REVENUE INADEQUATE

Evening Star, Issue 20193, 5 June 1929, Page 2

REVENUE INADEQUATE

PREMIER OK HALF MILLION ‘ DEFICIT READJUSTMENT NECESSARY PENSION FUND SHORTAGES United Peess AseocuTiox.] AUCKLAND, June 4. Tim national accounts were reviewed bv the Prime Minister in Ins speech in the Town Hall to-night. The revenue and expenditure of the Consolidated Fund for the last financial year had now been audited, and, as was previously announced, the deficit on tne year’s- operations amounted approximately to £577,000. o Sir Joseph said, to be exact, tl>e > five aue amounted to £23,599,6(6 and the expenditure to £24,176,928, leaving a deficit of £577,252. The estimate lor last year was very close, the anticipated revenue being set down at £23,868,250, against an appropriated expenditure of £23,865,522, leaving an estimated surplus of only £2,<-8. As the actual results showed a deficit of over £577,000, it would be seen that the provision made Ihded fo nmol the position to tbe extent of £oBU,UUO. “In analysing figures to > arrive at the principal causes of this discrepancy,” said Sir Joseph, “I would first like to say that the receipts from special motor taxation for _ highways purposes exceeded the estimate by about £90,000, but as this class of revenue is automatically paid out to other accounts it does not assist the Consolidated Fund, and the position of last vear’s accounts will, I think, be more easily understood if these compensating increases are eliminated. Setting aside such items, I find that in round figures the causes ot the defied are as follow: —Shortage in estimated revenue, £360,000; excess oyer estimated expenditure, £220,000 —a. tots of £580,000, which, less the estimated surplus of £3,000, leaves tlie actual deficit at £577,000. . “ The revenue shortage is due to the fact that with the exception of stamp duties the yield from the principal items of taxation did not come up to expectations. Customs, which is the mainstay ol the revenue* lell snort oi the estimate bv £307,000, largely due to the falling off in tho duty collected on spirits. Then income tax was short by £89,000, and land tax by £IO,OOO. Tho former, oi course, is a reflex of the tardy recovery of the position, while the drop in land tax is the result of the adjustment of country valuation and subdivisions. Beer duty exceeded the estimate by £II,OOO, and interest on railway capital by £76,000, but on all other items there was a netshortage of £-11.000, the outcome being a shortage ol £360,000 in total revenue.

“On the other side of the account the net increase in expenditure is made up of an excess expenditure under permanent appropriations of £310,000. partly offset by a saving of £90,000 under the annual voles. These annual votes consist for the most part ol salaries and other administrative expenses of the Public Service, and the savings of £90,000, without curtailing the service to the people, represent the fruit of the Government's careful control of expenditure. “The expenditure under permanent appropriations, however, is much more rigid, and for the most part is outside the scope of administrative control. This class of expenditure consists of interest, subsidies to local bodies, and to hospitals, pensions, and similar payment, fixed by Acts of Parliament or definite contract. Ol £310,000 excess expenditure over the estimate for permanent appropriations, £136,000 is accounted for in interest charges. Ju this connection the change in interest dates arising out of conversion operations in London entailed the payment of interest for a broken period of four months amounting to £136,000, which interest in the ordinary course would not have been payable until this financial year.

“ The balance of excess expenditure is spread over numerous items, among which mention may be made of the following :—War pensions £38,000, oldage pensions £29,000, losses on branch railway lines £II,OOO, and Samoan police force £25,000. the last-named being aii entirely new' item.

“From what 1 have just stated, it will be realised that the increase ‘in expenditure comes from items that cannot be curtailed. In connection with interest. J must point out that Loudon conversions of the 4 per cent, consolidated stock, when carried to completion by November .next, will inevitably lead to further increases in interest charges, and the whole operation will mean a permanently increased charge of about £22,000 a year. This, with tho normal annual increase for social services, such as education, war, old age, and other pensions, creates an expenditure that canot bo reduced.

“A reputation for balanced Budgets is a very considerable factor in the dominion’s high standard financially, and to safeguard this the present position must be rectified without delay. The revenues arc inadequate to meet the increasing charges I have referred to, and tho Governed would bo faiing in its duty if it did not take steps to adjust taxation and augment the revenues.” Another matter which was engaging attention was the position of the State superannuation funds, which, Sir Joseph regretted to say, were not in a satisfactory financial position. In recent years the increased burden on these funds, for instance, altered the price levels, and the resulting salary increases arising out of the war had led to larger retiring allowances, while the accumulated funds were not increased proportionately. The State subsidies to these funds should have been increased for this reason. Retirements at a much earlier age, particularly in the railway and post and telegraph branches of the service than was originally contemplated, were also adding considerably to the burden on the funds. “ I may say that I am going to Lave the whole position of the superannuation funds thoroughly investigated,” said Sir Joseph, “in order that the Government may be in a position to consider what steps must be taken to place them on % sound footing for the future.” 'The accumulated shortages against the current pensions in the case of two of the funds were as follow: —Public Service Superannuation Fund. £1,060,000; Teachers’ Superannuation Fund, £607,000._ In addition, there was also a considerable shortage in the case of the Railway Superannuation Fund.