“A MYTHICAL SURPLUS”

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

“A MYTHICAL SURPLUS”

COMMENT BY MR SULLIVAN

FORM OF ACCOUNTS DEFENDED

(P.A.) WELLINGTON June 14. "To review in detail each oi the 19 separate accounts which form part of the Public Accounts, as published in the Gazette this week, would not assist in giving a clearer picture of public finances? the Acting-Minister of Finance (the Hon. D. G. Sullivan) said when he was asked to comment on the statement by the Leader of the Opposition. “In nearly every case, the operations of the separate undertaking for which there are separate accounts are reflected in the main account— Consolidated Fund—and it is customary, as Mr Holland admits, and necessary only to deal with this account when determining the surplus for the year. The other major accounts —the social Security Fund and the War Expenses Account —which are financed largely from taxation, were also dealt with in my previous statement. Because they are of particular interest to the publie, they have been referred to in similar statements each year. The idea oi keening separate account* is not original nor is it exclusive to the present -Government, as the form of account* just published follows closely the procedure ot many years through the administration of successive Government*. In many respects, this continuity is desirable, as its facilitates comparisons with previous years. The pooling of various accounts as suggested by Mr Holland would be extremely misleading, particularly as it would, in effect, involve tha mixing of revenue and loan moneys. “Mr Holland’s calculations to produce an alleged surplus of £40,000,000 take into account Lend-Lease receipts and loan moneys borrowed for war purposes during the- year, totalling £64,020,000, and a further £11,270,000 received from the realisation of war assets. Such items obviously should not be included in the summary int tended to show the revenue surplus for the year. It ia neither the practice nor the Intention of the Government to resort to «uch a procedure. “Another instance of confused reasoning is the reference by Mr Holland to the case of the Electric Sunply Account,” said Mr Sullivan. “This is a separate trading undertaking, and its accounts should be kept separately, as is done at present. The account meets its full obligations to the Consolidated Fund and any surplus is rightly retained in the Electric Supply Account. Similarly with the other trading account*. results are reflected in the Consolidated Fund, which receives Interest on the capital involved. In certain case* where required. by legislation, the annual profit* are paid to the Consolidated Fund.

Social Security Revenue “Referrine to the Social Security Fund, Mr Holland states ‘that the people should know how much It is costing and where the money comes from.’ It was for this reason that a separate fund was. established, and it does show both the total expenditure and the sources of revenue to meet such expenditure. It wa* never contemplated that Social Security, as such, would be financed solely from revenue collected direct into .the fund, contributions from ordinary taxation always having been intended to be ai> essential part of the scheme. >’Mr Holland states that' gratuities are part of the liabilities to be met in current or future years, but the Government doe* not agree with a policy of holding over such commitments. Servicemen and women are entitled to their gratuities as at April 1, 1946, and it was only reasonable to provide cash as at March 31, so that it could be available immediately, if desired. “The fact that £27,500.000 has been provided tor debt repayment is commented on by Mr Holland, who appears to hold the view that war debts are best left unpaid. As has already been st»ted. the major part of this was applied in repaying the overseas debt due to the United Kingdom Government and was financed in part by issue In New Zealand of the £8,000,000 Treasury bill referred to by Mr Holland.

No Preview of Budget “Mr Holland mixed comments on the accounts as published with the proposals for the present year, but it is not intended to provide at this stage a preview of what is to come in the Budget. My earlier revjew dealt only with the facts as disclosed by the accounts for the last year. Mr Holland’s ststement is merely an attempt to confuse the position. He glibly speaks of a 'bribery' Budget when he has no Idea what the Budget will contain. He advocates a change in the form of accounts—a form which has been in operation for many years—and he completely confuses revenue with loan moneys, the proceeds of asset realisations and receipts under lend-lease. “The cold fact remains, the finances of the country have been sanely and prudently administered and the country has emerged from a difficult year with a surplus of £1,254,000 correctly computed in relation to the year’s revenue and expenditure. In conclusion. 1 appreciate Mr Holland's forecast oi the contents of the Budget and his apparent terror at the possibilities inherent in his mythical £40.000,000 surplus. If he sincerely believes in the correctness of his own amazing calculations, I can imagine that it must be truly a nightmare to the Leader of the Opposition. The fact Is that his astronomical surplus has been built up in his mind by including loan .moneys, lend-lease receipts, etc., and that such items are not available for concessions to the public. This will. I am sure, relieve his political terror, but will not increase public confidence in the ability of himself and his party to understand the finances of the coun-