Applause). There’s our market —take care of it. He thought strongest competition would come from 'South America, but possibly an arrangement could be made to give preference to Empire products. (Applause). That was ohe thing he had worked for. At one Imperial Conference he had taken the opportunity of moving to the effect that a system of preference for Empire products -be arranged, and that was the law of Britain to-day. though the Government had not as- yet done much more than affirm the principle. No Government dared to bring the matter up at a general election, but its time would come. STATE BANK PROPOSAL. “In the New Zealand election campaign a lot has been said about the necessity for a State bank,” continued Mr. Massey, who proceeded to put hisside of the case. We had a State bank now, the Bank of New Zealand, of which we owned a third, this proportion having been increased during -recent years from one seventh. Management was in the hands of six directors, and the general manager, and of these six the Government (appointed four, so that they really controlled the bank. Many comparisons had been made between the Commonwealth Bank in Australia and the Bank of New Zealand. He wished to disclose the real facts of the case. The Government had received from the Bank of New Zealand last year on behalf of the people £BO,OOO as income from shares. Seven years ago the Government had borrowed £32,000 to buy these shares. In income tax the Bank of New Zealand had last year paid the Government £342,000; in land tax £18,143; in note tax £141,004; making a total from the bank last year of £581,169. “I tell you I wouldn’t like to do without that,” said Mr. Massey, with a smile. “It’s very convenient for the Minister of Finance to know that he has that amount coming in.” He had nothing against the Commonwealth Bank; he simply wished to state the facts. That 'bank was managed bv a governor (whom he happened to know personally), who appointed a de-nuty-governor. There were no directors. The Federal Government had not received a single copper from this bank in the ten years of its existence. Tn his contrast between the two institutions Mr t Massey quoted the opinion of a leading Australian paper, which was recognised as an authority on finance, and it -went to bear cut what he had -said.

Tn addition to the accommodation given to the country and the farmers by the Bank of New Zealand, there was a substantial income from dividends and taxes, and if the Government set up a State bank in this country it would have to buy out shareholders of the Bank of New Zealand or set up a new bank right outside and go into competition with the bank. If they did that, down would come the shares and down would come property. It was his duty to protect the property of the State and he would do it as far as he possibly could. (Applaqse.)

PROPORTIONAL REPRESENTATION. There had been a proposal to change the electoral system from a system of “first past the post.” to proportional representation. He had taken a good deal of interest in looking for something better than they had at present. He had supported proportional representation for the Upper House, but not for the Lower House, if they had it for both Houses each would seem to be a duplication of the other. They had sometimes heard of a Bill being brought down to provide proportional representation with what was called the “country quota.” The ‘country quota” was mentioned in*the 8O’«3 to get over the difficulty of giving the sparsely-settled districts in different parts of New Zealand reasonable representation in the House of Representatives as compared with the cities.

It was considered just as easy for the Parliamentary representatives to represent 20,000 people in one of the big centres as to represent 15,000 people in the sparsely-settled backblocks. Some people maintained that the country quota could be given along with proportional representation, but it could not be done, because they would then get away from the system of one man one vote. They could not work proportional representation with a single electorate or two, but it could be managed with three electorates, although he thought the minimum should be five. That would moan that all those electorates would have to be made with one district, and he stressed the diffieulty of a man canvassing such a large area, or the electors coming to an agreement as to who was to stand. The most important point of all he considered to be against proportional representation was that it would not provide a strong and, stable Government. 'Someone had said' •that it had worked all right in Ulster, but that was because there they were a 1! of the one opinion. (Laughter.) Mr. Massey, continuing, said that tue system in New South Wales had been a failure and quoted the Bulletin as calling it. “contortional misrepresent•tion.” Mr. J. Dooley (ex-Premier of New South Wales) h«A said the other

