DOMINION FINANCES

Dominion, Volume 11, Issue 177, 16 April 1918, Page 5

DOMINION FINANCES

AN INTERIM BUDGET SURPLUS: FOUR MILLIONS AND A QUARTER A POSITION OF STRENGTH STATEMENT BY SIR JOSEPH WARD. The following statement on the finances of the country was made by tho Finance Minister (Sir Joseph 'Warii) tn the Houso of .Representatives :— I desire to make a statement to the House in connection with the finances of the year ended March 31. Tho final figures are not yet available. A certain time must elapse after March 31 before the Treasury can assemblo and enter up the large number of vouchers relating to tho year just ended. In ordinary circumstances wo hope to get the figures in a fortnight, but all the vouchers are not yet in from all parts of the country, consequently the figures I am placing beforo tho Houso are only approximate, and subject .to readjustment, but they may bo taken as giving a fair statement C? the financial position of the Dominion. The returns of revenue are as follow: —

An lion, member: Carrying on for one day? Sir Joseph. Ward: Yes, .for one d»Ji but it is a help, and a considerable help, and the principle"involved is a good one; it is tho proper Bpirit. In that respect wo havo done probably what no other country has done, and it is right that we should do it. Members will see that in having accumulated a surplus of 10j millions starling we hold a very strong reservo. Wo will at least hold !hat reserve at tho end of the war, and I hope it will bo increased still further as the far goes on, leaving it'available for any purpose that the Government may decide. My own opinion is that it should be for the reduction of the expenditure which, wo have incurred for war purposes, or in connection with, tho permanent sinking fund, so as to allow the reserve to accumulate. A Good Year. Thero is great strength in baring Ifli million sterling'of reserves out of our surplus in this country. If there was any great alteration in the financial and industrial or what I call the internal condition of this country, .we .should.,be in the position of having ; securities'';in ijondoii which would be of very material assistance in helping to maintain a strong position after the war was over. So I think I am "ight in saying that the result of tho year's operations is most satisfactory, though I feel it to be my duty to warn the House and the people that the charges for interest and sinkin? fund will eventually assume very largo proportions by comparison with, Iho increase I am now indicating to the Houso. These charges will now commence to increase pretty rapidly. tTp to now the increase has been fragment-

Statement of the Revenue for the Year ended.March 31, 1918, compared with the year ended March 31, 1!)17, as at April 8, i9lB. Ycaronded. Your ended Mar. 31,1018. Mar. 51,1917. Increase. Decrease, (Incomplete.) . £ j> £ .£ Customs : 3,361,380 3,819,675 - 488,295 Stamp and Death Duties 1,603,592 1,699,033 104,557 - Postal and Telegraph 1,830,594 1,815,558 15,036 - Land Tax .' 1,35i,H)4 713,118 671,076 - Income I'six 5,610,719 1,202,126 1,348,593 - • Deer Duty 237,075 187,953 . 49,122 — Railways. 4,575,465 4,836,27 a - 265,810 Registration and Other I'eea 92,314 103,041 - 15,703 Marine 37,311 43,712 - 6'.«1 Miscellaneous 683,929 518,063 , 165,8615 - Territorial '.. 199,795 215,787 ' - 15,992 National Endowment Revenue ... 100,493 85,971 14,522 — Other Receipts 24,030 32,200 - 8,170 k,20,000,918 . 18,367,517 2,428,772 795,401 ...:..'' 795,401. . .w1.683,371

