THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, JULY 4, 1932. FINANCE AND THE FUTURE.

New Zealand Herald, Volume LXIX, Issue 21225, 4 July 1932, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS. MONDAY, JULY 4, 1932. FINANCE AND THE FUTURE.

As it is unlikely in present circumstances that the country will see a Budget for the current year until much la.ter than the normal date, the appearance of detailed accounts for 1031-32 offers an opportunity for considering the outlook. When Mr. Downie Stewart gave Parliament his final review of prospects, on April 29, he undertook that there would be no increase in taxation this year. Announcing that an arrangement had been made with the Bank of New .Zealand and the National Bank for the provision of £2,300,000 against securities held in the Discharged Soldiers' Settlement Account, he spoke of reserving the remaining taxable capacity of the country against future contingencies. That phrase itself implied, and the entire statement admitted, that the yield of taxation as a source of revenue was practically exhausted. The way in which returns under almost all headings, as revealed by the accounts, have fallen short of the estimates is eloquent of this. It is true that in a number of instances loore has been collected in 1931-32 tli an in the year before. This was because the rate of levy had been increased. The returns were estimated in the light of results fpr the year before, and the fact that they were less than expected is evidence of diminishing yield. Its effects are shown by the following table:—

Revenue. Expenditure. Taxation. 1928-29 . . £24,177,000 £23.000,000 £17.832,000 1929-30 . . 25,350.000 25,201.000 19,471.000 1930-31 . . 23,069,000 24,708,000 18.G00.000 1931-32 . . 22,720,000 24,860,000 16,190.000 The lowtir amount collected in taxation last year and the year before compared with 1929-30 is in spite of increased rates, and : represents no relief whatever to the over-burdened taxpayer.

Comparison of items in the table shows other, significant features. Since 1929-30 revenue has decreased (by £1,630,000, taxation by £3,281,000 and expenditure by £341,000. Before considering the expenditure side, the fact that the revenue account ha 3 apparently diminished in a much milder degree than taxation income will repay , consideration. For the first time Post and Telegraph Department profits appear in the accounts, the item totalling £941,616, against an estimate of £1,090,000. Then there is another entry this year, "from reserves, £1,494,824." It is not necessary to discuss the legitimacy or otherwise of such appropriations in support of the Budget. Those points have had attention before. The immediate consideration is that the search for such devices has been thorough and the stock is exhausted. It will strain the ingenuity of any financier to find another prop equal to the •Post Office revenue to stay his descending revenue. The last available reserves have been appropriated by the use during the current year of the £2,300,000 already mentioned. The drastic increase in income tax rates imposed last year resulted in £444,200 more being collected than the year before—but it was nearly £500,000 less than the Octobe'r estimate of yield. Little need be said about customs taxation which produced nearly £3,000,000 less than two years ago, and £845,650 less than the October estimate. It is true collections this year have shown an increase, but there is no reason to expect a return to the levels of two or there years ago. The whole evidence is that "taxation has become so burdensome that increases in rates tend to cause decreases in yield. 7 ' The income on which direct taxation is levied has certainly diminished since the last assessment was made. With what has already been said about other-resources, it is obvious revenue in future must diminish in strict relation to reduced taxation income instead of that process being staved off as it has been hitherto. On the expenditure side, as stated, there is a decrease of only £341,000 compared with 1929-30 and an increase of some £150,000 over the outgoings for 1930-31. This is what must change now that the means of buttressing income—or apparent income—have disappeared. A detailed list of departmental outgoings published on Saturday shows what seems an impressive amount of saving. This is the result in part of the salary cuts, in part of the discontinuance of subsidies, and includes such items as a reduction of £20.398 in the' expenditure on the National Provident Fund -and Friendly Societies—making it only £4697—by charging administration to the fund itself instead of to the Consolidated Fund. On the other hand, £65,700 has been spent by the Native Department, against £35,720 the year before. This raises definitely the question of the money being spent, at a time like this, on the native settlement schemes, and the results being obtained. Charges have been made about land at Tokaanu having been ploughed and grassed, and then allowed to revert to noxious weeds. This position cannot be allowed to rest where it is. There must be an account of what is being spent and what achieved. Again, there must be amalgamation of departments to reduce overhead charges. This is merely rationalisation, and the need for it can be found with little search. Further, despite protests and propaganda, the swollen expenditure of the Education Department has to be realised, faced, and reduced. outpouring of money in capital ex-* penditure as well as revenue has proceeded for years; and "Hands off education" is no answer to the charge of avoidable extravagance. Unless these things are watched, the country will find Parliament trying to squeeze more from the exhausted taxable capacity of the countryr-trying and failing. Even the attempt would strike a further blow at the power to recover from depression, the failure would not enhance the strained credit of the qountry.