EXTRACTS FROM THE FINANCIAL STATEMENT.

Manawatu Herald, Volume XXXVIII, Issue 1566, 20 June 1916, Page 4

EXTRACTS FROM THE FINANCIAL STATEMENT.

ESTIMATED LOAN EXPENDITURE FOR 1916-17.

I estimate that it will be necessary to provide from sources within the Dominion a sum not exceeding £2,500,000 during the current year (says the Minister for Finance in the Financial Statement) to provide for the carrying on of works and other services which are deemed to be necessary. This amount has been cut down to the lowest ligure possible, and care will have to be exercised in the expenditure, as difficulties are likely to occur if further sums are required. Of the a-bove-mentioned sum, £500,000 represents money for the purchase of land for soldiers, and as this may be paid for by means of debentures I estimate that the net amount which it will be necessary to obtain for works will amount, to, approximately, £2,000,000. How far this will be given effect to must necessarily depend upon the sums which are from time to time available for investment on account of various Departments. COST OF LIVING PROBLEM.

During the year this matter has received a great deal of attention from the Government with a view to preventing high prices being charged to the people for their food supplies. Every aspect of the matter was considered prior to the appointment of the Board of Trade, but difficulties of solution, due to the unparalleled war, presented themselves in almost every direction. The needs of the great war have caused the Imperial Government to requisition a great proportion of the steamers and ships of the mercantile marine, and other countries have also made unusual demands on the ships sailing under their own flags. The tonnage remaining for general trade purposes of the British Fanpirc has proved quite inadequate for carrying on the transport and commercial requirements of the Empire, and the oversea dominions have suffered in consequence, The regrettable but inevitable result was that freights rose to an unparalleled height, and still remain so. 'Phis, with the phenomenal increase in the juices of goods in outside countries, including Great Britain, added enormously to the cost of goods imported into (his country. In this respect, as far as New Zealand is concerned, the Government* was powerless to immediately effect a remedy. Firstly, ships could not be built, chartered, or purchased. Secondly, if they could have been built, chartered, or purchased, the necesssities of the war would have taken precedence of everything else ; in fact, the ships would have been rightly commandeered for Imperial purposes. Thirdly, the first cost of goods of nearly every description in the countries of origin could not be controlled from here.

The Government consequently- directed its attention to preventing exploitation, and the Board of Trade, when it was set up, was specially instructed to leave nothing undone to help in this direction, and it has been engaged since its coWtitution in making close inquiries in different portions of (he country. The reports will be made available for Parliament.

It seems almost impossible during war-time, owing to the worldwide increases in freights, added to the general increase of the first cost of goods in the countries of origin, to hope for a general lowering of prices until the war is over, (similar difficulties present themselves regarding our own produce, which is, fortunately, in general demand. As prices are fixed by the law of supply and demand in all parts ot the world it seems apparent that only the lowering of values in the outside world can effectively bring about a reduction of prices in New Zealand. If relict by the remission of Customs duties would have helped, this would have been proposed. It will be seen, however, that practically all articles of food and materials largely in use are already free of duty. INCREA SED R KNTALS. Since the commencement of the war many complaints have been received regarding the advance in house rents. There can be no doubt that the increase of house rents adds greatly to the cost of living, especially to those in receipt of limited salaries or wages.

Honourable members will be asked to pass legislation to restore rents to their pre- war rates, and to prevent their being increased during the war period. WAR PROFITS. Money for the conduct of the war must be had, and there is no valid reason why those who have surplus moneys, largely due to war conditions, should not be called upon to provide portion of the capital required. Those who have made extra profits during the war, either from business or directly from primary products, cannot object to provide out of such profits a share of the finance necessary. I will ask the House to give authority to take by way. of taxation 45 per cent, of the excess profits earned during the last year. These will he ascertained by taking the average profits realised for each of the three years previous to the war and comparing this average with the returns made since the war commenced. 1 estimate to receive £2,000,000 from this source. The date of payment will probably be about the end of the current financial year. SPECIAL INCOME TAX.

