THE BUDGET

Hokitika Guardian, 5 October 1932, Page 3

THE BUDGET

PRESENTED LAST NIGHT. (Per Favour of Government). WELLINGTON, October 5.' The Hon. G. tv. Forbes delivered the financial statement in the House last night in the course of which he stated;— *

When economic conditions are changing as rapidly as was the case during the past two years, it is practically impossible to make reliable estimates of the revenue for the year. Honourable members will recollect that the main Budget last year made provision to meet a prospective deficit of £6,850,000, of which £4,810,0 0 was on acdount of shrinkages in revenue. The progressive drift in the finances increased so rapidly, however, that within a very, short period it became evident that inadequate allowance had been made for revenue shrinkages and provision was made : the Supplementary Budget ito meet further -anticipated decreases amounting to £1,250,060. 'Steps were thus taken to cope with a contraction in revenue of no less than £6,060.000. Unemployment subsidies, further assistance to hard-pressed farmers by way of fertilizer* .subsidies, together wjth unavoidable increases in debt charcjas-, tensions, &c- , brought the total .anticipated gap to be bridged lip to £8,445,000, equal to about onethird of the total Budget. This formidable task, it was hoped', would be ■ accomplished by means of stringent ] economies, reductions -in salaries and -I wages, the use of reserves, and some. 1 heavy increases in taxation. In short, a great effort was made to maintain ai balanced Budget. It failed to the extent of £2,140,000, almost wholly due to shortages in ithe revenues. The result Was disappointing, hut the drastic Steps taken “and the heavy additional burdens so cheerfully shouldered by the peopte were certainly not in vain, for without them the public finances would clearly.have | reached a hopeless position as 1 to constitute a menace to th° general financial stability of the -Dominion. We came ouit with a deficit, but of , ' k # manageable '«ize, so are entitled to I elaim that the situation was saved. | The total revenue received 'during the year mounted to £22,719,733. consisting of £16,189,967. proceeds of taxation;. £2,868:138 from interest receiots, and £2,166.803 from, departmental and 1 miscellaneous receipts, while £1,494,825 was drawn from reserves. EXPENDITURE. The net expenditure for the year totalled £24,860,552, against an estimate of £24,627,561—an excess of £2021,991 1 . Thie estimate!, however, included' no allowance for exchange bn pemittances 'to'LoildPh, ’but; -'owir'g to the abrupt change ' in the plan of London finance to \yhich; I . ‘Kawfe already referred, “expenditure for this purpose amounted to £74.473. On the -itenis covered by the Budget there w?s thus a saving in expenditure of approximately £140,000. “ Under “Permanent Appropriations/’ the expenditure amounted to £18,854,462, an excess- over the estimates of approximately £140,000. Interest charges contributed £94,000 to this excess, the -reason being that, owing to the deficit, issues of Treasury billswere greater than was anticipated. Further, on ; the departure of Great Britain from the gold standard Treas-ury-hill rates in London rose sharply. Of the annual votes covering the departmental expenses the amount 'appropriated! was £6,911,673, but the •expenditure, apart from the unexpected 'item of exchange already referred to, was kept down to £6,631,617, thus providing a saving of £280,000 in reduction of the deficit. This result is particularly , satisfactory in view of the fact that the estimates for the year were pared down foillovving" the Work of the 1931 Economy Committee. Practically every vote contributed towards the saving, which resulted from a multitude of small savings following a stringent control over every detail of expenditure. To sum up the . revenue prospects for this financial year, the estimates, in total, amount to £21,630,000, which is £1,090,'000 less than the receipts for jagt year;- - As; however, last year s receipts fell short of a balanced Budget to the extent iof £2,140,000, the problem resolves -itself into a question of reducing th 6 total of last year’s expenditure by £3,230,000. The actual reduction in items required to balance the Budget is round about £4,250,000, for, -a s pointed out in the preliminary 'statement, in the ordinary course a substantial amount of additional expenditure has to be provided for. After a careful consideration of ell aspects of the problem, it was con-

Following the Hon. 'Mr Downte Stewart’s personal representfttioine !n London ‘in regard to our difficulties, Great Britain has again extended a helping 'hand by consenting to postpon e foi another, year all payments du e on our Funded War Debt and certain othe,r debts due to the British Government, ■jphe additional re’ief' to this year’s Budget ds £825,000, in addition to which a saving of £47,000 will accrue to the State Advances Office. Our grateful thanks ar e due to the Mothercountry for this, substantial measure of assistance during the acute period of our troubles.

