NATIONAL ACCOUNTS

Rotorua Morning Post, Volume 1, Issue 181, 24 March 1932, Page 5

NATIONAL ACCOUNTS

("Post" Special Commissioner.)

REVIEW BY MINISTER REVENUE SHQRTAGE OF AT LEAST £2,000,000 EXPECTED EXPENDITURE ABOVE ESTIMATE

WELLINGTON, Wednesday. In a. statement in the House of Representatives to-day on the subject of the public finances, the Minister of Finance, the Hon. W. Downie Stewart, said it was his intention as soon as possible to lay before the House a financial statement giving full particulars in regard to the outcome of the public finances for the eurrent financial year and the prospective position for next financial year, together with an outline of the Governnient's proposals for dealing with the anticipated situation. In the meantime, he gave members some brief particulars of the position this year, based on the revenue and expenditure figures for the 11 months ended on February 29 last. 1 "The total revenue for Ihe 11 months," said the Minister, amounted to £16,348,151. This amount is equal to only about two-thirds of the estimated revenue for the year, namely £24,660,000, but the position is not as bad as these total figures .'appear to indieate, as the revenue from income tax is almost wholly received during March and the receipts under various interest items, transfers from rese^ves, etc., are not spread evenly over the year. | The revenue from taxation amounted to approximately £12,409,000, of which £5,386,000 was derived from customs, £2,621,000 from stamp and death duties, and £2,082,000 from land and income tax.

Customs Receipts Fall As previously indicated, the customs receipts had been lagging eonsiderably behind the estimate on a proportionate basis and the eleven months shortage was about £740,000 and the indications were that tbe shortage for the year would be about £800,000. In regard to stamp and death duties, the relative position had improved a little during the last month or so, but even so it was expected that the revenue for the year would be short of the estimate, probably to the extent of £250,000. Also, it was not unlikely that there would be a shortage on the amount anticipated in the supplementary budget under the heading income tax in the neighbourhood of £500,000. Nevertheless, the income tax had come in much better than was generally prophesised a month ago, it being then anticipated that there would be a much larger shortage under this heading*. "As members are doubtless aware," Mr Stewart proceeded, "the railway revenue has been falling off and though the Railways Board has been striving to offset this with savings in expenditure, it does not appear likely that they will be entirely suecessful, with the result that the net earnings will be about £100,000 less than was anticipated. Post and Telegraph profits will also probably fall short of tha estimate by about £160,000. Other departmental receipts will also not reach estimates." Interest Cost Rises On the other side of the accounts, net expenditure for the 11 months. including imprests outstanding amounted to £22,365,833, consisting of debt serviees 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 was fairly closely in

accord with the estimates. It was now estimated, however, that owing to it being necessary to make a much .more extensive use of Treasury bills than was anticipated and the. higher rates that had to be paid for these bills, the interest expenditure for the year would be approximately £150,000 in excess of the estimate. Expenditure Closely Watehed Concerning the annual votes, the figures indicated that the departn^ental expenditure throughout the year had been kept under close control and notwithstanding the careful pruning of the estimates, it - was likely that a further saving of about £70,000 would be made under this heading for the year. "The budget will he further upset to the extent of the expenditure involved in exchange, which for this financial year is estimated at £370,000," Mr Stewart said. To sum up the position for this financial year, he continued, it appeared likely on the basis of the 11 months' figures that revenue would fall short of the estimates by at least £2,000,000 while net expenditure as a whole would exceed the estimate by perhaps £500,000, due to the increased exchange costs and additional interest just referred to. "As regards revenue," continued Mr Stewart "it will he remembered that in the main and supplementary budgets, provision was 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 he evldent that the combined increased expenditure and shortage of revenue will produce a deficit for the year of about £2,500,000. Results Disappointing ''Although the exaet figure cannot, of course, be arrived at until after the

close of the financial year, it is regrettable that, notwithstanding the fact that/ the taxpayers have borne, with equanimity such heavy extra burdens in order to produce a halanced Budget, the prospective 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 the last, two years, exhausted all its reserves arising from the investment of accuniulated surpluses. This is not actually the case. We have still a large amount which came from aecumulated surpluses invested in discharged soldiers' settlement mortgages. This money came from revenue and can legitimately he called back into revenue. The only difficulty is that at the moment they are more or less "frozen" and are not easily realisahle. "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 securities, but I do not think it expedieiit at the present moment to discount repayment of capital by mortgagors to the extent probably required to produce a halanced budget. "It should not he overlooked that the deficit is much more than offset by these past surpluses from the Consolidated Fund. At a later date next year I may find it more feasible to bririg in some of these funds toward assisting the public finance." '