BRIGHTEST BUDGET FOR YEARS.

Pahiatua Herald, Volume XLII, Issue 12732, 24 August 1934, Page 5

BRIGHTEST BUDGET FOR YEARS.

WAGES TAX REDUCED BY 2d IN THE £. PARTIAL RESTORATION OF CIVIL SEAVANTS’ CUTS. OLD-AGE PENSIONS SHOW 5 PER CENT. INCREASE. MR COATES ESTIMATES A SURPLUS OF £B,COO. United Press Assn.—Bv Electric Telegraph—Copyright. WELLINGTON, Last Night. Features of the Financial statement presented in the House of Representatives last night by Hon. 3. O. Coates (Minister of Finance) are A reduction in the rate of unemployment taxation from Is to lOd in the £ as from October Ist. Exemption from the wage® tax of the salaries or wages received by any person under 20 years of age. In addition, the special exemption of women in receipt of “other income” is to be raised from £2O to £SO, and elderly people and also those persons suffering from mental or physical disabilities with incomes not exceeding £2 per week, will also be exempt. A 5 per cent, increase in the salaries and wages as from April 1 last to all public servants and others charged on the Budget, who suffered both the first and second cut. A 5 per cent, increase in old-age pensions, operative from October 1 next. No alteration is made to superannuation legislation, hut proposals are put forward for the consideration of State employees. The past financial year ended with an excess of expenditure over revenue amounting to £709,278. For the current financial year it is again intended to proceed with a moderate programme of capital expenditure, amounting in the aggregate, to £3.560,000. It is anticipated that funds already in hand, together with departmental investments, will he sufficient to finance this expenditure. For the coming year it is estimated that revenue will produce £24.252.000 (last- year £24,202,027) and expenditure £24,244,000 (£23.492/749), leaving the small surplus of £BOOO. It is hoped next year to be able to make further reductions in taxation.

SURPLUS OF £B y OCO. INCREASEDREVENUE. A surplus of £BOOO at the end of the current financial year was forecast by Mr Coates in his Budget speech in the House of Representatives last night In dealing with the budgetary position for 1934-35. Mr Coates said he found liis task much more congenial than was the case last year. The public revenues were no longer going down, but were moving steadily upward. After stating that this was a definite indication that economic conditions were on the mend, the Minister said it was not necessary to bring down any proposals for increasing taxation. The situation, however, did not yet warrant making any further reductions. Customs revenue during the closing months of last financial year and the first four months or this year had been more buoyant, and he was satisfied that we could rely upon a. comparative increase of approximately £1,115.000 for 'the year. The returns from the sales tax were also satisfactory, and he had allowed for an increase of £300,000 under that heading. TAXATION ON INCOMES. “Income tax last year exceeded expectations, and, as last year was certainly a belter trading year than the previous one. it is reasonable to allow for a further substantial increase* in tax for this year. In the conditions that have prevailed it is difficult to assess the amount of increase to he expected, but, after ireful consideration, :t has been set down at approximately £:690.000. Eaiui tax. on the other I by de< ireases in val-

uations, so for this item I have allowed ior a fall of £20,000 in the yield. “For all other items of taxation excepting beer duty I expect increases over last year’s receipts as follow:—Highways revenue, £156,000; stamp and death duties, £17,000: film-hire tax, £12,00; gold-export duty, £3OOO. Insofar as beer duty js concerned the reduction in import and excise duties already announced will slightly more than absorb the increase that otherwise wbuld have occurred. The aggregate net increase for all items of taxation is estimated at £2,245,000. WAITING QUEUES. Interest in the Budget was evinced by the large queues that formed some time before 7.30. By the time the Minister of Finance commenced to read The Budget all the galleries, except that rc served for Legislative Councillors, were crowded. Some 65 members were :n their seats. The Minister was followed attentively throughout the reading, which occupied an hour and a-quurter. He was subject to a few interjections from the Labour benches, most of which he ignored. At the conclusion he was heartily applauded. The House rose at 8.55. PUBLIC ACCOUNTS. After viewing world conditions, and those in thf Dominion, and dealing with the Government’s policy, M r ( oa t< s proceeded : The improvement in economic conditions during last year was to some < xtemt reflected • in the public revenues, and this fact, combined with a- saving of £250,000 in expenditure, < nabled the defic it lo he reduced from the Budget forecast of £2,094,000 to £709,000. All things considered, it will. 1 think, he generally agreed that this was a satisfactory outcome to a very difficult year. The operations for the year may )< summarised as follow: EXPENDITURE. £. £. Permanent appropriations— Debt services 10,397.332 Exchange ... 1.797,188 Highways ... 1,201.837 Other services 353,797 Annunl appropriations— Social services 6.841,819 Other services 3.610,054 2 4 ;202,027