From these figures, it will be seen that, the revenue for 1017-18 shows the substantial increase of ,£1,633,371 over the previous year, and those increases are largely duo lo' the increased direct taxa-. tion imposed by last year's legislation. That will be particularly noticed in reKiird to income tax and land tax. There was a very large increase in income tnx, and also it considerable increase in '.and tnx. Tn the Ordinary Revenue Account the expenditure out of appropriations for the year compiled as at April 8, compared with the corresponding period for 1917, aro as follow:— ORDINARY REVENUE ACCOUNT. Statement showing tho expenditure under appropriations for the year ended March 31, 1018, as compiled at April 8, 1918, compared with the corresponding; period for 1917:—

ary, if I nmv use the term; there ha* been but .a slow jTOcess of addition for. anything like a long period, because after, all the war is but three and a half years old, and only a, proportion of the v permanent annual charges has as yet been brought to i.cconnt, but Bβ the years come round it Will be large, and we shall appreciably feel the increased burden of interest md sinking fund for the war loans. . ■ ■ War Expenses. 1 want to say one word now in connection with tho war expenses account, and here I would remark that my colleague the Minister of Defence will make, I understand, a statement before the House rises, and it -will necessarily be one in more detail. I deal with the question only of die total war expenditure aa it affects the finances of the

Year ended Permanent charges- 31/3/18. Tear ended (Incomplete). 31/3/11. Inc. Dec. £ £ ■ £ £' Civil List 24,634 27,465 - 2,831 Interest and Sinking Fund 4,403,224 4,014,792 358.432 - - Under Special Acts 2,003,720 2,053,098 -;- 49,3<8 6,431,578 6,095,855 388i32 ,52,209 Annual appropriations— . „,»* Class I, Legislative L 41,105 34,939 6,166 - Cla» 11, Finance 129,722 106,722 23,000 - Class 111. Post and Telegraph 1,216,445 1,368,490 - 152,045 Class IV, Railways 2,996,411 2,871,977 124,434 - Class V, Public Buildings, etc 87,560 94,939 - 7,3/9 Class VI, Native ...'. : 22,231 24,191 - 1,960 Class VII. Justice 435,173 459,914 , - 24,741 Class VIII, Mines 26,324 28,278 - _' 1,951 Class IX, Internal Affairs 521,822 474,965 46,857 - Class X, Defence 403,414 438,656 - 35,242 Class XT, Customs and Marine 153,823 169,865 46,857 — Class XII, Labour 29,459 32,725 - 3,266 Class XIII, Lands and Survey 193,056 192,992 - 64 - Ciass XIV, Agriculture 84,227 216,897 - 132,670 Class XV, Education 1,540,718 1,406,264 134,454 -' Services not provided for 4,142 41,601 - 37,459 Totals 7,885,638 7,963,415 - 334,975 412,752 / ' '' ~~' ~ ' 723,407 464,961 • 464,961 Totals ' 14,317,216 14,0.58,770 258,446 -

Year ended 31/3/18. Year onded (Incomplete). 31/3/17. £ JJ Balance, April 1 6,474,854 2,166,077 Receipts 20,000,918 18,867,547 26,475,772 20,533,624 Less, expenditure ... 14,317,216 14,058,770 Bal. on March 31 ... 12,158,556 6,474,854 As follows— Cash 1,965,597 2,298,043 Advances outstanding 1,464,142 259,080 Investments .'. 8,728,817 3,917,731 Totals 12,158,556 6,474,854 Again I want Temind hon. members that all these figures are incomplete and will be subject to variation later. Expenditure Increasing.' From th,e figures I have given to the House it will be seen that there is a very largo increase in the expenditure as compared with the previous year. The charges for interest and sinking fund and the increases in tho railway and education expenditure are chiefly respou. sible for the increases 1 havo just named. A comparison of the revenue with tho expenditure shows that, if wo included iu tho expenditure the wholo eurn unaccounted for by the imprestees, there will be approximately a surplus oi 41 millions for the past year. The amount of the imprest, which hon. members will see is large, is entered under the headin" of "Advances Outstanding,' and amounts to £1,464,000. The imprests both hero and in the Old Country nre much, larger than ordinarily. Members will recognise that until tho accounting of- tho imprests is brought much closer up tho exact figures for the twelve months cannot be given, but I am rigM in saying that the figures I am giving the House can be taksn as a very fair lndiontion as to what ilie position will be when we have the whole of the figures in. There must be fluctuations one way o* the other, but the surplus, approximately, for tho past year is four and a quarter ■ millions sterling-. An hon. momber: Too much war exP Sir* Joseph Ward: It has no direct Vf Ming on the point at the moment. That ie all kept under another account and payments are made out of other funds.

