£560,000 PER ANNUM.

Auckland Star, Volume LXIV, Issue 252, 25 October 1933, Page 9

£560,000 PER ANNUM.

"THE MINIMUM SAVING." CHEAPER TREASURY BILLS. (By Telegraph.—Parliamentary Reporter.) WELLINGTON, this day. What the Reserve Bank is likely to cost New Zealand, and what it should save in Governmental finance, were points on which Mr. Coates gave details to the House. He explained that although the Reserve Bank would keep the Government account* arrangements would be made with other banks to do its business in other towns than Wellington, where it was intended to have the only office. Its staff was likely to number between 15 and 20. Based on the experience of the South African Reserve Bank, its annual cost should be about £75,000, including £25,000 payable to shareholders at the rate of 5 per cent on the privately-held capital. Mr. Langstone: Would not the Government loee on its million subsc/ibed capital? The Minister: Not necessarily. I will show what the bank, if it were operating to-day, would save New Zealand in the current year.

Losses and Gains. The Government, of course, would lose the note tax, totalling £260,000; interest from investments and cash, £60,000; loss on income tax from the trading banks, £50,000; interest on securities for the Reserve Bank, £37,500; total, £407,500. Those were the esti- . mated losses the first year—the largest losses which could be made—but against that he would set the State's gains:— Bank's revenue, £85,000; revenue from Government stock, £56,250; from Treaeur— bills, £200,000; from commercial business, about £30,000; total, £371,250. From that must be deducted expenses and dividend, £75,000, leaving a net total of £296,250. He estimated ■the State's share of the profits at £300,000, and the savings in interest on Treasury bills £740,000, making a total of £1,040,000, from which, after deducting the estimated State losses, £400,000, there would be a net gain to the State of £640,000. That would be the minimum for the current year. It might easily ! be more than that. Assets in London. The Government possessed sterling assets in the form of surplus exchange which it had purchased, and these a real asset. It was held in London, and no machinery existed in New Zealand to bring it back. When i the Reserve Bank was established they would save interest by repaying the banks in notes for a portion of the exchange now held by the Government. Mr. Langstone: That's the way you are going to buy the exchange? Mr. Coates: We have sterling assets to do it, and we can, with an organisation of this kind, replace it with notes. In calculating the savings to the country, Mr. Coates added, he had not included this aspect. However, he could definitely say that the taxpayers of the Dominion would have a bank which, when working, would save them a minimum of £560,000 per annum.