BUDGET DEBATE

Wairarapa Times-Age, 7 May 1942, Page 3

BUDGET DEBATE

OPENED IN THE HOUSE OF REPRESENTATIVES MR HOLLAND ON INFLATION DANGER. REPLY BY THE MINISTER OF SUPPLY. (By Telegraph—Press Association.) WELLINGTON, This Day. Opening the Financial Debate, in the House of Representatives last evening, the Leader of the Opposition (Mr Holland) criticised what he described as an inflationary trend as a result of spiralling costs, together with a reduction in the supply of consumer goods. Mr Holland suggested a searching scrutiny of expenditure both in the civil and war aspects of the Budget. He asked why the Government had failed to give heed to the recommendations of the Stabilisation Committee in. September, 1940, a non-party body created by itself. Replying, Mr Sullivan (Minister of Supply) contended that no other country had been as successful as New Zealand in keeping its finances on an even keel. No part of the war expenditure, he said, would be given effect to ’till the War Cabinet had approved of it. The Minister gave members considerable detail on the progress of munition and supply manufacturing in the Dominion, the House being put “off the air” during portions of his remarks. He said that the country could be proud of its war effort and would give a good account of itself if and when the test should come. The House adjourned at 10.12 p.m. till 2.30 p.m. this afternoon, when the debate will continue. LIMITED ECONOMIES. In, the course of his speech Mr Holland paid a tribute to the courage the Prime Minister had shown in writing the Budget, to those responsible for the organisation of the armed forces, including the Home Guard, to the great numbers of men and women who were giving valuable voluntary service and to the spirit in which the people of the Dominion were facing and accepting the burden of terrific taxation. Having emphasised our reliance on Britain, who was paying from £60,000,000 to £70,000,000 a year for our produce and to whom we looked this year for loans of £46,000,000, Mr Holland went on to observe that the Budget made it clear that the Government was unwilling to reduce domestic expenditure beyond the estimated fall in revenue. As Minister of Finance, Mr Nash had insisted that it was possible to have a war and still maintain the country’s standard of living. The present Budget contradicted that assertion. The Government had at last learned the truth that it could not be done, and it was belatedly showing some signs of trying to reduce civil expenditure. But even now expenditure had only been cut down by the amount of the reduced national income. STABILISATION NEGLECTED. Another contributory cause of the present financial difficulties was the inflationary policy of the Government. So far the Government had not been prepared to take the medicine it prescribed in the Prime Minister’s Financial Statement, namely, the stabilisation of costs. It was no use having increased spending power in the form of wage and other increases when the goods to support the increase did not exist. Since the outbreak of war, as the Prime Minister .had pointed out in his Statement, the volume of consumption goods had declined by more than 30 per cent. In the same period spending power was up by 10 per cent. If ever there was an admission of inflation that was it. Where the Government had failed lamentably was in not freezing costs at the outbreak of the war. In Australia the Labour Government in February, 1942, had decreed that no employer might offer, and no employee accept, rates other than those in force at the time of the decree. It was a pity that the same thing was not done here. CHECK ON EXPENDITURE. “I want to urge a nation-wide efficiency drive,” said Mr Holland. “Let us dig out incompetence and waste. War was extravagant and wasteful, and the greater the expenditure the greater the tendency to extravagance. A committee of the House should sit continuously examining accounts. There was enormous room for economy in the public service, in which coordination was missing and there was multiplication of departments. “With all respect to my friends in the gallery, I say we should wipe out the Legislative Council and put an end to that farce and extravagance unless we can make, it more useful,” said Mr Holland. “It does not produce threepence worth of use in the life of the community. We cannot afford to have this extravagance in these times,” SOCIAL SECURITY FUND. “The financial statement discloses an entirely unsatisfactory state of affairs in the Social Security Fund,” said Mr Holland. He estimated that the fund would be £6,550,000 short of being self-supporting next year. The increased cost of social security this year was £2,400,000, and bonus to pensioners added £550,000. This was to be rpet from past surpluses created by excessive taxation. When the Government was considering subsidies and bonuses, pensioners on 30s a week, he thought, should have had more generous treatment. They were more in need of 5s a week than single carpenters earning £9 10s. He said he wanted to enter a. plea for thousands of thrifty people who had provided for themselves and also for the forgotten man, the thrifty, hard-working, independent person who was the small investor. The new taxes cut ordinary shareholders right out. A plea for greater consideration for farm workers was also made by Mr Holland, who said they were always left out of wage increases. INFLATION DENIED. Following the Leader of the Opposition, the Minister of Supply (Mr Sullivan) said that every individual item of war expenditure went to the War Cabinet for its approval. He did not think there would be the slightest objection to the estimates as a whole being submitted to the War Cabinet. “No country in the world is less in danger of inflation that New Zealand,” Mr Sullivan continued. He added that

all the figures available from various countries demonstrated conclusively that the increases in prices in the war period had been less in New Zealand than in any other country inside the British Commonwealth of Nations, and in the United States of America. The speech of the Leader of the Opposition, said Mr Sullivan, would lead one to believe that the Dominion was already on the verge of inflation. He did not think that any country inside the British Commonwealth, or outside of it, had been as successful as New Zealand in keeping down the tendency to inflation and in keeping its finances on an even keel. In the food groups prices had risen conspicuously less in Nev; Zealand than elsewhere. He did not think it at all kind of the Leader of the Opposition to make the statement he did. It was calculated to inspire fear in. the minds of the people. Nearly everything used by the worker in his home, Mr Sullivan went on to state, was free of the increased sales tax. None of the items in the stabilised list of goods had’been permitted to rise. PARTICULARS DESIRED. The Leader of the Opposition, said the Minister, had failed to indicate what items of civil expenditure he would cut. It was necessary to develop both primary and secondary industries for the rehabilitation of the men returning from the war. Mr Holland had also complained of discrimination between civilians and soldiers in the charges for tobacco. He did not know why there should be objection to the soldiers receiving a concession. An Opposition member: “What about the men without access to the canteens? That is the point.” The Minister said the number of men without access to canteens was not very large. “The 40-hour week has already gone overboard and by the consent of the workers,” said Mr Sullivan, “and we might as well face up to it.” The Leader of the Opposition: “Do you really mean that?” Mr Sullivan said that canvas workers were working 57 hours a week, clothing workers 56 hours, workers in electrical trades 56 and munition workers 75. Mr Holland: “What about the boot trade?” The Minister said he did not think there had been an extension of hours in the boot and shoe trade, and he did not think there had been an application made. Mr Holland: “Oh, yes there has.” ARMY SUPPLIES. A statement that the Army was well satisfied with the position concerning small arms ammunition in New Zealand was made by Mr Sullivan. He gave detailed figures regarding tha Dominion’s production of munitions, and equipment of various kinds. It should be a matter of pride; he said, that all reports from abroad had paid tribute to the excellence of New Zealand-made battledress and footwear, the Minister added. He thought there was every reason to be satisfied with the great, work beingdone in munitioii, clothing, footwear and other factories. Both the workers and their employers had done a great job. Everything possible.to be obtained from abroad or made in New Zealand was and would continue to be obtained..