REVENUE. Taxation .. 17,059,830 Interest- 2,863,856 Other receipts 1.569.063 From reserves 2,000,000 Deficit 709,279 BANKS’ EXCHANGE INDEMNITY. Extensive operations also took place during the year under the Banks Indemnity (Exchange) Act, the amount of sterling purchased from the hanks being £26,684,000. Of this sum, however, £8,500,000 was utilised by the Government for its own requirements, so the net. surplus sterling taken over for the year was £18,184,000. As the Act has now been repealed, I may mention, for the information of honourable members, that, during its currency, covering the period from the 20th January, 1933, to the 31st July, 1934, the total amount of sterling purchased under its provisions amounted to £36,208,0()0, of which £13 ; .198 ; 692 was utilised by the Government for its own requirements. The net amount of surplus sterling taken over was thus £23,009.308. The greater part of the surplus sterling has already been sold to the Reserve Bank at its public buying rate of £124 New Zealand for £IOO sterling, and the balance will similarly be disposed of before the end of September, the whole operations being governed by the maturity dates of investments ill London and of liabilities in New Zealand. The proceeds in New Zealand will be sufficient to pay off the Treasury bills and to extinguish the suspense item, and are being applied to these purposes. TREASURY BILLS. Apart from renewals and conversions. the Treasury bills issued under the Banks Indemnity (Exchange) Act during the year amounted to £29.384,732, of which £12,360.197 had been repaid by the 31st Maich. Thus the net increase for the year was £17,024,535, and this, added to £2.380,337 of bills carried forward from the previous year, resulted in £l9, 404,872 of this of Treasury hills, of which £16.319.672 bore interest. at 5 per cent, per annum and the balance at rates varying from 2£ per cent, to 4 per cent., being outstanding on 31st March, 1934. Bills to more than this amount have recently been redeemed with the proceeds from the sale to the Reserve Bank of New Zealand of surplus sterling. As a result of all operations, the floating debt as at 31st March last amounted to £22,856,981, as compared with £3.965.337 as at 31st March, 1933, an increase of £18,891,644 for the year. The greater part .of the hills issued under the Banks Indemnity (Exchange) Act. were redeemed on the Ist August last and the balance of this class of bill will be repaid shortly. PUBLIC DEBT. Apart from the operations affecting the floating debt, there was a net increase in the amount of the* public debt during the* year of £1,277,394, £491,254 being due to premiums arising under the conversion operations and £786,140 to operations during the year. The successful conversion of £5.000.000 5-per-eent. debt into 3’ _pc*r-cent. securities at 97 in October last, referred to in last year’s Budget was the only debt operation undertaken in London during the financial year. In the Dominion additional long-term debt to the amount of £4,522.765 was raised for the following purposes:— Capital expenditure— £ £ Public works (including hydro - electric supply) 1,662,690 Land for settlements 198,000 M a in high ways 203,000 State forests 75.000 Redemptions o r debt 2,384,075 4,522,765 Of this £4.522,765 raised in New Zealand £1.906,090 was obtained from the public at 3f per cent., while

the balance of £2,616,675 was derived from department investments. Redemptions of long-term debt during the financial year amounted to £3,736,625 ' Thus the additional debt incurred exceeded repayments ny £786,140. Of the redemptions effected, £104,560 was held in Australia and the balance in New Zealand. Thanks to the generosity of Great Britain in extending the moratorium on our funded war debts and certain other debts due to the British Government, no payments were made ‘n respect of this portion of the debt during last financial year. The debt ojierations for last financial year may be summarised as follows :

Debt as at 31st March, 1933 282,622,958 Plus net increase in floating debt (mostly temporary) as previously mentioned ... 18,891,644 301,514,602 Plus net increase £ £ in long-term debt—(a) Due to loan conversion ... 491.254 (b) Due to operations during year 786,140 Public debt as at 31st March, 1934 ... 302,791,996 MODERATE EXPENDITURE. The new loan-moneys raised last financial year, agumented from balances in hand, were used in carrying c>ut the programme of capital works outlined in last year’s Budget., although the expenditure in respect of some of the items was less than was anticipated. For the current financial year it 5s again intended to proceed with a moderate programme of capital expenditure amounting in the aggregate to £3,560,000. It is anticipated that funds already in hand, together with departmental investments, will he sufficient to finance this expenditure. Accordingly, it will not be necessary to issue any special loan or make any further offer of Government- securities to the public this financial year.