FIRST WAR BUGET

Dominion, Volume 8, Issue 2551, 27 August 1915, Page 4

FIRST WAR BUGET

; ' : ",• •.: .v: ~—- V . ; WO MILLIONS OF EXTRA TAXATION NECESSARIES OF LIFE EXEMPT INCREASED CHARGES FOR: .POSTAL-ANI) , RAILWAY SERVICES I REACHING WAR PROFITS SUBSTANTIAL ADDITION TO LAND . AND INCOME TAXES ' TWO MILLION LOCAL LOAN ' SPECIAL INDUCEMENTS FOR THE SMALL INVESTOR

The Minister of Finance (Sir JosepH iTVard) delivered his Financial Statement in , the House" of Representatives last night. Almost every member of : tlio House was present, the galleries were crowded, and the Speech , was lis- • . tened to::with close attention and eager '. interest,.: .' : Following, is. the text of, the statement,' slightly . , ■ No Party Considerations* It has become my duty to lay before . ' honourable members a Statement of V the i»resent condition of the country's '...'■V-finances; '.'together with an explanation or the arrangements which were made by the;.;, Government to meet 'the. expenditure of the Dominion during a period which may . be described as the most momentous in its history. I also , submit for the information of honourable members the proposals of the Government for. the hnancial requirements of the future. . , Perhaps I may bo permitted,'at the outset to remind honourable members on botli aides of tlie House that the National Cabinet' was formed for the ■ purpos6'. ; of, promoting the' best interests of the ;Domimon and the Empire, and not forjthe/piirpose of advancing the views or expressing the convictions of any particular party.' When wo agreed that this step was neOeesary in tlie exceptional circumstances in .which we : ■ found ourselves, we all must have recognised that for a time party controversies would have to be set aside in. order that we might- unite in an earnest effort to achieve" tlie great objects we .. . had iii iview ; . This !os -the. spirit in •which. j'.ißS. prppo3als t ;.are framed/ and I am .'Sure it is the spirit in which you will considjer them. I do not expect the proposals to realise all the aspirations of all tho -jeople, but if tlie truce between-"the parties is to endure'there must be concessions and conciliation on both sides/ and'l' think, the wish of tho country and of this House is'that the National Government should endure' ■■ ■ ' .at least till the enemies of the Empire are defeated and we again are free to deal with our domestic affairs. I wish . specially to emphasise the fact that : none or the proMsals,' I am compelletl to submit for' aaditionai'Jtaxations and revenue have been suggested by party considerations; they have bqen framed ■ solely? with a view to. the "heeds of the country and the welfare of tlie mass of the people. - • f More Revenue Necessary. The;/Financial-Statement wbioh was . delivered by my predecessor in the House ! on August 6 last year was pre-' pared printed before tlio outbreak of tho'war, and at that date it: was not possible to forecast the effects which the war was likely to produce upon . our finances. Since then 1 tlio condi- . tions /which ordinarily regulate the country's trade have' been subjected to great disturbance, and the result has . been roflected in our Railway and Cus-< toms revenue, from both of which Bources the returns for the year, 1914-15 did not reach' the estimate made in last year's Budget. On the other hand, certain; sources of internal revenue have shown' a marked increase over the estimate/and the actual revenue for the year represents an excess of £219,186 over the previous year's figures, while the total expenditure for the year was ;• less than the estiipate by . £184,748. Tho result of the year's operations fives a net surplus of £72,142, which think, under the exceptional "conditions obtaining during the year, may " be considered very satisfactory. The total credit balance' in- the 'Consolidated - . Fund at March 31, 1915, was £119,047; but to enable honourable, members to accurately gauge the result of the year's operations it is necessary to deduct the balance carried forward from, the previous year —£426,90-5, less £350,000 transferred to tho l'ublic .Works Fund, or a net deduction of: £76,905.. The Government will'have riot only to, face the-prospect of a falling revenue,' but .will liavo also to provide for heavy additional charges 'on the Consolidated Fund to meet the annual interest and sinking fuild in connection with the war loans, war pensions/ arid similar obligations. Nor must we overlook the fact that it will be necessary to provide loan-moneys with which to carry on Siblio works and other services in the eminion, the interest arid sinking fund charges on which will further increase our annual expenditure out.of the Consolidated Fund. In view of these facts the Government would be failing in its duty if it did not this, session mako ample provision for raising sufficient additional revenue to enable it i to meet its increased obligations, and I will explain lator on how it proposes to do so. Loan Operations. With the object of placing the position regarding, the recent loan transactions clearly before honourable members, I ■will classify tho requirements of the Dominion under the following head'y ' ings:— (a) Loans for war expenses (b) Loans for worit3 contracted for. (c) Loans for works in progress and extensions. (d) Loans for works other than thoso referred to under headings (b) and (c). (e) Loans for redemption purposes. 'As regards our requirements for war expenses, honourable mombors will reinembor that towards :tho close of last session authority was granted by Parliament for the raising of the sum of £2 000,000 on Treasury bills in London. Very satisfactory arrangements werq subsequently entered.into with the ■ Imperial Government for the supply of this money in monthly instalments. It was found, however, that the amount authorised was insufficient to coyer the expenditure on war account until Parlianent again met in session* Tq enable

