NATIONAL DEBT

Dominion, Volume 32, Issue 261, 2 August 1939, Page 10

NATIONAL DEBT

£13,768,930 Increase Last Year NATIONAL SAVINGS SCHEME Avenue Of Investment For Wage-Earner A net increase of £13,768,930 in the public debt for last financial year is recorded in the Budget presented in the House of Representatives last night by the Acting-Minister of Finance, Mr. Savage. This is stated to be caused by the provision of funds for expenditure on public works and other capital purposes. New issues, which were all made in New Zealand, Mr. Savage said., were made for the following purposes:—

During the year revenue Treasury bills totalling £3,575,000 were issued, but all these were redeemed out of revenue, and consequently no revenue bills were outstanding at the close of the year. Money For Housing. The money for housing and most of the borrowing for public works and other purposes were obtained from the Reserve Bank. This method of finance has the effect of increasing internal purchasing power, and its usefulness Is conditioned by the volume of produe (ion. In present circumstances, when sterling funds are short and imports have Co be restricted, this type of finance, while justifiable and benelichb In certain circumstances, has obvious limitations during the current year In-fact, it must be clear to anybody who studies the position that we are not suffering from a shortage of money in New Zealand, but from a shortage of what money will buy. Accordingly, in May last a Government loan of £4.500,000 was offered to the public in New Zealand. The loan was substantially oversubscribed. The proceeds are being applied, in terms of the prospectus, to public works and general developmental purposes, including capital expenditure on defence works. The terms of issue for that loan were fixed on a basis designed to enable as large a section of the community as possible to invest. It was recog nized, however, that many people of limited means, though willing to help would not have a lump sum nvailabh for investment during the short period the loan was open for subscription. As a corollary to the main loan, therefore, the Government proposes to inaugurate a scheme specially <le-

signed to enable the wage and salary earners and persons of small means to invest portions of their incomes. Full particulars of this scheme will be made available at an early date, but, briefly, the proposal is to open up an avenue of investment in Govern ment funds for sums of money, however small. The investment can lie built up by small payments over a period bearing interest at a rate com parable with that of (he recent, loan. The term will be for a fixed period of four or live years.

Each individual's contributions will be accumulated in a separate National Investment Account in bis name and, if desired, will be convertible inti National Savings Bonds. As the most convenient means of bringing this scheme within reach of the public the organization of tlie Post Office Savings Bank will probably bo utilized to handle the details. Legislation will be brought down at an curly date to give effect to these proposals.

Public works Electric supply Milin fiighwiiys . < £ .... 9,622,27!) 180,000 ,.. . 2,675,600 State ooti 1 mines .. •. • .... 95,000 Wf n fo fnrtjcf« .......... .... 175.000 Housing 4,000,000 liaised for redemption, but not used at March 31, 193!) 1,107 £16,748,986 Against the increase of £16,748,986 are offset redemptions totalling £2,980.056. which were made from the undermentioned accounts: — Public debt repayment ....,'1,756,618 Sinkin'’ funds 228,030 Reparation and war credits 5,025 Repayments of capital by £2,980,056 The net increase of £13,768,930 has raised the total public Indebtedness to £303,970,272, which at March 31, 1939. was domiciled as follows: — £ A.ustr:i lift ...... '879’600 New Zealand 146,237,656 £303,970,272