HOW THE BUDGET IS BALANCED

Press, Volume LXXIV, Issue 22459, 21 July 1938, Page 12

HOW THE BUDGET IS BALANCED

♦ Minister Expects Surplus Of £58,000 ~*♦ ESTIMATED INCOME AND EXPENDITURE Little Change Compared With Last Year [From Our Parliamentary Reporter.] WELLINGTON, July 20. In budgeting for a surplus of £58,000 the Minister for Finance (the Hon. W. Nash) has estimated income and expenditure showing little variation from last year's figures. In his review of the budgetary position he assessed revenue for the year 1938-39 at £35,845,000 and expenditure at £35,787,000. The Minister anticipated a decrease of £214,000 in revenue, due principally to estimated decreases of £759,000 in customs tax and £99,000 in sales tax because of previous over-importation of goods. In expenditure he provided for an increase of £846,626 over the amount expended last year.

"The expenditure chargeable against the ordinary revenue account of the Consolidated Fund for the current financial year is estimated at a total of £35,587,000," the Minister said. "Provision has also been made for £200,000 to cover supplementary estimates and contingencies. "After eliminating the amounts totalling £3,181,000, which are transferable to main highways account and to local authorities—which amounts are offset by an equivalent amount of revenue—and allowing for the sum of £853,897 which was transferred io the general I reserve last year, it will be noted that, on a comparative basis, the. estimated 'expenditure exceeds last year's actual I results by a total of £848,626. . "Debt services constitute the largest single item of expenditure, although one of the smallest items of increase. The debt charges for the current financial year are estimated at £9,544,000, an increase of £103,000 compared with last year's expenditure. The success of the Government's management of the public debt is shown by the fact that during the last three years debt charges have increased by an average of only £66,000 per annum in spite of the substantial capital works which have been carried out in the Dominion. "The major portion of the comparative increase in expenditure arises in respect of annual votes. For social services comparative increases are provided for under practically all headings, and I propose to deal with these separately. "Under the vote 'health' the comparative increase of £117,000 is accounted for principally by additional expenditure arising in connexion with the milk-in-schools scheme (£67,000). and £16,000 for extending the scope of dental services throughout the Dominion. , . a x ■ I "The milk-in-schools scheme reflects, great credit on all concerned. The ob- I ject of this service, under which milk is supplied to school-children free of charge to the parents concerned, is to improve the standard of health of the rising generation. Details regarding the results which have been achieved to date in this connexion will be found in the Health Department's annuaj report. "The dental service now serves 1600 schools, and 90,000 children receive regular attention. With the objective of making the service available to all primary schools, the Government is erecting a modern training centre in Wellington. One hundred and forty nurses are now in training and 75 are being appointed for training each year as against the previous maximum of 40. Provision has been made for the opening of dental clinics in 23 new centres during the year and 14 existing centres are being strengthened by the appointment of additional staff. It is confidently expected that the service will be available to all primary schools within the next three years. Education and Pensions "The vote 'education' is responsible for a comparative increase of £312,000, a large proportion being due to an increase in the number of teachers consequent upon the increased number of pupils attending the State schools, together with a reduction in the size of classes. "The conveyance of primary and post-primary pupils to schools is being extended still further, involving an estimated increase of £37,000. Grants to university colleges have been substantially increased, and the cost of a new Chair in Public Administration in Wellington is being borne by the State. "Owing to the - increase in the number of students at training colleges, provision has been made for additional expenditure under this heading, and provision has also been .made for the appointment of a Chief Physical Instructor and of several additional instructors, in pursuance of the Government's policy of improving the physique of the rising generation. "Good pi ogress has been made in the preparation of suitable text-books for schools, and additional provision has been made this year. The country library service, which was mentioned in last year's budget, is now in operation, and motor-vans with supplies of literature are being used to visit the more remote centres in both North and South Islands. "The cost of maintaining the mental hospitals throughout the Dominion shows a comparative increase for the year of £22,000. "For pensions, an additional £445,000 has been provided. The principal increases are invalidity pensions (£lO2 000) and old-age pensions (£355,000), while a reduction of £36,000 has been allowed for in respect of family allowances. The present invalidity pensions' were introduced in 1930, and based on past experience a new form of pension usually increases rapidly for the first 18 months or two years, after which the number of claims becomes more normal. "For old-age pensions, honourable members will recollect that last year the period of residential qualification was reduced, and in addition applications are still coming to hand as a result of an easing which was made in 1936 of the private-income qualification. "Under the heading of 'Development of Primary and Secondary Industries' an increase of £139.000 has been provided for, the vote 'Agriculture' being responsible for £104,000, and the vote 'lndustries and Commerce, Tourist and Publicity* for £63,000. These increases are offset by savings in other votes under this heading. "Defence expenditure accounts for a comparative increase of £396,000, for which the Navy is responsible for £41,000, the Army for £174,000, and the Air Service for the balance of £IBI,OOO. I have already dealt with these services, and further details will be found in the estimates. "The total tevenue receivable during the current financial year is estimated at £35,845,000, .which vt