the Government to .meet tho heavy demands for war expenses it became necessary to raise an additional amount on ; the security of tho roserye securities held in London. By this means the immediate requirements of the Dominion in connection with the war have been met, and, as honourable members are aware, Parliament has this session granted authority to raise fresh moneys in. London to reinstate our Reserve Fund and to enable us to carry on until the session of 1916. ■ Tip to : March 31 the war cost, us, ■ roughly, £2,750,000, including liabilities outstanding at that/date/ and the rate of • expenditure necessarily increases in proportion to the number of men we put into the field. Moneys required underheadings (b) and (c); relate chiefly to public ■ works contracted for or in progress, and some correspondence'- took place with the High Commissioner as to tlie possibility of raising funds in the open market in London for the-purposes, named. The prices' quoted seemed to indicate that no public works loan could be floated except on terms which wero not sufficiently favourable' to the Dominion, .'arid the: Government accord: ingly determinedito utilise local; funds to ! meet:- presdrit;/requirenieiits./,. The amount of tlie deposits.iii tlie Post Office Savings Bank has largely exceeded the amount of the withdrawals,' thus providing a considerable amount of money for local needs., _. ' ? . • . _ With' respect to the heading (d) — ' loans for works other than those already referred to under headings (b) and (c) .-4he High Commissioner advised' the Government that loans for theso .works would not meet with favour if placed on the London, market. As, however; the amount required urider this heading was small, no inconvenience resulted. Redemption of Maturing Loans. : , Witli regard to heading '(e)—loans necessary, for the purpose of redeeming other loans which were maturing—, I refer honourable members. to the Budget of last session, in which it was stated that during the period from July 1, 1913, to March 31, 1915, loans amounting to £10,129,665 would mature, and that no less than £8,727,700 would require to be redeemed by raising_fros.li loans. It was also mentioned that a sum of £5,194,600 had then been borrowed, which would be sufficient to redeem loans maturing up to tho end of November, 1914.- By theend of November, 1914, £5,194,100 had been actually spent in redemptions, leaving a balanco of £3,533,600, held outside of New Zealand, for .which provision had to bo made before March 31, 1915. This balance has been provided for as follows:— Government Advances to. Settlers i Act, 1908, £12,900, renewed to January 1, 1919, London; New Zealand Loan Act, 1863, £266,300, redeemed out of Sinking Fund; New Zealand State-guaranteed Advances Acts, 1909-1910 (Advances to Settlers)-, £70,000, redeemed -out of £3,250,000 loan from Imperial Treasury; balance £5,000,000 loan, 1910, £3,142,600, redeemed out ' of £3,250,000 loan from Imperial Treasury; Land for Settlements Act, 1908, £41,800, £34,400 redeemed out of. money raised in New Zealand, arid £7400 renewed; a total of £3,533,600. _ Tlie foregoing is a brief statement of the financial arrangements which liavo been made up to the present time, and it is extremely fortunate that the Government has 'been \able to rely on resources within the Dominion for tho purpose of carrying on public works during. tho early stages of the war. Revenue Less Than Estimate. The revenue for the year 1914-15 was estimated at £12,488,370, and tho total collections amounted to £12,443,525, .or £44,845 less than the estimate. Details are as follow:— Receipts. Estimated. 'ActuaL Revenue Account — £ £ ■Customs .' 3,300,000 3,167,283 Stamps and Death Duties l! 200,200 1,417,207 Postal & Telegraph 17345,000 1,353,4-13 Land Tax...; 795,000 799,641 Income Tax 565,000 540,318 Beer Duty 125,000 127,660 Railways 4,250,000 4,106,675 Registration and other fees 101,700 101,020 Marino 52,300 50,387 Miscellaneous 455,400 .461,498 Territorial revenue 220,000 239,623 National endowment revenue ......... 78,770 78,770 Totals .12,488,370 12,443,525 . comparison of Years. Tlio following aro tho details of the revenue for 1914-15 as compared with tho..previous year's figures:— Consolidated Fund— 1914-15 1913-14 Ordinary Revenue — £ £ Customs 3,167,283 3,426,744 Stamp and Death Duties 1,417,207 1,221,971 Postal & Telegraph 1,353,443 1,257,537 Land Tax 799,041 767,451 Income Tax 540,318 554,271 Deer Duty 127,660 127,041 Railways 4,106,675 4,028,739 Hccistration and other feos 101,020 100,035 . Marine 50,387 . 53,037 Miscellaneous 461,498 424,067 Territorial revenue 239,623 190,444 National endowmentreveniio_ 78,770 72,402 Totals 12,443,525 12,224,339 An increase of £219,186. Increase in Expenditure. The expenditure for the year 1914-15 was estimated at £12,561,551, and tho aotual expenditure amounted to £12,379,803, or £184,748 less than the estimate. 'A comp&rativr table similar to that

