8.—6

The receipts of the Ordinary Revenue Account were £676,907 in excess of the estimate. About £600,000 of this excess was due to Customs, in which it was estimated there would be a substantial falling-off amounting to 8-8 per cent. The imports declined by 9-1 per cent., but Customs receipts showed a decrease of only 1-6 per cent. As to the cause of this unexpected revenue, it seems reasonably certain that it was largely due to the industrial disturbance in England forcing importers to buy more foreign goods, which are subject to higher rates of duty. An expected fall of approximately £306,000 in the proceeds of direct taxation did not occur ; but this was largely offset by the amount received for interest on Public Debt Redemption Fund being approximately £238,000 below expectations, due to the non - recovery of the whole of the interest from the Discharged Soldiers Settlement Account. EXPENDITURE. Turning now to the other side of the account, it is perhaps advisable, in the first place, to draw attention to the fact that, following the practice of the last few years, the expenditure shown in the published accounts is gross, the credits to the various items being brought into the statement on the receipts side. These credits in aid or in reduction, which represent sundry direct recoveries of expenditure, are not included in the revenue, and must accordingly be deducted from the expenditure. In this way we arrive at the total net expenditure chargeable to the year's revenue. The net expenditure last year amounted to £24,355,965, an increase of £785,882 compared with that of the previous year. Permanent Appropriations. Of this increase £678,017 is under permanent appropriations, as fixed mainly by Acts of Parliament. The following are the principal increases over the expenditure for the previous year : — Interest .. .. .. .. .. 320,995 Debt-reduction . . . . . . . . . . 82,772 Subsidies to Railways for losses on branch lines, &c. 84,238 Pensions (other than war). . . . . . . . 94,033 Maintenance of war graves and memorials overseas .. 36, 655 Fruit-export guarantee . . . . . . . . 82,619 I would like to explain that of the gross amount paid for interest, £10,594,655, the amount of £3,545,644 was on account of the war debt. This leaves £7,049,011 as gross interest on the ordinary debt, against which direct recoveries from interestearning accounts amounted to £2,143,861. In addition to this there should also be set off certain amounts included in the revenue, totalling approximately £2,634,000 — viz., interest received from the railways shown as a special item (less the amount of subsidy paid on branch lines, &c.); interest chargeable against the Post Office, which is included in the excess of postal and telegraph receipts over workingexpenses ; and interest earned on the investment of public moneys. Thus the interest burden borne by the taxpayer on account of the ordinary debt amounts to £2,271,150, proving that this debt is productive to the extent of approximately 70 per cent. Under the Funded Debt Agreement and the Repayment of the Public Debt Act, 1925, part of the interest saved on loans redeemed is applied to further reductions of debt. This latter, together with the increase in the debt, covered by the Act referred to, accounts for the increase in the expenditure under this heading. As regards the additional payment to the Railways for losses on branch lines and isolated sections built to promote settlement and assist the development of the country, this is owing to the previous year's expenditure covering only a period of eleven months, in addition to which the Dunedin Exhibition led to increased traffic in that year on branch lines.

Expenditure.

Permanent appropriations.

Interest.

Debt repayment.

Railway subsidy.

2