DOMINION DEFICIT

Hokitika Guardian, 24 March 1932, Page 8

DOMINION DEFICIT

"Wo AND HALF 'MILLIONS

(RESERVES MAY BE USED

(By Telegraph—ter Brest i Association,

WELLINGTON, March 23. In a statement in the. House of Representatives to-day on the subject of public finance, Hon. D. S-tewa-rt said: “it is my intention, as soon as possible, to lay before this House a financial statement, giving full particulars in regard to the outcome of the public (finances for tills financial year, and the prospective position for next financial year, together with an outline of the Government’s proposals for dealing with the anticipated situation. In • the meantime, however, I propose to give honourable members some brief particulars of the position this year, based on the revenue and expenditure figures for the eleven months ended on the 99th February last. The total revenue for the .eleven months amounted t 0 £16,348,151. This amount is equal to only about two-thirds of the estimated revenue for the year, viz £24,660,000, but the position is not so had as these total figures appear to indicate, as the revenue from income tax is almost wholly received during March, and the receipts under various interest items, transfers from reserves, etc., are not spread evenly over the year. “The revenue from taxation amounted to approximately £12,409,000, of which £5,386,0000 was' derived from customs; £2,621,000 from stamp and death duties ; and £2,082,000 from land and fcacom* tax. As previously indicated, the : customs receipts have been lagging considerably behind the estimate on a •. b(isiS, and the eleven months’ shortage is about £74,000 ; and the indications are that the shortage for the year will be about £BOO,OOO. In regard to stamp and death duties the \i.:ai v position has improved a little during the last month or so. Even so, it is expected that the revenue for the year will be short of the estimate, probably to the. extent of £250,000. “As to income tax it is not likely that there will be a shortage on the amount anticipated in .the supplement-' ary budget under this item—in the neighbourhood of £600,000, less the income tax has come in much better than was generally prophesied, a month ago, it being then anticipated that there would bei a much larger shortage under this heading. As honourable members are doubtless aware, the railway revenue has been falling off. Though the board has been striving to offset this with savings in expenditure, it does not appear likely that they will be entirely successful, with the result that the net earnings will be. about £IOO,OOO less than "as anticipated. “Rost and. Telegraph profits < will; probably fall short of the estimate by about £160,000. Other departmental receipts will also fall short.

EXPENDITURE. • “On the oilier side of the accounts, the net expenditure dor the eleven months, including imports outstanding, amounted to £22,365,833. This consisted of; _J)ebt services amounting to approximately £10,224,000 • grants, subsidies and other permanent appropriations £5,945,000 ; annual votes £5,928.000; .and exchange £269,000. The expenditure as a whole is fairly closely in accord with the estimates. It is no"' estimated, however, that, owing to it being necessary to make a much more extensive, us<', of Treasury Bills Bum was anticipated, and to the high rater' that had to paid for these hills, the interest expenditure for the year "ill be approximately £150.000 in excess o! the estimate. Concerning the annual votes, .the figures indicate that the departmental expenditure throughout the year has been kept under close control and' notwithstanding the earelul pruning of estimates, it is likely that a iurither s aving of about £70,000 will be made under this heading tor the year “The Budget will be further upset to the extent of the expenditure involved in exchange, which for this financial year is estimated at £370,000. SUMMARY OF POSITION. “To sum up the position for this financial year, it appears likely, on the basis of the eleven months’ figures that the net expenditure as a whole, will exceed (the estimate by perhaps £500,000, due to the increased exchange -costs and additional interest just referred to. "As regards revenue, it; will he remembered that in the main and 'supplementary Budgets, provision "as

made to cope with shrinkages, amounting to over £6,000,000. Notwithstanding this unprecedented effort, it now seems clear that there will be- a shortage of revenue of at least £2,000,000. It will thus be evident that the combined increased expenditure and shortage of revenue will produce a deficit for the year of about £2,500,000, al though the exact figure cannot of course be arrived at till after the close of the financial year. ft is regrettable that, notwithstanding the' fact that the taxpayers have borne with equanimity such heavy extra burdens in order to produce a balance, the productive results are- not more encouraging, but the position is not without some compensating features. For example, it- is commonly assumed that the Government has during tin last two years, exhausted all it;, reserves prising from /the investment of accumulated surpluses. This is no’ actually the case. We have stiD a 'large amount which came from accumulated surpluses invested in discharged soldiers' settlement mortgages. These came from revenue, and can legitimately he calk'd back into revenue. The only' difficulty is that, at the moment, they are more or less frozen, and are not easily realisable. It was for this reason that authority was taken in Section 7 of the Finance Act, 1931 (No. 4) for liquidating such reserves by hypothecation of the securities, but I do not think it expedient, at the present moment, to discount repayments of capital by mortgagors to the' extent probably required to produce a balanced budget. “It ,should not be overlooked that the deficit is much more than offset, by these reserves, built up out of past surpluses from the Consolidated I‘und. “At a later date next year I may find it more feasible to bring in some of these funds towards assisting the public finance.”