Spending up 20p.c. —deficit $1524M

Press, 28 May 1981, Page 4

Spending up 20p.c. —deficit $1524M

PA ’ Wellington Government expenditure increased by 20.4 per cent in the 1980-81 financial year but was 0.5 per cent less than budgeted for, said the Prime Minister (Mr Muldoon) yesterday when making, public the accounts for the year. The deficit before borrowing at the end of the financial year was $1524.9 million, which was 8.3 per cent of gross domestic product. The percentage compares with 4.9 in 1979-80 and 8.7 in 197576.

Total taxation receipts were $7050.8 million, up 17.1 per cent on the 1979-80 level. But. the total was 1.7 percent less than the level forecast in last year’s budget, mainly as a result of a fall in income tax receipts from companies, Mr Muldoon said. The deficit in the consolidated account had been met in part by a transfer of $956 million from the loans account. “This is well within the $1250 million authorised by Parliament in the 1980 Appropriation Acts to be transferred for this purpose,” he said. “The transfer represents, an increase of $278 million over the sum transferred in 1979-80." He said that the larger transfer was needed to cover lower-than-expected income tax receipts and generally to “maintain a stable level of economic activity.” ' A sum of $BO million had been transferred to the Consolidated Account from theReserve Account. “This is the amount which had been transferred to the reserve account at the end of the previous financial year to cover, the backdating ele-

inent of the general adjustment- granted to public servants from -November 10, 1979, and paid out in May, 1980, Mr Muldoon said.

The financial, statement shows that the biggest percentage rise in expenditure came under the heading

“debt services and miscellaneous transactions.” The amount spent in 1980-81 under this heading was $990.9 million, up 28.6 per cent on the previous year. Expenditure on foreign relations went up 28 per cent to $577.9 million, and that on education by a similar percentage to $1292 million. There was a 25.5 per cent rise in expenditure on transport and communications, with $332.6 million being spent under this heading. Increases of more than 19 per cent in expenditure on social services and health were recorded, with total sums spent on these being $2589.7 million,, and $1356.3 million respectively. The cost of general administration rose 13.5 per cent to $785.8 million, and. expenditure on the development of industry increased 11.6 per cent to" $797.1 million.

The largest increase in Government revenue on a percentage basis came from highways tax, which rose 35.7 per cent to $189.3 million. Income tax receipts were up 18.7 per. cent to $5298.9 million, and money received from customs levies, sales tax, and beer duty rose 17.3 per cent to $1189.2 million. There was a 21.5- per cent fall in the, amount received as motor spirits taxdo $139.5 million. Other . forms of taxation

brought in $233.9 million, about 4.7 per cent more than in the previous year. 1 The Government received $557.7 million from interest, profits and miscellaneous receipts — a rise of 3.3 per cent on 1979-80.

Net Government borrowing in New Zealand for the year was $774.8 million, compared with $703.9 million the previous year. The internal deficit was • $750.1 million, compared with $323 million.

Net overseas. borrowing was $753.8 million, compared with $327.7 last year.

Commenting on the PublicAccounts, the Shadow Minister of Economic Development, Mr R. J. Tizard said that there was no doubt that the Government was heading for a $2OOO million deficit this financial year. Taxes would not be increased in an election year, Mr Tizard said.

The deficit before borrowing had risen by a huge 48.5 per cent to more than $l5OO million.

“It is obvious from the accounts that the increase in the deficit was met by more than doubling the amount of net overseas borrowing,” he said.

"The greatest increase in expenditure was in servicing that debt.” "This Government is borrowing hand over fist at high interest rates, from anybody who will lend, merely to keep itself in office,” The accounts revealed the urgent need for tax reform, Mr Tizard said. Income tax was up almost 19 per cent, well above the rate of inflation, even though' company tax had fallen.