THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, FEBRUARY 11, 1933 MAIN HIGHWAYS FINANCE

New Zealand Herald, Volume LXX, Issue 21414, 11 February 1933, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, FEBRUARY 11, 1933 MAIN HIGHWAYS FINANCE

The official announcement of an increase of threepence in the tax on motor spirit for the benefit of the Consolidated Fund was accompanied by an estimate of yield, which made the return for a year £500,000. This indicates a reduction of importations to 40,000,000 gallons. This figure, the only one offering, must therefore be taken to calculate what other yields from the petrol tax will be. The full rate is now lid a gallon,increased by the customs surtax to 11.55 d. Sixpence remains for the benefit of the Main Highways Fund, but. the gross return is subject to a deduction of £500,000 to go to the support of the Budget. The sum of £1,050,000 collected in that fashion is therefore reduced to £550,000. the maintenance fund is entitled to 92 per cent of this sum, or a net payment of £506,000 for the coming year. The whole tax of 1t.55d on an importation of 40,000,000 gallons .means a gross yield of £1,925,000 from motor spirit used in road vehicles. Of the Avhole amount £506,000 will be available for the maintenance of main highways under the board. It is no new thing for roading funds to be drawn on for the benefit of the Budget in any emergency. In fact "raiding the road fund'' is a phrase that has been heard in more than one country at different times. Usually it has been a levy on reserves or on sums allowed to accumulate on capital account. In this instance the stream is being tapped before it reaches any reservoir. Whatever the necessity or the political implications of this drastic diversion of motor taxation to the purposes of the Budget, there is no question that it alters profoundly the outlook for highways maintenance in the near future. For the year ended March 31, 1932, the revenue fund received £1,231,202 as its share of the petrol tax. Its entire income amounted to £1,712,476 ; therefore the importance of this one item needs no emphasis. As there is no reason to expect the only two remaining sources of income, the return from the tyre-tax and the yield of licence fees and fines, to increase—indeed, the only , expectation is that they should fall, j in accordance with the general j trend of taxation returns —the revenue fund of the Main Highways Board seems Jikelv to be about onphalf that of 1931-32 in the coming year. On the expenditure side one item, subsidies to county councils tor rebate to ratepayers, will not appear again. It amounted to £253,900. Even with this relief the prospect is for an exceedingly lean year on the revenue side. The tendency for some time past has been to increase the obligations of this account while its sources of revenue have been shrinking. In 1930-31, when the return from tyre- tax had already begun to fall, the transfer of £35,000 from the Consolidated Fund to the revenue fund was first, suspended. It was not restored last year, when subsidies on rates to local authorities, amounting to £191,200, were made a charge on the fund, and the cost of the rebate to rural ratepayers was also imposed on it. By this time the return from registration and licence fees had also fallen heavily. The Government has not only discontinued the annual payment of £35,000 from the Consolidated Fund and appropriated £500,000 of the tax originally designed for highways finance. By imposing on the board obligations previously carried by the general revenue, and even "more by drying up sources of income through increasing the taxation of motor spirit so drastically as to reduce consumption to a marked extent, it has produced the same result as if the money had been arbitrarily diverted from the accounts of the board. The board's finances have suffered by much more than the mere effects of the depression.

The simple conclusion from these figures is that the Main Highways Board will have very much less money to spend on the maintenance of roads. The most significant part of this expenditure, far outweighing all others, is for labour. That is true of road maintenance everywhere. Therefore, its possibilities as an employer will be seriously reduced. But there are other consequences to consider. In its last annual report the board said : "It is obvious that the attention which will be given to maintenance during the current year will be dangerously low, even after due allowance has been made for the reduction in working costs.-It is necessary for the board to issue a warning that unless traffic on the roads is substantially reduced the continuance of the present policy is certain to be followed by serious results." The force of that warning has been greatly increased by the prospect the new taxation, with its effect on revenue, creates. The accounts show that since the declaration of main highways in 1921 there has been spent out of the construction fund—that is, on capital account —a sum of £4,977,600. Since the Main Highways Act came into force in 1022 £8,060,000 has been spent out of the revenue account on maintenance, The two combined represent a great sum of money. The objective was to improve, and keep to a standard suitable for modern road traffic, the principal highways of the Dominion. The question, an exceedingly grave one, which now arises, is how far the return for all the labour and all the funds devoted to roads in the past decacle is imperilled by the successive blows the finances of the board have suffered. The outlook is not reassuring. The whole main highways system, laboriously built up, is in the melting pot. and what the final consequences will be I it is impossible to say.