FINANCIAL STATEMENT

Hokitika Guardian, 3 August 1927, Page 4

FINANCIAL STATEMENT

i (Per Favour of Government). ! WELLINGTON. Aug. 2. In Coin mi lee of Supply, the Hon. W. Downie Stewart, Minister of Finance delivered the Financial Statement in the course of which he said: The revenue for the year amounted to £21.9-13,107. reprosecuting an increase of £217.315 over the amount received during the previous financial year.

Of the total revenue received last year £16.901,087 was derived from taxation, and the remaining balance of £8.038.120 from interest receipts, sundry revenues and recoveries from different State activities. Of the proceeds of taxation 18 per cent, catne front direct taxation (land and income tax and stamp duties) and the remaining 52 per cent, from Customs and beer duties.

The receipts from direct taxation show relatively little variation, there lining an increase of £19.118 in stamp and death duties. £53.700 in incometax. and a decrease of £37,592 in land tax. Under indirect taxation we find a decrease in both headings—viz.. Customs £131,302. beer duty £7.715.

Among other items the following increases may he noted: Postal and telegraph receipts, £118.823: interest on railways capital liability. £130.122: and departmental receipts £57.191. Including an amount of £112.175 of tire-tax credited direct to Wain Higliv:t.\s Account, the total Customs receipts amounted to £8.395.050. EXPENDITURE. Turning now to the other side of the account, it is perhaps, advisable, in the tn-st place, to draw attention to iho fa "I, that following the practice of the last lew years, the expenditure shown ■n the published accounts is gross, the

(•[edits to the various items heiuc brought into the statement on the l-o-feints side. These credits in aid or it reduction, which represent sundry di rcct recoveries of expenditure, are mil included in the revenue, and must nr eordingly he deducted from the expenditure. In this way we arrive at tin total net expenditure chargeable to tin year’s revenue. The net ev is

last year amounted to £21.355.905. an increase of £785.882 compared with that of the previous year. ANN LAL A PPII.OPR TAT IO N A The net expenditure under imir appropriations amounted to £10,091.02.) au increase over that of the previous year of only .£107,805, or 1 .OS Per cent. The increase in some votes cannot he avoided, hut {ho figures for the las* tin uncial year clearly deinun•strate that economy and close control of expenditure were exercised throughout the year. The Education vote showed an increase of £99.878. being lue normal increase due to growth of population. The cost of naval <h lei ice went up by £85,821), I lie reason being that the previous y; a r’s expend mi ro included the ro.si of I.lie second cruiser

' for only part of a yea, S, MM ARY OF YEAR'S OPERATIONS. I he transact .ions for the year resulted in a surplus, viz: REVENUE. £ Revenue {proper! 21,313,982 Departmental receipts ... 576.201 JU'eoveries on account of expenditure or previous years ... .52,921 Income for year 21.913.107 EXPENIHTUR E. Permanent appropriations 16,188.001 , Less credits-in-reduction 2.223.059 il. 261,915 I ' £ , Annual appropriations ... 11,885.368 j Le.-s credits-in-aid 1.791,318 i 10.091.020 i £ | Net expenditure chargeable to year’s income 21.355,965 I Sin plus ... 587.112 | SURPLUS AND TAXATION. Sundry statements have appeared in the press of late to' the efleet that ■surpluses should not he used for public works and debt-reduction purposes, hut b* npnlied to relief of taxation. The application of the surpluses of good years to public-works and deht-rerluc-tion purposes lias the effect of keeping down the debt charges, and al times obviates the necessity of increasing taxation.

'I ho policy of economy was strictly pursued throughout tlio year. and all departmental expenditure was kept under close control, ivitli tlio result tbnf tlio actual ex-eondituro under annual votes was £437,067 less Ilian (lie appropriations.

PHII. TO "WORKS. The amount expended on capital uorks during the last financial year out of the Public Works Fund and other accounts concerned totalled £6.607,967, made up as follows: £ Railway const ruction—additions &■ improvements 2.369,912 rologrnph.s it Telephones 558.041 Hydro-electric supply ... I,Kill,Old Haiti highways and roads 4,154.967 Irrigation,, land and river improvement 278 015 Public buildings, including schools ... 802.768 Other public work's 284,251 C 6.667.967 [n total the expenditure is approximately £510,000 less than tlio previous year. The requirements for railways showed a comparative decrease of £4i7,000. and telegraphs and telephones a decrease of £.374.000. while

the expenditure on electric supply increased by £184,000. and on main highways and roads l»y £175.000. The last-mentioned increase was largely due to additional works undertaken to give relief to unemployed.

