THE New Zealand Herald. AND DAILY SOUTHERN CROSS. SATURDAY, MAY 29, 1920. NATIONAL BALANCE-SHEET.

New Zealand Herald, Volume LVII, Issue 17483, 29 May 1920, Page 6

THE New Zealand Herald. AND DAILY SOUTHERN CROSS. SATURDAY, MAY 29, 1920. NATIONAL BALANCE-SHEET.

The national balance-sheet for the year ended March 31 is in most respects a highly. satisfactory one. What may be termed abnormal expenditure has reached its maximum, and any further increases will be due to the growth of 'the Dominion, and will bring compensating expansion of revenue. In spite of the iafiuence of these extraordinary conditions the Treasurer is " able to show a surplus of £2,299,415, an amount which is dwarfed by some balances of the war period, but which, prior to 1914, would have drawn severe criticism upon the Government for taking too much out of the pockets of the people. No such criticism is likely to be applied at the present juncture, in view of the enormous liabilities of the Dominion, and the uncertainty of the financial outlook. It cannot even be concluded off-hand that the surplus warrants a reduction of taxation, because a fall in prices such as may begin to influence the current financial year will automaticcontract the revenue by decreasing such important contributions as income tax' and Custpms. It may, -however, safely be presumed that if the business Departments of the State, including Railways and Post Office, are made to yield the ..usual i profit despite possible increases in wages, there will be no necessity for adding to the already considerable burden of taxation. The principle laid down in the last British Budget is that advantage should be taken of a prosperity which is widespread, but not necessarily permanent, to put the national finances upon a sound basis. This has been the principle underlying New Zealand finance, with the result that since 1915 the following surpluses have been accumulated:—

Revenue. Eip'n't'r*. Excess. ££ , £ 1915-16 .. 14,507,530 12.493,107 2,014,423 1916-17 .. 18,355,194 14.053.770 4.296,42-1 1917-18 .. 20,206,222 15,150,288 6,085.934 1918-19 . . 22,352,372 18.673,599 3.675.773 1919-20 .. 26,081,340 23,781,925 2,290,415 When every allowance is' made for the high prices ruling for New Zealand produce, it is an achievement of some magnitude that a population of a little over a million should have saved over £17,000,000 out of revenue, making possible the financing of soldiers' settlement without recourse to the money market. The present balance is due almost entirely to the buoyancy of the revenue. Sir James Allen forecasted the expenditure to within a million, but in his Budget Statement of September he showed only a nominal surplus, which he set aside to meet Supplementaiy Estimates. Later in the session he submitted fresh figures, which have proved remarkably accurate on the expenditure side, but on the revenue side have been exceeded by over £2,500,000. The growth of the revenue in its principal branches is shown in the following comparison

1918-19. 1919-20. Increase. Customs . . 3,830,681 4,830,324 999,643 Stamp and Death Duties .. 2.124,773 3,344,933 1)220.160 Post and Tele-

graph .. 1.954,811 2,098,756 131 945 Land Tat .. 1,512,693 1,557,903 45.110 Income Tax . . 6,219,336 6,369,765 150,429 Boer Duty . . 273,331 355.403 82,069 Railways. .. 4,975,445 5,76(!,015 790,570 Registration am; other fees .. 111,993 171..78S 63.762 On the side of expenditure there is an increase in permanent appropriations of £2,170,611—due principally to interest and sinking fund growing by over a million— and in the annual appropriations of £2,937,715, the two accounting together for an increase in the total expenditure of £5,108,326. The permanent charges arc to a large extent outside the control of the Treasurer, and if a . redaction is to be effected in the cost

of government it must be Sought in the pruning of the annual appropriations, These cover the cost, not only of earning Departments like the Railways and the Post Office, but of the • purely administrative Departments. At a time like the present they offer an unrivalled" field for the exercise of economies, which must be enforced if taxation is not to remain permanently at or near the var level. A comparison of the leading items of expenditure for the last two financial years is given below :—

1918-19. 1919-20. Increase. £ £ £. Permanent Ap- \' propriations '.. 9,218.850 U,389,<61 2,170,611 Finance .. '.. 167,237 189.061 21.824 Post and Tel. 1.699,701 1,941,493 241,792 Railways .. 3.4:5,595 4,305,965 890.370 Justice .. .. 549,794 587,989 38.195 Hospitals and Health .. 318,808 556.899 238,091 Defence.. .. 416,427 502,105 85,678 Agriculture and ■Commerce .. 240.465 818,566 578,101 Education .. 1,602,995 2.031.824 428,829 Internal Affairs 271,218 336,356 65,138 Customs .. 186.561 227.474 40.913 Lands & Surrey 209.403 238.364 28.961

It was hardly to be expected, with salaries on the up grade and all materials costing more, that any Department would succeed in carrying on at no greater cost to the country than the previous year. Nevertheless some of the increases are so large as to call for an explanation. The two business Departments, Railways and Post Office, are able to offset higher costs by higher returns, though in neither case so completely us to have the year's profit unaffected. The expenditure on education is inevitably and properly greater, and the Public Health Department shows ah increase which is largely accounted for by the reorganisation and expansion which followed the influenza epidemic. Apparently the most curious increase is that in the expenditure of the Department of Agriculture, but this is possibly accounted for by the flour subsidy of £163,000 and the butter subsidy of £340,000, both of which have apparently been set against the Departmental vote, although Sir James Allen at first proposed to pay the butter subsidy out of the accumulated surpluses. It is well that taxpayers should realise that bread and butter are fictitiously cheap and that the half million gained by consumers has been paid by the community in taxes. It is against the principles of sound national finance to contiriue this expedient longer than is absolutely necessary, even if the abolition of the subsidies should temporarily increase the cost of living.