“Most Unsatisfactory Position”; Mr Watts

Press, Volume XCIX, Issue 29212, 24 May 1960, Page 16

“Most Unsatisfactory Position”; Mr Watts

tNeu> Zealand Press Association)

WELLINGTON, May 23. The Public Accounts for 19591960 disclosed a most unsatisfactory position, the former Minister of Finance in the National Government Mr J. T. Watts, M.P., said today. “This is the third presented by the Labour Government and each year has shown the widest fluctuations and been the cause of considerable concern,” he said. “The 1957-58 accounts, which included only three months of the Labour Party’s administration, was the subject of criticism by the Auditor-General, who said that the Consolidated Fund had disclosed a deficit for the first time in 24 years. This was the result of the Government paying the £lOO tax rebate which ran down the balances in the Public Account by more than £2om. “In 1958-59, through severe increases in taxation, the Minister of Finance, Mr Nordmeyer, produced a surplus in the' Consolidated Fund of £3sm before making various transfers to other accounts that enabled -a surplus in all Government accounts of £lsm. "This year he states there is a surplus of £630,000 in the Consolidated Fund and an over-all deficit of £ 18.3 m. He does not appear to have made transfers to other accounts from the Consolidated Fund,” Mr Watts said "The receipts from taxation are closer to estimates than they were in previous years. But, Mr Watts said, the figures did not really show the correct state of the Government’s finances.

“The Government’s indebtedness to the Reserve Bank rose by £34.3m during the year. This figure will include the £lsm referred to in the Minister’s statement as being borrowed from the Reserve Bank “This increase tn the Reserve Bank debt is very serious for the country's economy.” Mr Watts said.

"The Defence Fund, which was carefully built up under the National Government, has been reduced by £9.5m. or nearly onethird. in one year. “This sum must be added to the drop in the cash balance of the Government of £ 19.3 m to show that the Government has

spent during the yeai £ 28.8 m more than it has received by taxation, borrowing from the people, and other Government receipts. “The investments which were made overseas during the year came from moneys in New Zealand which in effect the Government replaced by Reserve Bank credit. “Deficit financing to this extent is a serious matter, and there is no indication that the Government can do any -better during this current year.” Mr Watts said “Although the Government borrowed approximately £3om in New Zealand and also obtained £2om from small savings in th<> Post Office Savings Bank, it was still unable to finance Government spending," he added.