The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” GISBORNE, FRIDAY, MAY 30, 1941. DOMINION FINANCES

Gisborne Herald, Volume LXVIII, Issue 20568, 30 May 1941, Page 4

The Gisborne Herald. WITH WHICH IS INCORPORATED “THE TIMES.” GISBORNE, FRIDAY, MAY 30, 1941. DOMINION FINANCES

The announcement that the public accounts for the year ended March 31 showed a surplus of £1,726,000 is satisfactory at least to the extent that it indicates the capacity of the Dominion to balance its Budget under wartime conditions. The surplus is the largest since 1924 and is a measure of the remarkable buoyancy of the national revenues. It is questionable, however, whether the existence of a surplus is, of itself, evidence of financial stability. The State, like an individual, finds no difficulty in making ends meet if it is prepared to mortgage the future by borrowing almost without restriction. How much the Government borrowed last year has not been disclosed, but it had taken authority to raise no less than £15,000,000 for public works. In addition, there is still an overdraft liability to the Reserve Bank for £15,500,000. These factors must be taken into account before the mere existence of a Budget surplus is regarded as matter for jubilation. Then is becomes necessary to consider how the surplus was obtained—whether it was due to efficient and economic administration or the result of fortuitous circumstances for which the Government Is not responsible. If the position is analysed in this way there is room for doubt as to whether the financial position of the country is a matter for congratulation.. The dominating features of the national finances is that in 1940-41 expenditure from the consolidated fund alone amounted to. £38,712,000, an increase of more than £1,000,000 over the previous year, of nearly £3,000,000 over 1938-39, and of more than £10,000,000 compared with 1921-22 which was the record expenditure in any year prior to 1936. It has to be borne in mind that this expenditure is exclusive of any commitments in respect of the war and, in fact, has been reduced by reason of the fact that defence expenditure is not now chargeable to the consolidated fund. Expenditure on social services has also been largely transferred to a separate account from which there was an expenditure of more than £10,000,000 during the year, The civil expenditure of the Dominion, exclusive of loan moneys, amounted to the huge total of £45,000,000, an increase of more than £20,000,000 when compared with the average for the five years from 1926 to 1930. In other words, the cost of Government in New Zealand has increased during the past decade by more than £l2 10s per head or £SO for a family of four. What this really amounts to is that, on an average, each family has to put aside an extra £1 a week to pay for the rise in governmental costs during the past ten years.

So far as last year’s accounts are concerned, the surplus of Jo 1,720,000 was entirely duo to the unexpected buoyancy of revenue. Taxation which had been estimated to yield £30,905,000 actually produced £34,874,000. or nearly £4,000,000 more than was expected. Of itself, this might be regarded as a satisfactory position, but the truth is that the result was obtained through the ability of the Dominion successfully to exploit the war situation. This is shown by the fact that the value of exports for the year increased by nearly £11,400,000 to a figure that has never previously been dreamt of. This, in turn, had beneficial results on nearly every item of taxation revenue. Income tax which was expected to increase by just over £2,000,000 actually rose by

nearly £5,500,000; the customs revenue was £1,378,000 better than had been estimated; sales tax exceeded the estimates by £500,000; and even beer duty returned £220,000 more than the estimates. These figures serve to emphasise the extent to which the finances of the Dominion are governed by the export situation over which the country has no control. Since the revenue from taxation was nearly £4,000,000 more than had been expected there is little room for congratulation in the fact that there was a surplus of £1,726,000.

On the contrary, it is a matter for comment that at a lime when the Dominion is faced with the enormous cost of the war the expenditure from the consolidated fund alone showed an increase of more than £1,000,000. To this, as has been pointed out, there should be added the cost of defence services, now transferred to the war expenses account, and the cost of social services transferred to the social security fund. Exact figures are not easily obtainable, but it is known that the expenditure of the Dominion, entirely exclusive of war costs, amounted to £38,712,000 from the consolidated fund, more than £lO,000,000 from the social security fund, and an undisclosed amount of borrowed money. If loan authorities were fully exercised, the total expenditure for the year, for civil purposes alone, amounted to the enormous total of £64,000,000. To this must be added war costs estimated at another £40,000,000, making a grand total for one year of well over £100,000,000. Just what this means can be better understood when it is pointed out that the Government last year spent the equivalent of £6O per head of the population or nearly £5 a week per family. This explains why it is that the Minister of Finance, even while producing a large Budget surplus, does not hesitate to warn the country that it is facing a grave financial crisis.