' for the revenue above was read By Sir Joseph Ward, showing that the expenditure, while less than the estimate, was £553,939 more than for the previous financial year.. Result of the Year's Operations. £ £ Balance brought forward, April 1, 1914 , ;../ 426,905 Receipts during year: Revenue ' and' other . -receipts L. 12,451,945 Expenditure during year-: Appropriations 12,379,803 :. Excess of -receipts over expenditure 72,142 499 047 Transfer to Public Works Fund 350,000 Balance, March 31, 1915 ... £149,047 The Public Works Fund. , £ statement read showed that the Public Works Fund at the beginning of the year had.a balanco of £1,178,584. Receipts for the year, chiefly from loan moneys, amounted to £2,110,654, making the total sum available £3,289,238. The expenditure was £2,593,476, leaving a balance at March' 31 of £695,762. iTliere:is a balance of loan money still to como of £1,475,000, making tlie amount available with which to start the current year £2,170,762. Our Financial Position. Balances in the accounts kept by tho Treasury were quoted to show the financial position of the Dominion as at March 31. Following are the figures for principal accounts: — Consolidated Fund. £ Balance on March 31, 1914 ... 426,905 Liabilities on March 31,1914... 285,141 Balance on March 31, 1915 ... 149,047 Liabilities on March 31,1915 ... 336,696 ■ Public Works Fund. , '£ '£ Balance on March / 31, 1914 : 1,178,584 Loan money to receive 227,628 , , 1,406,212 Liabilities on March 31, .1914 992,098 Balance on March 31, 1915 ;... 695,762' Loan money to re- . , ceive . ...... 1,475,000. 2,170,762 Liabilities on . March 31, 1915 1,094,961 Land for Settlements 'Account. -' £ £ Balance on March 31, 1914 ..: 64,297 Loan money to receive .'. 3,029 Unexhausted authority for raising loan ......... 190,500 .... 257,826 Liabilities on March 31, 1914 3,386 Balance on March 31, 1915 34,079 Unexhausted au- ■ '.; thority for raising loan 467,300 Liabilities .. on" ~ 501,379 March 31,1915 ... , 3,452 State Advances 'Account. £ £ Balance on March 31, 1914 881,038 Loan money to receive ..../ 1,005,000 Unexhausted authority for raising loan 1,956,000 T . .. . 3,842,038 Liabilities and commitments on March 31, 1914 '680,799 I Balance on March 31, 1915 ' 1,062,959 Loan money to receive 773,200 Unexhausted authority'for raising loan 2,426,800 t • v-1-4.- ' '4,262,959 Liabilities and com- ; mitnients ' on March 31, 1915 682,753 War Expenses Account. £ Balance on March 31, 1915 ... 287 302 Liabilities on March 31, 1915 596^710 The Public Debt. Tho gross public debt at tlio end of tho financial year amounted to £100,059,910, and tho net debt to £96,644,455. The following table shows the purposes for which tho various amounts wero borrowed:— ' £ Maori War 2,357,000 Defence 3,670,552 War expenditure, 1914-15... 2,000,000 Public works (includes railways, roads : and bridges construction and lands improvement, public buildings, telegraph, and telephone lines, harbours and lighthouse's, immigration,,tourist and health resorts, development of water power, development of goldfields and coal-mines) ... 51,213,693 Advances to settlers 9,355,315 Advances to workers. 2,507y763 Advances to local authorities ! 2,775,528 Land for settlements 7,317,314 Native land settlement .... 1,033,331 Guaranteed mining advances 23,000 Fruit-preserving; industry --. 11,500 Kauri-gum industry 1.4,000 Hauraki Plains, settlement,,, 109,000

