Uncovers Hidden Surplus of £39,000,000

Chronicle (Levin), 15 June 1946, Page 6

Uncovers Hidden Surplus of £39,000,000

Press Association t -

By 'Telegraph—

DARGAVILLE, June 14. , The claim that the real sprpius in I tho Pubiic Accounts is. almost £40,000,- • 000 aud not £1,254,000 as stated by tho Acling JMiuistcr of Finance, Hon. D. 0. Suilivan on Aionday, is eontaincd in. a statement released from Dargaville, the principal contre in the new Hobson electorate, by Mr. S.G. Holland, Leader of the" Ppposition. ' Mt (would be sare to say that the pubiic- "would iiiterpre't a ' surplus of £1,254,01)0 as announeed, to mean that . aftcr all Government paymcnts are sfibtractcd from all Government receipts, there is a credit balance or surplns of oue million and a quartor," said Mr. Holland. "That is far from the facts as many . accounts are not included in the iigurcs as publishcd by Mr. Sullivan. Those not included are railways, Post Oliice, coal mines, electric snpply aecouut, broadcasting, Etatc forests, scme of the accounts o'f tho Intcrnal Alurkcting Dcpartment, and liousing account to mention a few. "The inetliod of prcsenting pubiic accouuts makes it extremely difficult to obtain a clear picture of the true position of the national linances. I liave anvays advocatcd the pubiic accounts should be presented in such a forni as would allow taxpayers who provide the Government with all their millions of monoy, to read the accounts and undeistand how the pubiic funds are speut. The inetliod of prcsenting the accounts as published on Aionday, is that followed for many years and I would not iike it to bc thought that I ani charging thc Government with being the first oll'enders in that conuection. By a pro eess of transfers from oue account to another thc position is further confusod while thc practisC in including substantial paymcnts unuer general lieadings, makes the position more difficult for lavman to follow.

"Oue cxample will suffice to demonstrute the points. The Abstract of Statistics for Marcli, 1940, disclosed total paymcnts for Social Socurity and War Pensions for eleven montlis was £23,339,589 whercas thc statement issued on Monday shows total payments for Social Sccurity at under £23,000,000 for the whole twclve montlis. Obviously War Pensions payments liave been in cluded under some other lieading. '-'The statement is careful to avoid directing attention to the huge surplus in the war expenses accounts, the figuies greatly cxceeding the estimate m thc last Budget. The taxpayer must bear in mind that altliough tiro war was over for the latter half of the financiai year under review, war taxation continues at its liighest level and still cou tinues today. "Air. Nash will not return from his ovcrseas trip in time to alter taxation before the first half of the current iiuaiicial year 's operation and it;would"be too much to expect liim to maKe any tax reduction retrospective to April last. "The Consolidated Fund really has a surplus of £8,250,000 but this is reduced to £1,250,000 by transfarring £7,000,000 to huild up the Social Security Fund. A study of the Social Security accounts discloses that it is far from being self-supporting for the year just closed. Keceipts from taxation were approximately £15,000,00. and payments, excluding war pensions, were £23,000,000. For the financiai year 1910-1947 payments from the Social Security Fund will probably be increased by £12,000,000 on account of the universal family allowances and other increases, bringmg the total payment to about £35,000,090 with practically no provision for unemployment. "So the estimate we made when the Budgct was under discussion last year, estimates which were ridiculed by Mr. Nash, are jiow proved to be remarkably close to the mark. People are realising as never before, that no Governmem can give the people anything it has not first taken from the people and the 50 per cent mcrease in Social Secuiity tax ation (from 1/- to 1/6 in the £) demonstrates that fact forcibly. Steadily - rising increases in 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 direct taxation on wages and incomes. "This year all taxation for war pur poses will be paid into the Consolidnte& Fund and this will further confuse the situation and make comparisous. more diflicult. 1 want it to be clearly understood that I am in 110 way saying or inferring that Social Sccurity is too high. Wliat 1 wish to, eonvey is that thc people should know wliat it is costing and whero the mouey eomes from. The terrific cost of Social Sccurity which in the ncar futurc will reach betwecn thirty-five and forty million pounds pcr annum, can only pe found by taxation. In one forni or another it must come from the pockets of th-3 people. There is no other way. In turn taxation can only come from production which is being seriously afl'ected today by the crushing burden of taxation on every scction of the communityr. "I£ we add three accounts — Consolidated Fund, Social Seeurity Accounts and the War Expenses Account — together we iind that thc total surplus for the year just closed is almost £40,690,000 and with taxation continuing for the first half of this linaucial year at last year's ration — except for sixpence reduction in wages tax — Mr. Nash will liave a considerable sufplus in hand or in siglit before he retmrps to aunonee his ' bribery ' Budget in the eoming session. "The" 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 cnrious to know how Mr. Nash can greatly reduce taxajion in the current year and thus redeem his promise to produce a Budget j that will save the Government from de-

