[?]GET SHOWS IMPROVEMENT

Rotorua Morning Post, Volume 2, Issue 345, 5 October 1932, Page 5

[?]GET SHOWS IMPROVEMENT

\ES OPlMimC ^QTE Lif reduged by half jlE MINISTEfe'MVfEVs kOUNTKY'S cEDfMQia v k pRUNING OF ESTlMAf ES |t emphasi.sec* the eontiriued necessity for le'cdridmy and (departmental expenditure, the budget presented to the Lesentatives last evening hy thie aeting-Miriister 1of I « W Forhes, struck a. note of restrained optimism. ■on. > ■' - - j * •i- * 4 4 s f 'tions of improved conditions ahd showed that the |d been suecessful in halving the deficit of £2,000,000 ; limated at the beginning of the financial year. The j Lj sliortage is now estimated at £877,442, but with luilts likely to be required for contingencies ahd suplimates, it will probab'ly appfoxiuiate £1,000,000. |f the difficult conditions obtaining^ and the fact that lenaes of revenue had ahnost. reached their taxable IForbes said that it had beeh considered inadvisable to Lcure a balanced biidget this year. The Government's Ijs to attain budgetary equilibrium at the end of the I ending March 31. 1934, ahd it was emphasised that a Iponing the budget balance had been adopted only to [thing space for industry and to assist recovery.

Irospective shortage | year 1932-33 was pis was reduced to Lgeable" figure of fie enforcement of [ng £4,390,000 and lOO.QOO bythehypottments in the Disfsettleinent mortgagI of additional taxaIridged the gap, but lected on the ground Inly prudent to with|s remaining taxable Imeantime. Ino increases in taxIsaid the Prime Min|ng his review. "In |some reductions in I the Ottawa agreeI should not be overipeople are already lable benefit from ipenny postage. The Ixious to assist trade I making further re|0n, and will continue ip expenditure down K order that aetion in iy be taken as soon Ifar as I am aware, Itiffle that this Doisohard pressed as to lor advisahle to budI and the fact is elo1 of the extent to I in priee-levels can ieconomic and finanI the country. |ms Duties lesolutions were inl will appear ahout iiltaneously with the Ihe resolutions in the/ jons. New Zealand's' |e tai'iff schedule wiK Ival of the surtax /£ I'nited Kingdom pb>liwering of the exptIlimited number /of ■Dominion has to peet Irest on war d/bts. ier moratorium/ this Kaiti last year, ind it Isted with cqtainty iangements ylll be I The result /f negoIprogress wi j he anItion alreacfc passed lade for t)e Consolilietain twelve lluses frftn the Post iepartmJt, and up to |e reveiue received irits tpation. The ledthe (tntinuation of leiits. / ■the fflning financial |o07,412 and revenue |s, £3/630,000.

lev&ue i lvenue is made up 'ajtion £ 5,700,000 640,000 35,000 Outies 1,610,000 h duties 2,900,000 515,000 3,400,000 14,800,000 lterest 740,000 aph ... 540,000 demption 645,000 ffleys ... 625,000 - 2,550,000 f Receipts 2,500,000 profits 470,000 1,310,000 ; 4,280,000 ll _ 21,630,000 l^nditure 'enditure may be pws: — £ | 10,012,000 Ptor taxh 1,110,000 1 350,000 it charges 473,000 5- 6,870,000 h 631,000 | , 688,000 | Prifflary k indusj- 897,000 fgeneral 1,476,000 f- 22,507,000 | Reviewed 'te prospeetive pbsi- | IjTent financial year > 1933, Mr. Forhes end of the preN', the Government ped with a deficit of Ifhmates for the cur- ^ £21,630;06(f p,000 less than the jyy&ar. ^ However, as had fallen short Ue,t to the. extent of foblem resolved itself ^reducing the total ps expenditure by