PUBLIC DEBT. The gross public debt on the 31st March. 1927, amounted to £245.850,889. as compared with £238.855.478 twelve months previously—an increase for the year of £6.005,411. The net increase for 1925-26 .amounted to approximately £11.000,000, so

that the borrowing for last year represented a decrease of £1.000.000 in comparison with the previous year. Tlio conversion scheme inaugurated in September. 1922. by which the public were afforded an opportunity of converting free-of-tax securities into inscribed stock (nof free of tax) lias been availed of to the extent of £3.- | 157.570. This sum. together with renewals not free of tax find redemptions from time to time amounting to .£10.849.236, has accounted for a total reduction of ’£14.006.806. leaving the tax-free securities outstanding at the 31st March. 1927. at £37.726.599. STATE ADVANCES' OFFICE. Mew loans granted during the year amounted to £3.665,175. and the amount paid over in respect of these and other loans previously granted totalled £6.185,970. Since the inception of the Department £57,159,209 has been advanced to borrowers, £22.324.60$ of which has been repaid, leaving a balance of j

£34,834,001 outstanding at the close of the last financial year. The new Rural Advances Branc.li commenced operations on the Ist April last. The special features of this branch arc that it allows advances tip to £5,500 instead of £3,500 as in the case of the Settlers Branch, and, as the bonds are secured on the first mortgages and not on the State revenues, it avoids increasing the public debt for a purpose that is really purely commercial. Up to the 18th July last. 157 loans, amounting to £387,905 have been authorised.

Legislation will he introduced this session to provide for writing off accumulated losses and also reductions in values recommended hy the Revaluation Board under the provisions of tile Discharged Soldiers Settlement Amendment. Acts. 1923 and 1921. STATE GOA! MERCIA I. ENTERPRISES.

It js satisfactory to report that the State Departments run on commercial lines have in the main experienced asuccessful year in 1926-27.

The steady progress of the Government. Life Insurance Department was well maintained during the year, and Iho total business now in force comprises 65.396 policies, assuring £20,218.404, including bonuses. The triennial investigation of the Department's liabilities as at the 31st December last resulted in a surplus which allowed reversionary lion uses to he allotted to the extent of £661.100. being the largest division ol profits in the history of the Department.

The State Fire Insurance Office had a most successful year. The income received £233,545. was a record for the Office; and although very much heavier losses were incurred, and the rate of bonus rebate was increased from 10 per cent to 121 per cent, the year's operations resulted In a profit of £51,237. The Accident Department showed excellent increases in the premiums and interest. received. Ihe surplus for the year was £14.332. as against £8.390 for the previous year. I refer next to the Public 'I rust Office. The value of estates and I mills under the administration of this office oil the 31st March last totalled £41,043,523, a net increase for the year of £3,034.043. In the last ten years the net increase has been £2(i.UC9.UOO. The net profits for the year were £32.650; a.nd following upon the increase in tlu* rates of interest granted last year on money invested in the Common Fund, and the reductions in commission and charges, this result is very satisfactory.

The operations of the Native Trust Office are on a. much smaller scale, and activities during the year were somewhat restricted owing to the dearth of funds, hut nevertheless a small profit was shown on the year’s working. The output of coal from the State coal mines for 1926 was E 9.147 tons, an increase of I < .982 tons compared with the previous year. I lie financial accounts disclose a profit lor the year. unemployment. The unemployment difficulty U " matter receiving urgent attention, and in order to help the situation, State departments, hy accelerating their programmes, have absorbed large numbers of additional men. I am pleased to say that local auth--viti"s and citizens generally are also taking active steps to assist n coping with the Mtun.t ion.

The Government . have also undertaken to subsidise on a pound-ior-lor relief of the unemployed, provided dm money is expended on works which are approved and duly carried on| in accordance with any conditions laid down hy tihe Public Works Department.

