The Press WEDNESDAY, MAY 24, 1950. Public Accounts

Press, Volume LXXXVI, Issue 26120, 24 May 1950, Page 6

The Press WEDNESDAY, MAY 24, 1950. Public Accounts

In giving the customary annual review of the Public Accounts (printed to-day), the Prime Minister and Minister of Finance (Mr Holland) has departed from custom in the form of his summary, though no doubt the accounts themselves will be published later in the usual form. By his novel method Mr Holland has emphasised two things. First, his predecessor (Mr Nash) was unable to finance the year’s public works and loan repayments out of the proportion of the national income that was saved and invested in Government securities. The deficiency of £ 25,000,000 was met from Reserve Bank credit. Second, a little arithmetic shows that Government spending under all heads approached the huge total of £200.000,000. For these purposes, including capital transactions in the new form of Ministerial statement has merit; but it does tend to confuse the picture of the Consolidated Fund, the Social Security Fund, and the War Expenses Account, on which the Budget is based. Where and how a Government raises loans are of prime importance to the national economy, which is distorted by inflation and over-large Government spending; but they do

not affect in the same year the amount required from taxation and other sources to meet the ordinary running costs of the State. Though Mr Holland is certainly right to emphasise how heavily the Labour Government leant on monetary inflation, his end might have been better achieved in another way. On the other hand, there is good reason for amalgamating the three ordinary accounts: and, it may be noted, they involve the formidable total of just on £ 160,000,000 for current Government expenditure. Mr Holland has given thought to making these big figures and their implications easier for the average man to understand. Perhaps he could best do that by issuing the figures in two sets, one for capital and the | other for current expenditure, show- j ing clearly in each on the one side the sources of revenue and on the other the principal avenues of expenditure. As for the accounts themselves, they cover a year’s taxing and spending over which the new Government had practically no control. The final figures conform closely to the estimates made by Mr Nash last August. Expenditure from the Consolidated Fund at ! £120,688,000 was about £30,000 less i than the estimate. Revenue in total exceeded the estimate, and the opening balance of £2,631,000 rose |to £4,307,000. If the separate ; accounts were in fact separate the I surplus would be larger by the ■■ £ 12,000.000 transferred to the Social I Security Fund. In that case, of I course, the year’s operations in that ’ fund would have shown a deficit of • £ 14.580,000—much more than the opening balance of £ 8,682,000 from which Mr Nash budgeted to meet an estimated shortage of £2,588,000. : Expenditure from the War Expenses Account was apparently £ 1,000,000 more than Mr Nash estimated, but there is possibly some accounting explanation for this. On the whole, : Government spending kept close to I the Budget. Hydro-electric works 'exceeded the estimate by £2,000,000 and housing expenditure by £ 1,500,000, probably because of rising costs. Railway capital expenditure was much lower than ex- ! pected. The buoyancy of customs collections (£ 2,000,009 above the

estimate) and sales tax (£1,000,000 above) assisted the revenue side. Income tax fell a little below expectations, and highways tax also just failed to reach the estimate, suggesting that the upward curve of revenue may be flattening out. It is a fair warning against increases in the cost of government.