PUBLIC WORKS POLICY.

New Zealand Herald, Volume LXVIII, Issue 20923, 13 July 1931, Page 10

PUBLIC WORKS POLICY.

REDUCTION OF 40 PER CENT.

UNDERTAKING IN LONDON.

LAST YEAR'S INCREASE IN DEBT

LOAN REDEMPTION EXPLAINED.

ImportanJ information regarding the public finances of New Zealand is contained in the prospectus of the £5,000.000 loan issued in London on June 5. The most striking is that the Government has given an undertaking to make a drastic reduction in expenditure on public works. A statement was made by the Prime Minister on June 9 that the proceeds of the loan would be allocated as follows: Public works, £3,000,000; electric supply, £1,000,000; redemptions, £1,000.000. The purpose of the loan was stated in the prospectus, of which a copy was received by yesterday's mail, in the stereotyped f orm —"£4,000,000 of the proceeds of this issue will be allocated entirely to productive purposes, e.g., railways, the development of hydro-electric power works, telephone and telegraph extensions and other public works, and considerable amounts will again be spent in Great Britain in the purchase of material required for these purposes. "In view of the present economic position, the programme for capital expenditure in the Dominion during the current financial year has been reduced by about 4P per cent, as compared with the past year." Debt Transferred to London. The prospectus explains that the remaining £1,000,000 would be applied to the redemption of current Treasury " bills in London which were issued in place of -debt outstanding in ! the Dominion. "By this means £1,000,000 of the proceeds of this issue will be allocated to the redemption of a corresponding amount of debt formerly held in New Zealand."

Brief reference is made to the deficit at March 31 of £1,639,000 with the statement that this "has'been met from the balance of the accumulated surpluses since 1914, totalling about £30,000,000." There is, however, no reference to the fact that the sum of £30,000,000 has now been reduced to £278,600.

Public Debt Now £276,000,000. Ijeviewing borrowing operations, the prospectus stated that the gross public ua')fc at March 31. was approximately £276,030,000, showing a net increase for the year, of £8,650,000. New loan money received during the year totalled £11,120,000, "which has been applied to public works (principally railways, electric power, telephone and telegraph extensions and other productive works)* and to State ,advances to settlers." Redemptions of debt amounting to approximately £2,470,000 were carried out during the year, of which £1,636,000 was provided from the - year's revenue, £466,000 from reparation receipts and the balance from other accounts These redemptions included £2,070,000 on account of the war debt, which has been reduced from £81,843,543 in 1921 to about £67,713,000 in 1931. Oyer £IBO Per Head. With the information given in the prospectus the following summaxy of the increase in the public debt in the last five years can be made: — Total. Per Head. 1927 £245,850,889 £l7O 19 5 1928 -1. 251.396i252 172.19 2 1929 - .. 258,812,878 175 19 8 1930 " .. 267,383.343 179 12 5 . 1931 .. 276,030,000 ISO 5 i

The total- debt at March 31, 1929, is given in the official records as £264,191,983 but this includes £5,379,105 raised in Jan-

uary for expenditure in 1929-30. The derduction pf this amount is necessary to obtain a fair comparison. Following its accession to office in December, 1928, the United Government borrowed £2,263,000 for State advances in the last quarter of that financial year. Tlip net- iricreasf* in the public debt in 1929-30 "was £8,570,465 and in 1930-31, £8.650,000. 1 The public debt in 1920 was equivalent to £162 12s 9d per head of population, so that by March, 1928, there had been an increase of £lO 6s sd. When the change of Government occurred, the debt was about £175 a head, representing an increase in nine years of about £1 9s a year. Since then the increase has been at the rate of about £2 7s per head annually. ,