THE SURPLUS

Otago Daily Times, Issue 26478, 4 June 1947, Page 6

THE SURPLUS

PUBLIC ACCOUNTS REPLY TO MR HOLLAND MINISTER DEFENDS EXPLANATION P.A WELLINGTON, June 3. The only real surplus was, and always had been, the balance on the year’s working in the Consolidated Fund, said the Acting Minister of Finance, Mr Nordmeyer, replying tonight to comments by the Leader of the Opposition, Mr Holland, on the public accounts for the past financial year. Mr Nordmeyer said that Mr Holland’s “real surplus of £34,000,000” was arrived at by the curious and novel expedient of adding together the balances carried forward from the previous year in the three main accounts and totalling approximately £ 18,000,000, plus his imaginary surpluses in those accounts, which he quoted at £16,000,000. A Budget surplus or deficit, as -Mr Holland well knew, was the result of the year’s working. It was the difference between revenue, receipts and payments for the year in question. It did not take account of money in hand at the beginning of a year, as such funds constituted normal working balances, which were required for any major undertaking, whether public or private. A New Procedure The working balances, in the case of the State finances were, in fact, the result of past' surpluses, and to add them to the current year’s figures to arrive at a new and imaginary surplus was an entirely new accounting procedure. In Mr Holland's calculation the same money was added twice to produce a wrong answer. His figures were incorrect to the extent of £17,916,000. made up as follows:—Previous balance in the Consolidated Fund, £4,500,000;' previous balance in the Social Security Fund, £1,716,000; previous balance in the War Expenses Account, £11,700,000. “When Mr Holland deals with the War Expenses Account he is even further astray,” said the Minister. I quote him: ‘War Expenses Account cash balance at the beginning of the year, £11,700,000; surplus on the years working, £7,894,000; balance at the end of the year, £19,594,000.’ In my review of the accounts I explained that the war expenses'balance, to the extent to which it was. still available, was used towards meeting part of the cost of the gift to Great Britain of £12.500.000. What is Mr Hollands peculiar method of reasoning when he includes as a surplus at the end of the year an opening balance which he knows has been spent? , The War Expense's Account is now being used for the clean-up stage of the war, and no taxation is credited to it. Funds in that account cannot therefore be applied in producing a revenue surplus. To the extent to which there were surplus capital receipts in this account at March 31, they were applied as had been done in the past in repaying the war debt. “The closing cash balance was not £19,594.000, as suggested by Mr Holland, but £405,757, which even for Mr Holland is a serious discrepancy. Social Security Fund Mr Nordmeyer said that in the case of the Social Security Fund, no Question of a surplus could arise as there was a gap each year of many millions representing the difference between revenue and expenditure chargeable to the .fund. The difference, was made good by feeding into the fund from the Consolidated Fund the amount required, and last year this .transfer was made at £18,000,000, as authorised by Parliament last session. It was expressly stated last year by the. Miniter of Finance that it was necessary to build up a surplus in this fund, which was Tbeini? drawn on at the rate of £3,000.000 per month. «To describe this increased opening balance as a Budget surplus was seriously misleading, to say the least, Mr Nordmeyer added. “The only real surplus is, and always has been, the balance, on the year’s working in the Consolidated Fund, and as I stated in my review last week, for last year this was £4,611,000. The Leader of the Opposition may amuse himself by trying to magnify it into an astronomical surplus, but his efforts are in vain.