1 have now plated before honourable members the position as regards the past year’s operations, and ' outlined the steps taken to effect economy, together with brief comments in regard to expenditure, debt, and taxation. Ii I hesitated last year to consider reductions in taxation, it will he admitted that the present conditions are st:l less favourable and do not permit ol reductions in the current year. I lie Government have already set aside large stuns to assist unemployment, which I trust will diminish to a considerable extent as the year advances. II is necessary, however, lo make pro vision to meet a situation that mat not take a favourable turn when additional seasonal work becomes available. The estimates 1 am giving here are based on the position as it appears a! present.

1 have referred to tlio policy of debtreduction, and I regret, for reasons already given, that very little beyond the statutory appropriations is likely to be available for this important purpose (luring the current year. I propose to ask authority to appropriate up to £500,000 for public works should circumstances towards the end of (ho year permit consideration of any such transfers. As honourable members are aware, the price of local money is inclined to harden ; hut se tong as I can do so, I will not assist that movement by raising the rate for our New Zealand issues. When we fixed the amount of our London loan 1 anticipated that wo could rely on our local loan resources to make up the balance of the year’s requirements. But the indications arc that those resources may fail short, so that any assistance from revenue for capital purposes will he of the greatest aid. ESTIMATED REVENUE.

The difficulties of arriving at a close estimate of revenue under present circumstances will, 1 think, he appreciated hv honourable members. The imports are falling off, which means less Customs revenue. Various adverse factors make it probable that land and, income tax receipts may also he affected. 1 estimate the revenue for the year at £24,676.900, as follows : £ Customs 7,775,000 Beer duty 610.000 Stamp and death duties ... 3,403.100 Postal and Telegraph ... 3,254.000 Land-tax 1.205.000 Income-tax 3.425.001) Interest on public moneys 640.000 interest on railway capital liability 2.180.000 Interest on Public Debt Redemption Fund 870,000 ! Other receipts 4,314.800 | £24.676,900 '

ESTIMATED EXPEXDTTVR E. The estimates of this year's expenditure as already mentioned have been drastically overhauled by an expert committee of heads of Departments. After final revision hv Cabinet 1 estimate the ordinary expenditure at £24.258,549. being a decrease of £97.416 compared with last year’s expenditure. In addition to the expenditure included in the estimates, however, f have also to make provision for other items, such as unemployment and further Naval expenditure for Singapore Base, the total of which it is estimated will require about £240.000. ESTIMATED RESULTS.

Allowing for the additional items just referred to, 1 estimate the result of the present year’s transactions as follows: £ Revenue 21.676.900 Expenditure 24.498,549 Leaving for supplementary estimates ... £178,351 The balance thus leaves very little to work upon, and a strict watch will re-

quire to be kept on all fresh claims for expenditure if we are to keep our finances on a satisfactory basis. The effects of the revision of the tariff and adjustment of the income-tax schedule are problematical, and will not be known until the end of the year. The general indications are that the Dominion is gradually freeing itself from temporary difficulties and steadily working towards more favourable conditions.

SUMMARY, 1926-27

Consolidated Fund— Ordinary Kevenue Account— C Kevenue 21,013,107 Ksponditurc 24.335,905 Surplus. 1923-27 ... £587.142 Kevenue exceeded estimate by £070.907 Net increase in debt for year 0.905.411 Stale Advances— Loans paid over during year 6.185,970 Loans paid over in last four years on urban and and suburan securities 12,090.502 On rural securities 23,899,939 Kura] Advances ActCommenced operations on Ist April last. Loans authorized to 18th duly 3s 7,905 Cnomploy meat— State Departments absorbed large number of additional men. Legislation passed enabling local authorities to raise loans for rebel works without a poll. Subsidy on wages and on voluntary contribtutions for approved relief works.

Contribution provided for Singapore naval base.

taxation— Position and recommendations of Taxation Commission reviewed. Income-tax one of the most liberal in the world in regard to rate oi tax and exemptions. Further substantial reductions not feasible until good progress made in reduction of dead-weight debt. Change in basis of company taxation cannot at present be considered, as it involves large loss of revenue. Correction in graduations of incometax this year so that reduction when feasible can be made on equitable and scientific basis. Adjustments to be made in Customs tariff.

FSTI.M ATKS FOK 1927-28. Consolidated Fund -rdinary Kevenue Account— Psliiiiatcd levcnue 21.b7b.900 estimated expenditure ... 24.198. .',49 Available for supplemontnrv estimates 01,6.351 c Estimated Customs and excise revenue 38b, 000 Estimated stamp and death duties 8,408,100 Estimated land and income tax 4.630.000