Rangitaiki land drainage ... 62,000 This gre.ll increase in our exports is I Opening up Crown lauds... 302,911 due to tho exceptional prices obtained t Bank of J5.55.--shares 875,000 and to tho larger quantities of goods 'J New Zealand Consols *175,991 exported. The figures are the highest t Purchase of Native lands ... '2;715,217 over recorded.' < ■State coal mines ............ 227,601 ] Loans to local bodies ... 3,507,000 Our Trade With the Enemy. .. i Reserve Fund securities ... - 800,000 J n sp ;to of tho preferential tariff in f Scenery preservation • 84,000 favour of British goods the trade with Deficiencies in revenue, Germany and other foreign countries charges and expenses ' of in ]3uropo previous to the war, had . raising loans, -increase by assumed considerable proportions, the ] conversion, provincial lia- principal items of import being pinnos, i ■biiities. and ■miscellaneous . 8,622,194 fancv goods, and toys, chemicals, dyes, ] — lamps, glassware, chinawnre," enamelled Total ..; 100,059,910 ware, cheap hardware, and agricultural < manures, the total values imported dur- ; Sinking Funds. ing 1913 being:—" .The net debt amounted to £96,644,- Germany 087,935 < 455. arrived at as follows:— - Austria 17,863 £ Turkey 7,827 Gross debt of the-Dominion 100,059,910 Asia Minor 17,215 Less sinking funds— . £ \ ' As compared with— Government Loan* ] £ to Local Bodies Great Britain 13,312,192 Act 799,601 Immediately upon the outbreak of Naval Defence ffar w jth Germany and Austria, and Act, I'JO9 ... 256,471 Turkey, trade with those countries was Stato Advances totally prohibited, and it became an loans 646,700 offence against the law for any person Land for set- 'to enter into any new commercial, tlemcnts 584,800 financial, or other contract with the Native land set- enemy. Precautions were also taken tlement ...... 11,977 to safeguard British interests by the Guaranteed min- ) prohibition of exportation, either directing advances 417. fly or indirectly, to enemy countries of Seotion 26 (5) ' goods which might be used as either (b). State Ad- foodstuffs or munitions of war, or. as vances Act, ' material for the manufacture of rnili1913—Hauraki tary, clothing, boots, or equipment. Plains Settle- . , _ , ment Account, The Food of the People. ■ £2176; open- The Government was compelled to go ing up Crown. further than this, in the general inlands for set- terests of tho oommunity, and to tako ment account, tho control of the exportation of food- ' £3417; Ra- stuffs and forage which were likely to nrritaiki land be sent away in excess oil account of drainage ac- ' / tho high prices ruling abroad. Wheat, oount, £904 6,497 oats > cha ®> bra "> l oa , tme '? l, a ."? Piihlic Debt Ex- butter can now bo exported only with j.; .(.• n Apt ■- tho consent of the Government when loin nfi tho reasons are of an urgent nature wii nl' lip ' and when there is a margin over the ? „ supplies needed for home consumption, fence loans... 192,691 With regard to the. export of butter, Oanterbuiy , . which has been the subject of a good 1 -10/n " OQ icn deal of comment and discussion, ; it may _ance, 186- ... |j 0 stated that a number of dairy facN'.Z. Loan Act, tories in the northern districts are 1863 -,575 commencing operations this moiitli, and ■ d,i/a,uoo shortly there should he sufficient butter produced for consumption in the Doab,pel,boo rninion and for export. If it should be Less redemption-money necessary to take any steps to regutwice included 237,400 j a t 0 supplies and prices they, will be i considered later on. Net debt, March 31, 1915... 96,644,455 The New Zealand Government has done its best to assißt tho CommonLoans Falling Due. wealth of Australia with supplies of The loans falling duo during tho foodstuffs,, but with the present harvest seven years ending 1922 are as follow:- and dairying prospects it may be mi-

possible to go much further in this direction. Wiles of the Enemy. Through tho agency of tho censor it was discovered that attempts were being made by the enemy to keep up a trade with this country through neutral countries, and consequently steps were taken by tho Government to prevent this by requiring that all goods imported from Norway, Sweden, Denmark, Holland, Switzerland, and Italy should be _ supported by a certificate of origin signed by the British . Consular Officer for these coiuitries vouching for their placo of production. Since then Italy has joined'the Allies in tho field, and thus has given the best assurance that li'er ports will not be used by the enemy to out- disadvantage. Arrangements were made with the Imperial Government to obtain the assistance "of their Consular Officers in carrying out the issue of these certificates. School Teachers' Salaries. As forecasted in tho Financial Statement of last year, a substantial increase is shown in' the current year's estimates, apart from the increase naturally consequent on the expansion of population; This increase is' in tho main due to the further provisions that , have been mad© for the staffing of the public primary schools and secondary schools, and for the higher rates of salary payable to the teachers employed. In the amount to be provided for the salaries of public school teachers an increase of .£90,000 is shown, of which £30,000 may bo set down as the increase that would naturally have been made in the ordinary development under unamended conditions.