£3,230,000. The a,ctual reduetion of items required to balance the budget was approximately £4,250,000. After a careful consideration of all aspects of the problem, it was considered advisahle not to attempt to restore budget equilibrium this financial year, but to confine efforts to reducing the deficit to not m'ore than £2,000,000. This was considered to he a manageahle amount, which would not disturh the financial stability of the country. At the same time, it should not be overlooked that this programme meant incurring further .fioating debt which had to he liquidated sooner or later. Thus the programme adopted was an extraordinary oue, designed to provide a breathingspace. It could not he continued "for long, for to pile up debt of this nature was only building up a further serious obstacle to economic restoration. Change For Better The outlook has undergone a change for the hetter during the past few months, and, as half the year has now elapsed, more accurate estimates could be made of the probable receipts under the various headings. Accordingly the estimated revenue decreases given in the previous statement had been varied somewhat. The main alteration was in respect of Customs revenue, which it was apticipated would fall to £5,000,000. during the first five months of this financial year, however, receipts were £250,000 ahead of those for the corresponding period of last year. Imports for the period showed a comparative decrease of £406,000, and the additional revenue was due to the fact that the increased duties imposed last year were operative from August 1, 1931, only. Give'n a reasonably good season, with an improvement in overseas prices, of which there were hopeful indications, it appeared likely now that the value of exports for the year would reach last year's total. This should allow of much the same volume of imports, for, with due aUowance for interest and other invisible imporfc items, the balance of external trade was on the right side last year. Accordingly, after a careful investigation of "the prospects for various classes of goods, and making allowances for the loss of revenue arising out of the tariff reductions to he made to give effect to the Ottawa agreements, it had been decided. to put the estimate down at £5,700,000, which was approximately £200,000 less than was received last year.

Revenue Sources Beer duty, it was considered, should produce about th-e same amount of revenue as was received last year, the decrease in the volume of busi; ness being offset hy the higher duties imposed last year. The economic conditions were also adversely affecting the revenue item of "Motor-vehicles— Duties and IxCt enses." There is a falling-off in thQ registration of vehicles, and this, of course, must be refiected in a lower petrol-consumption. It is estimated that the revenue will show a fallingoff of approximately £200,000. Stamp and death duties appeared to be relatiyely stable at the lower level reached last year,, but it had been deemed advisahle to allow for further decreases in racing revenue, amusement tax and duty on instruments. On the other hand allowance had to be made for the receipts froni the 10 per cent. stamp. duty on interest from _ Government securitjes imposed by tlie National- Expenditui'e Adjustment "Act. Inci'dentally, . it might be mentioned that tlxis latter item would not be a net.gain to the budget, as it would be Qffset by reductions in mortgage interest, particularly on State Advanees securities. Taking all factors into consideration, the estimate for stamp and death duties had been set down at £2,900,000, which was approximately £100,000 ahead of last year's receipts. Income apd..Land.Tax ; . Then there was ijicome tax which under present circupistances was admittedly the most uncertain item in the budget. This year's tax was assessed on last year's income. It was. well known that in many 9ases profits had fallen away to zero, and, as the assessments had not yet heen made and compiled, it was very difficult to estimate the effect m the aggregate ofi the amount of tax due. On such information as "v^as avail-j able tlie estimate had heen set down at £3,400,000 for this year. This was approximately £1,050,000, less than the receipts for last financiql yekr. Ednd-tax.due copld be calcul^fn eI wifly ipbch ./more precision, pjtbo'uglx the posifib'n wag^to some e^-{ 1 tent complicated b'y subdivisions and ! revhluatio'iis- The ifiaih, pncertain ' meiit, • however, was the ability jof 1 landowners to pay. Last year's ye- | ceips,.. Sssessed, oii ,.the lowef ..yhtes j of tax provided for, were £83,000 short of the budget estimate, and for this year it was deemed advisahle

