8.—6 [Stop.].

of income-tax. This allowance was made to avoid the double taxation involved in taxing the land and also the income derived from it. With the flat land-tax standing at Id. a shortage will require to be made up, which will in part be done by the abolition of the 5-per-cent. allowance and partly by the further tax proposals which I will refer to presently when dealing with the budgetary position. I may say, however, that to a considerable extent the burden will fall collectively on the same shoulders as formerly paid the graduated land-tax, although the individual incidence will be different. So far as rural lands are concerned, the taxpayers in the higher scale, above £7,500 unimproved value, already pay income-tax ; but it is proposed to make provision by legislation, which will operate from next year, to bring farmers with an unimproved value of £3,000 or over under the operation of the income-tax, subject to the usual exemptions. This will mean that all income will then be treated alike. FERTILIZERS. The measures that I have already referred to will assist the farmers to remain on the land by lightening their fixed obligations. In addition, however, the Dominion as a whole is vitally concerned to see that the volume of production is maintained, and even increased. Before the Special Parliamentary Economic Committee many witnesses urged that, if farm production is to be maintained, it is imperative to provide further assistance to farmers. The following extract from eyidence is emphatic on the point:— " A falling- off in the volume of our farm production will be a serious matter for the whole country, and will affect not only public revenue, but the earning-power and standard of living of every one. A serious falling-off such as seems to us to be in evidence will be nothing short of a calamity, which will upset and disorganize our whole economic relationships. What is needed is an increase in the volume of farm production to balance the reduction in values that now obtains, and that seems likely to continue. The whole economic future of this country depends upon increased farm production. This is the question of supreme importance at the moment." Maintenance of production can be greatly stimulated by fertilizers. It is found that there has been an alarming falling - off in the use of these manures, brought about, no doubt, by the efforts of the farmers to cut down expenses. Under these circumstances it is essential that the prices of fertilizers must be reduced, and if production is to be maintained it will be necessary for the whole community to assist. For this purpose the Government has arranged to share a substantial portion of the cost of the raw phosphate rock, which will ensure to the farmer a material reduction in the purchase-price of fertilizers. The cost to the Government for this year is estimated at approximately £100,000. ARBITRATION COURT. The bearing of the operations of the Arbitration Court on the farmers' costs, unemployment, and the industrial situation in general has received the careful consideration of the Government. It is considered that many conditions and restrictions now in operation in many of the Arbitration Court awards seriously militate against the employment of our people. The economic conditions now existing demand more flexibility. For the purpose of making it possible for employers and employees to arrive at agreements that will enable costs to be reduced, and at the same time allow for maximum employment and the fullest development of our industries, it is proposed to amend the Act mainly on the lines suggested by the 1928 Industrial Conference, the chief feature of which is known as compulsory conciliation and voluntary arbitration. UNEMPLOYMENT. In spite of the most strenuous efforts by the Government, the Unemployment Board, the local bodies, and numerous social organizations, and the provision by the taxpayers of a huge sum of money to assist the unemployed, no substantial or satisfactory solution of the problem has yet been achieved. Every one is agreed that no real progress will be made until the unemployed are engaged on reasonably productive work which will reflect itself in increased exports or increased local manufactures. The Government is engaged in an attempt to change over from the present policy to a new policy on the lines indicated above. If it proves successful, it should result in the gradual absorption of the unemployed in productive, industry

4