FINANCIAL POSITION.

Auckland Star, Volume LXII, Issue 96, 24 April 1931, Page 12

FINANCIAL POSITION.

FURTHER TAXES POSTPONED

2H MILLIONS NEEDED TO I BALANCE BUDGET. RAPID FALL IN REVENUE. (By Telegraph.—Press Association.) ■WELLINGTON, Thursday. A further statement regarding the financial position was made, in the House of Representatives this afternoon by the Prime Minister, the Rt. Hon. G. W. Forbes, who outlined the problems remaining to be considered before the Budget could be balanced, and suggested that- the normal session of Parliament would be summoned earlier than usual, which is the end of June. "When introducing the second Finance Bill I announced that the prospective deficit for the current financial year, on the basis of last year's legislation and ■scale of operations would, on present estimates, amount to approximated £5,500,000," said Mr. Forbes. '"This amount represented an increase of ,£1.000,000 over the amount announced in my review of the financial situation at the beginning of February. The people are naturally perturbed at this increase in the already large shortage to be made good before the Budget for the year can be balanced, and are doubtless anxious as to the nature of the further burdens that they will be called upon to carry. How Position Became Worse. "Many.people who are not in touch with financial affairs have evidently found it difficult to understand the sudden increase of one million pounds in the estimated Budget shortage, and some, apparently, have wrongly concluded that the Government has been withholding part of the facts and giving the information to the country in instalments. Any such conclusion is quite incorrect, for the Government has at all times endeavoured to place the full facts before the people. "The reason* for the increase in the estimated deficit is simply the rapid change for the worse in the economic and financial position during the few months. The first estimate, prepared in January, was based on the returns for the first nine months of last financial year and the outlook so far as it could be seen at that time. During the last quarter of the year, however, the rate of decline in several items of revenue, notably Customs, stamp revenue and railway revenue, was sharply accentuated. In these circumstances, with the outlook clouded as to the conditions that are likely to prevail during the year, both in this country and abroad, forecasting the position of the public finances is a very difficult matter indeed. Items of Shortage. "On the revised Estimates the shortage, in • rdund figures, is made up as follows— "Revenue decreases: Customs £2,000,000 stamp revenue £400,000, land and income tax £600,000, railway interest £1,000,000, other items £500,000. Total, £4,500,000. "Expenditureincreases: Unemployment subsidies £600,000, debt charges £200,000, other items, pensions, etc., £200,000. Total, £1,000,000. "The two sums amount to £5,500,000. Theee figures do not allow for the loss of revenue that will accrue as a result of the Hawke's Bay earthquake, which item cannot be estimated at present, or for any additional funds that may have to be provided from revenue for the unemployment problems. " Th ® B^e P ß already taken to meet the situation may be summarised as fol-lows:-—Reduction in salaries and wages £1,390,000, economies apart from salaries and wages £700,000, uae of reparation moneys £330,000, additional postal revenue £900,000.. Total, £3,320,000. Normal Session to be Earlier. "On present estimates, this leaves somewhere about £2,250,000 still to be provided before a balanced Budget is obtainable. Some additional taxation is inevitable, but the Government realises that under present economic conditions it is imperative that the amount to be obtained in this way must be a* small as possible, and after careful consideration of the position I do not propose to take any steps in that direction until the normal session, which, however, will probably be called a little earlier than ; usual. In the meantime I will have the opportunity of making a more thorough examination of the position, additional data will be available, and the trend of events should be clearer than at present. By that time the effect of the economies already made will be more easily gauged and there will be more information as to what further economies can be effected. "I may say that the Economy Committee has not yet completed its work, and though provision is being made to effect a saving of £230,000 in education, it is hoped that the special committee of investigation which is to be set up shortly will be able to make further reductions in the large amount of approximately £4,500,000 per annum at present spent in education.. Highways Taxation. "Another matter remaining for review is the present arrangements concerning highway* finance," Mr. Forbes continued. "The relief to the Consolidated Fund through transferring the charge for subsidies to local authorities and other items to taxation earmarked for highways, which, under last year's legislation, is operative to August'3l next, should certainly be continued. When that legislation was passed an undertaking was given that the whole question of highways finance would be investigated by a Parliamentary committee, and I propose to arrange for this to be done in the ordinary session, so that finality may be reached as to what bearing this question will have on the Budget. "To sum up the position, it is clear that a large sum has yet to be found before the Budget can be balanced, but the Government proposes in the meantime to make a further careful review vi the estimates of the shortage and of the benefit to be obtained from the economies already effected and at the same time to continue its efforts to obtain further savings and economies, with the object of reducing any necessary further demands on the taxpayers to tho lowest possible dimensions."