BUDGET DEFICIT

Ashburton Guardian, Volume 51, Issue 133, 18 March 1931, Page 3

BUDGET DEFICIT

EXPECTED TO BE £1,250,000.

REVENUE DECLINES SHARPLY.. (Abridged from Press Association.) WELLINGTON, March 17. In the course of moving the second reading of the Finance Bill in the House of Representatives to-night, the Prime Minister, the Rt. Hon (I. W. Forbes, made the following statement: The revenue, of the Consolidated Fund for the first 11 months of the financial year ended February 28 last, amounted, approximately, to £lB,193,000, compared with £20,071,000. for the corresponding period last year, a decrease of £1,878,000. The mam contributory cause of tins decrease in revenue was a comparative decrease ot £1,350,000 in interest on railway capital liability. As I have already explained, after making due allowance for steps taken to -increase the railway revenue and decrease the expenditure, a. falling-off for the year of approximated £750,000 was allowed for in the Budget, based on. the fact that the accumulated losses of the past having exhausted the railways reserves, the interest that could be paid in tins financial year would have to he decreased by the amount of the loss for the year. .Considerable savings have been made in railway expenditure, but as a result of the depression, the railway revenue has shown a heavy falling off', particularly during the last lew months. As a result, with only one more month's figures to be taken into account, it is evident that the amount of railway interest that can be paid to the Consolidated Fund this year will amount only to about half the Budget estimate of £1,380,000.

Customs Revenue. For the most part the balance of the comparative decrease in the revenue ot the Consolidated Fund is due to a heavy falling-off in the Customs revenue, where the receipts tor the eleven months were £1,090,000 less than for the corresponding period last vear A decrease of £367,000 was anticipated in the Budget but this amount alreadv has been exceeded by £/2d,UUO. The rate of decline in the Customs revenue has been sharply accentuated during the last two months. On a proportionate basis of the year s estimate the receipts for nine months were about £350,000 short, but for eleven months the shortage is more than double that amount; that is to say, that during January and February the falling-off in the Customs revenue was greater in amount than for the previous nine months. Excluding specie the imports tor the eleven months show a comparative decrease of over £9,000,000, and the Customs revenue has been affected relatively to a greater extent owing to the fact that the decline in imports has been the heaviest m items or the luxury tvpe where the rates ot duty are highest. The cause of the trouble is, of course, the shrinkage in income derived bv the Dominion from exports accentuated by the high rate of exchange operating. The beer dutv was a little short ot expectations, the comparative decrease for the eleven months being about £36,000. Stamp Duties. Stamp and death duties show a comparative increase for the period or £25,000, but an increase for the year of £375,000 was allowed for in the Budget, so it will be evident that on a proportionate basis the receipts are behindhand. Receipts under the heading of death duties, however, fluctuate considerably and if some large amounts at present outstanding can be collected bv March 31, as is probable, the final position will not be nearly so bad as the figures for the eleven months indicate. , . . Land tax receipts, which are now practicallv complete for the year are over £IOO,OOO short of the Budget estimate, but it is hoped that tins shortage will be made good m the excess income tax receipts the greater part of which is received m March. The revenue from the petrol tax, tyre tax, and duties and licenses on motor vehicles for. tne 11 nionthssliowed a comparative increase ot £'2U>,OUU, but at present this revenue passes automatically to the Main Highways Account and the local authorities* and thus will not affect the result for the vear in the Consolidated Fund.

Expenditure. The expenditure for the eleven months amounted approximately to £21,929,000, made up a* follows: — Permanent appropriations £ 15.230,000 Annual appropriations ... £6,by i J,OOO Compared with the corresponding period last year, debt charges sliow an increase approximately of £'<o,ooo . against an increase approximately of £BOO,OOO for the year allowed ior in the Budget. Interest, however, fluctuates according to interest dates and the saving indicated by these figures will not be maintained at the end of the year, although it is expected that there will lie a saving of over £IOO,OOO compared with the interest estimate for .the year. . Under special Acts of the Legislature there is a comparative decrease for the 11 months of £530,000, due mainly to transfer of the charge for subsidies to local authorities to the Main Highways Account and the cancellation of the subsidies on branch railway lines. Allowance was made for these, alterations in the Budget. Annual votes as a whole show a net comparative decrease of £125,000, and generally the returns indicate that while some votes will be slightly exceeded, the vote expenditure has been kept down to the curtailed estimates for the year. Estimated Deficit of £1,250,000. To sum up, I regret to say that the Budge-try position has changed for the worse since my previous statement, based, on; nine months' figures, owing to the fact that the falling-off in the two items principally concerned {Customs and railway interest) has been sharplv accentuated during January and February. As a result, notwithstanding all' the efforts made to increase the revenue and curtail the expenditure, it seems likely now that the financial- vear will close with a deficit of at least £1,250,000. In addition to that, we have the fact that the expenditure regarding unemployment is likelv considerably to exceed the provision made for it. Taking the figures 1 have given as the basis for our calculations for the coming year, our estimated shortage of £4,500.000 seems likelv to be exceeded. I do not wish to paint a black picture, birt I think it is mv dutv to nlace all the facts bofore the country. The situation is one of the gravest this country has faced, and calls for evorv endeavour and cooperation to enable us to get through with the minimum of hardshio to our people. It i< the sincere desire of the Government that whatever we do will create as little hardship as possible. Mr Forbes mentioned also the additional expenditure incurred as a result of the earthquake.