PAST YEAR’S ACCOUNTS

Otago Witness, Issue 3571, 22 August 1922, Page 7

PAST YEAR’S ACCOUNTS

THE ACCUMULATED SURPLUSES. SAVINGS EFFECTED. The Minister of Finance brought down the Budget in the House of Representaties on the 15th. In the course of it, he said, with reference to the past years accounts : The rapid fall in the price of our primary products had a marked effect upon the year’s operations, but the situation improved with the increase in values. Whilst it would not be prudent to assume that the improvement will continue or that an early return to normal conditions is to be looked for, I am confident that the worst has been passed. It is a matter of congratulation that the difficulty arising out of over-importation, which proved so serious in other parts of the world, has been satisfactorily overcome in New Zealand. The results of the year’s operations within the Consolidated Fund, ordinary revenue account, are summarised hereunder: — £ £ Receipts daring year 1921-22 Revenue 28,127,007 Expenditure during year— Permanent charges 12,874.161 Annual appropriations ... 15,502,677 Excess of expenditure over revenue 330,831 Less other receipts— Repayments by Southland Electric Power Board 60,000 Net amount required to adjust expenditure and revenue 270,831 The balance of the accumulated surpluses brought forward at April 1, 1921, was £8.591,209, including £2,409,251 held in reserve to meet the inevitable drop in Customs revenue. The balance at March 31, 1522, was £7,531.367, including the unexpended portion of the excess Customs revenue, the reduction being accounted for by the application of £780,011 to debt reduction or capital purposes and of £279,831 to adjusting ordinary' revenue and expenditure. The following statement shows how the accumulated surpluses have been applied:— To accumulated surplus at 31st March,

The financial advantages of applying our surplus revenue due largely to war taxation to debt extinction purposes, for which money must otherwise have been borrowed, are set out hereunder. In addition to other gains, the interest and sinking fund charges nave been relieved to the extent shown, whilst the income resulting from the transfer of £1,200,000 to the reserve fund account in London has provided a valuable addition to the annual revenue of tlie Consolidated Fund. SAVINGS THROUGH UTILISING SURPLUSES. £ £ J)ischarg»*d Soldiers’ Settlement Account 13,500.000 lnt«*r< st and sinking fund 405,000 Redemption of \\ ar Loan Certificates 560,(XX) li md 16,800 Public Works Fund, £500,000 (transferred) — Inture.-t and sinking fund. etc. ... 15,000 Discharged Soldiers' S( ttlcment Loans Act, 1920, Depreciation Fund, £l<X>,ooo oents .. 4.800 Reserve Fund (Ixmdon)— Ini rc:-t on capital gain, 3.150 444,750 j *KR CENT. SECURITIES PURCHASED AT £95, X< >\V VALUED AT PAR. Discharged Soldiers’ Settlement Loans Act, 1020— Depreciation Fund, £SO,■000 (principal) 2,600 Reserve Fund Securities, £1,200,000 (prin ci pi i) 63,150 65,150 SUMMARY. Interest and Sinking Fund — Consoli 430,050 Other aoouGnto 4,800

