Vitality Of Public Accounts

Northern Advocate, 21 July 1938, Page 8

Vitality Of Public Accounts

[Special to “Northern Advocate.”! . WELLINGTON. This Day. The Hon. Walter Nash dealt at some length with the public accounts in the course of his Budget speech last evening. The following is a summary of the portion of these accounts;Revenue. £ £ Taxation' .... 51,664,000 Interest ".. y.% . 141,000,' ;■ Other receipts . 2,254,000 36,059,000

PUBLIC DEBT. "The loans raised by the Government during the past financial year totalled £7,454,897, while redemptions of debt amounted to £11,836,805, resulting in a net reduction in the total public indebtedness of £4,381,908. ‘‘Details of the loans raised during the year are as follows; — r> 1 Public Works, including - main highways and State forests ~ 5,851,526 , Housing 1,600.000 Raised for redemptions but not applied as at 31st March, 1938 3,186 Premiums on conversions . 185 ' ' ‘ £7,454,897 « . r—-'—

. t V.’ ’ v ' • , Expenditure. Permanent Appropriations— £ £ £ Debt services 9,441,000 Exchange .-. ■•. 1,828,000 Highway 5............ 2,835,000 Other services ‘ -i 1.517.000 . ‘ * 15.621.000 Annual Appropriations— Social services 11,872.000 Other, services 7,756,000

Surplus Record Proportions, “It will be noted in comparing these results with those of the previous financial year,” said Mr Nash, “that both revenue and expenditure have reached record proportions. This Is in accordance both with modern trends in public finance and with the Government’s policy of increasing the range and scope of social services. Such a policy requires little justification in .the light of present-day enlightened standards. “The Government has already gone some distance along the road of social amelioration, but there is much still to be done, and the remaining problems will be faced with the same resolute determination as has characterised the Government’s action up to the present. Social Services. "No nation can afford to rest content so long as numbers of its citizens who are able and willing to work arc denied the opportunity of providing for the reasonable comfort and advancement of themselves and their families. Moreover, if any real benefit is to be obtained from the progress of science and Invention, it must be shared by every section of the population. It will be appreciated, too. that an individual is able to take advantage of the various forms of material progress only to the extent to which he has the necessary means of making lx is demands effective. A progressive extension of social services tends to bring these material advantages within the reach of all. "Of the total increase in expenditure (compared with the immediately preceding year) 0f£4,574.000, social services accounted for an amount of £1.959.000. Other annual appropriations accounted for an increase of £1.082.000. the result very largely of additional Defence expenditure. Exchange charges were responsible for £247.000. and other services for a total of £ 1,286.000. Revenue. "On the revenue side of the accounts the increase of £4.912.000 is due largely to the more prosperous conditions which obtained in’the Dominion as there was very little variation in the actual rates of taxation. Of the increase referred to. income tax (which surpassed expectations) accounted for no less than £2.461.000, customs duties for £1,260,600, and land tax, together with miscellaneous items, for the balance,, leaving ;i surplus for the year of £810 ; 000.

> : ■— Redemptions. “Funds for redemption purposes were obtained from the following sources:— £ Public Debt Repayment Account 1,713,811 Sinking funds 166,664 Other accounts 6.330 Sale of State Advances Corporation stock, representing investments of — Loan capital 3,250.000 Public Debt Redemption Fund 4.000,000 Deed of hypothecation over discharged Soldiers Settlement Account mortgages .. 2,700,000 £11,836.805 Debt Repayment. "The first three items in the table just referred to.” said Mr Nash, “cover what might be termed ’normal debt repayment operations.’ Under the provisions of the Repayment ol the Public Debt Act, 1925, funds arc provided from the Consolidated Fund each year for the repayment of debt. The last three items, under which funds for redemptions amounting to £9.950,000 were derived from the sale ol State Advances Corporation securities, represent special operations arising out of the transfer of mortgages to the State Advances Corporation pursuant to the provisions of the original Mortgage Corporation of New Zealand Act, 1934-35. and the consequential liquidation of the old Stale Advances and the Discharged Soldiers Settlement Accounts. "Formerly the transferred mortgages were investments of moneys borrowed and forming part of the public debt, and of moneys from the Public Debt Redemption Fund. This fund was constituted under the Repayment of the Public Debt Act. 1925. Oi some closed sinking funds and certain amounts transferred to the Discharged Soldiers Settlement Account from the Consolidated Fund. In addition, the mortgage investments of tile Discharged Soldiers Settlement Account wort* covered by a deed of hypothecation under which the amount due at 31st March. 1937. was £ 2. / 00.000. When these mortgages ux-re transferred to the newly-consti-tuted Slate Advances Corporation in exchange tor stock ii became possible to sell £9.950.001) of this stock and T " apply the proceeds in repayment ot an equivalent amount of the public debt, la this way the deed of hypothecation was extinguished and other public debt to the amount of.

£7,250.000 was cancelled. In essence, the operations were exactly the same as though investments of any sinking fund were realised and the proceeds utilised to extinguish the debt against which the sinking fund was held. ■‘lt may be added the reductions in the public debt thus effected were not all clear gain, in that the interest saving on the debt repaid is largely offset by the loss of interest on the investments realised.’’ All Treasury Revenue Bills issued during the year were redeemed out of revenue by the 31st March, 1938. Overseas Loans. "No additional funds were raised abroad during the period under review, the policy of the present Government being to repay external loans j as quickly as possible and to restrict borrowings to amounts required for conversion purposes. The effect of such a policy is reflected in savings in overseas interest charges. Thus for the year ended 31st March, 1936, the total cost under this heading amounted to £5.837,000, whereas for last financial year the comparable expenditure was £5.341.000, a reduction ever the period of two years of no less than £496,000 per annum.” Rural Advances Bonds. Rural Advances Bonds issued under the provisions of the Rural Advances Act. 192 C. were secured upon the assets of the Rural Advances branch of the old State Advances Account and did not form part of the public debt. As part of the liquidation of the State Advances Account. Rural Advances bonds to the amount of £4.213,050 were made part of the public debt, but this was purely a technical adjustment, and in no way increased the obligations of the Consolidated Fund. The public debt as at March 31, 1938. was £290.201.342, domiciled as follows;—London. £156,857.016; Australia. £882,600; New Zealand. £132,461,726.