Govt spending rises 20 p.c.

Press, 1 August 1986, Page 3

Govt spending rises 20 p.c.

Total Government spending will rise almost 20 per cent in the 1986-87 financial year, to a total of $26,833.1 million. Net expenditure, which takes into account Government trading and departmental receipts, will increase 14.5 per cent to $20,228.7 million. The Government expects to receive $16,210 million from taxation, an increase of 13.9 per cent on last year’s tax revenue.

Indirect taxation will yield the Government $4240 million, an increase of 34.1 per cent. This is largely due to the figure of $l2OO million which the goods and services tax will raise. New Zealanders will pay the Government $9840 million in individual income tax. Total income tax, which includes company tax and the Fringe Benefit' Tax, will total $11,450 million. This is an increase of 8.4 per cent. Mr Douglas said that because of accounting changing there was no basis for comparing the 1986-87 net expenditure with previous years. These changes included the introduction of GST and Family Support tax rebates. When comparisons are made with last year’s expenditure only the Rural Bank and. the Ministry of Works appear to have suffered a spending cut Xhe 63.7 per cent de-

crease in spending by the Rural Banking and Finance Corporation is because of money being allocated for lending to primary industries. The bank will have to raise all its money for lending from the private sector.

The Rural Bank’s expenditure of $61.4 million will go towards assisting primary industry through interest concessions on its lending. The Ministry of Works has had its spending cut by 21 per cent to $171.9M. The only big increase in the department’s expenditure is an extra 16 per cent going to the national water and soil conservation programme, which will receive $93.4M. Spending in other areas has decreased, although the maintenance of Government buildings will now be met by the State Services Commission.

The Ministry will also not contribute to the National Roads Board this year, but an increase in road user charges will compensate for this.

The Social Welfare Department will spend $5810.76M this year — by far the largest expenditure of any Government department The Post Office, education, and health, are the next three most expensive departments. Each will spend over S2OOOM this year.

Social Welfare spending has risen only 8.3 .aer cent

largely because Family Care will be replaced by Family Support in October. The new programme will be funded through the Inland Revenue Department. War pensions have decreased because of fewer people claiming this benefit.

Of the total spending on benefits of $1866.1 million about one third will go on the domestic purposes benefit and about 20 per cent on the unemployment benefit. The Government will spend $2586.8M on education this year, an increase of 27.5 per cent. Spending on pre-school education has risen to $46.9M, partly because the Education Department assumed responsibility for childcare centre. These were previously administered and funded by the Social Welfare Department. Grants - and subsidies totalling $4.7M will be given to childcare organisations this year.

Staff costs will account for almost 60 per cent of the education vote this year.

Post Office spending will increase about 30 per cent this year, up to $2288.7M. Telecommunications will take the bulk of the figure with $1675M expected to be spent on this section. Postal services will cost $335M, and banking services S2ISM.

The Health Department will spend $2781.9M, 71.5 per cent of it going to hospital and area health board services. The increase in spending can be attributed to wage and salary increases and the application of GST to all activities.

Spending on courts in Vote Justice this year has increased 40 per cent to $51.9M. This is because of increased personnel costs and an extensive demand for counselling services in the Family Court, particularly providing counsel for children.

Total spending for the Justice Department has risen 40.7 per cent to $283.68M. As well as court spending, penal and probation costs have risen sharply. The introduction of Family Support largely accounts for the 269.5 per cent increase in the Inland Revenue Department’s expenditure. Of the department’s total spending of $425.3M, Family Support will take $247.5M. Assessment and collection of revenue will cost $115.9M, compared with $77.3M last year. Police spending will rise 32.4 per cent to $328.7M. With the new police pay package announced last month, increased costs of SSSM are expected in wages and salaries, and GST will cost an extra SI4M. Iflljich of the almost 100

per cent increase in spending by the Trade and Industry Department can be attributed to a new provision of $85.3M for interest on New Zealand Steel Development, Ltd, debt After excluding this item, which distorts comparisons with previous years, total expenditure is estimated to be 19 per cent below the previous year’s total. The axing of the elec.ricity concession for South Island industry will mean a $9.6M saving to the department. Restructuring of the Internal Affairs’ Department is largely responsible for the 40 per cent increase in its spending. The increase in work prevents comparisons. Defence spending is up 21.7 per cent to $1059.57M. The largest single increase is an extra 56 per cent on general defence, which includes salary increases and the effect of GST.

The rise in the lending base for Maori housing and the relatively high personnel and running costs for the Maori Affairs Department’s community development programmes accounted for most of the 28 per cent increase in the department’s spending. : . . ,

The other main component of the increase was a doubling of the concession in interest payable to the Public