feat, when there is only a Consolidated Fund surplus for the year ' just cioseu of £1,254,000? An examination of th>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 capxtulated 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 wastoutly denied at the time, the publisn ed figures confirm our allegations up to the hiit. "Surplus, of courso, is- to. bc found liidden away in tlie \Y ar Expenses Account. . War expcnses were cstiinated at £105,000,000 but at the end of thc financiai year Mr. Nash had a huge enough surplus to pay olf two itenis not provided for in the Budget, viz. £27,o00,000 of debts and to pay from his right hand pocket (War Expcnses Account) to his left hand pocket (Posi Oflice Savings Account), a further £18,000,000 to ineet war gratuities which will fali due this financiai year at the earliest. It should be noted however, that receipts are increased by borrowing on Treasury bills by £1,000,000 and llus was not mentioncd in the Budget. The monetary' requirements of thc Government should be at least £50,000,000 luss for the current year than for last year aud yet balancc the Budget, that is, after allowing for a further incroase of £12,000,00 to meet the steadily inounling cost of Social Seeurity. " It is iinportant to remember that taxation at record high levels is still rn 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 crystai clearness: (1) That the people were overtaxed in 1945-48 to produce a surplus of £39,qi « nnn

(2) That the Budget estimate of the Government's need for 1945-46 .were extremely wide of the mark and enabled 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 £5,000,000 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 financiai position in that many important accounts such as the State Coal Nffnes Account, the Post and Telegraph Account, and Railways Accounts, are not included. "A-much clearer picture of the three accounts — Consolidated Fund, Social Seeurity, and War Expenses, can be seen by prcsenting them as oue aeconnt as foliows (in every instauce thc figures are preciscly the same as published by the Minister) : — Receipts ■ — Taxation (Consolidated Fund) £48,3(71,000, taxation - -..(Social Seeurity) £15,280,000, taxation (war expenses) £5.1^417,000 — total taxation £115,074,000. .Interest reeoverics, etc. (Consolidated. Fund) £10,135,000, LcjidLease and memo of seeurity £30,375,000. Borrowings: War £25,6-15,000, Treasury bills £S, 000, 000, totalling £33,645,000. Disposal of war assets £1,127,000, mis cellaneous receipts £1,774,000, niakiug the grand total of receipts £202,273,0U0. Payments 1 — Consolidated Punu £50,252,000, Social Seeurity £22,960,000, war expenses- £89,145,000, grand tota payments £162,357,000, the surplus be ing an excess of receipts over payments for 1945-46 of £39/91(5,000. "This balance of £39,910,000 h'as been disposed of as foliows: — Loans redemptiou £27,500,000, gratuities depositod with the Post Offiee £18,000,000, credit balance Consolidated* Fund £1,254,000, making a total of £40,754,000 which, less a dcbit balance in the war expenses uf £0,104,000 and less a debit balance in thc Social Seeurity Account of £074,000, equalliug £0,838,000, lcaves £39,910,000."