OUR DEBT BURDEN

Wairarapa Times-Age, 10 August 1939, Page 7

OUR DEBT BURDEN

MR J. A. LEE DENOUNCES PAPER CHAINS analysis of existing POSITION. WORK FOR POLITICAL VULCANS. (By Telegraph—Press Association.) WELLINGTON. This Day. “ Unless we get a low rate of interest in Great Britain, with all our loans refunded on .| long term amortisation plan, no Government in New Zealand could meet the terms I hat have been imposed.” said Mr. J. A. Lee (Government. Grey Lynn), when' referring in the financial debate in the House ol Representatives last night to the terms fixed for the tl 6.000,()00 cash anil conversion loan.

“New Zealand must be freed from the morass of debt in which it is situated,” Mr. Lee said. “The problem has to be faced some time or other, and I think I have enough love for this country to believe that the right moment for the challenge is now. I believe that if the members of the Labour Party adhere to their principles thencareers will look after themselves.” Mr S. G. Holland (Opposition, Christchurch North): “Why did they borrow £9.000.044 recently,” Mr. Lee: That was forced on us because certain people in our party, with the best intentions in the world, did not appreciate the length to which financial gangsterdom would go to defeat the Government. They did not take steps to check the raid till the money had ben taken from New Zealand’s account that was urgently necessary for defence and this year's impoi’ts. “If our nation is to be in paper chains —the chains of bonded debt —I suggest to the Montagu Normans,” Mr Lee added, “that the time will come when some political Vulcans will arise and liberate New Zealand by setting fire to those paper chains. And New Zealand will support those Vulcans. LIMITS OF BONDED DEBT. “I believe in living up to, the letter of our obligations except where those obligations are unconscionable. I want to suggest that we have reached the limit of the form of finance represented by bonded debt. We are increasing taxation to pay interest on debt, not to build up social services or industry. While we build on the foundation of the old-fashioned debt finance system we build on sand, but when we make finance the servant of industry and not the master we build on rock.” The national debt was £425,000,000 altogether, Mr. Lee stated in the course of his speech, if national and local body debt were combined, and the contingent liability of the State Advances Department added. "If we are to live up to those obligations,” said Mr Lee, “we will have to pay out a total of £ 108.000,000 sterling or £136.000.000 in New Zealand currency in five years. We must provide £136.000,000 through Budget surpluses in that time. It must be done either by taxation or inflation or by ruthless deflation such as was seen in 1931. That means we will need £27.000,000 a year in New Zealand currency and that will leave ,£33.000.000 for imports. No intelligent person will believe that if the same terms as were imposed by the recent agreement are to be imposed again we can meet these obligations.”

BORROWING TO PAY INTEREST. The money had mostly been borrowed to pay interest. Between 1901 and 1939 debt owed in London increased by £133,000,000, but interest paid in London during that time totalled £145,000,000. This demonstrated how impossible the debt system had become and how untrue it was to say that New Zealand had got some benefit. The present conversion loan was arranged in respect of £77,000 borrowed in 1860 and £1,168,000 borrowed in 1863, Mr. Lee said. New Zealand had paid out £278.000 in interest on the £77,000 and £3.796,000 in interest on the larger amount, and both amounts were still owing. “Anyone who objects to that system and determines to break the line—-and we cannot continue the present system —is told that he is a madman or a wiki man,” Mi’ Lee added. "We can cut the charwoman’s wages but the £22.000.000 interest is sacred. Who wields this power? We are the trustees of the people. As trustees we gave the banks their power and we can take it away. "Everyone knows that the only thing that keeps this sorry system going is that we have borrowed to keep it going,” Mr. Lee concluded. OPPOSITION QUESTIONS. "We have just heard from Mr Lee one of the most amazing speeches ever delivered in this House," said Mr. J. M. Allen (Opposition. Hauraki). who followed Mr. Lee in the financial debate last night. Mr. C. L. Carr (Government, Timaru>: "Brilliant." "Doos the member for Grey Lynn advocate wholesale repudiation or default, or was he speaking with his tongue in his cheek and did not believe in what he was saying?" asked Mr. Allen. A Government member: "Who wrote that?” Mr. Allen: "I cannot think that the member for Grey Lynn was serious when he advocated that this country could win out with a policy of repudiation or default.” Mr. Richards (Government. Roskill): "He never said either.” "The onus lies on the Government." said Mr. Allen, "to disown the policy recommended by Mr. Lee.” Mr. Richards: "Who told you that?”