Those taxpayers who derive their incomes from other sources than war profits should likewise at this juncture be required to contribute something further than they are at present called upon to pay, and I propose to ask for authority to levy a special tax of 5 per cent, upon incomes earned last year from all sources, exclusive of war profits which have already been dealt with. This tax will be collected in March next. I calculate that £750,000 will be realised under this heading. INCOME TAX MINIMUM. I direct attention to (he minimum upon which income-tax is charged in this Dominion. So far as I can ascertain, the amount, at which we start to levy income-tax is (be highest in the world —by that I mean we exclude from the payment of any tax all those who receive wages or salaries not. exceeding £OOO per annum. Nothing is proposed in the direction of increasing the incometax revenue by reducing the minimum upon which income-tax is leviable, but it will become a question for serious consideration if the war continues beyond the end of next year whether this should not be done. It is only right that those who are well-to-do or possessors of wealth should contribute the greater proportion of the cost of this war, the successful winning of which means such enormous advantages to them as well as to every other section of the community. Even the humblest in the land would probably take exception to being altogether excluded under the law from malting some slight contribution towards helping to win the war and towards assisting to maintain a pensions scheme for the benefit of the widows and dependants of those who are, on behalf of every class, great; or small, throughout the Dominion, lighting for the freedom of this country. IMPORTS AND EXPORTS. TRADE ’WITHIN THE EMPIRE. Under the heading of “Customs,” a clear idea of the tremendous volume of trade which has been carried out by the Dominion during the past; year was given by the Minister, who said : “When the estimate of Customs revenue was made for the year just dosed it was anticipated that there would be a considerable restriction of importation owing to increased freights, lack of shipping facilities, difficulties of getting orders fulfilled, and the total exclusion of trade with Germany and Central Europe. The revenue was accordingly estimated on a. conservative basis at £2,800,000. In addition to this, it was expected that primage of seven months, and increased duties on spirits, motor-cars, gas and oilengines, would bring £115,000, making a total of £2,045,000. The amount actually realised was £3,805,508, being £420,508 over Hu* total estimate. This remarkable surplus is accounted for mainly by the great increase in the value of goods the world over. While the volume of imports has somewhat decreased, the value remains approximately the same as in former years. The following comparison of tonnages and values of imports show this :

Year. Value. Tonnage. 1913 £22,288,302 1,5(53,404 1914 £21,850,090 1,538,755 1915 £21,728,834 1,370,057 “It is gratifying to note that Great Britain jincj British dominions still maintain their full share of the goods ordered for New Zealand. Out of the total imports of £21,729,834, Great Britain a'nd British dominions sent £17,727,127, the balance being distributed between the United States and other countries. The new duties for the seven months during which they were in operation amounted to £149,000, and of this amount pfiipage duty of 1 per

cent, on all imports was responsible for £98,000. Comparative figures showing the value of exports for 1914 are as follow : 1914. 1915, £26,261,447 £31,748,912 “The value of exports for 1915 is the highest ever recorded, the increase being, of course, greatly due to the high prices of our staple products.” ENEMY TRADING. “Trading with the enemy” is referred to in the following terms : “To assist the British Government in preventing supplies reaching the enemy, many restrictive regulations under Orders-in-Council have been issued during the past year. No goods may be exported to Switzerland, the Netherlands, Denmark, Norway, or Sweden without special application to the Minister of Customs. Hides, leather, wool, tallow, and fatty substances yielding glycerine can be exported to Britain or British dominions only. To more effectively prevent trade by enemy firms through neutral countries, regulations have been issued providing that any company or firm shall be regarded as an enemy company or firm which had, prior to the war, its chief place of business in enemy territory, and it is further provided that, where the AttorneyGeneral is satisfied that any business is carried on either in or out of New Zealand for the benefit of enemies, such business may be declared to be an enemy business, and any such business existing in New Zealand at the present; time must be placed in the hands of/ the Public Trustee as custodian of enemy property. There has been reason to believe that small quantifies of goods made in Germany have reached the Dominion from time to time through neutral countries in spite of the precaution which has been taken to obtain the certificate of the British Consular officers at neutral ports of exportation. Numerous" instances of goods marked ‘Made in Germany’ have been brought to the notice of the Department of Customs, but full investigation has frequently shown that such goods either came out; of enemy steamers w!..’< ii were interned in neutral ports upon the outbreak of the war or that they had been held in stock in shops and wholesale warehouses long before hostilities commenced. It is consequently unsafe to assume that all goods marked ‘Made in Germany’ have been unlawfully imported. Nothing however, has or will be left undone to slop the importation of all enemy goods.”