PUBLIC ACCOUNTS

Press, Volume LXXXII, Issue 24902, 15 June 1946, Page 6

PUBLIC ACCOUNTS

“•Real Surplus Of £40,000,000” ANALYSIS BY MR HOLLAND (P.A.) DARGAVILLE, June 14. The claim that the real surplus in the Public Accounts is almost £40,000,000 and not £1,254,000, as stated by the Acting-Minister of Finance (the Hon. D. G. Sullivan) on Monday, 1* contained in a statement from Dargavllle, the principal centre in the new Hobson electorate, by Mr S. G. Holland (Leader of the Opposition). "It would be safe to say that the public would interpret the surplus of £1,254,000, as announced, to mean that afteiuall Government payments are subtracted from all the Government’s receipts there is a credit balance or a surplus of £1,254,000, said Mr Holland. “That is far from the facts, as many accounts are not included in the figures as published by Mr Sullivan. Those not included, are railways, post office, coal snipes, electric supply, broadcasting. State forests and some accounts of the Internal Marketing Department and the Housing Account, to mention a few. The statement continues.' The method of presenting the Public Accounts makes it extremely difficult to obtain a clear picture of the true position of the national finances. I nave always advocated that the Public Accounts should be presented m such a form as would «allow the taxpayers who provided the Government with all its millions of money, to read the accounts and understand how the public funds are spent The method of presenting the accounts, as published on Monday, is that followed for many years arid I would not like it to be thought that I am charging the Government with being first offenders in that connexion. By the process of transfers from one account to another, the position is further confused, while the practice of including substantial payments under general headings makes the position more difficult for the layman to follow. One example will suffice to demonstrate the points. The Abstract of Statistics for March, 1946, disclosed that the total payments for Social Security and War Pensions for .11 months was £23,339,589, whereas the statement issued on Monday shows total payments for Social Security at under £23,000,000 for the whole 12 months. Obviously War Pensions payments have been included under some other heading. “The statement is careful to avoid directing attention to the huge surplus in the War Expenses Account, figures greatly exceeding the estimate in the last Budget. The taxpayer must bear in mind that, although .the war was over for the latter half of the financial year under review, war taxation continues at its highest level and continues today. Mr Nash will not return from his overseas trip in time to alter taxation before the first half of the current financial year is over. Thus he will have a substantial surplus in hand for the first half year’s operation and it would be too much to expect him to make any tax reductions retrospective to April last. The Consolidated Fund really has a surplus of £8,250,000, but this is reduced to £1,250,000 by transferring £7,000,000 to build up the Social Security Fund. Social Security Finance “A study of the Social Security accounts discloses that it is far from being self supporting. For the year just closed, receipts from taxation were approximately £15,000,000 anct payments, excluding War Pensions, were £23,000,000. For the financial year 1946-1947, payments from the Social Security Fund will probably be increased by £12,000,000 because of universal family allowances and other increases, bringing the total payments to about £35,000,000, with practically no provision for unemployment. So the estimates we made when the Budget was under discussion last year—estimates which were ridiculed by Mr Nash—are now proved to be remarkably close to the mark. “The people are realising as never before that no government can give to the people anything It has not first taken from the people, and the 50 per cent, increase in Social Security taxation (from Is to Is 6d in the £) demonstrates that fact forcibly. Steadily rising increases in the transfers from the Consolidated Fund to the Social Security Account are just a method of building up the latter account by indirect taxation, instead of by direct taxation on wages and incomes. This ’year all taxation for war purposes will be paid into the Consolidated Fund, and this will further confuse the situa-. tion and make comparisons more difficult.

"I want it to be clearly understood that I am in no way saying or inferring that Social Security is too high. What I wish to convey is that the people should know what it is costing and where the money comes frpm. The terrific cost of Social Security, which, in the near future, will reach between £35.000.000 and £40,000,000 per annum, can only be found by taxation in one form or another. It must come from the pockets of the people. There is no other way. In turn, taxation canonly come from production, which is being seriously affected to-dav by the crushing burden of taxation on every section Of the community.

