STATE FINANCE.

Auckland Star, Volume LXIV, Issue 190, 14 August 1933, Page 9

STATE FINANCE.

PUBLIC ACCOUNTS.'

"NO FURTHER FALLING AWAY"

LONDON EXCHANGE POLICY.

(By Telegraph. —Press Association.)

WELLINGTON, Sunday.

Details of the public accounts for the quarter ended June 30 have been announced by the Minister of Finance, the Rt. Hon J. G. Coates. The revenue for the quarter amounted, he said, to £4,215,000.

"An abridged summary of the accounts given below." proceeded the Minister, "indicates that the. principal items show remarkably little variation from the receipts for the first quarter of last financial year so far a<3 taxation is concerned. Particular interest no doubt will be taken in the new items, sales tax and gold export duty. The yield of both of these was well up to expectations. The revenue was as follows: — 1933-34. 1032-33. Increase' ,£ £ £

Totals £4.214,07S £3,504,907 £050,071 •Decrease. . "A substantial increase is disclosed under the heading of interest. It should be explained that this is solely due to accounting fluctuations, and therefore has no budgetary significance. Stability of Revenue. "Perhaps the most satisfactory aspect of the revenue position is its stability, there being no indication of any further falling away. This I consider to be further evidence that the worst of our troubles are behind- us. • "Turning to the other side of the account, it will be seen there has been a net expenditure for the quarter amounting to approximately £0,470,000. It compares with that for the same period last year, as follows:— 1033-34 1032-33 Increase £ £ £

Totals .. £0,470,240 £4,014,901 £1,853,258 ♦Decrease. "The increase of £131,000 under debt services arises substantially, out of the recent conversion operations, necessitating the payment of interest to March 31 on all securities affected, and also from increased payments by way of discount on Treasury bills issued under tl,o Banks Indemnity (Exchange) Act. The benefit from the conversion operations will not be apparent in the figures until later.in the financial year. "The operation of that Act is also reflected in the item exchange, in vol vin" an increased expenditure of £l,<uu,000 A small increase of £10,000 under social services arises substantially by reason of greater expenditure on pensions, but this is more than offset by restricted expenditure, totalling £52,000, under otlrcr items of general expenditure. Purchase of Credits. "Exchange is really the only item of expenditure which calls for comment, and the transactions under the Banks Indemnity Act will no doubt be scanned with interest. The accounts show that London credits purchased from the banks during the quarter and passed through the indemnity exchange account amounted to £9,215,000. The exchange paid on this amount is included in the expenditure shown above.

"Transfers to the public account amounted to £9,740,000, the diligences between the figures representing London credits taken over last financial year. "It may be explained that the whole of the London credits purchased does not represent surplus, for out of it has to be taken approximately £7,500,000 required to meet interest and other normal requirements in London. It would have been necessary' to purchase exchange to this extent in any case. The net surplus to June 30 was thus £1,715,000.

"The amount of London credits taken over during the quarter is large, but it should not be taken as an index of the amount likely to be purchased during the balance of the financial year, for June is 'really the end of the export season. Imports arc normally light during the- period of the year in question, and this year the situation has been accentuated through traders being induced by recurring and unfounded rumours, probably spread by interested parties, to hold back from importing in many lines. However, I understand that stocks have reached a low level, and, as the firms cannot trade without goods, there must be increased activity in importing before long. Any enterprising firm that has maintained its stock will get the business until the general shortago is made good. Proposed Reserve Bank. • "The amount of London credits that will hav*e to be purchased during the balance of the year is bound up with the trade position, and is as uncertain as any estimate of trading results for the year. What is certain, however, is that, pending some appreciable recovery in export prices, the general interests of the whole Dominion require a measure of economic adjustment between prices and costs in the basic industries now being effected through the exchange rate, for anything approaching a general collapse of our primary industries must mean ruin for the whole Dominion. "As it Is, the London exchange requirements of the Government for the financial year have been provided during the first quarter, and in addition there is a surplus of £1,715,000. I may add that the position was much the same last year, when the total requirements for the year were obtained before the exchange pool was released at the end of June. As regards any additional London credits that will be taken over this year, there will be no difficulty in disposing of them, and one factor to be taken into consideration is that the reserve bank, when established, will require large amounts of London assets."

°"e . a " d »04rt 1*00.001 ••1.445 Sales tax ..... 448,327 - 448,327 Gold dmy •• 2U.fl8.-> — liO-0-'.' Motor vehicles 577,808 578,130 *331 Stamp and death .„ ,„„ ..':,,, 7-300 duties 048,409 041,1 il 7,328 Land, income and rl _.„ mm hire mves 235.223 183,;)07 i>l,t*>u interlst 1 "'," SgW "JJBS H6.059 Other receipts -la.bia ™

Permanent — _„__„,«, okv-oiq 110 Debt services 2,320.138 2,10..018 i.^\^ Exchange .. 2,000.7)4 300,079 1,759,815 Other services 00,733 100,01-1 4_,J"J1 Annual — 1,403,140 1,380,785 16,356 Departmental 010,141 010.385 «0.1«