ATTACK & DEFENCE

Wairarapa Times-Age, 4 August 1938, Page 7

ATTACK & DEFENCE

MR COATES CRITICISES BUDGET SAYS SURPLUS IS BASED ON RAIDS MR PARRY DEFENDS LABOUR FINANCE (By Telegraph—Press Association.) WELLINGTON, This Day. A contention that the Minister of Finance (the Hon W. Nash) was able to budget for a surplus this year only because he had raided the Employment Fund was elaborated by the Rt Hon J. G. Coates when he spoke in the Financial Debate in the House of Representatives last evening. The Minister had budgeted for an estimated surplus of £58,000, Mr Coates said, but it was significant that allowance had been made for declining revenue from customs and sales tax.

The estimate for customs this year was £10,000,000 compared with about £10,700,000 last year. Imports last year had been valued at £58,000,000 and on the basis of estimated customs revenue, it appeared that this year they were expected to be valued at £54,000,000. A balance of £11,000,000 was required to meet debt, charges and other overseas commitments and the position was that this year's exports would have to yield £65,000,000 in order to provide a favourable trade balance. The Government was already showing signs of nervousness as to how long the sterling funds would last and if the position did arise where sterling funds were short in London every trader in New Zealand would be adversely affected. Even’ as it was, the prospect of exports valued at £54,000,000 did not hold out any great hope for the manufacturers of the Dominion. “The point I want to make,” said Mr Coates, “is that the world trade outlook, coupled with the general trading position inside the Dominion give rise to doubts as to the accuracy of the Minister’s estimates for customs revenue. The same argument applies with almost equal force to sales tax, and if these two items work out below the estimates, they will be sufficient to place the Budget surplus in jeopardy. TRANSFERS CONDEMNED Declaring that the estimated surplus was made up from the proceeds of a raid on the Employment Fund, Mr Coates said the Consolidated Fund estimates showed that the following credits had been obtained from the Employment Promotion Fund:—Land and Income Tax Department, £60,000; Labour Department, £280,000; Native Department, £12,000; Agriculture Department, £131,000; total, £483,000. The Minister could not possibly justify the use of that money to meet departmental charges. Moneys for unemployment were raised to meet an emergency, and if all charges had been obtained from the Consolidated Fund the Minister’s muchvaunted surplus of £58,000 would have turned out to be a deficit of £425,000.

Adding that credits for public works had also been drawn from the Employment Fund, and that certain expenditure had been loaded on to loan accounts,, Mr Coates, continued: — “The position in a nutshell is that the Minister is raiding the Employment Promotion Fund to the extent of £1,328,500, and in addition is financing maintenance out of loan moneys. If the Budget had been drawn up in accordance with accepted practice, the Minister’s estimated surplus of £58,000 would have turned into a deficit of something like £1,500,000. That would be the true position. The Minister, in his enthusiasm for juggling with figures, has probably succeeded in thoroughly confusing himself. “One might argue reasonably that if there is a surplus in the Employment Promotion Fund, the wages tax should be reduced,” Mr Coates added, “but the Government has pinched everything. The next Minister of Finance will have a nice time. The wages tax is to be increased and devoted to the social security scheme, and a raid on the fund will be impossible. For that reasin, I say that the Budget does not give a true and proper picture of the country’s financial position.” MR PARRY’S REJOINDER “The whole of the speech of the member for Kaipara was based on assumption," said the Minister of’lnternal Affairs.” the Hon W. E. Parry, who followed Mr Coates in the debate. It was a stereotyped form of speech and designed to fan the germ of fear, Mr Parry said. Mr Coates had expressed his concern that £1,000,000 had been taken from the employment fund and spent on public works, said Mr Parry. Mr Coates had done that himself and should not be blamed. However, it was better to spend the money on useful public works, than on cutting weeds. Mr Coates had apologised for what he had done during his term of office. "I am not going to criticise him for that,” said Mr Parry, “but for the unbusinesslike way he handled the affairs of the country at that time.” Mr Parry said that a comparison of the activities of previous Governments during the 10 years from 1920 to 1930, which did not include the slump years, with the activities of the present Government during its three years of office would show that the National Governments spent the surplus income of the country not in creating assets but in buying surplus equipment and creating debt. During the years from 1929 to 1930, National Governments reduced income' taxation. If the tax had been left alone, the Government would have collected an extra £40,000,000 from the surplus income of the country and could have avoided borrowing most of the £56,000,000 that had been -borrowed overseas and paying the £54.000,000 interest that had been paid. National Governments had added to the national debt at the rate of £10.000,000 a year for 10 years, but the present Government had done so at the rate of only a little more than

£1,000,000 a year, and besides that had removed £6,000.000 of debt from overseas to New Zealand. “The surplus of those years was used in an orgy of speculation, not only in land but also in dud companies,” said Mr Parry. “ORGY OF SPECULATION” The settlement of soldiers, Mr Parry continued had cost £15.000,000 to £16,000.000, and already half of it had been written off in an endeavour to clean up the mess. Millions were lost in excess freezing works, and in investment in land ultilisation companies, but while this orgy of speculation was going on 164 farmers a year and 691 others were going bankrupt. During the term of the present Government, bankruptcies among farmers had been reduced to 30 a year and general bankruptcies to 80 a year. Expenditure on pensions, said Mr Parry, showed very well how the present Government was redistributing the wealth of the country. In 1921 25,392 civil pensioners received a total of £1,158,000. In 1935 the figures had risen to 45,968 pensioners and £1,963,000. and this year pensioners numbered 76,655 and received a total of £4.613,000. The Government was using the surplus national income to build up the country and give contentment and prosperity to the people. Mr Parry concluded by saying that something would have to be done in giving the mothers of the country the security they were entitled to. If the mothers were given the national recognition they deserved, he said, there would need to be no fear of a falling birth rate.