"Bribery Budget” “If we add the three accounts— Consolidated Fund. Social Security Accounts, War Expenses Account—together we find that the total surplus for the year just closed is alipost £40,600,000, and with taxation continuing for the first half of this financial year at last year’s ratio—except for 6d reduction in wages tax— Mr Nash will have a considerable surplus in hand or in sight before he returns to announce his ‘bribery’ Bpdget in the coming session.

“A simple fact, which cannot be disputed, is that taxation last year was at an unjustified level. The real surplus is almost £40,000,000 and not £1,254,000. as claimed. The people are naturally curious to know how Mr Nash can greatly reduce taxation in the current year and thus redeem his promise to produce a Budget that will save the Government from defeat, when there is only a Consolidated Fund surplus for the year just closed of £1,254.000. An examination of published accounts quickly clears up any doubts in the matter. Last year we urged that the high rate of taxation was not justified once Japan had capitulated, and we alleged that Mr Nash was determined to build up a' huge surplus and to reduce taxation in election year. Although such a motive was stoutly denied at the time, the published figures confirm our allegations up to the hilt. The surplus, of course, is to be found hidden away in the War Expenses Account. War Expenses “War Expenses were estimated at £105,000,000, but at the end of the financial year Mr Nash had a huge enough surplus to pay off two items not provided for in the Budget—£27,soo,ooo of debts and to pay from his right-hand pocket (War Expenses Account) to his left-hand pocket (Post Office Savings Account) a further £18,000,000 to meet war gratuities which will fall due this financial year at the earliest. It should be noted, however, that the receipts are increased by borrowing on Treasury bills by £8,000,000, and this was not mentioned in the Budget. “The monetary requirements of the Government should be at least £50,000,000 less for *he current year than for last year and yet balance the Budget—that is, after allowing for a further increase of £ 12,000.000 to meet the steadily moufiting cost of Social Security. It is important to remember that taxation at record high levels is still in operation, and a large surplus will already be in sight by the time Mr Nash returns from his world tour. “Four facts stand out with crystal clearness: (1) that people were overtaxed in 1945-46 to produce a surplus of £39,916,000; (2) that the Budget estimates of the Government’s needs for 1945-46 were extremely wide of the mark and enable debts to be reduced by £27,500.000 and gratuities of £18,000,000 to be provided for. whereas no provision was made for either of these items in the Estimates submitted to Parliament last year; (3) that the Government will require £50.000,000 less from the people in the present year than they took from them in 1945-46; (4) that the accounts

published by no means disclose a full picture of the country's financial position, in that many important accounts, such as the State Coal Mines Account, the Post and Telegraph Account, and the Bailways Account are not included. “A much clearer picture of three accounts—the Consolidated Fund, Social Security Fund, and War Expenses Account—can be seen by presenting them as one account as follows (in every instance the figures are precisely the same as published by, the Minister): —receipts' taxation (Consolidated Fund) £48,371.000, taxation (Social Security) £15.288.000, taxation (War Expenses) £31.417,000: total taxation. £115.074.000; interest recoveries, etc. (Consolidated Fund). £10,135.000; lend-lease and Memorandum of Security. £30,375 000; borrowings: war £25.845.000; Treasury bills £8.000,000, totalling £33 645.000' disposal war assets, £11.270 000; miscellaneous receipts £1.774.000. making grand total receipts £202:273.000 "Payments: Consolidated Fund. Social Security, £22.960.000; War Expenses. B r and total payments, £162,357,000, the surplus, being excess ,P a y me “ts 1945-46. £39.916,000. This balance of £39.916.000 has been disposed of as followsloans redemption £27.500.000, gratuities deposited with the Post Office £lBOOO.OOO, credit balance Consolidated Fund £12.540.000, making a total of £46,754,000. which loss the debit balance In the War Expenses of £6.164,000 and loss th” debit balance in the Social Security of £674 000 equalling £6,838.000. leaves £&,916,000" e ”