Profit on investments— Consolidated Fund 63,150 Other accounts , ... 2,600 PUBLIC WORKS FUND. The expenditure upon publiS works amounted to £5.461,407, or £2,320,210 over the expenditure for the year 1920-21. Advantage was taken of the provisions of section 56 of the Public Revenues Act, 1910, to temporarily transfer £500,000 from the Consolidated Fund in anticipation of the receipt of loan money, whereby a saving of interest amounting to £7500 was effected. The activities of the Public Works Department have been very considerable throughout the year. It was not possible in connection with railways to carry out the principle of concentration in its entirety, owing to unemployment throughout the country, which has necessitated the carrying-on of works in various parts _ in order to avoid the expense and dislocation which would have been caused by an endeavour to employ all the men requiring wbrlc on a limited number of works. As a result, some lines, which would have otherwise been stopped, have been continued. On the more important lines vigorous work is being carried out, and progress satisfying anticipations has been effected. In connection with roadworks, the ordinary programme has been speeded up and work done this year which, but for the necessity of finding employment, would not have been carried out so soon. The number of men employed has risen to about 6500, one-third of these being what are known as relief workers. The legislation prepared last year in connection with the construction and maintenance of main roads has been reconsidered. There has recently been a conference between the Government and the interests involved, and it is hoped that the difficulties which appeared will be overcome. The work of developing the backblocks is still proceeding vigorously. The department’s hydro-electric works have been vigorously pushed, on; fresh units have been and are being installed at the Lake Coleridge power-house, _which will soon reach its maximum capacity of the first development. The Harper River has been diverted into Lake Coleridge, this being the first stage of a complete duplication of the installation, which will be progressively proceeded with. Work hao has been speeded up. The reticulation in connection with the Horahora scheme has been extended, so that a large area of fertile country and a number of towns are supplied with power. The returns from this scheme have been very gratifying. The work of enlarging the power-house, with the consequent extensions elsewhere, is in progress. The development of the first stage at Waikaremoana is so far advanced that power will probably be available for Wairoa very shortly. An agreement has been entered into 'with the Auckland I’ower Board whereby this body agrees to take the whole of its demand from Arapuni power-house as soon as the supply is available, and the Government has agreed to use every endeavour to have the power available by the end of 1928. Very good work in connection with the improvement of the Wa-ilui and Ohinernuri Rivers lias keen done, and during high water, which occurred once or twice during the year, the good effects of the work already done were plainly evident. Th e work on the Manuherikia irrigation scheme. Central Otago, is so far advanced that water " was turned on officially by my colleague me lion. Minister of Public Works on the 31st March, 1922. Further extensions are being made in connection with the Ida Valley scheme, the financial returns from which have maintained the steady increase which has been evident ever since water was turned on. The rate of progress so far, and the proposals for the future, are such that the present loan authorities will not be sufficient, and necessary financial proposals .will be submitted for your consideration in due course. The expenditure for the year was largely increased in order to provide a substantial measure of relief in connection with the unemployed difficulty. I propose to supplement the Public Works and Development Accounts by transferring £1,250,000 of the accumulated surpluses and thus effect a saving of £25,000, including Sinking Fund and flotation. TREASURY BILLS. As a large portion of our revenue, especially the land and income tax, does not ciine in until the end of each financial year, special arrangements have to be made to meet current requirements when the expenditure is in excess of receipts. In the year just ended Treasury lulls amounting in the aggregate io £1,155,453 wore issued in anticipation of ordinary r- venue and loan moneys, upon receipt of which they were duly redeemed. The rates of interest varied from 3i to 5 per cent. No Treasury hills were outstanding at tile 31st March, nor have any been issued since, although, for the reason stated,

it will probably be necessary to anticipate receipts in this manner before 31st March next. By the use of Treasury bills in preference to the sale of Imperial securities held by the different investment accounts a saving of at least £93,000 was effected, as Imperial 5 per cent, stock purchased at £95 was quoted at much lower price when the bills were floated. REDEMPTIONS AND RENEWALS. The loans which matured during the year amounted to £7,704,990, to which must be added £42.740. matured loans for which debentures were not presented up to the 31st March, 1921, making a total of £7,747,730. Of this sum, debentures amounting to £3,244,430 were redeemed, and £4,496,625 renewed at rates of interest varying from 4i to 6 per cent. Moneys for redemption purposes were obtained as follows: £560,011 from Consolidated Fund, £2,683,130 from the public and other sources, and £1289 from sinking funds set free. Matured debentures amounting to £6675 remained unpresented at the 31st March, 1922. CONVERSIONS. As the advantages of inscribed stock over bearer bonds become more appreciated by investors the conversions into stock tend to increase, as the following statement will show: —1920-21, amount converted, £499,700; 1921-22, amount converted, £749,100. CUSTOMS DEPARTMENT. With a view of estimating the amounts likely to be received during the current financial year, inquiries have been made from merchants and others, and it is doubtful if the volume of imports this year will exceed that of last year. On this" assumption it is evident that, had it not been for certain increases in the duty on luxuries made by the new tariff, we would, in view oi the reduced prices of most classes of goods, have expected this tear to collect much less than during 1921-22. Under the new tariff the duty on spirits was doubled and that on tobacco was increased by over one-third. The full effect of tlie duty on spirits will probably not be felt during the current financial year, because merchants, in anticipation of the new duty, cleared abnormal quantities at tile old rate, and there are still considerable duty-paid stocks in hand. It will also bo remembered that large concessions of duty were maefe last year in certain classes of machinery and appliances necessary for industrial development. Concessions were also made on inorganic salts, Australian hardwood timber, read rollers, and on gas and oil engines, and stationary and marine steam engines of sizes which could not be economically made in New Zealand. There will also be a reduction in the duty on silk piece-goods from the Ist June. On the other hand, a number of items were added to the list of goods liable to preferential duty, and until traders are able to adjust their businesses and obtain their supplies from British sources it is likely that there will be a slight.increase in duty owing to the continued importation of these goods from foreign countries. Although the duty on locally manufactured beer was practically doubled last year, the revenue did not increase in a corresponding ratio during the period tlio increased duty has been in operation. It is estimated that the revenue for the present financial year will be as under:— Customs duties £5,160,000 Excise beer duty 650,000 Fees for licensed warehouses and other receipts 15,000 £5,825,000 During last year the savings resulting from economies introduced in this department amounted to £1346. It is estimated that the total annual savings will amount to £3355. The expenditure in 1921-22 amounted to £136,475, and £108,507 is the current year's estimated requirement, a reduction of £27,963. LAND AND INCOME TAX DEPARTMENT. Tho net receipts in this department for the past year amounted to. £7,640,803 (land tax, £1,637,816; income tax, £6,002,987), which compared with those for collection, for the previous year show a decrease of £2,297,121. The decrease in the land tax receipts is due principally to the enlarged exemption granted in respect of mortgaged lands, and also to the subdivision of large taxpaying properties into smaller and nontaxpaying holdings, and would have been much larger but. for the increased value of land in districts revised under the provisions of the Valuation of Land Act, Tho number of land-tax payers who benefited by the increase in the mortgage exemption granted by the Act of last year was approximately 10,100, and the amount of lax remit led aggregated £IOO,OOO. '1 ho decrease in income tax is due to tho large shrinkage in ihe incomes of taxpayers generally, tho full effect of which has not yet been realised, but will be shown in the income returns and assessments for the current year.