to allow for a further decrease of £27,000. ... . Railway Revenue Apart from taxation, there was a considerable amount of revenue derived from interest and other . receipts, Under interest, the most difficult item was interest ,on railway capital. This item represents the jiet earnings of the railways. Railway revenu© direetly refiected the depressed state of trade , aird mdustry, and had been falling steadily, . although the rate of decline was now easing off. To a considerable extent the decline had been offset by savings in expenditure, but, if the services were to he maintained, there was a minimum beyond which .expenditure could not he reduced. The re■ductions in salaries and wages assisted the finances of the Railway Board considerably. Allowing for this and other relevant factors, it was considered that the net revenue for this financial year would not be more; than £100,000 belowthat of last year.. . Other interest items would' probably he adversely affected to an extent estimated at £220,000. In this connection it might be mentioned that interest on the Public Debt Redemption Fund would suffer as a result -of the reduetion in interest rates of the Common Fund of the Public Trust Office, following the reduetion in mortgage interest under the proyisions of the National Expenditure Adjustment Act and relief given to mortgagors. . Interest qn public inoneys would also be less, due to> the fact that halances available for investment were smaller and rates of interest in London were low. The. land revenues, departmental receipts, and other miseellaneous items grouped in the accounts under "Other Receipts" produced last year, apart from the amount drawn from reserves, revenue totalling approximately £2,167,000. Of this amount £940,000 came from Post ahd Telegraph profits. For the current financial year the estimate for. this item had been set down at half this amount— viz., £470,000. The estimates for. the other items in this group had been varied somewhat on account of the closing of some of the separate accounts. The het result was an aggregate estimate which was £387,000 less than receipts for last financial year. Use of Reserves The remaining item on the revenue side of the accounts was the amount dfawn from reserves. Last y6ar £1,495,000 was derived from this source, and in the preliminary Financial Statement it was estimated that only about £200,000 derived from repayment of diseharged soldier settle-' ment mortgages would be available this financial ' year. Arrangements were made with the Bank of New Zealand, with tfie National Bank of .New Zealand participating in the deal, to liquidate up to £2,500,000 of the reserves invested in diseharged soldiers settlement mortgages by Iiypothecating the securities. The present intention was that the amount obtained hy this procedure

would be repaid as instalments of principal were received in respect of these mortgages. This arrangement took the place of the proposal contained in the preliminary Financial Statement to find £2,200,000 by additional taxation. By fhus utilising a considerable proportion of the remaining reserves, having regard to actual and probable deficits, the Government had conserved wbat remained of the taxable capacity of the people and avoided imposing further heavy burdens upon the commimity at a time when it was finding great difficulty in holding its own against the weight of the depression. It was hoped that this respite from further taxation would be an encouragement to trade and industry, and thus hasten the process of recqv- ; ery. , Dealing with expenditure during the year, the Prime Minister stated that the net expenditure for tlie year totalled £24,860,552, against an estir mate of £24,627,561 — an excess of £232,991. The estimate, however, included no allowance for exchangq on remittances to London, but, owing to the abrupt change in the plan of London finance, expenditure for this purpose amounted to £374,473. On the items eovered by the budget there was thus a saving in expenditure of approximately £140,000. Under. "Permanent Appropriations'* the expenditure amounted to £17, r 854,462, an excess over the estimates of approximately £140,000. Interest charges contributed £94,000 to this excess, the reason being tha.t, owing to the deficit, issues of Treasury hills were. greatef than was anticipaied, Further, on tlie departure of Great Britairi from the gold standard Treasury bill rates in London rose. sharply. Gf the annual votes covering the departmental expenses the amount appropriated was £6,911,673, but the expenditure, apart from the, unexpeetefi itqjn of exchange already. rer ferred to, was kept.down to .£6,631,617, thus providing a saving of £280,000 in feduction .of tlie deficit. This resqlt was pafticularly satisfactory ip view of. the fact that the .estimates for the year were pared down following tlie work of the 1931 Economy Committee/ Practically eyery yote contrib.uted towards the saving, : whicK f esulled . from a multitu'de of small savings following a stringent control over every detail of expenditure.