THE BUDGET

Feilding Star, Volume 9, Issue 3850, 5 October 1932, Page 6

THE BUDGET

Deficit Down by Half ESTIMATED SHORTAGE NOW ABOUT £1,000,000 NO NEW TAXATION MARKED REDUCTION IN EXPENDITURE REVENUE YIELD REVEALS A DISTINCT IMPROVEMENT (Per Pleas Association). Wellington. Oet. 4. Fourteen months ago tlie Prime Minister presented a Financial Statement to Parliament which was immediately dubbed tlie Blai-k Budget because of tlie gloomy pied ure it painted of tlie country’s financial ik>sitioii. As Acting-Minister of Finance. Mr. Forbes delivered a Budget speech‘in tlie House of Uejircsentatlves this evening which reflected a change! outlook, anil which held out hopes for a revival of confidence and general prosjierity. One of the most significant statements in tlie Budget, which was half the usual length, anil which took only an hour and ten minutes to read, was to the effect that tlie prospective detieit for this financial year would be kein within £1.000.000 as against tlie Ajiril estimate of £2.000.000, while it may lie jmssible to reduce this figure even further if tlie country is “given a little acceleration along tlie road to economic recovery. Mainly on account of tlie imjiroved revenue it will lie jiossilile to dispense entirely with additional taxation. It was revealed that tlie net gain by savings over last year's exjienditure totalled £2.355.0000. The exjieniliture for the current year will Is; £22.507,422, as comjiareil with £24,8000.000 last year. Much relief lias been secured by tlie agreement of tlie British Government, now announced for the first time, to extend for a further year New Zealand’s obligations under tlie Funded Debt jiayments. Tills will assist tlie Budget to the extent of £825.000, tlie sum involved in tlie Hoover Moratorium of last year. Mr. Forbes unnouneed that tlie Hawke’s Bay earthquake had cost the State alone, ajiart from public subscriptions, it total of £1,770,000. this busing jirovcd a very heavy drain on the Government's resources. In a statement of general policy concerning expenditure, tlie Prime Minister said it was proposed to taller off siiendiug on cajiital works, and he added that the Dominion would have to rely to a greater extent on tlie local market in view of the uncertainty of the Government being able to borrow money overseas at reasonable rates. “As we now enter ujion what I believe to be the up grade, renewed confidence will give jiowerful aid to preserving effort and accelerate our progress along the road that leads to i>rosjierity and better times.” were Mr. Forbes concluding words. “Courage, initiative anil hard work are called for. The Government can lie depended upon to do its utmost to smooth tlie way.” INTERNAL LOAN’S MORE SELF RELIANCE Tlie iinjKirtant announcement is made that the Government would have to be prepared to rely more on tlie local market for essential cajiitul requirements, in view of tlie uncertainty of its being aide to raise additional funds overseas at a reasonable cost. "As I have already jiointeil out, of the loan of £5.000,000 raised in April last, only £1.000.000 is available for capital works this financial year, and tlie balance of our requirements will have to lie raised locally,” Mr. Forliest said. “Only a loiiiiiaratively small amount, of debt is due for reiiayment overseas this year, but the Government has the option, at any time after July 16 lasi, on giving three months’ notice, to repay tlie £5.000.006 bonds issued ill Loudon in 1031. These bonds are very costly to tlie State (approximately 1/3 Tier.cent, jier annum), and it would be advisable to exercise tlie option us soon as conversion can lie secured on favourable terms. THE BURDEN OF TAXATION “A small amount will probably be

required fur supplementary anti contingencies, hut I consider that we can now lie reasonably certain of keeping tlie deficit wltliin £1,000.000, which is half the amount allowed for in the initial programme for the year. Most of the additional saving arises out of the generosity of Great. Britain. Given a little acceleration along the road to economic recovery we may l»e able to reduce the.deficit still further. The prospective* deficit has lieeu reduced to this amount partly by an easingoh or cessation of the fall in the various items of revenue, but mostly by reductions in expenditure. For tlie reasons already indicated, there will he no increases in taxation this year: in fact, there will he some reductions in giving effect to the Ottawa agreements. Further, it should not Ik* overlooked that the people are already receiving considerable benefit from the restoration of penny postage. The Government is anxious to assist trade and industry by making further reductions in taxation. ami will continue its efforts to keep expenditure down to a minimum in order that action in this direction may Ik* taken as soon as possible. As far as Ia in aware, this is the first time that this 1 dominion has l>een so hard pressed as to find it necessary or advisable to budget for a deficit, and the fact is eloquent testimony of the extent to which alandslide in price levels can strain the whole economic and financial structure of the country.”