day it had not been a success. There was no doubt about the fact that it broke Parliaments into groups. They had three parlies in New Zealand, and he thought candidly that it would be better if there were only two, because there was always the danger of the | third party getting the balance of | power. He denied that the Reform I Party was in power on a minority of ! the votes, end said that out of the 65 i electorates contested by the Reform Party last election they had won 50. It was not a very good thing when one country owed money to another country. New Zealand’s debt wan £200,000,000, of which -in direct assets £150,000,000 could be quickly raised, if necessaty, while there were plenty of indirect assets. The point he wished to stress was that £100,000,000 of the debt was owing to people in New Zealand, and the interest was paid to them and circulated all over the country, which was better than sending it -to England. (Applause), He had, he said, seen in a West Coast paper that the Government had thrown away a lot of money by its payment to a firm of inspecting engineers at Home. The Government during the past two or three years had done an immense business, having purchased 45 engines and 2500 trucks, as well as electrical machinery for Mangaoho, Otira, Waikaremoana, etc., and it was no use employing men without the necessary experience to inspect them. The Government had paid 1% per cent, to 2J per cent, for this inspection work. The Postal Department also employed the same firm, but considering they were charging too much they arranged with the Imperial Post Office to get the work done, with the result that it cost i more. Messrs. Elliott and Carruthers ( had been the inspecting engineers for the Government of New Zealand long ! before he took office. They had now 1 resigned the position, but he did not know why. There Was, he said, nothing in the charges. Attempt after attempt had been made to work up a scandal, but (very attempt had failed. He had been I challenged to give an enquiry. He had 1 given enquiries and come out on top every time. He admitted that he may have made mistakes. (Applause). He wanted to tell them that if the slightest thing were proved he would take the consequences and would resign. (Applause). In regard to housing, there had also been gross misrepresentation. During the last three years the Railways Department had built 188 houses, costing £224,154. The State Advances had loaned £3,245,510 to the workers to build 6252 houses. The Housing' Department, an experiment which he considered had not been successful, built 340 houses at a cost of £409,355, while on the discharged soldiers settlement account £2,667,000 had been expended in building 3300 houses, irrespective of what had been purchased. This showed that £0,542,119 was expended on 10,110 1 houses. This, he said, was pretty good, and he could make it look better if he included the houses purchased. For some reason hard to explain houses Avere scarce, particularly in Wellington, where £2 was being paid for a four-roomed cottage, while in some districts in the Auckland province a better house was being rented at 7s 6d. He was amazed at the building going on in Auckland, but private enterprise was not doing much in this direction in Wellington, and he pointed out that the State could not ’be expected to do it all. He had always thought that it would be a splendid thing if every family in the State owned its own house. (Applause). This tended to good -citizenship and, therefore, the larger number that owned their own houses the better for the State and for the people. (Applause). When he had money to spare he would be belter pleased to let it go to the people to build houses than for any other purpose.

TARIFF WITH AUSTRALIA. The new Customs Tariff with Australia was next touched on by Mr. Massey, who remarked that though New Zealand and Australian soldiers had come together during the war, there still seemed to be a certain coldness between the civilians of each country. Australia had revised her tariff and had “clapped” a heavy tariff on New Zealand goods. New Zealand had retaliated, with the result that negotiations had proceeded, and as a result. New Zealand had come out of it very well, while he thought the arrangement would be satisfactory to both countries.

Taking examples of tariff reductions in New Zealand exports to Australia. Mr. Massey quoted bacon and hams, the duty on which bad been reduced from 4d to 2d a lb; oats and rolled oats from Gs 3d n 100 lb to 2s Gd; hay and chaff from £1 to being admitted free; hops had been reduced threepence a lb; tinned meats from 2|d to Ad a lb; onions from £6 to £1 a ton; tallow from £4 to £3 a ton; while timber was now duty free instead of having to pay Ils per 100 feet. A rather curious provision was that all agricultural machinery made in New Zealand could be admitted free to Australia, and he had heard from those interested that they were going to take advantage of th« fact.