f £214,000 less than last year's actual receipts of £36,059,000. Although there is thus comparatively little variation in total revenue, it will be noted from the Budget tables that larger variations are anticipated in the individual items. "Customs duties for the current financial year are estimated to bring in £759,000 less than was received last year. It is common knowledge ;hat there has been over-iraportation in the case of many classes of goods, and this has been allowed for in the current year's estimates. Taking the various itctors Into consideration, J &m of the opinion that a reasonable estimate of customs revenue for the present financial year is £10,000,000. "While tht anticipated reduction m imports v/ill have an effect on the revenue from sales tax, it _is considered thai counteracting influences will show a quicker improvement than in the case of customs revenue, and accordingly a reduction of only £99,000 has been allowed for, reducing the estimates for the year to a total of £3,400,000. "Highways revenue has been estimated at £3,200,000, compared with S year's leceipts of £2,839,000 under this heading. At March 31 last, a total of 280,337 motor vehicles were ncensed compared with 255,748 on he previous March 31, and owing to the increased spending power-in the community it follows that the consumption of motor-spirite shomd show an increase over that ofiasi ve™ I hfcve accordingly allowed for increase in highways revenue of £ "High°W S revenue, in addition to petrol tax includes tyre tax fees and "ffighways" is for all Poetical purexpenditure. Income Tax "The only other important variation ~nder the heading of taxation is in-come-tax. Las? financial year as pubUshed statements have *ready indurated the revenue exceeded the estimates by the substantial total of £1579,000. This total was accounted for in part by payment ' °f some £640 000 arrears owing in respect of Pr "Co°ne S ct y ion rS of these arrears had hitherto no Tbeen possible because of ?he flnan n c"l difficulties «««ggg by many taxpayers whose Prosperity has since been restored by the introduction of more stabilised conditions and the gradual improvement in manufacture Ind other industry since 1935. The total was also augmented a a result of active measures by the coi lectins authorities with a view to preventing evasions by those not disposed to meel their obligations voluntarily. "With no increase in the rates or taxation, I feel justified in estimating thf» taxation receivable during tnis financial year at £9,300,000. I would add that in arriving at this estimate due allowance has been made, for the fact that more liberal provisions for the granting of relief to those to whom payment would cause hardship were placed on the statute-book at the beginning of the present year. 8 "The remaining headings of revenue consist of "Interest" and "Other Receipts," estimated at £1,955,000 and £2,175,000 respectively. "Interest in this connexion consists of recoveries from the Government Railways, representing the net surplus of revenue over expenditure for the year, interest on the capital liability of the Post and Telegraph Department, interest on Public Debt Redemption Fund moneys, together with dividends on the Government's holding of Bank of New Zealand shares, and miscellaneous items of which full details are published in the accounts. "The revenue which has been received during the first quarter of the present financial year indicates that to date the estimates are being very closely adhered to, and I am satisfied that they have not been computed on too optimistic a basis. A summary of the position is as follows: — Revenue Ta Custom7 .. IofoOO.OOO Beer duty .. 1,000,000 Sales tax .. 3,400,000 Film-hire tax 100,000 Gold-export duty 100,000 Highways .. 3,200,000 Stamp and death duties 3,300,000 Land-tax .. 1,075,000 Income-tax .. 9,500,000 Miscellaneous 40,000 Total taxation 31,715,000 Interest recoveries 1,955.000 Other receipts 2,175,000 35,845,000 Expenditure £ Debt services .. 9,544,000 Exchange .. 1,800,000 Transfer of highways revenue .. 3,200,000 Other permanent appropriations .. .. 521,000 Annual votes— Social services .. 12,774,000 Other services .. 7,748,000 Total, main estimates .. 20.522,000 Supplementary estimates and contingencies .. 200,000 Total estimated expenditure 35,787,000 [Estimated surplu* .. £58,000