Apart from these postponements, debt charges, would have shown an increase of £325,00D d ll e to the last London loan and the extensive use of Treasury bills and other, forms of borrowing to finance the remittances to Londou, last year’s deficit, etc. As it is, there i*. now an estimated net decrease in debt charges amounting to £500,000. SUMMARY. ‘' , ~£ Expenditure estimates ... 22,507,442 Revenue ... 21,630,000 ’ Shortage ... ... ... £877,442 UNEMPLOYMENT. 'Towards the end of last financial year it became evident that the financial resources placed at the disposal of the Unemployment Board were quite inadequate to cope with the increasing numbers of unemployed. Further, the position of the ; »Go n-so lida te d Fund was such that it was deemed advisable to relieve it of. the burden of the £l‘-for-£l subsidy pi*™.’died for wilder the original legislation. Accordingly unemployment finance was entirely separated from the general Budget and the special taxation on salaries and ' wages; and other, inoome was raised to ,1s in the £l, operative from the Ist' May last. 'On this, basis the income at the disposal of the Board up to the 31st March next is now estimated at £3,967,000 ; made up a§ follows ;

Levies ;• ... ... • 400,000 Wages-tax 2,400,000 Tax oq-.other,income « idyQOQsQOQ Subsidy from Consolidated ' Fund ... .... 167,000 £3,967,000 PUBLIC WORKS. » Apart from the other considerations already referred to, the public-works programme for the ensuing year is, of course, limited by the amount of loanmoneys available, and this will be dealt with under the heading of the London loan. Including £450,000 from railway depreciation reserves for replacement of rolling-stock, etc., the total amount available for public works this year is £2,700,000. This includes £500,000 for | the “smalUfarm plan” previously re-: ferred to. Approximately £560,000 will be expended ’ on railway improvements and additions' (principally the Tawa' Flat Deviation and new rolling-stock), £477,000 on roads and highways, and £400,000 on hydro-electric construction- j al works, of which tile Waitaki scheme j will be responsible for the greater por- I tion of the expenditure. I In addition to the amount to be j provided for public: works, the sum of j £830,000 will be required for capital I expenditure in connection with the Government’s land-development schemes including £150,000- in respect of Native , lands, and also £IBO,OOO for State forests purposes.

Loans falling- due locally during this financial year amount to £5,301,170, of which £4,136,150 is held by the public and £472,120 represents Post Office Investment Certificates. Of the total of £5,301,170 the sum of £155,660 has. already been redeemed and the debt reduced accordingly. To the extent that the available funds provided by the statutory debt-repayment scheme are not sufficient 1 to cover the redemption of such portions of these loans as are not renewed, the funds derived from new investments will be required for this purpose. This may further decrease the amount that can he made available for capital expenditure on publicworks.

sidered advisable ' not to .attempt "to store Budget equilibrium this tinan- J cial year but to confine our efforts to reducing’. the deficit to not more than £2,000,000. This if considered to he a' manageable amount ; which will not disturb the financial stability of the country. At the same time, it should not be overlooked that this programme means incurring further floating debt which has to b e lijuidatod sooner of later. Thus the programme adopted is an extraordinary Oiie, des gned to provide a breathing-space. It oannot be continued for long, for to pile up debt of this nature is only building up a further, serious obstacle to economic restoration

A small amount' will probably be requjred for supplementary estimates and contingencies, but I consider that we can now be. reasonably certain of keepjn g the deficit within £1,000,000, yyfiich is half the amount allowed ioi j n the initial programme for the year,