PUBLIC FINANCES

Evening Post, Volume CXI, Issue 95, 23 April 1931, Page 13

PUBLIC FINANCES

FALLING REVENUE

REASONS FOR DEFICIT

BASIS OF .FORECAST

A statement covering the financial position of the Dominion was made by tho Prime Minister (the Eight Hon. G. W. Forbes) in the House of Representatives jthis afternoon. ~ ; Mrl Forbes's statement was as follows: —. -.; '. .' : "When'introducing the second Finance Bill, 1 announced to this House and to the country generally that the prospective deficit for tho current financial, year -. on-' tho basis of. . last year's and' scale of operations.1 would, Jon present estimates, amount, to approxiniate-]v;-'j£s-500,'0b0..- This amount represented an increase of. £1,000,000 over the amount announced in my reyiew of, the financial situation issued at the beginning of February. The peoplo are naturally perturbed, at this increase in tno already large shortage to. be made good before the Budget for the year can be balanced, and are doubtless anxious as to the nature of tho further burdens that they will bo called upon to carry. "Many people who-are not in touch with financial affairs have evidently found it difficult to understand the sudden increas'o of one million pounds in the', estimated Budget shortage, and some apparently have wrongly concluded that the Government lias been withholding part of the facts and giving the 'information to the country in instalments. Any such conclusion is quite incorrect, for the Government has at all times endeavoured, to place the full facts beforo the people, well knowing that this is the first essential step towards meeting the situation. REASON FOB INCREASED. DEFICIT. "The" reason for the increase in, the estimated deficit is: simply the rapid change for the; worse in the economic and financial position which has taken place Sduring tho last few months. Tho first estimate prepared in January last was based on the returns for tho first nine months of last financial year,.and the outlook so far as it could be seen at that time. During the.last quarter of the year,'however, the .rate of decline in : several items -of revenue— notably Customs, stamp revenue, and railway revenue—was sharply accentuated. Under these; circumstances, with the outlook clouded as to the conditions that are likely to prevail during the year, both in this country and abroad, it will.be obvious to all that forecasting the'position of the public, finances is a very difficult matter indeed; The shortage on the revised Estimates,'.in. round figures, is made iip as follows:— ■■~'?'. -'■."■ ■■''-. ''■- REVENUE DECREASES. , '.-■■■-.■-- "p ' ■•■■-■■" £ ■ - ■:&,■ Customs' .............. ;.;2,000,000 Stamp revenue .......... '100,000 Land-and."income tax... 000,000 . Railway Interest ;." V 1.000,000, Other, items ...:.,,., ._ l sO^^ oOjOoo '^'..EXPENDITURE INCREASES. Unemployment ■ subsidies . 000,000 Debt charges ......... 200,000. .. Other items—renslons.etc. 200,000 , _■„„■ • ' ' ' ". ";'" '■"■■ £5,500,000 -These figures-do not allow for the loss of revemie that' will accrue as a result .of-.;-theVEa'wkes. '.Bay Vearthquake,; which Stem cannot be esjimated-at present, or -for any additional funds that may have to- be provided from revenue-,.for the unemployment problem. , ' ' ■ PROPOSALS SUMMARISED. ; . "The steps already taken to meet the situation. I detailed when '.introducing; the second: Finance Bill.' These proposals may be summarised as follows: — ) ■ ■ ■..''.■..': ;■ . ■ .., £, Seductions in salaries and ■'•:.-„ wages ................. 1,390,000 Economies apart -from ■ sal- - aries and.: wages .... -.' ; .. ™°j°W Use of reparation moneys- . 030,00U Additional postal ■revenue' .. 900,000 ,!■.,-'■ '■■-/':■. ■".';'::"V £3,320,000 "On present estimates .this leaves somewhere about £2,250,000 still to be provided before a balanced Budget is obtainable. Some additional taxation is inevitable, but' the Government realises that ■under present .economic conditions it 'is imperative that the; amount to bo obtained in this way must be as small as possible, and after careful consideration of the position, I do not propose to take, any steps m that direction Until the normal session which, however, will probably be called a httlo earlier than usual. \ more' thorough inquiry. ; ' "In the meantime I will have the opportunity of • making a more thorough; examination of the ■ positio.n than has been possible in the short time at my disposal,: and under ,theatres? of this emergency session of Parliament. Addi-, tional data will be available, and the, trend of events should be clearer than at present. In addition, by' that time, the effect of the economies- already made will be more easily gauged, and there. will be more information, as to what further economies can be effected. In this connection r may say that the Economy Committee have not yet completed their work, and.though provisr ion is being made to -effect ;a saving of £ 230,000 in education, it. is hoped that the special Committee of Investigation which is to be set up shortly will be able, to make further in the large amount of approximately £4,500,----000 per, annum, at present spont on education. -. .... . ; \ ' HIGHWAY FINANCES. ' ; ; "As indicated in niystatemont of the1-position issued early in February, another, matter, remaining for review is the present arrangements . concerning Highways finance. ' The relief to the Consolidated Fund through.transferring 'the.- charge for " subsidies "to local authorities and other items to taxation earmarked for highways which, under last year's legislation, is operative to 31st August next, should certainly be continued. When that legislation was passed an undertaking was given that the whole question of highways finance would be investigated by a Parliamentary Committee, • and 1 propose to arrange for this to bo done in the ordinary session,-so that finality maybe reached as to what bearing this question will have on the Budget. ■■' "To sum up the position, it is clear that a large, sum has yet to bo found before the Budget can be balanced, but tho Government proposes in the meantime to make a' further careful review of tho ■■ estimates of the shortage, and of the benefit to be obtained from the economies already effected, and at the same timo to continue its efforts to obtain further savings and economies, with the object of reducing any necessary further demands on the taxpayers to the lowest possible dimensions."