HIGHWAYS FUNDS

Dominion, Volume 22, Issue 288, 31 August 1929, Page 10

HIGHWAYS FUNDS

THE £200,000 TRANSFER

BOARD NOT TO BE DEPRIVED PRIME MINISTER’S EXPLANATION That the Highways Board was not being deprived of its funds was stated by the Prime Minister (Rt. Hon. Sir Joseph Ward) in the House of Representatives yesterday when making a full explanation of the position regarding the State’s contribution of £35,000 to the board’s revenue fund, and the transfer of £200,000 from the Public Works Fund to the construction fund.

“There has been a great deal of misunderstanding and misrepresentation regarding the Government’s proposals in this matter, and I will endeavour to clear up the position,” said the Prime Minister. “It has been stated that the Budget proposals will deprive the Main Highways Fund of £235,000, but how such an. impression can be held in view of the previous explanations given it is difiicult to understand. In the first place I wish to emphasise that the sections of the Main Highways Act that deal with these moneys mean that the amounts so provided for require to be annually voted by Parliament and obviously are subject to annual revision, and are not, as appears to be imagined, a permanent charge. Mr. Coates: What does the Act say? The Prime Minister: These sections of 1922 merely express a policy for the time being. Since that date, considerable changes in highway taxation have occurred which undoubtedly affect the original position. In 1922 the Highways Fund had little revenue from taxation, but it is now in receipt of about £1,250,000 revenue, and is thus a revenue account, and should, in view of the changes that have taken place, come within the category of all public accounts in receipt of revenue; that is, pay interest on the loan capital it requires. The total loan allocation for highways construction this year was £550,000, and if the Act as operating for the last few years was still followed, £200,000 of this would be free of interest to the Highway Fund by transfer from the Public Works Fund, the Consolidated Fund being left to bear the interest. The change proposed merely requires that the Highways Fund shall pay interest on its full loan capital and the statement that £200,000 is being withheld is quite incorrect. “Regarding the £35,000 which has been annually granted from the Consolidated Fund, in view of the changed and improved revenue position of the Highways Fund it is considered that the Government, at a time when it is faced with increasing taxation to balance the Budget, should discontinue this grant, the disadvantage of which in no way restricts the Highways Board’s present finances. The Highways Account does not need this £35,000 at present, so the Government would not be justified in making the grant while there is a general shortage in the Consolidated Fund. In the South Island suggestions have been made that as a result of these adjustments, subsidies and grants for various local body works have been refused or curtailed. I can assure the House that these suggestions are quite incorrect, as the matters referred to are wholly questions of policy as between the Highways Board and the local authorities poneerned, and they are not affected by these adjustments.” In regard to the £200,000 transfer, the Prime Minister said the board was expected to repay the country the interest it had paid. That was only a fair thing A member: Will the £200,000 be paid this year? The Prime Minister: Yes, it will be P Mr. Coates: And the £35,000? The Prime Minister: The £35,000 will have to be in the same position. We cannot take the liberties that were taken last year. We have all to recognise that we are in a different position from what we were last year. We have in the first place to face a shortage of revenue. We are £1,500,000 short of what we were last year. We have to make that up. We are depending upon sources of revenue that may or may not come up to the estimate that we are expecting to reach. We have not got the moneys available in such quantities as the previous Government had twelve months ago. ft e have not got any lqo.se money to enable us to take over £200,000 and lend it to the Highways Board, or any other board without interest, ft'hen we are lending it, we have got to obtain it. We cannot depend upon the consolidated revenue, notwithstanding the increased taxation proposals, being elastic enough to give us sufficient m J r ' gin to take liberties with it in the meantime. It is only by a spirit of co-operation between the mass of the people and the Government of the day that we can expect to get things on a solid basis in the future.