POST OFFICE ACCOUNTS.

New Zealand Herald, Volume LXVI, Issue 20324, 3 August 1929, Page 15

POST OFFICE ACCOUNTS.

NET PROFIT OF £89,000.

SEPARATE BUDGET SYSTEM.

RESERVE FOR DEPRECIATION

NEW POLICY ENDORSED

[BY TELEGRAPH. —SPECIAL REPORTER. ] WELLINGTON. Fridny.

The results of the Post and Telegraph Department's operations were announced by the Prime Minister in tho Financial Statement, these being for the first year of operation under an independent budget. Sir Joseph Ward said the receipts amounted to £3,445,545, and the expenditure, including £428,000 interest paid to the Consolidated Fund, to £2,921,756. Tho balance of receipts over payments was thus £523,809, and after providing for depreciation and other reserves the net profit for tho year was approximately £39,000.

Last year's report issued by the department showed receipts amounting to £3,329,511, and expenses to £2,299,571, leaving a balance of £1,029,940 the highest in the department's history. Before payment of the interest charge, the past year's results show a balance of £951,809. Paper Reserves in Past. In 1927-28 the department's transactions were included in tho ordinary Budget, the amounts actually recorded differing slightly from the department's own figures, but the net result was that the Consolidated Fund gained £1,026,202 from this source. Subsequently, the commercial accounts of the department were published. These show substantially different figures, tho gross profits being reduced to £904,141. Depreciation was calculated as amounting to £497,604, and interest to £379,568, leaving a net profit of £26,968. These were, however, only paper reservations, as the gross profits were absorbed into the Consolidated Fund, which met the interest from the total public debt appropriations. From these figures, it appears that interest on the department's capital liabilities has increased from £379,568 in 192723, to £428,000 last year; according to the estimates, the department in this year to pay £480,000 for interest. From Sir Joseph Ward's estimate of the net profit for the past year, it appears that the department will set aside about £485,000 for depreciation and other reserves, as against the previous year's calculated depreciation of £497,600. On a Commercial Basis. An interesting passage in the Financial Statement was that- containing an endorsement of the Reform Government's action in obtaining legislation in 1927 to separate the Post Office accounts and place the department "on a commercial basis." The Prime Minister remarked that the Consolidated Fund is kept purely on an annual cash basis, which is not suitable for a commercial undertaking which requires continuity of finance in order to build up depreciation and renewal funds, etc.

"The change in system meant, that the ordinary revenue account received considerably less assistance from the Post Office last year than was the case in 1927-28," said "Sir Joseph, "but the additional receipts formerly received and used for general purposes represented the Tost Office depreciation reserve, which, of course, should have been held intact_ until such time as the moneys were required for tho renewal of telephone and telegraph lines and apparatus, all of which are comparatively short-lived assets. Capital expenditure on telephones and automatic exchanges has been very heavy in the last few years, and if the change had not been made to enable a proper depreciation fund to be created it would have meant that the excess receipts being wrongly used to relieve the taxpayer in the interim would have had to be made good within a comparatively short period when renewals became necessary. Tho only other way would have been renewal out of loanmoney, and that, of course, would be quite unsound.

"Under the circumstances the settingaside of the Post Office revenue, after meeting working-expenses and interest charges, was the right and proper thing to do, notwithstanding the. temporary inconvenience to the Consolidated' Fund."