HEALTHY FINANCE

Hawke's Bay Tribune, Volume XXV, Issue 299, 4 December 1935, Page 8

HEALTHY FINANCE

OUT OF THE SOOD Foundations of Prosperity BALANCED BUDGET (By Telegraph—Press Association.) WELLINGTON, Dec. 4. A statement emphasising the buoyancy of New Zealand’s finances was issued last evening by the Minister of Finance, the Rt. Hon. J. G. Coates, who also reviewed the main aspects of the Coalition Government's policy during the past four difficult years. The retiring Minister reiterates his faith in democracy and his belief in its superiority over alternative forms of government, and asks for the continued co-operation of the people of New Zealand in the task which still lies ahead.

“On the eve of relinquishing office as Minister of Finance, I consider it desirable to make a statement showing the present position of the country ’» finances,” Mr Coates said. “It will be a source of gratification to the public to note that the finances of the country ar e in a healthy position, and that the new Government comes into office with a balanced Budget, with buoyant revenue and with expenditure well under control.

“I do not despre to traverse the controversies which have been raised during the election campaign, but I wish to place on record the main aspects of the Government’s policy during the past four years, since it is on these that success in balancing the Budget and in promoting business recovery has largely depended. IMPROVED CONDITIONS. “The general improvement in economic conditions during the past three years is shown by a reduction in unemployed on the register from about 56,000 to under 40,000, the increase in the value of total production from £83.6 million in 1931-32 to £98.8 million in 1933-34, and in farm production from £49 million to £63 million. “Since 1932 the annual value of exports has increased from £34.7 million to £43 million, and of imports from £24.7 million to £34.3 million. Wages and salaries paid have increased from £59 million in 1933 to about £65 million in 1935. These improvements have naturally been reflected in marked improvements in the national Budget. From 1931 onward, when the full force Of the storm hit New Zealand, the Government was faced with deficits of alarming proportions, but by last financial year Budget stability had been restored and a potential danger to the whole financial fabric was thereby removed. ’ THE CURRENT BUDGET. “As to the current year’s Budget, I am pleased to say that the results to date are in accord with my expectations. The Consolidated Fund revenue for the eight months ended November

30 last amounted to £13,260,881, and the relative position of the principal items is clearly set out in the following table:—

“The revenue is not evenly spread over the year. Customs, beer duty, sales tax and stamp duties are all closely in aceord with the estimates. Highways revenue appears to be behindhand but this is not the case, as an alteration in the method of collecting petrol tax causes a lag of one month, which under the arrangements made will be picked up before th e financial year closes. The variation for 'other taxation’ is of no signilicance, being due to a flucuation in the amount of land tax received up to November 30. Interest and other receipts for the most part come to hand at irregular intervals, and the variations apparent in the table are due entirely to accounting fluctuations; for instance, ‘other receipts’ for the first eight months of last year were swelled by the receipts of £1,364,000 from profits on the sale of gold coin. COMPARATIVE EXPENDITURE. “On the other side of the picture the expenditure for the period compares with the proportionate part of the appropriations as follows: —

“Debt services appear to be running ahead of the appropriations, but this is due to the fact that nearly the whole of the amount provided for debt repayment for the year has already been utilised. Similarly the variations shown for ‘highways,’ ‘exchange’ and ‘other services’ are due to accounting fluctuations, and the expenditure on all these items for the year will be in accord with the estimates.

“Under the annual votes a considerable saving is shown on a proportionate basis. There are some large payments to be made under some of the votes, so this saving will not be wholly maintained to the end of the year. However, an analysis of the votes in detail shows that the expenditure has definitely been held within the appropriations. “To sum up the position, if the Budget, as arranged, is allowed to run its course, I am satisfied that the net result will be a surplus, probably somewhat in excess of that provided for in the financial statement. “As at November 30 Treasury bills to the amount of £3,650,000 are outstanding, but these bills, which are held by Treasury accounts, represent temporary accommodation in anticipation of revenue, and under my Budget proposals they will automatically disappear, by March 31 next. “Concerning the long term debt it wdl be recchected that the capital programme for the year outlined in the Budget called for £3,750,000 from loan mcney augmented from the unemployment fund for certain classes of work and also by the expenditure on highways out of revenue.

