CONSOLIDATED FUND

Dominion, Volume 37, Issue 264, 4 August 1944, Page 6

CONSOLIDATED FUND

Estimates Of Revenue And Expenditure YIELD FROM TAXATION Receipts into the Consolidated Fund for the current financial year are expeced to produce £51,500,000 and expenditure to amount to £51,197,000, leaving £303,000 available for supplementary estimates and contingencies, said the Minister of Finance, Mt. Nash, in his Budget speech in the House of Representatives last night. The taxation revenue is.estimated to be approximately the same as it was last year. ’ Details of tlie Consolidated Fund estimates are as follows:—

A slight change has been made in the method of presenting the annual accounts for debt services and interest payments and recoveries, said Mr. Nash. Iu the past, interest on the capital liability of the Railways and tlie Post and Telegraph Department has been shown, as revenue, while interest received from other trading undertakings, such as electric supply, State coni, housing, and State Advances Corporation has been treated as a reduction of the amount payable for interest ’ on the public debt. This is somewhat confusin:,-. and it is proposed in future to show the full amount, of interest payable, on the expenditure side., and the full amount of the interest received from various sources, on the receipts side, of the accounts. This amendment in accounting procedure has the apparent effect of inflating both revenue and expenditure, but it is in fact simply showing the accounts more clearly. Debt Services. The net figure for debt services last year, including' interest and repayment, was £15.720,000. but the gross figure was £18,974,000. and this gross figure is comparable with the amount being provided this year. £21,413,000. The net increase in debt services is therefore £2,439,000, made up principally of the increased interest payable on the larger debt, now . increased by £63,000,000 as compared with last year, and the consequent increase in the contribution for repayment through the Public Debt Repayment Account. The actual increase in interest is £1,940,000. and in the repayment provision £464,000. The difference between the net interest shown in last year’s accounts and the estimate for interest this year is £5,189,557, and is made np as follows :—lncrease due to increased debt, £1,938,879; interest receivable now shown as revenue, £2,690,614; decrease in amount of interest receivable. £560,064; total, £5,189,557. Provision has been made for a substantially lower amount as interest: receivable on railway capital as, due to the restricted services, the revenue has been materially affected. Whereas last year £2,691.000 was received from this source, the estimate for the current financial year is shown as £1.500.000. On the expenditure side, provision was made last year under the permanent appropriations for a transfer of £1,500.000 to War Expenses Account, though the ’ amount actually transferred was £7,500.000. For the present year this amount is shown at £4,000,000. Permanent Appropriations. It will thus be seen that in respect of the permanent appropriations of £27,533,000 the sum of £2.1,413.000 is in respect of debt services, and £4,000.000 is in respect of lhe transfer to War Expenses Account, leaving £2,120,000 under other special Acts. Of this last-mentioned figure. £1,671,000 is the transfer of main highways revenue to the Main Highways Account, and the balance. £449,000. represents various small items as set out in the estimates. As regards expenditure under votes, totalling £23.664.000. there is an estimated increase of £2.232.000, made up of “Social services £l.222.ooo’*’and other votes £1.010.000. Under “Social services” the principal increases nre as follows:— Vote. “Health.” £193.000; vote, “Education.” £162.000; vote, “War and other Pensions.” £461.000: transfer to Social Security Fund. £400.000: total, £1.216,000, In connexion with other votes where the increase totals £1.010.000, this is spread fairly evenly over the majority of the votes. ~

