GOVERNMENT FINANCE

Otago Daily Times, Issue 21986, 22 June 1933, Page 8

GOVERNMENT FINANCE

EFFORTS TO BALANCE BUDGET CURRENT YEAR’S PROBLEMS HUGE GAP TO BE BRIDGED {Per United Press Association.) WELLINGTON, June 21. Speaking at the opening of the annual conference of the Royal Agricultural Society to-day the Minister of Finance (Mr J. G. Coates) said the public accounts for the past financial year disclosed that the Budget was balanced with a small surplus of £40,000 after £2,500,000 from reserves had been taken into account. i That result, said Mr Coates, could not have been possible had not Britain played her part by foregoing payments totalling £825,000 upon the funded war debt after the Hoover moratorium had expired. He was sure that New Zealand was deeply grateful for this great and timely assistance. The Budget had provided ' for reducing a huge prospective shortage of £8,300,000 to not more than £1,010,000; but, as a result of the revenue exceeding expectations by £938,000 and savings amounting to £112,000 being made, after making provision for additional expenditure on exchange amounting to £470,000, the gap had been bridged. “The problems of the past year have been creditably disposed of having regard to the difficulties of the period, and we have now to face the position for the current financial year,” Mr Coates went on. “ The prospective budgetary position was reviewed in a statement presented to the House in January last. The outlook showed,that the gap to be bridged this year was even larger than was faced at the beginning of last financial year and amounted to £9,850,000 —not far short of half the revenue of a normal year- Furthermore, this position has to be faced at a lime when our resources have been practically strained to the utmost in coping with the- budgetary situation in past years. On the one hand, there are definite limits to Increasing taxation, and on the other hand there are limits beyond which It is not possible to reduce the expenditure, unless State services are' to be ruthlessly abandoned. Nevertheless, Mr Coates said, substantial progress had been made towards closing the anticipated gap in the current year’s finances. In this connection he mentioned the conversion operations which would provide a net saving of about £570,000. Arrangements had been made to liquidate a further £2,000,000, practically all that remained of the reserves of the Consolidated Fund. In addition, the sales tax had been imposed and some increases had been made in the taxation on petrol and one or two items in the Customs tariff. Mr Coates said that in January he had indicated that these items would bring the deficit down to about £4,500,000. The Estimates, however, were now being prepared in detail, and he was hopeful that they would do better than that. For one thing, the economic outlook had grown considerably brighter since January. Prices of primary products had risen somewhat and there appeared to be a more confident tone in business. Furthermore, the World Economic Conference was sitting at present, and .throughout the world there was a general expectation that considerable benefits would result from its deliberations. RUMOUR OF INTERNAL LOAN COMMENT BY MINISTER (Per United Press Association.) WELLINGTON, June 21. Commenting on a rumour published in the South Island that the Government contemplated floating a new and substantial internal loan of 4J per cent., the Minister of Finance (Mr J. G. Coates) said to-day:— “The people of the Dominion can be assured that the policy of the Government is to stabilise low rates of interest for long-term borrowing. In fact, this is also the policy of the British Empire as enunciated at Ottawa, and there is reason to believe that it is likely to be the policy internationally adopted at the London Conference. It is absurd, therefore, to suggest that the Government will pursue any line of action that; will clash with such a policy.”

The rumour, to which reference ia made in the foregoing message, originated in Christchurch, where, it was suggested, specific inquiries had been made regarding the prospects of such a loan on the market. The rate of interest mentioned was 4J per cent., and it was stated that though the amount of the loan was not known, portion of the money at least was to be used for funding the Government’s floating debt. DEALING IN SECURITIES OVER-THE-COUNTER SALES. (Per United Pres- Vssditathin i WELLINGTON, June 21. Over-the-counter sales Of Government securities were discontinued when the Government’s own internal conversion scheme was launched, and it was decided at that time to suspend such sales until the markets had settled down in relation to the new securities. This has now been achieved, and the Minister of Finance (Mr J. G. Coates) is happy to note that the new 4 per cent, securities are all quoted at a premium. The time is approaching, therefore, for consideration to be given by the Government to a resumption of over-the-counter sales, which is always one of the avenues by which the Government secures a portion of its requirements each year. When a decision on this has been reached, the Minister stated, he would make a public announcement. Needless to say, the rate of interest to be offered will not exceed the basic conversion rate of 4 per cent.