i ■ — : —— —— ; The loans falling due this year inI elude £5,421.053 from ' tho Imperial Treasury. This amount is made up of j £3,142,600 to redeem portion .of the s loan not converted, £107,400 raised for land settlement purposes, and £2,000,000, war expenses Treasury bills. ' State Advances Office. j The Government found it necessary to 3 restrict the lending operations of. this I office during the war, and the board has r from time to time varied tho limits of its advances so as to suit the circumstances of its finances. Taking the Local Authorities Branch, . for instance, on April 7, 1914, tho limit 1 was fixed by the board at £10,000, then L in May following the limit was increas- { ed to £15,000, and on June 15, 1914, it 1 was decided, owing to the generally improved condition of the outlook, to remove all restrictions and lend up to the full limits allowed by tile Act. On the outbreak of the war the board passed a resolution to make no advances, but on October 27, 1914, it was decided to 2 lend up to £1000, and'on December 14 it increased the limit to £2000, and 5 since then the limit his been further increased to £5000, at wjiich figure it now stands. ' In the Settlers and Workers Branches the limits have similarly been varied J from time to timo, arid the' limit in the case of settlers' applications now L stands ' at £1000, while in the case of the Workers' Branch the board' is lending up to the full amount allowed by the law. In tho Settlers Branch wo are now lending money for tho repayment of_ existing mortgages not exceeding £450, and wo are also lending under this branch up to £450 for the purpose of bujlding homes in'urban districts. The following table will show the > total amount advanced and the total , commitments for the year ending March > 31, 1915: — Amounts of Advances Paid over During Year Ended March 31, 1915. Advances to settlors 1,136,475 £ Advances to workers 313,025 1 Advances to local authorities 336,'295 J . £1,785,795 Commitments as at March 31, 1915. £ Advances to settlors 267,157 Advances to workers 79,640 Advances to local authorities 335,625 £682,422 Customs. Tlie estimated Customs revonue for 3 the financial year ended March 31, 1915, was' £3,300,000 This would doubtless have been realised but for the » outbreak of the war, as the returns received up to the end of August exceeded tho estimate to that date-by £41,000. After August, however, a'consistent decline in revenue took place, ,and the total fbr the year was £3,167,283, or £132 ; 717 short of tho estimate. This condition of affairs was only to bo ox- ' pected, as the war cut off all trade with Germany, Austria, and Turkey, and reduced very greatly the trade with other ' European countries. The shortage and risk of transport, high freights and insuranco,. and difficulty in getting orders } promptly fulfilled also, no doubt, have ) been contributing factors to the restriction of importation. This restriction is likely to continue until the war is conE eluded, and although there appears to ) be a tendency to go to new markets for j some classes of goods—the United 3 States and Japan, for example—this can ! only operato to a limited extent, as the great bulk of our imports comes from the United Kingdom. A comparison of ) tlie reveinie received during the months I of January, February, March, April, ) and May of 1915 with tho same months of 1914 makes it apparent that we be prepared to face very much reduced receipts for the current financial year. During the five months mentioned tho amount realised is £275,559 less than for tho same period of last year. increase In Exports. Tho comparative figures showing values of imports and exports for the calendar years 1913 and 1914 are as follow:— 1913. 19)4. £ £ Imports ... 22,238,302 21,856,096 Exports ... 22,986,722 26,261,447 The exports for the financial years 1913-14 and 1914-15 were as follow: — 1913-14. 1914-15. £ £ Eaportß ». 23,471,131 27,1-"6,823

, Year ending March 31. London. Australia. New Zealand Total. ■ 1916 ... 6,274,953 ' 127,550 3,503,971 9,906,474 ' 1917 ... 222,200 1,087,800 575.240 1,885,240 1918 ... 40,700 84,400 3,281,456 3,406,556 - 1919 ... 147,250 60,000 1,604,665 1,811,915 1920 ... 42,800 29,400 3,753,245 3,825,445 1921 ... 3,000 550,300 894,700 .1,448,000 .1922 ... . . 11.000 934,400 1,092,050 ' 2,037,450. . 6,741,903 2,873,850 14,705,327 24,321,080