£2,222,580 SURPLUS

Past Year’s Operations The accounts for the past financial year show a surplus in the Consolidated Fund of £2,222,580, said Mr. Nash, in bis Budget speech. To complete the picture of the financial position of the country the Consolidated Fund surplus should be examined with the War Expenses Account and the Social Security Fund. Both these lastmentioned accounts are filmneed by taxation direct and by transfers from the Consolidated Fund. It is (lifiicult in the case of the War Expenses Account, which is financed partly from loans and partly from revenue, to assess what, the exact surplus- is for the year, as the term is usually applied to a revenue surplus, but. based on the difference between the opening and closing balances, it may be said that the account showed a deficit of £621.097. Similarly, the deficit in the Social Security Fund amounted to £1 11.662, so that, taking the results in-the three accounts together, we arrive at a net surplus for last financial year of £1.469.821, The principle of pooling of the revenue resources applies equally to capital resources. Thus since 1941 the only publie loans which have ibecn raised have been for war purposes, and the Government have been able to finance the whole of the capital required for national development purposes from departmental funds. Moreover, surplus departmental funds have been applied toward fulfilling war loan requirements. Thus the State has marshalled the whole of its financial resources primarily for assisting in the war effort. The surplus in the Consolidated Fund is due both Io revenue having been received in excess of the estimates and also reduction in expenditure. On the revenue side receipts from taxation under practically every heading were up compared with both the previous year ami the Budget estimate. .Income tax and Customs duties were rcsimnsible for the major part of Hie increase. The total taxation receipts into (lie Consolidated Fund were £-12.000.000. an increase of £6.500.000 over the Budget estimate, and it Wits (his factor, as I shall explain later, that enabled ait additional transfer of £6,000,000 to be imide Io War Expenses Account. The other receipts into lhe Consolidated Fund. including interest on capital liability of trading undertakings. wore till very close to the estimates, and do not call for any special mention. Expcndiliit'c Position. The position regarding expenditure is very satisfactory in that though the estimates wore exceeded in certain cases this was more than offset by savings in other respects, so that, on balance the total ex-

penditure is well within the amount appropriated by Parliament. Social services chargeable against: the Consolidated Fund accounted for £14,600,000, as compared with the nniount authorized — £1.4.800,000- —both ■ of which figures include the amount, of £4.100.000 transferred to the Social Security Fund as set out. in the Estimates. Other votes show an expenditure of £6.800,000, as compared with the £6,900,000 appropriated. Expenditure under the permanent appropriations—that is, under special Acts of the Legislature—was also, in the main, lower than anticipated, the only exception of any importance being the transfer which I have already mentioned to War Expenses Account of an additional £6.000,000. The total amount provided out of the current year’s revenue in aid of the War Expenses Account was thus £7.500.000, against the £1.500,000 provided for in last year’s Budget. In addition, the previous year's surplus-of £4.200,000 was also transferred to War Expenses Account during the year just closed, making a grand total of £11,700,000. transferred under the statutory authority contained in section 2 of the War Expeuses A el. 1939.

Following life precedent of the past liyc z years, it is proposed to transfer the 1913--I I’siirplus in the Consolidated Fund to the War Expenses Account. The ,'ictmil expenditure from the Social Security Fund for' 1 ' the year was £1.7,600.000. as against a Budget estimate of £17,500,000. Revenue in the fund from the social security charge, registration fees, and miscellaneous was up by approximately £1.200,000. the total being £13.-100,000. This, together with the £4,100.000 from Consolidated Fund as originally provided for enablefl the whole expenditure to be met with only a small reduction iu‘ the cash balance of the fund. From July 1. 1043. basic rates of benefits were increased. AH classes of beneficiaries received an adjustment, in the award previously payable. The Government. also arranged for a comprehensive review of the war-pensions legislation, ami .substantial increases in the rates of pension were authorized. These increases had the effect of bringing the war pensions available to totally disabled servicemen and to the widows of deceased servicemen to u rate Comparable with changed economic circumstances. Under lhe heading of national development. the Government’s programme was necessarily on a very small scale anti was in keeping with war-time policy of restricting such development to bare essentials. Most of the expenditure incurred was for housing and hydroelectric works. Allowing for approximately £2.000.000 available at the beginning of the year. it. was anticipated that. £6 500,000 would have to be raised to carry out the restricted programme, but, due partly to the diversion of men mid material to urgent war work, it was found that £4.000,001) covered requirements. As already indicated, loanmoneys for works other than will’ purposes have been provided from departmental sources, thus leaving the public , market entirely free to meet war-Juan requirements. 1

REVENUE; Taxation — Customs Beer duty Sales tax Film hire • •• £ 7,600,000 2,000,000 3,900,000 . 130,000 Highways Stamp duty • • Land tax Income tax Miscellaneous J ,671,000 1,750,000 . 988,000 24,000,000 ' 95,000 £42,134,000 Interest recoveries from trad iug activities, etc Other receipts 5,766,000 3,600,000 £9,366,000 EXPENDITURE £51,500,000 Permanent appropriations — Debt services . •• 21,413,000 Other special Acts, including transfer of £4,000,000 to War Expenses Account 6,120,000 £27,533,000 Annual appropriations— Social services Other votes 15,815,000 7,849,000 • £23,664,000 Supplementary estimates am £51,197,000 • contingencies 303.000 £51,500,000