THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, SEPTEMBER 29, 1919. THE FUTURE BUDGET.

New Zealand Herald, Volume LVI, Issue 17277, 29 September 1919, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, SEPTEMBER 29, 1919. THE FUTURE BUDGET.

The Financial Statement presented to Parliament last week has an interest altogether apart from the customary annual returns to be found on its pages. It is the first peace Budget since 1914, and it enables a fairly accurate contrast to be established between the financial position of New Zealand before the war and that disclosed at the termination of hostilities. There are a few factors not yet fully discovered. Demobilisation is not complete, and consequently the war expenditure continues at a diminishing rate, but as this is a charge against loan moneys it is possible to allow for contingent additions to the debt for pay, gratuities, medical treatment, land settlement and repatriation, and calculate the interest bill accordingly. The war expenditure to June 30 was £66,118,045, but the total addition to the national debt during the war period through all causes is considerably over £80,000,000. Thus the debt, which in August, 1914, was nearly £92,000,000, is now over £172,000,000. It has almost doubled, and the limit of expansion has not yet , been reached. Apart from future borrowings for public works there are several items of war expenditure which will swell the indebtedness. Mr. Massey has expressed the opinion that the total increase in the debt during the war period dli prove to be £100,000,000, and it is on this assumption that the future proportions of the Budget can most prudently be considered.

A serviceable working basis is to be found in the estimates of revenue and expenditure submitted by Sir James Allen for the current financial year. He forecasts a revenue of £22,919,165, and an expenditure of £22,441,057, against the £12,000,000 odd at which the Budget was balanced in 1913-14 and 1914-15. The increase is so remarkable that details are worthy of investigation. The following table shows the principal items of revenue and expenditure during the year ended March 31, 1915, and the estimates for the year ending March 31 next: —

Revenue. Est. rev. 1914-15- 1919-20 Customs . . . ■ £3.167.283 £4.400,000 Post and Telegraphs 1,369,060 1,910,000 Land and Income Tax . . . ■* 1,339,959 7.360,000 Railways . . . . 4.106,675 5,000,000 Stamp and Death Duties . . . . 1,417,206 2,460,000 Estimated Expenditure. Expenditure. 1914-15. 1919-20. Permanent Appropriations— Civil List . . . . £21,9K3 £30,100 Interest and Sinking Fund . . . . 3,071,448 7,210.850 Total permanent appropriations . . 4,505,177 11,274,883 Annual Appropriations— Legislative Bept. . . £37,551 £43.010 Dept. of Finance . . 170,133 250,876 Post and Telegraph . . 1,244,568 2,003,809 Working Railways . - 2,881,087 3,575,000 Public Buildings . . 117,676 161,100 Native Dept. . . 24.004 24,128 Justice Dept 442.478 565,182 Mines Dept. . .. 29,170 ■ 39,800 Defence Dept. . . 499,136 500,000 Customs and Marine 149,199 205 76S De-,t. of Labour . . 28,141 3o!812 Lr.nds and Survey . . 239,043 231 405 Agriculture . . . . 206.731 470 - 617 Education . . . . 1,207,982 2,014,526 The outstanding increases on the expenditure side are in the permanent appropriations, which include an additional £4,000,000 for interest and | £2,000,000 for pensions, but it is j noticeable that practically all the j annual appropriations also show I substantial increases. This is due j principally to the raising of Civil ! servants' salaries. On the revenue | side the arresting feature is the ! phenomenal growth of the land and j income tax by nearly £6,000,000. | This has been the most exacting of | all the war taxes, and to its operaj tion is largely due the relative growth of revenue from taxation, j compared with revenue from other I sources, including the public ser- ! vices. This development is illusI trated by the following table, showI ing the revenue per head of popuj 1 at ion : — ' Your prided From From other Total .March 31 taxation. sources. per head. ! 1911 ..£5 10 0 £5 17 4 £11 7 4 . 19IS . . 5 7 5 6 0 0 117 5 11916 . . 6 12 1 6 11» 7 I ■ 1" 7 ■• mill 7 2 0 16 13 11 I 19IR ..1139 70 7 IS fi 1 ] 1 1919 -.1278 7 12 1 19 19 9 J The basic facts which must guide j the Minister for Finance in framing : the Budgets of the future emerge | clearly enough from these figures, i Pensions will cost £2.000.000 a year', I hut the liability will gradually'dim- ! mish. Interest on public debt now i absorbs over £4.000,000 more than 1 j in 1014, and this charge will increase . by at least another million. These ! two items alone will account for I £7,000.000, sufficient to swell the prej war rate of expenditure by considerably over 50 per cent. In addi- , j tion there has been a heavy ' | increase in the cost of government ' j and at least portion of this is likely to be permanent. Salaries of pub-

lie servants are absorbing £1,000,000 a year more than in 1914, and a further increase is forecasted in the Budget. It •would be imprudent in these circumstances to assume that the normal expenditure will show less than an increase of "75 per cent, compared with that of pre-war years, and, it may easily be much greater. The task of the Treasurer will not be an enviable one for many years. He is bound to reduce taxation, especially the levy on incomes. Tf the prices of New Zealand produce could be maintained at present values his difficulties would be immeasurably eased, but this can by no means be relied upon. The only sure remedy is to increase production, so that a fall in prices will be balanced by an expansion in volume. If New Zealand could double her national output taxation could immediately be brought to the 1914 level. If she can add 50 per cunt. to the volume of her exports she will be in a reasonably good position and this is the minimum expansion that should be sought by statesmen, farmers, and manufacturers.