country. The account ehows that since the war commenced, up to April' 8, the total amount actually Taised for war purposes, but not jet wholly expended, amounted to ,£46,304,860. Of that amount £172,476 was subscribed' gratuitously by the peoplo.of New Zealand. The total amount of expenditure for war purposes during the same period, inclusive of imprest advances in tho hands if : imprestces, amounts to- £40,930,697. I said the 'other day '. it was approximately forty-ono millions, *.nd here I think it right to say that if there should be any difference between the figures of the Treasury and the Defonce Department, I want hon. members to lecollect that the Treasury only deals with amounts that. actually have come to charge in the Treasury, and includes the cost of raising the loans and also imprests in the hands of imprestees.. Aβ is the case with the railways, you find sometimes a. difference: between the figures of tho TrojjsuryjLaiid the railways, but you may accept my assurance that in actuality both gets of figures are corroct and can be reconciled if necessary. There are also some arrears of payment due to tho Imperial Government for the maintenance of our troops, but they will soon be cleared up out of the authority that has been-given by the House for raisin* another .£20,000,000 loan. They will in all probability be cleared by tho acceptance of New Zealand stock by the British Government for the amount which tho Government hag incurred in England. ' , Mr. Witty: Could you give tho approximate amount? Sir Josetfi "Ward: I could not give that at tho moment because I do not know it exactly, and it is better not to give figures that may prove even not approximately correct. It depends on things not tinder the control of the Govemmfflt nt this end at all. War Expenses Account. The War Expenses Account from August 4, 1914, to March 28, 1918, compiled as at April S, 1918, showed:- ■ Receipts. War Loans: Public Revenues Amendt. Act, 1914 (Sec. 8} .£2,000,000 P üblio Revonues Amendt. Act, 1915 (Sec. 5) 10,000,000 Finance Act, 1916 (Soo. 35) ... 16,000,000 Finance Act, 1916, and Appropriation Act, 1917 17,900 War Purposes Loan Act, 1917— 4J% War Bonds... £4,730,400 4j% Inscrib. Stock 6,031,875 41% Inscribed Stock, 'Death Duties ... 825,425 Advanced by Imp. Govt. on security of Memo. of Security 4,830,000 5% War Bonds ... 1,542,500 17,960,200 Contributions, otc, received __ towards war oxponses 1i2,4<6 Securities issued to cover expenses on raising loans— 2,000,000 Loan .... 67,410 10,000,000 Loan ... 32,323 16,000,000 Loan ... 64,550 154,254 Other receipts— Remittances from Soldiers' Account 14,821 Remittances to Soldiers' Account 210,120 Pay Warrants Ac/t. 19,400 244,341 Total £46,519,503 Expenditure. War purposes .£36,646,316 Relief purposes 233,237 Charges and expenses , in raising loans— 2,000,000 Loan ... £67,410 10,000,000 Loan ... 32,324 16,000,000 Loan ... 51,667 17,900 Loan ... — 2-5.000.000 Loan ~. 78,355 H7,<»

The Accumulated Surplus. Members will recollect that the total accumulated surplus at thei end of Uμ year 1916-17 amounted to i 6.474.854, so that the total accumulated .surplus at the end of 1917-18 is approximately 10j ndlions sterling. Out of this accuuniktion of profits wo have invested in London in Imperial Government securities at the pfesont moment a&um of M,ia,817 I want to call the attontion of the House to the fact that this investment of our -urplus .moneys with the Tmnerial Government ib, in. my opinion, a soTnd and desirable thing to do. They haTemade advances in the Old Country from time to time for which they have accepted the stock of this country in payment, because we could not go on the market thero, and they accepted pur stock, authorised, of course, by Parliament, from tho beginning, amounting probably to something liko nineteen millions sterling, porhaps more. When tho Motherland is under such a heavy financial strain it is our duty to givo in this vny whilo. retaining the money for our own requirements at tho end of the war. I repeat that it is desirable that vre should give the Mother Country relief by investing this surplus. It certainly helps tho Mothor Country in connection with the gigantic finances which she requires for carrying on tho general purposes of tho war.

