NATIONAL INCOME

Evening Post, Volume CXV, Issue 74, 29 March 1933, Page 9

NATIONAL INCOME

STATE TAKES 3IOEE

EXPENDITURE ANALYSED

ECONOMIES URGED

(By Associated Chambers of Commerce.)

Despite attempts that have been made at economy, the cost of Government is not being reduced in conformity with the lower income of the Dominion. An examination of facts and figures reveals a disquieting position, and shows that the State is absorbing a larger share than ever,of tho national income. The public mind is by no means clear as to the effect of economies on. total Government expenditure, or as to the expenditure to which tho country is committed. A- full statement of the position should thcreforo. remove misconceptions. EXQESS OF FIVE MILLIONS. The total expenditure of the Government in 1929-30, including public works, ■which were almost wholly financed out of loan moneys, was £33,011,427. For the financial year 1932-33, ending this month, the expenditure will bo approximately £26,803,648. This includes £2,694,047" appropriated for public works, other than main highways under the Main Highways Revenue Fund. It also includes £3,800,000 as the estimated revenue pf tho Unemployment Board (apart from subsidies), -which is taken as the probable expenditure of the board. Regarding economies, the Minister of Industries and Commerce stated recently that economics ; representing £4,891,281 have been made in 1032-33, as compared with 1929-30. When tho figure of actual appropriations for the current year is used, however, the amount to be shown for economies this year is reduced by £2,560,852, sincothe latter saving is reflected in the reduced appropriations for tho current, year. The position, is then as follows: — EXPENDITURE FOR 1932-33. £ .Appropriations .' 22,040,0(10 Other public works 2,691,01" ■Unemployment ' (excluding subsidies) 3,800,000 29,134,047 Less economies • 2,330,399 Probable total expenditure .... 26,803,648 Total expenditure for 1029-30 .... 33,011,427 It will thus be seen that,the expenditure for 1932-33 is only IS per cent, less than for 1929-30. The Prime Minister stated recently in the House that national income has fallen By 35 per cent, as compared with 1928-29. If Government expenditure had been Teduced in like ratio, further economics amounting to more than five- million pounds should have been made in Government expenditure during the year now closing. As it is, the Government is today taking a larger.share of the national income than it was in 1929-30. COSTS INCREASING. With regard to the new financial year starting next month, if expenditure is continued on tho present scale, and no increases arc brought about, the total cost of Government will show a considerable advance on 1932-33. As a . basis, 'appropriations for the' year are here taken as £20,309,601, which is the amount of the present year's appropriations less current economies. To this is to be added the increases in expenditure) consequent on the increase in the rate of exchange, and detailed by tho Minister of Finance in January. To these increases, covering extra, exchange requirements and debt charges, are to be added further increases for pensions and for tlie repayment of motor taxation, bringing total appropriations up to £23,61)9,001. Assuming that expenditure on public works 7 other than, on mainr highways out of the Main Highways Hevenne Fund, will be equal to the current year's appropriations, and assuming also that the Unemployment Board will again raise and spend £3,800,000, the total is brought up to. £30,103,648. On the side of savings, there will be £370,000 from tho conversion of tho Government's internal debt (which amount .includes the saving on lower interest payments on Post Office Savings Bank deposits) and \£loo,ooo additional economies indicated by the Minister of Finance in. January. The result is a.total Government expenditure of £29,433,648, as follows:— ESTIMATED EXPENDITURE TOR 1933-31. Appropriations > 20,31)9,601 Plus increases— Exchange 2,100,000 Debt charges 5.i0.000 Pensions 50,000 Repayment'motor taxation .... 500,000 -3 000 HOI Unemployment , 3,800,000 Other public works 2,691,047 T . „ 30,103,64S Less savings—Conversion £370.000, additional economies £160,000 . 670,000 Total estimated expenditure 29,433,648 These figures show an increase in expenditure of nearly 10 per cent, on the current year. If the Funded Debt payments to the British Government are resumed, there will be an additional expenditure of £825,000. If the total expenditure for 1933-34 were reduced to the same extent as national income has fallen— namely, by 35 per cent, on 1929-30—then economies should be effected amounting to closo on eight million pounds. This may be a staggering reduction to contemplate, but the community is being weighed down at the present time with staggering taxes by which an extravagant State structure is being supported. BACK TO FUNDAMENTALS. It is necessary for the people, under present-day conditions particularly, to entirely recast their ideas as to" how tar the State is to enter into their private lives by its benevolent activities. The business of Government is to govern. Tho true and fundamental functions of the State are tho administration of .-justice, the maintenance of law and ovdpv, and defence. From this standpoint the other costs-of Government that come under the heading of social services are for so many attractive but foreign additions that the public must now do without. Keductions in wages and salaries in tic 1 übhc Service- do not entirely meet tlio case; heavy reductions in the personnel of the Public Service and the wholesale closing of departments, resulting in the withdrawal by the State ot many services it now performs, can alone do that. In addition, the possibilities of the report of -the National expenditure Commission are not vet exhausted. Until this reconstruction is effected, national recovery must continue to bp seriously impeded by excessive taxation.