NATIONAL FINANCES

Dominion, Volume 24, Issue 147, 18 March 1931, Page 10

NATIONAL FINANCES

A Serious Situation DEFICIT INCREASES About £1,250,000 Down “CHANGE FOR THE WORSE” Information concerning a prospective deficit of £1,250,000, instead of the first estimated deficit of £750,000 for the current financial year, was given to the House of Representatives in his speech upon the Finance Bill by tlie Prime Minister, Rt. Hon. G. W. Forbes, last evening. He also stated that next year’s deficit would be more than the first estimate of £4,500,000.

“The revenue of the Consolidated Fund for the first eleven months of the financial year ended on February 28 last amounted to appriximately £18,193,000, compared with £20,071,000 for the corresponding period of last year, a decrease of £1,878,000,” Mr. Forbes said. The main contributory cause of this decrease in revenue was a comparative decrease of £1,350,000 in interest on railway capital liability. “As I have already explained, after making due allowance for steps taken to increase the railway revenue and decrease the expenditure, a falling off for the year of approximately £750,000 was allowed for in the Budget, based on the fact that the accumulated losses on the past having exhausted the railway reserves, the interest that could be paid this financial year would have to be decreased by the amount of the loss for the year. Considerable savings have been made in railway expenditure, but, as a result of the depression, the railway revenue has shown a heavy falling off, particularly during the last few months. With only one more month’s figures to be taken -into account, it is evident that the amount of raliway interest that can be paid to the Consolidated Fund this financial year will only amount to about half the Budget estimate of £1,380,000. Customs Duty Declines. “For the most part, the balance of the comparative decrease in the revenue of the Consolidated Fund is due to the heavy falling off in Customs revenue, where the receipts for the eleven months were £1,090,000 less than for the corresponding period of last year. A decrease of £367,000 was anticipated in the Budget, but this amount has already been exceeded by £723,000. “The rate of decline in Cuetoms revenue has been sharply accentuated during the last two months. On a proportionate basis of the year’s estimate, receipts for the nine months weye about £3a0,000 short, but for the eleven months the shortage is more than double that amount. That is to say, during January and February the falling-off in Customs revenue was greater in amount than for the previous nine months. “Excluding specie, the imports for the eleven months show a comparative decrease of over £9,000,000, and the Customs revenue has been affected to a relatively greater extent owing to the fact that the decline in imports has been heaviest in items of the luxury type, where the rates of duty are highest. The cause of the trouble is, of course, the shrinkage in the income derived by the Dominion, from exports, accentuated by the high rate of exchange operating. “Beer duty was a little short of expectations, the comparative decrease for the eleven months being about £36,000.

Stamp and Death Duties. “Stamp and death duties showed a comparative increase for the period of £25,000, but an increase for the year of £375,000 was allowed for in the Budget, so it will be evident that on a proportionate basis, the receipts are behindhand. Receipts under the heading of death duties, however, fluctuate considerably, and if some large amounts at present outstanding can be collected by March 31, as is probable, the final position will not be nearly so bad as the eleven months’ figures indicate. “Land tax receipts, which are now practically complete for the year, are over £lOO,OOO short of the Budget estimate, but it is hoped that this shortage will be made good in excess income tax receipts, the greater part of which is received in March. “The revenue from petrol tax, tire tax and duties and licenses on motor vehicles for the 11 months showed a comparative increase of £296,000, but at present this revenue passes automatically to the Main Highway Account, and the local authorities —and thus will not affect the result for the year in the Consolidated Fund. The Expenditure Side. “The expenditure for the 11 months amounted to approximately £21,929,000, madp up as follows: —— Permanent appropriations .. £15,230,000 Annual appropriations .. b,6J9,UUU Total £21,929,000 “Compared with the corresponding period of last year, the debt charges showed an increase of approximately £<o,ooo, a-aiust an increase of approximately £3OO 000 for the year allowed for in the Budget. Interest, however, fluctuates according to interest dates, and the saving indicated by these figures will not be maintained at the end of the year although it is expected that there will be a saving o£ over £lOO,OOO as compared with the interest estimate for the year. “Under special Acts of the Legislature there was a comparative decrease for the 11 months of £530,000, due mainly to the transfer of the charge for subsidies to local authorities to the Main Highways Account, and the cancellation of the subsidies on branch lines of railways. Allowance was made for these alterations in the Budget. “The annual votes as a whole showed a net comparative decrease of £125,000, and generally the returns indicate that while some of the votes will be slightly exceeded, the expenditure has been kept down to the curtailed estimates for the 5e!ll “To sum up the position I regret to say that the budgetary position has changed for the worse since my previous statement, based on the nine months’ figures, due to the fact that the falling-off in the two items principally concerned (Customs and railway interest) lias been sharply accentuated during January and February. As a result, notwithstanding all "the efforts made to increase the revenue and curtail the expenditure, it seems likely now that the financial year will close with a deficit of at least £1,250,000. In addition, the expenditure o.i unemployment was likely to exceed the provision made. Next Year Also. The previous estimate of a deficit of £4,500,000 at the end of next financial year seemed likely to be exceeded. He did not like to place a black picture before the country, but it was his duty to place the position before Parliament so that it could realise exactly how thiugs stood. He felt that the situation called for every endeavour and help if it was to be met so that the country would get through its difficulties with a minimum of hardship. That was his desire and the desire of the Government. Additional expenditure would be involved as a result of the earthquake. “I don’t think any reasonable man would say the measure could be avoided,” concluded Mr. Forbes. "I would have liked to avoid it, but that could not be done. I feel that by placing the position before members they will have an opportunity to discuss it. When we come to discuss the measure members will then come here with a firm realisation that these measures are imperative if the country is to be kept in a solvent position,” i