In order to give some relief to taxpayers rebates were granted of 10 per cent, of land 'tax and 5 per cent, of income tax if paid within 21 days of the due date; and, while this had the effect of reducing the collection as a whole,, it aiso had the effect of inducing taxpayers and the financial institutions to make every effort to meet the payments within the time specified, with the result that a larger amount was collected within the financial year than would otherwise have been the case. The business of the department has increased to such an extent that it has not been found possible to effect any material reduction in expenditure. The retirement of a number of officers and the bonus reduction, however, resulted in a saving of £B3O for the year. STAMP DUTIES. The revenue for the year amounted to £3,444,504, as compared" with £3,745,902 for the previous year, the decrease being due almost entirely to the reduced collections from, duty on instruments. The amended provision in the Finance Act, 1920, to increase the rates, and of the Death Duties Act, 1921, to charge interest on duty outstanding, resulted in a considerable increase in the death duties. The amusements tax is expected to produce additional revenue amounting to £60,C00. The amounts collected by way of totalisator, bank note, and amusement taxes are shown hereunder: —

The departmental vote expenditure for 1921-22 was £101,415, but in the Estimates for the current year this is reduced by £21,234. POST AND TELEGRAPH DEPARTMENT. The amount of revenue collected by the department during the year was £2,748,481. The principal items were: Postages, £1,410,251: telegrams, £685,855; telephone exchange receipts, £614,367. The net expenditure was £2,448,688, a decrease of £139,672 when compared with that of the previous year. The increased expenditure compared with 1914-15 is due entirely to tho war or is a result of the war. As an indication of the ir creases in prices of material and office equipment, it may be mentioned that telephones increased by 52 per cent, in price; poles, 83 per cent. ; arms, 100 per cent, ; other materials, wire, etc., ranging from 400 per cent, to 600 per cent. ; stationery, 103 per cent. The salary expenditure in 1914-15 absorbed 55 per cent, of the total revenue, and 57 per cent, in 1921-22. The bonus reduction under the Public Expenditure Adjustment Act, 1921-22, resulted, for the quarter of the year it was in operation, in a saving of £28,257; and economies during the year reduced the amount appropriated by a further sum of £48.716. Apart from the amount saved by the reduction in the cost-of-living bonus, an estimated annual sum of £133,337 will lie saved by changes in course of being effected. - The arrival of comparatively large shipments of materials which had been under order for a considerable time caused the vote “Telegraph Extension’’ to be somewhat inflated, the total amount expended on the construction of telegraph and telephone lines being £579,899, whilst the sum of £170,395 was spent in maintaining the existing lines and cables. Commitments to the amount of £350, (XX) for outstanding orders are being carried forward, and will require to be met Ihis year. Machineprinting apparatus has been . installed on two main telegraph circuits —i.e., Christohurch-Weilington and Auckkvnd-Wel-lington. The experience gained in this modern means of handling telegraph traffic goes to prove that in comparison with Morse working (lie carrying capacity of the wires bos been increased by about 390 per tent., and that the output per operator has in ■ d on an average by 90 per cent. In view of tho success of the existing installations, provision has been made for extending the use of maehineprjntiug to other main routes. A revision lias been made of the hours and duties performed at the New Zealand wireless coast stations with a view to effecting an economy in the operation of these stations, consistent with the keeping f a vigilant watch for distress signals, the carrying out of public radio communications with shiits at sea, and with the dominion’s dependencies Consideration is now being

