Sir Joseph Explains “Raiding” of Funds

Sun (Auckland), Volume III, Issue 749, 23 August 1929, Page 10

Sir Joseph Explains “Raiding” of Funds

ACCOUNTS IN PROFIT ANSWER TO MR. COATES (The .S' US .S' Parliamentary Reporter) WELLINGTON, Thursday. An explanation of the "raiding” of accounts was given in the House of Representatives this afternoon by the Prime Minister (the Right Hon. Sir Joseph Ward) in reply to the Budget speech of the Leader of the Opposition (the Right Hon. J. G. Coates). Sir Joseph charactei*ised Mr. Coates's suggestion that post office surpluses should be used to decrease the deficit as improper and contrary to law. Mr. Coates, he said, had mentioned two accounts in particular —the Public Trust and the Main Highway Fund. Mr. Coates had mentioned the taking of half the profits of the Public Trust. It was plain from his remarks that he knew little of the financial operations of the office. The Public Trust must be considered in connection 'with its relation to the Consolidated Fund. He pointed out that there was deposited in the Public Trust an amount of £8,000,000 (debt repayment sinking funds account), at a fixed rate of 51 per cent. There was provision in the Act for this amount to be invested elsewhere, but the late Government had never taken advantage of investing the money elsewhere, and gaining an increased amount of interest for the Consolidated Fund. This meant a loss of £30,000 a year to the fund, and the money could be invested without any injustice being done to the Public Trust. HIGHWAYS FUND

Regarding the Highways Fund, Sir Joseph said that there was sufficient revenue for this from the tyre tax, the motor spirits tax, etc., so that there was no need for the Government to make the annual grant of £35,000. Mr. Coates: The Act says so. The Minister of Finance gave a clear indication that it was so. The Prime Minister: Not necessarily. It was done in accordance with the Act. Mr. Coates said something about that being done with a Government wanting money. Sir Joseph Ward said that the withdrawal of the grant could not have been made under the Act without the authority of the Auditor and Controller-General. In view of the financial position generally in regard to highways, he thought there could be no doubt that the Government was justified in saving the Consolidated Fund instead of increasing the general taxation to obtain the sum of £85,000, which was the sum required. The question of highway grants and the Consolidated Fund would have to be considered very carefully in the future. Regarding Mr. Coates’s suggestions that surpluses from the post office account should be paid into the Consolidated Fund, Sir Joseph said that under the Post Office Amendment Act such surpluses had to be used for the repayment for telephones, renewals, etc. Mr. Coates: The amount is invested in Government stock. Sir Joseph Ward: It is invested for a specific purpose. It is not for the Minister of Finance of the day to borrow from. It must be used for renewals, etc. He went on to say that to suggest that the surplus be used for helping to wipe off the deficit was improper. Next, Sir Joseph referred to the railway funds, which had been made separate from the Consolidated Fund. Mr. Coates had taken the credit for this innovation, and he claimed that he had known the figures about the working of the railways and the short-distance lines. Then why did he do nothing to remedy the state of affairs? He claimed that he had known of the position a year or two ago. The speaker had known it even when he was not in office. He had known that there were large deficits on various lines, and that the railways were going to the dogs. EXTRA REVENUE NEEDED Although the revenue figures for the first three months of the current financial year show an increase, as stated by Mr. Coates, the Prime Minister claimed that Mr. Coates had forgotten about extra expenditure to be incurred by the Government this year. This, he estimated, would amount to £1,570,000. He said that Mr. Coates had made no reference to this expenditure, which was necessary to balance accounts. It was of no value to criticise on the grounds of increased revenue over the first three months the actions of the Government, and say that no increased taxation was necessary. Under present conditions, Sir Joseph was satisfied that the revenue required could not be met by the automatic increase from present taxation, and therefore further temporarv taxation was necessary. If Mr. Coates had stuck to the principle he had enunciated last evening while he was in office, under present conditions he would find himself down at the end of the year to the extent of the extra £1,570,000 expenditure and the loss on the year's working. Referring to the increase of £500,000 on the first quarter’s working, the Prime Minister said that the first quarter's figures were always unreliable, and even if the present rate of increase were maintained, without extra taxation, there would be a deficit of £600,000 on the estimate at the end of the year. On the Reform members’ own statements there would be a deficit. The late Minister of Finance (the Hon. W. Downie Stewart) himself had said last year that even the first seven months’ figures were unreliable. Any Government carrying on on the lines suggested by Mr. D. Jones (Mid-Canterbury) in particular would be placed in a position of financial difficulty.