“DOMINION'S SOUND FINANCES”

Sun (Auckland), Volume 1, Issue 46, 17 May 1927, Page 12

“DOMINION'S SOUND FINANCES”

MR. COATES STANDS FOR CAREFUL CONTROL OF EXPENDITURE THE PUBLIC DEBT Press Associatio7i. DARGAVILLE, Monday. “T AM pleased to be able to say that the public finances are in a healthy condition,” said Mr. Coates at his meeting here tonight. “The revenue for the last financial year amounted to approximately £24,940,000, and the expenditure to £24,353,000, leaving a surplus of £587,000, which is very satisfactory in view of the uncertainty of trade and business conditions throughout the year. “A gratifying feature is the fact that the Departmental expenditure has been kept under close control, with the result that in spite of inevitable increases in certain votes such as education and naval defence, the total expenditure under the annual appropriations shows an increase of only £IOO,OOO over that for the previous year.

SUCCESSFUL LOAN FLOTATION “It is pleasing to record the successful flotation of our recent £6,000,000 loan on the London market. The loan was issued at 5 per cent, at £99£. It was intended to leave the loan open to subscription for three days; but it was actually closed in a day and a-half, with subscriptions then received totalling over £7,000,000. The return to the investor in our loan with redemption in 18£ years is £5 0s lOd per cent., compared with £5 2s 6d for a similar loan last year. This result compares very favourably with that achieved by New South Wales, which went on the London market subsequent to our issue for £11,000,000 in terms of per cent, at £99, which was underwritten to the extent of £6,000,000. The return to the investor in this case, with redemption in 20 years, amounts to £5 6s 8d per cent., as contrasted with £5 0s lOd in i the case of New Zealand. “In connection with our loan flotations on the English money market I would draw attention to a point which is perhaps not generally appreciated in New Zealand —namely tjiat the British investors are not so keen on lending money for the purpose of making advances to settlers and others to enable them to carry on their avocations. They are eager to subscribe to loans having for their objective the prosecution of necessary works of development; in fact they have in the past responded generously to our proposals. APPEAL TO INVESTORS “Recognising this position I want to make an appeal to all our citizens who have cash to invest. Government debentures are to-day being sold over the counter. Those who wish to assist their country in a difficult time can show their patriotism in a practical manner by purchasing these debentures. The security is gilt-edged, the rate of interest liberal, and the whole of the moneys thus raised are being asked for making advances to settlers and providing homes for workers. I would like to draw attention also to the bonds which will shortly be offered as a result of the legislation of last year in connection with the Rural Credits Branch of the State Advances Office. These bonds will open another avenue for the investor and provide him with a perfectly safe and attractive security. PUBLIC DEBT CRITICISM “From time to time adverse criticism is expressed regarding the public debt, and the borrowing policy of the Government. Comparisons with the per capita debt of other countries are made, but very often the deductions are misleading if not erroneous. Our public debt at March 31, 1926, was £238,855,478. The war debt at the same date was £75,333,648. Deducting the war debt and charges thereon we have approximately a debt of £163,500,000, the annual charge on which amounts to £7,193,000; but of this latter sum the taxpayer as such was called on to find only £1,656,000. proving conclusively that, excluding the war debt, the public debt is financially productive to the extent of 77 per cent. “The debt of £163,500,000 may be divided as follows: “Expended on productive purposes, principally railways, telegraphs, telephones, hydro-electricity, land settlement, soldiers’ settlement, State advances, £122,720,000. “Expended on indirect productive purposes, including highways, roads, and bridges, £20,630,000. “Expended on financially unproductive purposes, chiefly public buildings, including schools, £20,150,000. “Total, £163,500,000. “As was show* in last year’s Budget the State assets held against the debt of £163,500,000 were valued on March 31, 1926, at £247,000,000. It is quite evident that our debt is in an entirely different category from that of most European countries, whose debts were almost entirely incurred for war purposes. These considerations should not be overlooked when debt comparisons per head are made.”