“Allowing for balances carried forward on April 1 last the loan monev for the capital programme has been raised with the exception of approximately 450.000. In addition the con version operations dealing with £10,135,000 of our London debt, have been completed, and the charges and expenses provided for. while in terms of legislation passed last session £260.000 of guaranteed debt has been taken over from the Greymouth Harbour Board. DEBT REPAYMENT “Additions to the debt during the eight months totalled approximately £2,900,000, but debt Repayment to the amount of £1.800,000 was effected, £1,440,000 being provided for out of the Consolidated Fund under the Publie Debt Repayment Act, and the balance from capital repayments from other accounts. As a result the long term debt as at November 30 stood at £281,677,000, a net increase of £1,096,000 only since March 31 last. If the programme laid down is adhered to

the net increase for the year should not exceed £1,600,000. An important factor in lightening debt charges was the extensive conversion operations undertaken. The whole of the internal debt was converted, the opportunity being taken to rearrange it on a basis more satisfactory to the market and one that will facilitate future operations. Gross saving in interest charges amounted to approximately £1,000,000 per annum.

CONVERSION OF LOANS. “The task of arranging for the conversion of the internal debt of all the local bodies in New Zealand was also undertaken and is now virtually completed. As a result there is a saving to local bodies of over £500,000 per annum, in addition to which these debts have been placed upon a satisfactory basis with adequate sinking fund provisions that generally will obviate any question of renewal. Furthermore, every opportunity has been taken to arrange conversions of public debt in London, and Operations to date have meant a saving of £300,000 sterling per annum in debt charges. In August next the Dominion has the option of repaying a 6 per cent, loan amounting to £5,8 1 0,000, and while 1 was in London 1 took the opportunity of making tentative arrangements for dealing with it. If the present sound position of the Dominion s finances is maintained there is an opportunity here of effecting a lurther substantial saving in debt charges. ■'Following the general election, 1 notice that the prices of our stocks on the London market have slumped by about four points, but 1 trust that this is only a temporary phase and that the incoming Government will take steps to maintain the credit of the Btate both at home and abroad. In New Zealand there will be an opportunity in 1937 of dealing wi(h £12,436,000 of 4 per cent. debt. UNEMPLOYMENT FUND. “Concerning tie financial position oi the Unemployment Fund, 1 may say tnat the balance carried lorwald on April 1 last was £1,333,000, while the receipts to November 30 amounted to £2,498,000, making a total of £3,831,000 available. Expenditure authorised to November 30 totalled £3,159,000, so the balance available on December 1 was £672,000. Revenue for the balance of the financial year is estimated at £1,328,000, and on this basis the amount available for the lour months December t ch inclusive is £2,000,000. At the present time, however, the expenditure is at the rate of £425,000 for each four-weekly period. In addition £60,000 will • - absorbed in payment of a bonus at Christmas. Ou this basis it is estimated that by March 31 next the unemployed will have had the benefit of practically the whole of the available resources, and the year will close with a small balance to the fund. FOUNDATIONS OF PROSPERITY.

“To repeat tho statement made in tho Budget I consider the Government can justly claim to have piloted the Dominion successfully through the worst economic storm in its history. The foundations of recovery have been well and truly laid, and it is no small satisfaction to the Government in relinquishing the Treasury benches to know that the Budget is healthy, and the financial position of the Dominion sound and secure; that tho work of reconstruction has met with a considerable measure of success; that recovery is well under way, and business confidence substantially restored.

“Naturally the Government regrets that it has not the opportunity of putting into euect the policy of development and humanitarian legislation which it placed before the electors; but it accepts the wjtl of the people with the intention to fulfil its duties in opposition as sincerely and resolutely as when in power.”

Revenue for 8 months to 30/11/34. £. levenue for 8 months to 30/11/35. £.' 5,065,495 419,158 1,499,478 1,266,300 1,677.282 1,290,770 Customs Beer duty ... Sales tax ... Highways Stamps Other taxation 4,753,541 409,500 1,319.923 1,275,391 2,112,993 1,318,128 Total taxation 11,189,476 11,218,483 Interest .... 1,175,723 999,640 Other receipts 2,291,950 1,042,758 Total revenue £14,657,149 £J3,960/S81

fl 0 si is, PDebt services Highways Exchange Other services © c ■5 -2 a « .2 o o o a p U » ft < £ i 6,293,966 1,360,667 1,090,667 423,925 S ” 5 © ft « £ 2 £ 6,533,939 1,107,872 1,114,114 251,263 6 . fl £ .2 o £ ft £ 239,973* 252,795 23,447* 172,662 £9,169,225 £9,007,188 £162,037 Annual Appropriations: Social services 5,107,569 4,996,416 111,153 Other votes ... 2,948,831 2,566,747 382,084 £17,225,625 £16,570,351 £655,274 ( •Over proportion.