THE BUDGET

Rotorua Morning Post, Volume 2, Issue 442, 28 January 1933, Page 6

THE BUDGET

("Post" Special Commissioner) .

i PROSPECTIVE POSITION

Wellington, Friday. Discussing the prospective budgetary position, the Minister of Finance said that the various proposals outlined would for the most part accentuate rather than relieve the financial position of the country. "Taking a broader view, however," said Mr. Coates, "it cannot be gainsaid that if we fail to take steps to enable our primary industries to carry on and to maintain a high state of efficiency, our. budgetary position will be before long be still more seriously affected. Already the shrinlcage in the national income has been such as seriously to diminish the taxable capacity of the country. A justification of the increased exchahge rate from the viewpoint of the Government's budget is that th& increase which this action should produce in our national income as measured in New Zealand money must later strengthen also our taxable capacity. "The budgetary situation for the current financial year may be regarded' as satisfactory in that in general the estimated results for the year will be fairly closely realised. "The position will be reviewed in more detail when the figures for the first nine months of the year have been audited and are available for publication. In the rneantime I may say that our expectation is that with the utilisation of reserves amounting to £2,500,000 the year will close with a deficit in the vicinity of £700,000. For the next financial year if the revenue and the expenditure were the same as is now anticipated for this year, we would, of course, come out with a deficit of a similar amount. Unfortunately our problem is not as simple as that, and to obtain the prospective shortage we have. to add to this £700,000, the further anticipated shrinkages in the revenue and any unavoidable increases in expenditure. Exchange Reaction While the raising of the exchange rates will be of immediate benefit to the primary producers it will be some time before the. beneficial reaction can be felt by the rest of the community or be reflected in the budget, in fact it is anticipated that the immediate effect on the budget will be an adverse one pending the time when business generally can be adjusted to the changed conditions. Fall in Revenue Accordingly so far as the next financial year is concerned, it is considered advisable to allow for a further failing off in revenue and particularly in customs revenue. In addition to the effects of the. increase in the exchange rates and the other proposals which I have already outlined, the revenue would inevitably have been further affected by the continuance of the slump conditions the effects tending to be cumulative. In addition, in estimating the customs revenue we have also to allow for the fact that the concessions given, -following the Ottawa Conference, will be operative for the full year. Apart from all these special considerations, the difficulty of forecasting the budgetary position for 1933-34 is increased by many uncertain faetors over which we have no control — for instanee the trend of overseas prices for primary products and any steps that may be taken following the World Economic Conference may materially affect our estimates,"