SUGGESTED ECONOMIES

Sun (Auckland), Volume IV, Issue 985, 30 May 1930, Page 13

SUGGESTED ECONOMIES

PRIME MINISTER’S PLANS

REDUCING RAILWAY LOSS Special to THE SVN WELLINGTON, Today. In his review of the financial situation. the Prime Minister, the Hon. G. VC. Forbes, indicates the ways in which the Government hopes to effect econoThe net expenditure out of the Consolidated Fund last year amounted to approximately £ 25.200,000, of which £117,227,000 was incurred under permanent appropriations, that is to say, continuous authorities, and £ 7.973,000 under annual votes, which comprise the departmental expenditure, numerous small grants and subsidies, and various miscellaneous items, says the Prime Minister. Nearly half the latter amount, or £3.219.000, was for education, in connection with which there is practically continuous pressure for more and more expenditure in various directions. In addition to the vote, there is expenditure under various Acts of Parliament included under permanent appropriations. and also out of the revenue from national endowments and reserves. Then there is the annual charge, amounting to about £ 350.000. for interest and debt repayment charges on the loan expenditure. Thus the total ifnnual cost of education is at present more than £4.000,000. and it is steadily increasing year by year. In reviewing the expenditure this huge annual cost of education requires serious consideration, and the question arises whether the limit of the burden on the taxpayer has not been reached. NAVAL AND MILITARY DEFENCE Another large item of expenditure that calls for serious overhaul is naval and military defence, which in total is costing the taxpayer more than £1,000,000 a year. This is a heavy Grain on the Consolidated Fund under present conditions, and. as was announced by Sir Joseph Ward some weeks ago. steps are being taken to bring the whole defence policy under review. In the meantime the suspension of military camps will enable considerable savings to be made. The votes generally are being very carefully examined, and for this year departments will be allocated only such amounts as will enable them to carry out their proper normal functions efficiently, while exercising continuous rigid economy in detail. In this way it is hoped to save over £500,000.

Of the £17,277.000 of expenditure under permanent appropriations, £10.697,000 is interest and debt repayment charges where no reductions are possible. Debt charges, of course, are governed by the amount of the public debt and the purposes to which the borrowed capital is applied. Capital used for State advances and other purposes that are earning full interest obviously imposes no burden on the taxpayers as such. But great care must now be used in investing further loan moneys in purposes for which the return is indirect.

Another aspect of the matter that needs careful consideration is the involved question of what should be provided out of revenue and what out of loan capital. Even in the commercial world this question is on occasions the subject of diverse opinions, but in State finance where the “public Intertest” is the broad aim as opposed to “profit” i— private enterprise, the problem much more difficult of solution. In short, what the Government will aim at will be to arrange its programme of development in such a way that the interest and sinking fund charges on the loans raised for the various purposes will be absorbed without causing the country financial embarrassment. At the same time, every endeavour will be made to‘ensure that 20s of value materialises for every £1 expended.

Deducting interest and debt repayment charges, there remains on the basis of last year’s figures £6,530,000 of expenditure under various special Acts of Parliament. This amount included approximately £2,750,000 for pensions and family allowances, a rigid item where no curtailment o£ expenditure is possible without altering the basis of the various pensions schemes. In fact, an automatic increase in pensions is to be expected annually. A further £3,500,000 consisted of automatic transfers of petrol-tax and other ear-marked revenues to the Highways Account and the local bodies, while £910,000 was absorbed ir. subsidies to hospital boards and local authorities on rates, and £380.000 for subsidies to the Superannuation Funds and the National Provident Fund. Apart from these items, the expenditure under special Acts of Parliament amounted in the aggregate to £990,000, so that it will be seen that the scope for reductions is not nearly so great as the total figures would lead one to expect. CURTAILMENT OF SUBSIDIES Part of the subsidies to hospital boards is on account of capital expenditure. In view of the financial position, hospital boards will be requested to reduce capital expenditure to an absolute minimum in the interests of both the taxpayers and the ratepayers. At present bequests and voluntary contributions for public purposes are generally subsidised bv the Government. I am afraid that this! expenditure will have to be curtailed and subsidies withheld in cases where no undue hardship will result from such action. For instance, many bequests aro in the nature of “windfalls.” and quite additional to the normal finance, the institution benefiting. Obviously no serious hardship or disorganisation can result from the withholding of the subsidy in such cases. It is probable that further savings can be effected in connection with other statutory payments and each one will be examined closely in the light of the principles that I have already enunciated. Further, all special funds will be reviewed in connection with making good the Budget shortage. In regard to highways, as I have already indicated, the whole policy will have to be dealt with from the point of view of promoting co-ordination with the railways. ECONOMY IN RAILWAYS The fact that the railways ha\e reached the end of their financial resources and are unable to meet a larg? part of their interest charges is the principal cause of the present financial predicament. Before calling upon the taxpayer to make good the shortage, it is the intention of tlie Government to have the expenditure of th*» department minutely overhauled with a view to obtaining the greatest possible economy in operation. In order to do this, the Government proposes to set up a special commission from outside the Public Service to investigate fully all branches of the department’s activities and advise the Government where economies can be effected.