GjtSer eipeuditui*=> s , ; iJeniittuncea from Sol'diers' Account 12.55S ! Remittances to ! ■■■.Soldiers'-Account 131,208 : Pay Warrants' Ac/fc. 19,852 166,133 Balance on April 9, 1917— I -Cash iii Public Ic/t. 2,021,7-11 :' ;: Imprests put: .-. .- :'- -standing in > "'".;iind6ii..-2 ( lM,i7e'. ' ' : .:\';.Doniiiiiori 1,920,147.4,056,623 ' Temporary "invest- •■ ■ ■ ; ments ..;............ '3,197,371 9,275,731! i ■';:.■■".'Total ........;...... .£46,549,202 i - Public Works. ': Now, I want to give the position of j . the Public Works .Fund. The- policy of j the Government has necessarily required to be a cautious one in regard to public works expenditure, but notwithstanding the reduced activities of the Department ' owing to war conditions there has been <i total expenditure during the twelve months amounting to includ-' ■• .'ing '.sums' in the hands of lmprestees. The figures are as follow:—

Statement showing the position of the Public Works Fund on March 31, 1918 as i compiled on April 8, 1918. EeceiP' 3 ' i Balance at beginning of year— & ■ * * Cash in Public Account 310,913 -Imprests outstanding in ■ i>ollo ■ Dominion. * s >"3 London '. 2 > 4G3 , 5 -^ Investment Account '. m - m j , : Recoveries on account of expenditure of previous years 43,256 i" Special receipts in connection with the Ellesmero and -Forsyth Reclamation and Aiaroa Railway Trlls t Account I'o3i)1' o3i) /. ■ Debentures issued under— .„„,,»« Financo Act, 1916, Section 49 'OO.JOO : . Finance Act, 1918, Section 77 125,000 Aid to Public Works and Land Settlement ; Apf inu 4a,100 Aot ' lM 870100 : ■ 1,436,476 ; ■ . Expenditure. ; Under appropriations' yiv >^!: ■ . Elleemere Land Drainage Act, 1905, Section 6, Sub-Section 1 439 Balance at end of year— • ' „,, ; Cash in the Public Account ll\f* Imprests outstanding in the Dominion ••• *»>*** 43G 476

Conservative Estimates. Hon. members will,. see,- if they, refer to the J3udget, that the surplus is a larger ono than I estimated wkeu submitting the Budget. It will be found that the rcvemie receipts ure approximately two millions greater than I, in-dicated'-we wert likely to receive, and itVill be found that the expenditure is-not far away from the amount I indicated. And 1 want to emphasise again : aow that during the times through 'which we are passing I consider it is uiy duty ■ as Finance Minister to keep the Estimates in this country down tb as low an amount rts is prudent, so as to provide for any fluctuation which may take place during the course of the financial year. That will be done again for the succeeding year, because circumstances, which ura stronger than men and stronger tlan Parliaments, might occur which might greatly affect receipts in the Treasury during the war period through which we are passing. I call attention to it only to say that I nm not making any excuse or apology for the Estimates being considerably beyond my forecast, as I was deliberately cutting the amount down for fear of eventualities. , I felt it was the only course for me to follow in the circumstances. I ■would call attention to the fact that a eurplus of 4J millions at this juncture is encouraging to the whole of -us and to the country, and it is a source of satis-faction-to us to know that we arenot in the position of other countries--■which I need not name—which have not. been so fortunate as to be in such ft strong financial position at the «nd of •the financial year as we are. The outline of the position which I have given :3 intended to take the place of the Budget which would have come down in the ordinary session. It is an interim statement made, as I have already said, approximately, but is a fair account of what ttie position is. I sincerely hone lhat. the circumstances of this country 'riming the coming financial year may be so satisfactory from the roint of view of enabling ihf' country to r.ay its \my and maintain a strong position to the end of the war