UNEMPLOYMENT

Southland Times, Issue 25301, 3 June 1935, Page 9

UNEMPLOYMENT

FINANCES OF FUND PROGRESS CONTINUES (Special to the Times.) Wellington, June 1. A matter of particular interest to the public which was dealt with at the last meeting of the Unemployment Board, was a report .on the board's finances as at the end. of the financial year, 1934-35. The annual statement to the board, from its accountants is one to which the board always gives lengthy consideration, as upon it depends very largely the margin of reserve to which the board may look for funds with which to finance new policies in unemployment relief for the ensuing twelve months, and what is still of urgent importance this winter, measures for providing some additional comforts for the unemployed during the cold season. “The considerations mentioned are of direct importance to those whose normal avenues of employment have not yet reopened after the depression, but the Board’s annual review of its revenue receipts are of interest also to the public generally on account of . the clear reflections which it gives of recent trends in the economic position of taxpaying citizens throughout the Dominion,” remarked the Hon. S. G. Smith (Minister of Employment) in making available to the Press particulars of the Board’s finances for 1934-35. “These reflections,” added Mr Smith, “are this year as pleasing as they are clear. “I regard the revenue from salary and wage-tax as a particularly direct and useful indicator of the current income position of the average citizen,” said the Minister, “for the reason that this tax is paid as and when salary and wages are received by the taxpayer. For this reason it gives, in my opinion, an even more close-up view of the situation than do either customs or in-come-tax returns, especially as the latter is not payable by thousands of small wage and salary earners. “Probably more often than otherwise, the Minister of Employment is concerned with unwelcome news, and I accordingly take special pleasure in being able, bn this occasion, to announce that, from the returns of salary and wages-tax for the past financial year, it is calculated by the board that a rise of £3,600,000 has taken place during the year in the wages-bill of the Dominion. This deduction remains true in spite of the apparently contradictory. fact that the Board’s revenue from that particular tax fell in the same twelve months by £72,000 compared with the previous year. This reduction in tax and the estimated increase in earnings are, of course, easily reconciled when it is recalled that during last year the rate of the tax was lowered from 1/- to lOd. in the pound, and that from the 12th November last, persons under twenty-one years of age were wholly exempted from it. The amount received into the Unemployment Fund from this tax was £2,794,000. Revenue From Levy. “Revenue from levy payments amounted to £414,000, which was £lB,OOO less than last year, the reduction being due to the fact that relief workers were granted last year the concession of paying levies on only 1/insfead of 5/- per quarter. This tax being on a flat rate basis, the returns from it do not offer the same interest as an indicator of economic conditions, as do those from the salary and wagestax, although it provides a very substantial portion * the board’s revenue. “From the point of view of revenue into the Unemployment Fund, the most marked improvement is shown under the heading of returns from taxation on incomes other than salary or wages, which, after allowing for an item of £38,000, representir.-! some revenue received in advance, amounted to £l,314,700, an increase of £200,000 over the previous year’s figures. The rate of this ta:; was also reduced in 1934 from 1/- to lOd. in the pound, so that the rise in this class of income which was necessary to off-set the reduction in tax and yet produce £200,000 more in taxation, clearly must have been substantial, '.he Board calculates it to be £6,388,000, or an increase of 281 per cent; but satisfactory as this result is, it cannot be viewed, as a recent indication of the state of affairs with the taxpaying community, with quite the same optimism as is warranted by the l .ilary and wages-tax figures mentioned earlier. It has to be remembered with due caution that the tax on income other than salary or wages is derived from incomes earned in the year before the tax is levied on it—in this case the year 1713-34—and it has to be borne in 'nd particularly that in that y ,ar ther. was a sharp rise in wool values which has not, unfortunately, bean fully maintained sine C Inspection. “It is proper to mention too,” said Mr Smith, “that the closer inspection now maintained by the board of payments due under the headings both of salary and wages-tax and tax on ‘other income’, has contributed in good measure to the improved returns into its funds. In this connection I might mention that it is found by the board’s inspectors that omissions to pay these taxes lie broadly with two classes of persons—those whose omissions are due to honest ignorance of their obligations under the Unemployment Act, and those who know but are prepared to risk prosecution if discovered. The board’s inspectors are, in the course of their duties, making the former class better acquainted with their obligations, and are bringing increased numbers of the latter type to the notice of Magistrates for enlightenment. “I should like on this occasion,” went on the Minister, “to forestall what have come to be almost regular misunderstandings—not always accidental with some critics of the board I am afraid — about the surplus in the Unemployment Fund, as published quarterly in the New Zealand Gazette. These gazetted returns are published by Treasury as a matter of departmental routine, and deal only with the purely cash position at the date concerned, taking no account of forward commitments, accounts due but not paid, revenue received in advance, the cost of measures which the board has under contemplation but has not yet made commitments for, nor the need for maintaining a certain reserve against sudden demands on the fund as a result of unexpected rises in unemployment registrations. It is obvious that if the board conducted its affairs so that at the last day of each quarter its outgoings precisely balanced its income, relief workers and the Board’s various creditors for goods and services would have to face a very lean period until the next quarter’s revenue began to accumulate again, and that no funds would ever be available for developing avenues of full-time work at standard rates of pay. The following table sets out the year’s finances in the simplest

