NATION'S WEALTH

Evening Post, Volume CXXX, Issue 6, 6 July 1940, Page 7

NATION'S WEALTH

MAKING AN ESTIMATE

MANY FACTORS TO CONSIDER

ACCURACY NOT POSSIBLE

Whatever its merits or practicality, the proposal made in,the House of Representatives on Thursday by the member for Christchurch North, Mr. S. G. Holland, that, as a method of war financing, New Zealand should insure its assets at a rate of Id in the £, draws attention to an interesting question on which the average person is probably not very well informed — the wealth of New Zealand. It is not possible, of course, to state with accuracy at any given time the actual cash value of a country's assets, but it is possible to make an approximate estimate, although that estimate may vary considerably from year to year. At a time of changing values, for instance, the figure would rise or fall very quickly. Each year the Treasury, working on returns supplied by the various State Departments, compiles a State balancesheet, setting out the country's assets and liabilities. The latest available balance-sheet is for .the year ended on March 31, 1938. The State assets were then shown as £402,556,454 and the State liabilities at £333,413,055, leaving an excess of assets over liabilities of £69,143,399. The principal assets were as follows:—Land and buildings, including Crown settlement and endowment land, departmental land , and buildings. £43,921,587; State forests, nurseries, and plantations, £39.902,089; railways, including permanent way and works, rolling stock, and unopened lines, £63,003.850; telegraphs, telephones, and wireless systems, £11,835,625; electrical schemes, £15,807,737; Crown interest .in State Advances Corporation, £45,598,177; main highways, roads, etc., £35.361,329; education, £9,262,327; war expenditure (loans), £62,830,618. On the liabilities side of the ledger the principal items are: Public Debt, £290,201,342 and Public Debt Redemption Fund, £11,216,689. Since 1938, of course, the Public Debt, as is the way of all public debts, has made a considerable advance. SOME QUALIFICATIONS. Before the figures in the State bal-ance-sheet can be used in estimating the national wealth of the Dominion, it is necessary to qualify them in some directions. For instance, many of the assets and liabilities of a State cannot be expressed financially in the manner in which the goodwill of a business concern is assessed. A State balance-sheet cannot be drawn up on strictly commercial lines. It should be pointed out, too, in reference to the Public Debt item in the liabilities nominal assets have been included for outstanding loan expenditure on war and other purposes in respect of which no material asset now exists. Even in some cases where items are represented by tangible assets the valuation is more or less arbitrary. In arriving at an estimate of national wealth it is also necessary, of course^ to take account of the assets of local authorities and here again it is im- ; possible to obtain an accurate figure, partly for the. same reasons as apply in the case of State assets and partly ! because of the failure of local bodies to make complete returns. The ap- : proximate value of local body assets at March 31, 1938, is given in the latest ; Year Book at £81,153,193. When ; sinking funds are included the assets ; amount to £90,644,765. This figure ; does not include the assets of hospital ; boards which, at March 31, 1938, were estimated (excluding outstanding fees ■ and subsidies) at £5,250,000. Taking State assets and local authority assets together, and allowing for the factors already mentioned, it was estimated that the approximate public wealth of the Dominion at March 31, . 1938, was £360,000,000. ; ESTIMATING PRIVATE WEALTH, j It is now necessary to give attention < to private wealth and the difficulties of i arriving at an accurate figure are againvery great. Estimates of the private > wealth of the Dominion are arrived at on the asumption that the wealth per head of the living is approximately equal to the average amount left by persons dying. The fact that the younger and more numerous members of the population do not possess as much accumulated wealth as the older members, taken in conjunction with the fact that the death-rate varies with age, renders it necessary for tiiis purpose to divide the population into age groups. The average wealth of persons dying within any one age group being known, the average wealth of living persons belonging to that age group is assumed to be identical, and an estimate of the total private wealth of the Dominion is arrived at by weighting the average wealth of persons in each quinquennial age group by the num- ; ber of persons in that group. The . average wealth of deceased persons is obtained by a consideration of the ; estates certified for stamp duty. Based i on the estate and death figures for the i triennium 1936-38, the aggregate pri- : vate wealth estimate of the Dominion ; at the end of 1938 was £684,000,000. ■ This is exclusive of Maoris. An addi- ; tion for Maoris of 4 per cent, to the aggregate figure for 1938 brings the estimated private wealth of the Dominion to approximately £710,000,000. THE COMBINED WEALTH. ; An estimate of the combined public • and private wealth of the Dominion , in 1938 would then appear to be approximately £1,070,000,000, but in , order to arrive at a closer approxima- ! tion of the actual national wealth of , the Dominion it is necessary to take , other factors into consideration. In the case of public wealth the figure given ; practically represents gross assets, no deduction having, been made on ac- , count of indebtedness of the General '. Government and of local authorities. , Were the whole of this indebtedness ' owing outside the Dominion, no de- . duction on this account would be , necessary in arriving at a computation " of the national wealth, as the object , is to arrive at an approximation without taking account of the fact that there are external charges against that wealth. Of the gross indebtedness of the General Government at March, 1938, £132,000,000 was domiciled in New Zealand and in the case of local body indebtedness the amount domiciled in New Zealand was approximately £48,000,000, making the grand tofal of State and local body indebtedness domiciled in New Zealand £180,000,000. For the purpose of estimating the national wealth of the Dominion, therefore, it is necessary to subtract £180.000,000 from £1,070,000,000, and this gives an estimate, on the 1938 figure, of £890,000,000. On the information available, that is the closest approximation that can be made of the" national wealth of New Zealand.