A HUGE HURDLE

Evening Post, Volume CXI, Issue 38, 14 February 1931, Page 11

A HUGE HURDLE

NEXT YEAR'S FINANCES

MAKING UP £4,500,000.

In order to balance next year's Bud-, get, Mr. Forbes anticipates that it will be necessary, to provide in one way or another for £4,500,000, including a shrinkage in revenue of £3,000,000, and an increased expenditure, of £900,----000. "So far asi the public finances are concerned, the economic situation will undoubtedly mean a large shrinkage in the revenue next financial year/ 5 said Mr. Forbes. "A comparative falling oil of from 20 per cent, to 25 per cent.' in the value of imports is, likely to i lower Customs revenue by an even greater proportion, as the falling off is likely to bo ( heaviest in the luxury items where1, generally speaking, the rates of duty are highest. In view of the uncertainty as to prices and the, exact effect.of the slump and the high exchanges on external trade, it is udmittodly very difficult nt. this stage to .forecast the amount of the Customs revenue for next financial year, but' having regard to the circumstances, it is considered that a falling off of about £2,000,000 is likely in comparison with the amount budgeted for this financial year. DROP IN INCOME TAX. In regard to income tax, which will bo based on tlie trading results for the current financial year, it is obvious that a substantial- decrease is to be expected. As in the case of Customs, the extent of that decrease is a Very difficult matter to gauge, but on the best information at i present available it is estimated at about £500,000. "Then there is the item for railway interest, iii respect of which tho experience of the last few months clearly indicates' that tho amount that can bo paid will by considerably less than the £1,380,000 allowed, for "in tho present year's, Budget; Next financial year additional benefit is to bo expected from the fact that tho increase in rates and fares and from the economies recently effected will operate for a full year, but'against that a further falling off in the volume of traffic is considered to be practically inevitable under present economic conditions. It is anticipated that the comparative decrease will" not be far short of £500,----000. "The totalisator revenue and, to a lesser extent, tho amusement tax, and other items of stamp revenue, are *ilready being adversely affected by the slump. Accordingly, having regard to tho present economic outlook, a comparative decline estimated 'lit about £300,000 is to be expected undor the heading of Stamp and Death Duties next financial year. . •■■'■. "All the other items included in the rovenuo of fhe Consolidated I'und have also been carefully reviewed, and tho prospects in regard to each weighed in the balance. Practically all of them are to be adversely affected, although the falling off is naturally greater in some than in others. The total Shortage in the meantime is set down nt about £300,000. ; REDUCING'EXPENDITURE. "The position in regard to expenditure, is still being reviewed in detail by the Economy Committee set up by the Government* for this purposo' as soon as the present trend of affairs in public finance became apparent.-, This eomm/ttce is painstakingly investigating each departmental vote in turn with a view to effecting all possible reductions consistent with the maintifiaiice of services considered, necessary for the welfaro of "tie community. In view of the fact that this financial year will end in less than two months, the work of the Committee can have little effect on this year's finances, but it will bo extremely valuable wh<«i tho estimates .for .next financial year are *beingr reviewed. ' * 'Ih this connection I would like to state that every effort was made this year to obtain the maximum of administrative economy, and if further reductions, of expenditure are to be , obtained—and I think it will be generally agreed that this Is esseu= tial under present conditions^ can only be done by eliminating or curtailing some of tlie services at present supplied by the State, either free or below cost. That is to say, some of the monetary grants at present given, or work done by Departments below cost, will have to be reduced or perhaps entirely stopped. In private life most of us in hard times have to forego many desirable things because we cannot afford them, and the same economic laws apply to the State,, which, of course, is merely the people as a corporate body. INCREASES IN EXPENDITURE. ■ "To return to tho prospective budgetary position, next financial year's expenditure will be increased by about £200,000 under the heading of debt charges, which is a rigid item whore expenditure of capital for developmental purposes is necessary. Then provision will have to be made for the usual automatic increases in pensions, and cost of the General Election, and for a new item of about £600,000 in subsidies payable under the provisions of the Unemployment Act. Thus on the present basis of expenditure for tho departmental votes and the remainder of the items payable under (Special Acts of Parliament—that is, without making «ny allowance for any other possible increases, but eliminating certain nourectirritig items —there would be a comparative increase in expenditure next year of at least £000,000. : POSITION SUMMED UP. "To sum up the prospective budgetary position for next linanihal year, all the information at present available indicates that the Government and. the country aro faced with the formidable problem of providing in one way or another for the following before next year's Budget, can be balanced: — Shrinkage in Revenue. & Customs ~..,.'........ 2,000,000 Income tax 500,000 Railway interest 500,000 Stanip revenue 300,000 Other items 300,000 Total £3,600,000 Increases in Expenditure. ■ ' .£ Debt charges 200,000 Unemployment subsidy 000.00.0 Other items 100,000 Total £000,000 ■•'total shortage £-1,500,000 ' * That is the position, as fat as it enn be estimated at this stage, and I have

I taken the earliest opportunity of laying the facts before the country, being confident that the people will accord the Government that measure of co-opera-tion and support which is necessary if the position is to bo met and the Budget balanced by means that will assist rather than retard tho general economic recovery of the Dominion."