Four and a Half Million Deficit

Manawatu Times, Volume LVI, Issue 5603, 18 March 1931, Page 7

Four and a Half Million Deficit

RAILWAYS AND CUSTOMS RESPONSIBLE Per Press Association. WELLINGTON, Last Night. In the course of moving the second reading of the Einancc Bill in the House of Representatives the Prime Minister made the following statement:— The revenue from the Consolidated Fund for the first eleven months of the financial year ended February 2$ last, amounted approximately to £18,193,000, comxjared with £20,071,000 for the corresponding period of last year, a decrease of £1,878,000. The main contributory cause of this decrease in revenue was the decrease of £1,330,000 in interest on railway capital liability, as I have already explained. After making due allowance for the steps taken to increase the railways revenue and decrease the expenditure a falling-oil for the year of approximately £75,000 was allowed for in the Budget. Based on the fact that the accumulated losses of the past having exhausted the railway reserves, tho interest that could be paid this financial year would have to bo decreased by the amount of the loss for the ycaT. Considerable savings had been made in railway expenditure, but as the result of the depression the railway revenue has shown a heavy falling-off, particularly during the last few months. As a result with only one more month’s figures to be taken into account it is evident the amount of railway interest can bo paid to the Consolidated Fund this financial year will only amount to about half the Budget estimate of £1,380,000. For the most part the balance of tho comparative decrease in the revenue of the Consolidated Fund is due to a heavy falling-off in Customs revenue, whore the receipts for the eleven months were £1,01)0,000 less than for the corresponding period of last. year.

A decrease of £367,000 was antici pated in the Budget, but this amount has already been exceeded by £723,000. The rate of decline in the Customs revenue has been sharply accentuated during the last two months. On a proportionate basis of the year’s estimate the receipts for the nine months were about £350,000 short, but for the eleven months the shortage is more than double'that amount. That is to say. during January and February the fall-ing-off of Customs revenue was greater in amount than for the previous nine months. Excluding specie, the imports for eleven months show a comparative decrease of ovcs £9,000,000 £nd Customs revenue has been effected to a relatively greater extent owing to the fact, that the decline in imports has been heaviest in items of tho luxury type where the rates of duty arc highest.

The cause, of the trouble is, of course, a shrinkage in the income derived by the Dominion from exports accentuated by the high rate of exchange operating.

The beer duty was a little short of

expectations, the comparative decrease for the eleven months being about £36,000. Stamp and death duties showed a comparative increase for the period of £25,000, but an increase for the year of £375,000 was allowed for in Budget. So it will be evident that on a proportionate basis the receipts are behind hand. Pieceipts under the heading death duties, however, fluctuate considerably and if some large amounts at present outstanding can be collected by March 31 as is probable the final position will not be nearly so bad as the eleven months figures indicate.

Land tax receipts which are now practically complete for the year arc over £IOO,OOO short of the Budget estimate, but it is hoped this shortage wilt be made in the excess of income, tax receipts, the greater part of which arc received in March.

Revenue from the petrol tax, tire tax and duties and licenses on motor vehicles for the 11 months showed a comparative increase of £206,000, but at present this revenue passes automatically to the Main Highways Account and local authorities, and thus will not affect the. result for the year. In the Consolidated Fund the expenditure for 11 months amounted approximately to £21,920,000 made up as follows:

Permanent appropriations £15,230,000 Annual appropriations .. 6,699,000 Compared with the corresponding period last year the debt charges showed an increase of approximately £75,000 against an increase of approximately £300,000 for the year allowed for in the Budget. Interest, however, fluctuates according to interest dates and the saving indicated by these figures will not be maintained at the end of the year, although it is expected there will be a saving of over £IOO,OOO compared with the interest estimate for the year. Under special acts of the Legislature there was a comparative decrease for 11 months of £530,000, due mainly to the transfer of the charge for subsidies to local authorities to the Main Highways Account and the cancellation of subsidies on branch lines of railways. Allowance was made for these alterations in the Budget. Annual votes as a whole showed a net. comparative decrease of £125,000 generally, the returns indicate that while some votes will be slightly exceeded the vote expenditure has been kept down to the curtailed Estimates for the year.

To sum up tho position, I regret to say the Budgetary position has changed for the worse si%:e my previous statement based on the nine month’s figures duo to the fact that the falling-off in the two items principally concerned (Customs and railway interest) has been sharply accentuated during January and February. As a result, notwithstanding all efforts made to increase revenuo and curtail expenditure, it seems likely now that the financial year will close with a deficit of at least £1,250,000. In addition to that, we have the fact that the expenditure regarding unemployment is likely to considerably exceed the provision made for it.

Taking the figures, I have given as a basis for our calculations for the coming year our estimated shortage of £4,500,000 likely to be exceeded. I do not wish to paint a black picture, but I think it my duty to place all the facts before the country. The situation is one of the gravest this country has faced and' calls for every endeavour and cooperation to enable us to get through with the minimum of hardship to our people. It is the sincere desire of the Government that whatever we do creates as little

hardship as posisble. Mr. Forbes mentioned also the ail dition expenditure, incurred as a resul; of the earthquake.