possible form, which should leave no room for misunderstanding:—

* In the ordinary course, it is expected, of course, that portion at least of this item can be met from the next year’s revenue. ' “Final figures naturally cannot be ascertained,” containued the Minister, “until the whole of the outstanding accounts for 1934-35 expenditure are received and passed for payment, but I am advised that the estimated surplus will not be materially altered. The net increase in taxation revenue for the year, compared with the year 1933-34, was £109,386. Improvements Effected.

“Having due regard to the fact that rationed unemployment relief allocations and sustenance payments are in fact merely relief and do not pretend to fill adequately the gap left when a worker loses the wage obtainable from his ordinary employment, the board views with satisfaction the improvements which it has been able to effect during the financial year under review. Relief payments are higher now than they have been at any stage before, excepting a few months shortly after the relief system started; relaxations in rules (involving in practically all cases increased cost) have been made in various directions with a view to infusing a more sympathetic spirit into the administrative organization; children between the ages of sixteen and twenty are now classed as dependents when they are wholly dependent and their fathers are in receipt of relief; the system of granting supplementary rations has been extended from the four main centres to serve unemployed in all the larger secondary towns; a more liberal scale of private earnings which an unemployed man may receive before affecting his relief allocation has been adopted; a further issue of working boots has been arranged; and married men are to receive, as supplies come to hand, a pair of good double blankets. All of these measures, and numerous others which have been put into effect in the ordinary course of administration, have conferred direct and substantial benefits on those who are regrettably compelled to rely on the Unemployment Fund for assistance; but 'they have been costly, and certainly could not have been even remotely possible had the board succumbed to tire pressure of those whose urgings would had led it to abandon all financial prudence in administration and live only for the day. n “Progress is definitely being made, concluded Mr Smith, “towards a better state of affairs for the unemployed, without, I hope, imposing any heavier burden on those other citizens who are providing the board with its funds. There has not elapsed since I took over the Ministry of Employment, sufficient time for me to see personally all the difficulties and the resources of the various districts throughout the Dominion but as soon as I have been able to do this I shall hope to have some definite statement to make regarding new proposals which, in consultation with my fellow members of the Unemployment Board, I have under consideration.”

& Cash balance carried forward from 1933-34 621,518 Add receipts from all sources during 1934-35 4,623,560 Total amount available during 1934-35 5,245,078 Deduct amounts paid out during 1934-35 3,912,909 1,332,169 Deduct 1935-36 revenue received in advance 38,225 1,293,944 Deduct accounts due but not yet paid at March 31, 1935 366,683 927,261 * Deduct commitments made on or before March 31, 1935, but which do not fall due until after that date 639,821 Surplus not committed at March 31, 1935 287,440