GALLERY GLEANINGS

What Members Say IDEAS, VIEWS, AND QUIPS “It is quite possible that in the next few weeks we will vote against the Government,” said Mr. A. W. Hall (Ref., Hauraki), after he had stated during the Address-in-Reply debate yesterday morning that the Leader of the Opnosition had given a promise that the Reform Party would not vote against the Government so fur as that debate was concerned. “Whether the honourable members of the Labour Party will follow us is for them to decide.” Life of Parliament Any attempt to postpone the general election is not likely to meet with support in Labour quarters, judging by the remarks of the Leader of the Labour Party, Mr. H. E. Holland, early yesterday morning. Mr. Holland said it had been suggested that the Government would attempt to prolong the life of Parliament. He hoped nothing of the kind would be attempted, for there was no justification for any such line of action. Of course, with the fusion of the two Conservative elements, the Government might survive a little longer, but it was better for tlfe two parties to hold the Treasury benches with the Labour Party in Opposition. It would be better still to have the Labour Party on the Treasury benches and the other parties in Opposition. If a postponement was decided upon it would, be done by a Government, which, if it faced the electors at the constitutional time, would go out as a Government. The House was entitled to a statement from the Prime Minister as to the position. Cost of Living Issue A demand that the Prime Minister should indicate to Parliament what steps he proposes to take to force down the cost of living compatible with the suggested reduction of wages by 10 per cent, was made by Mr. D. G. Sullivan (Lab., Avon), who quoted the London “Times,” in which there appeared a statement that a reduction in wages by 10 per cent, did not mean that living costs would necessarily fall in proportion. Mr. Sullivan said many employees in the Public Service who were on the basic wage would still have to pay the same rents and meet other charges on the same level as before, and the wages reduction would have to be met out of living expenses. He wanted to know from the Prime Minister what he was going to do to bring about an equivalent reduction in the cost of living. The House was fully entitled to know whether it was the Prime'Minister’s intention to do this, he said. Unless compulsion were brought to bear there would be no chance of the cost of living coming down. This would mean that workers would have nothing to compensate them for their loss of wages. He was informed by a man who had worked it out that in some instances Public Servants had lost from £9OO to £lOOO in wages since the “cuts” were first brought about. Reform’s Attitude A suggestion that there was more than the question of immediate support for the Government behind the attitude of the Reform Party was made by Mr. E. J. Howard (Lab., Christchurch South). He drew attention to a recently published letter from the hand of a prominent member of the Reform Party, who stated that he was not in favour of wages reductions for Public Servants. In this letter he had said that a levy on salaries would effect but a negligible reduction in the Estimates, and he had added that if he were reminded that he was a member of the Government that brought about a previous wage “cut” in 1922 his reply would be that for that reason he was better able to realise not only the hardship a “cut” would inflict, but also its inefficiency in effecting . a permanent reduction in the cost of administration. Mr. Howard expressed the opinion that as soon as the United Party had done what the Reform Party wanted it to, the Reform Party would move a no-confidence amendment which he expected the La-. bour Party would support. “The United Party is doing the job, and as soon as it has done it it will go out,” he said. “I do not blame my friends for not speaking upon the question; it is all part of the game.” Increases in Salary When discussing salary reductoin, Mr. C. H. Chapman .(Lab.), Wellington North), said he had in his possession a list of 33 officials in the Post and Telegraph Department who were to have their salaries increased after April 1. The salary of one man was being increased from £505 to £715. Mr. Chapman asked whether it was fair that those on small salaries should have to face a big reduction while higher-paid officials were able to look forward to increases or to exemptions from a “cut.” Quite a number of post and telegraph employees had had their salaries reduced by £2O to £3O during the last few weeks, and now they had to face a further cut of 10 per cent.