given to the modernising of the wireless transmitting equipment at Radio-Awanui and Radio-Apia, in order to increase the efficiency of these services and reduce the rates at present, charged between New Zealand and the Polynesian Group. This it is hoped will result in the equipment of a first-class high-power wireless station capable of worldwide communication and opening up, at a reasonable rate, communiation with all countries with which New Zealand desires to extend its business relations. The obsolescence of a number of manual telephone switchboard systems is being met as rapidly as possible by the installation of automatic switching: systems to eventually replace at all principal centres the present manual methods. Fortunately, t.he intermediate or common-battery stage has been avoided at the large centres, and the conversion to automatic is therefore being effected at a minimum of cost to the country. Automatic exchange systems are at present in operation either wholly or as auxiliaries to the manual system at Auckland, Hamilton, Masterton, Wellington, Blenheim, Christchurch, and Oamaru, and complete installations are being pushed forward as rapidly as possible at Auckland, Wanganui, Palmerston North, and Wellington. bo rapid has been tho growth of the telephone systems that at all places where the automatic system has recently- been brought into operation immediate provision has had to lie made for its further extension. The proposals for automatic telephone switching systems also embrace Christchurch and Dunedin, as well as a number of other centres where the manual systems have reached their full capacity, and where it would bo more economical—as soon as funds can be made available—to resort to a more up-to-date and efficient method of giving telephone service. During tho past year the department has done its best to meet the ever-increasing demand for telephone connections, and by various expedients has effected the renewal and extension of existing systems. There are, however, practical limits to these temporary measures, and considerable development and extension must take place if the telephonic needs of the community are to be satisfactorily met. Despite the fact that 9259 new subscribers wore added to the telephone exchange system during tho year, there still remain 6132 persons awaiting telephone exchange connections, and 26 exchanges awaiting erection. Only essential building has proceeded during the past financial year and maintenance has been kept at a minimum, but when financial conditions improve a considerable number of new buildings as well as extensive renovations will bo required. A new system was established on January 1. *1922, for dealing with postal deliveries in rural districts. Deliveries are now established only where a reasonable return muy lie expected for the expenditure involved, and the fixing of charges enabled the department to cancel most of the contributions formerly paid by settlers. In some cases these contributions fell very heavily on a few. The small charge referred to converted the annual loss of £4700 to a profit of £2BO, and enabled t.he department to proceed ’ with establishing additional deliveries in i he far back blocks without loss. The box-holders under the old _ system totalled 8700: the number now is over lO.OCO. On April 1, 1921. the number of permanent officers of the Post and Telegraph Department was 7762; the temporary etuplovees numberd 6/3, while there were 659 casual men emploved on maintenance and construction work." The total number of employees was therefore 9094. That total had been reduced to 8679 by April 1 last, oil which date there were 7657 permanent officers, 429 temporary and 593 casual men employed. RAILWAYS. The gross receipts from the railways amounted to £6,643,591 —a decline of £265,000 in the previous year’s Figures. The working expenses amounted to £6.237.727. The net revenue is therefore £405.864 — representing a return of 1.07 per cent, on capital cost. The year has been one of abnormal difficulties—a post-war condition common to railway systems throughout the world. Although the net result of working does not provide sufficient return upon the capital expenditure, too much significance cannot bo attached to that fact, and in measuring tho result, duo consideration must lie given to tho causes operating to bring it. about. The railways have in point f fact been working under abnormal conditions due directly to the economic effect of the war. On the one hand the prices of stores and materials have increased and wages have greatly advanced since IS/5. These advances reflect themselves in increased operating expenses for the year iust ended, as compared \vi ! h 1915, by 130 per cent. On tho revenue side the rates for the carriage of passengers and goods have been raised during the war period by 25 per cent, and 40 per cent respectively. Lp till 1920 tho trade in the country was stimulated by the high prices cf its product*. This resulted in an expansion of the rail-

