ECONOMIES AND SAVINGS

Otago Witness, Issue 3571, 22 August 1922, Page 8

ECONOMIES AND SAVINGS

REVIEW BY MINISTER OF FINANCE, A LARGE SUM INVOLVED. The economies and savings effected by the Government’s policy of retrenchment was with in the Financial Statement which Mr Massey delivered on the 15th inst. The Minister of Finance said : “Honourable members will recognise that a general reorganisation to effect economy must be a gradual process, as ill-considered savings lead only to extravagance and waste. ’lhe duty which has devolved upon the Government- is by no means a pleasant one, especially when faced with tho absolute necessity of reducing cash grants and services, as well as dispensing with staff, at a time when employment is difficult to obtain, but, the balance between taxation and expenditure must lie maintained upon an equitable and sound basis. Justifiable and desirable expenditure has had to be postponed, for the simple reason that at present the country cannot, afford it.. “The results which I summarise hereunder indicate the actual reductions and savings effected in detail, and also the economies now being effected and proposed, including those in the table referred to. The period

under review runs from April 1, 1921, at which date I directed the operation of special measures to bring about the necessary reductions. As the adjusting and coordinating process is gradual, ana I desire to bring- these changes about with as little disturbance as possible to the various public utilities which- are used by all classes of the community, the full effect of the economies under action and proposed cannot yet show in the annual appropriations. “First taking the Consolidated Fund expenditure, the reductions are—

“The savings in interest and other economies in course of being- effected amount to a considerable sum. Taking interest, and sinking fund charges, the position is that, had I during the preceding years allowed our surplus revenue to be expended on annual servioes, not only would the Consolidated Fund expenditure have been much greater than it is, but the interest and sinking-fund permanent charges would have increased proportionately. The use of these surpluses for capital purposes such as soldier settlement, etc. —purposes beyond administrative or policy control—undoubtedly obviated borrowing at heavy cost, and the amount, given is based on a conservative rate of interest. Savings in interest and sinking-fund charges:—

s*" " “ ' " - The results of other economies effected, now being effected, and proposed were summarised as follows: — Due to services reduced and financial adjustments, 1921-22: — Expenditure voided owing to reduced services (including £578,106 due to termination _of butter and flour subsidies, being difference between payment 1921-22 and estimated season’s subsidies, £1,000,000) _ .... ... £780,000 Amalgamations, co-ordinations, increased fees, etc. 160,000 Improved stores control 200,000 Proportion, not yet operating, of annual rate of total reduction in cost-of-living bonus in terms of Public Expenditure Adjustment Act 466,000 Estimated savings on proposed redemption and cancellation of death duties stock war loan securities 45,000 By proposed transfer of j 81,250,000,250,000

“In considering the foregoing it is necessary to remember that the estimated expenditure includes the cost of those automatic increases which inevitably follow the growth of population and expansion of business. These are substantial items which being statutory cannot be avoided, such, for instance, as interest and sinking fund, pensions, scale increases tcv salaries of public servants, hospital and other social services, whilst, of course, administrative charges are proportionately increased. As the country develops new services require also to be undertaken. All of this represents expenditure that cannot be eliminated, and amounts to a large sum, whifeh tends to obscure the effect of the economies. “The figures, however, should, I think, satisfy honourable members that the attention I am giving to this important matter has already brought, about satisfactory results. The estimated savings in full in respect of the economies and adjustments in course of operation should in the main be realised by the end of the current financial year. “I do not suggest that this is a complete programme of what is required to be done, as I am convinced that the most important part of the policy of this country for a considerable time to come (along with energetic development) must be retrenchment and economy. If we profit by the lessons of th e last- two years the depression from which we have suffered will not have been an unmixed evil. Every possible effort on the part of the Government, Parliament, and people should be used in the direction of reducing the cost of government, of reducing the cost of production, of reducing taxation, and consequently keeping th e public expenditure within the public income. There will be no satisfaction until this' is accomplished, and there should be no slackening-off.”

Departmental Votes— Estimates, Main, 1921-22 ... Estimates, Supplementary ... £ 16,055,112 341,131 £ 16,396,243 Deduct actual net expenditure 15,692,677 Reduction Expenditure, 1921-22 Deduct estimate, 1922-23 ... 15,502,677 14,703,401 803,566 Reduction 880,276 Total departmental reductions over period effected £1,692,842 Special Acts— Estimates, 1921-22 Add Supplementary £ 4,667,803 5,972 £ Deduct actual expenditure (less advances other Governments) 4,673,775 4,341,466 Reduction Expenditure. 1921-22 Deduct estimates, 1922-23 4,341.466 4,013,754 322,309 Reduction 327,712 Total economies under special Acts over period Departmental reductions as above 660,021 1,692,842 Total economies departmental and special Acts over period £2,352,863

On £14,560,000 ... £136,800 On funding Imperial debt 55,000 By profits on investments, Imperial war stock 63,150 Through deferment of loan-flota-tiori, commissions, etc. 51,000 Treasury bills used instead of selling securities 93,000 Total £696,950

from surplus to Public Works and development accounts .... 25,000 Total £1,676,000 The complete summary of economies, savings, reductions, etc., show: — Actual departments and special Acta from- 1st April, 1921 £2,352,863 Interest and sinking fund charges 696,950 Other economies proposed, effected, and in hand 1,676,000 Total Consolidated Fund ...£4,725,813 Miscellaneous departments and accounts 464,606 Grand total £5,190,419