National debt rises 25 per cent

Press, 21 July 1982, Page 1

National debt rises 25 per cent

PA Wellington New Zealand’s national debt increased almost a quarter in the last financial year, boosted in part by a record “invisible" increase - through the decline in the value of the dollar. Details released in the annual report of the Controller and Auditor-General, Mr A. C. Shailes, tabled in Parliament yesterday, showed a public debt of. almost $14.4 billion — 23.8 per cent or $2.7 billion up on the 1980-81 year, the equivalent of $4508 for every New Zealander. The increase was almost equally divided between domestic and overseas borrowing ($1.4 billion and $1.3 billion respectively) but. the foreign debt was signifi-

cantly, higher than the previous year, increasing 31 per cent. Mr Shailes said" the currency realignment caused by the free-fall of the NewZealand dollar amounted to $514.2 million and was “the highest recorded.” The other big factor in the increased debt was a $2.25 billion increase in borrowing to meet Government spending. A breakdown of the total public debt showed that the foreign segment increased for the third year in succession. Last year it comprised 38 per cent of the total debt, up from 36 per cent in 198081 and 34 per cent th' previous year.

Of the total debt of $14,381 billion, $B.B billion was domestic borrowing and $5.5 billion overseas. Interest payments were correspondingly up, topping $1 billion (at $1.2 billion) for the first time, up from $B9l million the previous year. The tax take from which the interest charges are paid was also well up but Mr

Shailes said that while the relevant tax take had almost j doubled since the 1978 finan--1 cial year, the cost of interest had increased five-fold.

Mr Shailes said that in only four years the transfers of money from loans to the Consolidated Account had accumulated to the level where they now amounted to 25 per cent — up from only 8 per cent in 1979. Of the more than $3.6 billion transferred, $2.1 billion had been used to finance current spending.

Mr Shailes said Parliament’s financial proceedings mainly'centred on the Budget and the Appropriation Bill it gave rise to. But he said most Parlia-

mentary debate centred on the estimates of the Government’s spending in the coming year and rarely touched the three clauses that put a ceiling on how much money could be transferred from the loans account to the Consolidated Account . . . sanctioned unauthorised spending in the previous year . . . and written-off losses of public money and stores which had occurred during the previous year. The appropriation of public money and fixing the taxation level were principal elements of Parliamentary control over finance but a third major control was the ability of Parliament to fix borrowed money that could be used for spending from the Consolidated Account. “Parliament may consider the three clauses .. . worthy of much fuller consideration and debate,” he said. “One possible way to achieve this

would be to include them in a separate finance bill.” Mr Shailes said the Ministry of Agriculture had overspent its budget by $4l million, almost entirely through support payments to the Meat Board under the supplementary minimum price scheme. In all, departments overspent by $2OO million, and underspending in other departments totalled $llO million. The increase in the debt was attacked by thd Leader of the Opposition (Mr Rowling) for being of “very alarming dimensions.” The increase in the foreign proportion of the national debt would all have to be paid for by export earnings at the same time as the value of those earnings was sliding downwards with the value of the dollar, Mr Rowling said.