PUBLIC DEBT.

Press, Volume LX, Issue 18218, 31 October 1924, Page 8

PUBLIC DEBT.

TO LIQUIDATE IN SIXTY YEARS. BILL EMBODYING NEW PROPOSALS. SPECIAL TO "THE TSBSS.") WELLINGTON, October 30. A Bill, entitled "Repayment of Public Debt Bill," was introduced in the House of Representatives. The debt amounts to £221,610.361. of which about £ !7.100.000 Is for State Advances and £5,000,000 for electric power. State coal, Wostport Harbour Board. Nauru and Ocean Islands, etc., which accounts have special sinking fund provisions. In addition, £27,000,000 of the debt due to the British Government has been funded, leaving the net present debt affected by tho Bill approximately £172,000,000. The funding operations concluded with the British Government dealt with £20,000,000 of the war debt, :t portion of the amou7it borrowed under the Naval Defence Act, 1909. amounting to £960.000, and other advances amounting to £230,000. These sums a.rc reparable by half-yearly instalments, and are therefore now separated from the New Zealand sinking funds and will not be affected by the Bill.

There are other sinking funds, e.g., local bodies' loans and old war and defence loans which had accumulated with the Public Trustee up to 1910, when the Public, Debt Extinction Act was passed. No further contributions to these sinking funds have been made, and the interest on them has since been paid to the Consolidated Fund by the Public Trustee. System of Repayment. The Bill proposes to substitute for the long term sinking fund system a method whereby the Dominion debt reduction resources may be available to purchase and. cancel Government securities as the market price is advantageous, or pay them off at maturity and so ensure an actual reduction in the public debt annually. For this purpose there will be issued annually out of the Consolidated Fund a sum equal to i per cent, of tho debt affected by this Bill. To this will be added a sum equal to interest at 3£ per cent, per annum on the debt paid off under this scheme. By this means a portion of the savings in interest on the debt, paid off will be applied to further repayments, and the present debt will be liquidated in about sixty years. All future loans will be liquidated within a similar period from the date of their inception. A capital fund, termed the Public Debt Redemption Fund, will be created, consisting of (I) the present accumulation of sinking funds amounting to about £10,560,000, leaving aside the State Advances, West.port Harbour Board, and State Coal Mines Funds; (2) the amount advanced for discharged soldiers' settlement (£13,500,000). The capital of this fund will be held intact, and the earnings therefrom will be credited to the Consolidated Fund and applied towards meeting the annual charge against the Consolidated Fund created by this Bill. The Bill provides for an annual reduction in the amount of the Public Debt, the amount of the reduction increasing from year to year. There will be an annual saving to the ' Consolidated Fund on the amount of debt redeemed consisting of that portion of the interest and sinking fund in excess of 4 per cent., which.would have been payable had the loans not been redeemed under the provisions of the Bill. The War Debt. A return presented to the House shows that the amount of interest paid on the war debt up to March 31st, 1924, was £22,853,056. The war debt at March 31st, 1924, was £77,434,184, of which £25,924,904, being the balanco of £26,340,245, is funded on an annuity basis at 6 per cent, on the original debt, and is calculated to pay off the principal and interest in 36J years from the date of the agreement, namely, September 6th, 1922. The amount'of interest paid to March 31st, 1924, on this portion of the debt was £1,955,282, and the amount remaining to bo paid to the date of maturity is £29,389,605, making a total of £31,344,890 on the remaining portion of war debt (£51,509,280).. The amount of the interest charge at March 31st, 1924, was £2,374,493, and on the present basis of sinking fund the total principal will be repaid in 33 years. Tho sinking fund, if accumulated at the present rate of interest for a further 33 years, will equal the total amount of war debt then outstanding, on the' assumption that the interest rates on the loans are unaltered. Tho total interest remaining to be paid on the war loans will amount to £107,747,877. These figures are estimates and arc subject to debt reductions, conversions, and alterations in rates of interest on loans issued for redemption purposes which may materially affect the ultimate amount.