8.—6.

The half-yearly payments represent both principal and interest, and the following table shows how the debt has been reduced to £26,590,311 : —

New Zealand has the right, on giving three months' notice, to repay at par any part of the principal. This right was exercised during the past year, and on the Ist December, 1924, in addition to the usual payment, £200,000 was paid off the Naval Defence Loan, as indicated in last year's Financial Statement. LOANS FALLING DUE. Loans falling due during the next seven years ending with the year 1932, excluding Imperial debt repayments and Treasury bills, are, —

Loans falling due.

PUBLIC DEBT REPAYMENT. My predecessor prepared and embodied in a Bill an improved method of dealing with public-debt reduction. It is desirable that the change outlined in the Bill already circulated should be made, in order that the State may benefit by the savings that would accrue from the actual reductions of debt. The gross public debt at 31st March, 1925, amounted to £227,814,647, but about £21,400,000 was State Advances, and £5,700,000 for Electric Supply, State Coal. Westport Harbour, Nauru and Ocean Islands, &c., which accounts have special sinking-fund provisions. In addition, £26,600,000, balance of the debt due to the British Government, is funded, leaving the net present debt affected by the Bill approximately £174,000,000. The present provisions for reduction of the public debt are briefly as follows (1.) The Public Debt Extinction Act, 1910, whereby an amount is set aside annually to accumulate at compound interest, so that in seventy-five years from the inception of each loan the accumulated fund will equal such loan. This Act, however, does not relate to any debt for which special sinking funds have been instituted. (2.) The War Loans Sinking Fund under the Finance Act, 1918 (No. 2), whereby a sinking fund of 1 per cent, of the outstanding war debt is paid annually out of the Consolidated Fund to the Public Trustee. If invested at 4-J- per cent, this sinking fund would equal the balance of the war debt in about thirty-two years from the present date.

Public debt repayment.

19

I Instalment paid. i Interest. Principal. Balance of Debt r | r outstanding. £ £ £ 1st December, 1922 .. .. .. 684,794 141,171 27.390,993 1st June, 1923 .. .. 681,282 144,683 27,246,310 1st December, 1923 .. .. .. .. 677,684 148,281 27,098,029 1st June, 1924 .. .. .. .. 673,996 151,969 26,946,060 1st December, 1924 .. .. .. .. 670,216 355,749 26,590,311

Year ending 31st March. London. j Australia. j New Zealand. Total. £ £ £ £ 1926 .. .. .. 80,000 18,550 13,647,746 13,746,296 1927 .. .. .. 3,900 577,100 3,686,950 4,267,950 1928 .. .. .. .. 81,100 8,840,216 8.921,316 1929 .. .. .. 13,000 .. 12,583,135 12,596,135 1930 .. .. .. 29,754,679 .. 7,632,379 37.387,058 1931 .. .. .. .. 59.400 11,521,670 11,581,070 1932 .. .. .. 200 334,900 624,540 959,640 Totals .. .. 29,851,779 1,071,050 58,536,636 89,459,465