way business to an extent sufficient to make up for the disproportionate increase of the rates in relation to the large increase in expenditure. The slump in trade last year, however, changed the position, the reduction both in exports and imports reflecting itself strongly in the railway receipts. The small additions that had been made in the railway charges were therefore no longer sufficient to maintain a proper balance, and the falling prices of the country’s products made it impracticable to further advance the rates. The only means of regaining normal relationship between revenue and expenditure was therefore to reduce the latter, and steps were taken to do this. The matter is still engaging the close attention of the Government and departmental experts. The problem is, however, by no means a simple one. The coal stocks had been depleted and had to be replenished at high cost in order that the department might fulfil its obligations to the public. The enhanced price for coal and other stocks of materials obtained during the war period and required for carrying on the operations will continue to he charged against the working expenditure until such time as stocks are exhausted and the lower prices now ruling can be reflected in the expenditure. As illustrating the practical results that have keen obtained in the direction of economy, it may be stated that in September, 1921, the expenditure exceeded the gross revenue by £54,000, w’hile on the 31st March. 1922. the revenue was in credit to the extent of £405.864. For the year ending 31st March. 1923, it is anticipated that the revenue will amount to £7,200,000, and the expenditure to £6.164.000. In regard to railways, it must not lie forgotten that they act powerfully in the development of the country and the promotion of its industries, and in pursuance of this policy they daily render services to the dominion in many cases at below actual cost. RURAL CREDIT ASSOCIATION'S. I have arranged with the Public Accounts Committee to inquire into the Government's proposals with regard to agricultural banks or rural credit associations, as they are called in some countries. This matter will he taken in hand at once, and the evidence of experts will ho heard so that tho necessary legislation may reach the Statute Book during the present session CONCLUSION. I. think I can claim, and with reason, that the outlook for the present financial year is very much 1 Hitter than was tho case at the corresponding date in 1921. It is true that since then there has been a serious drop in revenue, hut there has also been a decrease in departmental expenditure. The withdrawal of part of the bonuses which were agreed to and provided for in 1920 and preceding years as against the increased cost of living has naturally caused a certain amount of dissatisfaction, but I am glad to be able to express the opinion that the great majority of those in tho public service realise piat the burdens which the State is carrying at present are too heavy, and must

be reduced if within a reasonable time we are to get back to normal prosperity. Economy and industry must be the watchword of the citizens of this country for a considerable time to come. So far as industry- is concerned, there is little to find fault with. Undoubtedly the war and the aftermath of the war have had a very unsettling effect, but the manner in which most of the people of this country have gone back to w-ork is beyond all praise, and this result is shown in the steadily increasing volume of our exports. It should be the duty of all concerned to reduce the prices of commodities required in New r Zealand, and to reduce the cost of production wherever possible so as to enable us to compete successfully in the markets of other countries, and at the same time bring down the cost of living in this country. There is no royal road to prosperity, and there is only one way, and that is the way of industry and cooperation. In a crisis such as that through which -we are passing, every citizen must be prepared to do his share of the work and carry his share of the- burden. No other method will bring complete success. In a country like New Zealand, with its good soil, good climate, and industrious population, and the best markets in the world ready to receive its products, a financial depression, however severe it may be, cannot last for long. With the steady application of those qualities which I believe New Zealanders possess in an unusual degree the time must come, and soon, when the depression will pass away as mist disappears before the morning sun.

1020 £17,538.978 Surplus for financial year 1020-21 ... 6,132,233 Tntfll acenmulnted Enrplns £23,671,209 £ £ Bv transfers— To Discharged Soldiers’ Settlement Account — 1020-21 13,330,000 1021-22 170.000 13,500,000 To Discharged Soldiers’ Settl nieut Depreciation Fund Account — 1020-21 50,000 1021-22 ■ 50,000 100,000 To Public Works Fund, 1920-21 50*0,000 To He-servc Fund Sccurities Account, 1920-21 ... 1,200,00*0 To loans redemption, 192122 (war loan ccrtificalcs, £580,000) 560,011 To balance revenue and expenditnre, 1921-22 279,831 Total 16.139,842 Balance to March 31, 1922 ... 7,531,367 £23,671,209

TOTALISATOR TAX. 1921-22 1920-21 .. Increase .. .. 17,287 BANK NOTE TAX. 1921-22 1920-21 .. .. 227,080 Decrease .. .. 9,003 AMUSEMENT TAX. 1921-22 1920-21 .. .. .. .. Increase „ .. £23,712