The Public Purse

Sun (Auckland), Volume III, Issue 731, 2 August 1929, Page 8

The Public Purse

COSTS CANNOT BE CUT (THE SUN'S Parliament ary Reporter) PARLIAMENT BLDGS., Today. REVIEWING the. national expenditure of the Dominion in liis Financial Statement, presented to the House of Representatives last evening, the Minister of Finance, Sir Joseph Ward, traversed the factors governing that expenditure. He stressed the difficulty of cutting down any of the items. If they were not either fixed charges, such as interest on debt, or necessary social services, they were largely essential for the preservation of administrative efficiency.

“The first item, war pensions and interest on war debt, £5,023,755, which exceeds the total receipts from both land and income tax,” he said, “represents the dead-weight costs of the war, which costs are practically rigid in the meantime, and will only be reduced with the effluxion of time and the repayment of the war debt. There can b,e no question of economy under this heading. “ ‘Other debt charges’ is also fixed. The total debt charges apart from war debt amounted last year to £5,724,742, but the greater part of this is recovered from interest-earning assets, leaving £2,226,416 to be defrayed out of taxation, representing the charges; on that proportion of the ordinary debt which is not directly or fully, productive. “Then we -come to ‘social services,' the largest item of all. It includes £3,224,968 on account of education, £1,209,571 for health, and £1,858,391 for pensions and superannuation. I do not suppose that any one advocates a reduction of expenditure on education, about 90 per cent, of the money for w'hich goes in grants to tho boards and other local governing authorities to cover the cost of teachers’ salaries and administration expenses of such local authorities. As to the health expenditure, this comprises hospital subsidies, £673,689; maintenance of our mental hospitals, £302,737; and £233,145 to cover the various activities of the Health Department. “The charge on taxation for oldage, widows’ and other pensions, which cost, with administration, £1,628,737, is an item that I am sure none would wish to see curtailed. Superannuation, with the subsidy and expenses of the National Provident Fund, cost the taxpayer £229,763. Expenditure on these items cannot be curtailed. The promotion of agriculture cost the taxpayer last year £464,533, about half of which goes in grants and direct subsidies of various kinds.

The cost of roads and highways has increased greatly in the last few years, and last year, including the petrol tax specially imposed for roading purposes, absorbed 8.3 per cent, of the taxation. This is only the direct

cost, and does not include the interest charges on the millions of capital expenditure out of the Public Works Fund. There is little, if any, scope at present for curtailment. The remaining item under the heading of “General and Other Administration Charges” covers the cost of the Legislature, the maintenance of public buildings, the expenses of the revenue departments, and of lands, labour, internal affairs, and all the other departments of State not covered in the other items I have mentioned. There are also included numerous small grants, and subsidies, and other items of a miscellaneous nature. “To sum up. it will be seen that the existing charges on the taxpayer are, as I have said, largely of a rigid nature, and the scope for administrative economy is very much smaller than is popularly supposed. Every effort will be made to obtain the utmost economy in administration, but I am satisfied, after an examination of the detailed estimates for the current year, that enough cannot be saved in this way to offset the automatic increases in such items as interest, pensions, education, etc., let alone make good the deficit for last year. So far as interest is concerned, in addition to the increases arising out of loan expenditure for such purposes as schools, public buildings, and other items that are not interest-earning wholly or in part, wa must expect increases from the reaewal at higher rates of some of tha old loans. For instance, by the time the operations are completed, it is calculated that the conversion of the £29,000,000 4 per cent. 1929 consolidated stock will increase interest costs by about £220,000 a year. “Thus it is clear that the deficit cannot be made good by administrative economy, and, as a matter of fact, the only alternative left is either to reduce the services rendered by the State (and by services I mean not only work done by the departments, but financial assistance given, which is the larger item), or to obtain more revenue. That is the position in a nutshell.