DOMINION'S FINANCES.

Auckland Star, Volume LVIII, Issue 108, 10 May 1927, Page 11

DOMINION'S FINANCES.

ECONOMY AND THRIFT NEEDED. DEPRESSION SIMILAR TO 1921. RELATIVE TRADE POSITION. REVIEWED BY HON. MR. STEWART. (By Telegraph.—Special to "Star.") PEILDING, Monday. "Anyone can aee from a casual glance at the trade figures, the banking returns, the unemploymeat figures, the bankruptcy statistics, and other items, that we are passing through a depression similar to what occurred in 1921," said the Hon. W. Downie Stewart, Minister of Finance, in an important speech tonight on the Dominion's financial position. "You will remember that we recovered from the 1921 depression with astonishing rapidity, but it is not so clear that our present difficulties will be so soon overcome. These rapid fluctuations of prosperity and adversity are a well known feature of post-war conditions, and were forecasted by all economists as certain to occur. "I am glad to say that the effects of the present depression did not reflect themselves in the public finances for the year just closed to anything like the extent I had anticipated. I have already made public the fact that there was a surplus of revenue over expenditure of £587,000. That is a modest surplus compared to some we have had, but it is a satisfactory one under present conditions and better than I had hoped for. In the Budget I calculated that the revenue and expenditure would just about balance. But an unexpected feature of the Customs revenue was mainly responsible for my good fortune in having a surplus. The Customs revenue did not fall in proportion to the decreased imports. We had anticipated that the imports would drop by £6,250,000, which would decrease the revenue by £900,000. Actually they dropped by £4,833,000, which should have produced a drop in revenue of £725,000. Yet, in fact, the Customs revenue only fell short of the previous year by £131,000. "Unexpected Windfall." This curious and unexpected windfall •was partly due to the English coal strike which fofced importers to buy from foreign countries when they could not fill their orders in England. Hence they had to pay the higher duties which are payable on goods from foreign countries. There were other factors which influenced the results, which I will deal with in more detail in the Budget." Reply to Critics. Some critics had complained that this surplus was too large and some said it was too small and some seemed doubtful whether it existed at aft, said Mr. Stewart. In reply to the first, he denied that Customs revenue had been purposely underestimated. In repply to the second, he- pointed out that the expenditure was only £130,000 in excess of the appropriations for main and supplementary estimates approved by Parliament, which was a fairly close calculation on a Budget expending about 24 millions. "So far as expenditure on departmental services is concerned, this totals £10,034,000, which shows a decrease of £434,000 compared with the amount appropriated for the year and an increase of only £110,000 over the actual expenditure for 1925-26. Increases in certain votes such as education are inevitable being dependent largely on population and in view of this and an increased expenditure for naval defence, the figures show that departmental expenditure has been kept under close control. Practically the whole of the increase in expenditure compared with that for last year is to be found under the heading of Permanent Appropriations, that is, interest, pensions, etc., the expenditure under which totals approximately £14,260,000 as against an estimates of £13,693,000 and compared with an expenditure for the previous year of £13,587,000." In reply to the third, lie affirmed, after giving details that "all legitimate expenditure charges against the year's revenue have been made." With regard to the public debt and the loan expenditure, Mr. Stewart said that in the last budget he expressed the opinion that they should seek tot curtail the increase in the public debt and to taper off in borrowing. In this respect be thought the public would be pleased with the curtailment effected, for in 1925-26 the net addition to the public debt was £11,000,000, whereas for 192627 it fell to £6,900,000. It was only fair to say, however, that in the £11,000,000 was included a large part of the special loan raised tot try to catch up on the applications for loans from the State advances. "Be Quietly Confident." "There is not doubt the year we are now in will be difficult," said the minister, in conclusion. "We see on the one hand falling revenue, lower bank deposits, increased bank advances and on the other hand increased expenditure for unemployment, family allowances and other items. There has been a sudden contraction of our general purchasing power by the sale of our exports producing less than the previous year. Nevertheless, the country is essentially eound. There is no reason why we should not be quietly confident even though we may have to exercise economy and thrift to an extent which we thought unnecessary while prices were high and trade was buoyant. During the year production has been well maintained and in some districts the production of butter-fat has been phenomenal; while the value of our exports decreased, this ■was due to lower prices. But as against this, there has been a handsome increase in the volume of exports of cheese, lamb skins, coal, seeds, apples, potatoes and other items. The relative trade position of exports and imports has improved substantially as compared with the previous year and is tending to a restoration of a better trade balance The wheat crop has been bountiful-, wool prices have been satisfactory. Many of our manufactures have shown eubstantial progress. While the picture Jβ not all sunshine, I think we can look forward to the future with confidence."