FALL IN NATIONAL REVENUE

Sun (Auckland), Volume IV, Issue 985, 30 May 1930, Page 1

FALL IN NATIONAL REVENUE

MR. FORBES FACES THE FACTS

MORE TAXATION; RIGID ECONOMY HEAVY LOSS ON RAILWAY SERVICES

Special to TUB SUN WELLINGTON, Today. TO sum up, it is estimated that there is this year a Budget shortage of about .£3,000,000,” said the Prime Minister, the Hon. G. W. Forbes, at the close of a statement on the Dominion s financial position, issued last evening'. “This shortage must be made good out of savings or increased revenue or both. In view of the contraction in the national income due to falling prices, the Government is especially anxious that as much as possible of the amount is obtained through savings.”

•"Drastic measures are essential if any worth-while progress is to be made in this direction, continues Mr. Forbes, and it must be recognised that not only is the Government unable to enter into fresh commitments at present, but that savings cannot be made without a curtailment of some of the existing services. "It is probable after all feasible economies are made, that some additional taxation will be unavoidable. However, it is with confidence that 1 appeal to all sections of the community to face the unpleasant hard facts quietly and resolutely, and accord to the Government solid support and co-operation, in order that the diffculties of the position may be surmounted without strain, and with as little disturbance as possible in the economic life of the people. The principal factors contributing to the £3,000,000 deficit are a predicted drop of £1,000,000 in Customs revenue; a drop of £250,000 in other taxation; a railway loss of £1,250,000; and a general growth of £500,000 in expenditure. WILL TACKLE PROBLEM

"It will be seen from what I have already stated that the Government has to cope with a falling-oif in the revenue of the Consolidated Fuud amounting to something like £2,500,000. In addition, in the ordinary course, there will be automatic increases in debt charges, pensions, and other statutory payments of a rigid nature, so that if the various services at present supplied by the State are all to be carried on as heretofore, an increased expenditure of about £500,000 would be necessary. A shortage of £3,000,000 —that is thij position as I find it, without doubt a formidable problem for any Minister of Finance to solve. "Still the Government is ready to tackle the problem resolutely, and, given the co-operation and support of the members of Parliament and the people generally, I am confident that the position can be met and the Budget balanced, as, of course, it must be, without any serious hardship, for the general financial position of the Dominion as a whole is quite sound, and courage, determination, and a capacity for hard work are typical characteristics of the New Zealander. SCOPE FOR DEVELOPMENT "Then, of course, the scope for development in this naturally well endowed country is very large, and “hard times” like the present can best be met by redoubling our efforts to tap the potential wealth of the Dominion, in the immediate present, however, it must be recognised that we have to cut our coat according to our cloth, both privately and nationally, and review our expenditure w r ith the object of temporarily eliminating or curtail-

ing such items as can be most easily dispensed with. This is the line of action the Government proposes to take in balancing the Budget for the current financial year. “Needless to say, every effort will be made to obtain the greatest possible economy in administi'ation, but as this is a matter that has already received considerable attention, there is no possibility of saving anything like the £3,000,000 a'equired in this way. Accordingly, befoi-e considering the question of inci-easing taxation, the Government is reviewing the services at present supplied by the State, and by services 1 mean monetary assistance granted as well as work done by State departments. It is proposed to curtail or even suspend services where this can be done without upsetting the basic organisation of the departments or causing undue hardship to the institutions oi- sections of the community who are indirectly benefiting by particular items of expenditure. In other words, we have to determine what is essential and what is not, and for this year, at any rate, eliminate or at least severely curtail the non-essentials. THE RIGHT COURSE

“Under the circumstances most people will agree, I think, that this is the right course to adopt, but in dealing, for instance, with grants and subsidies, the institutions or sections of the people directly benefiting naturally have a somewhat biased opinion as to what is essential, and the Government is left with a rather invidious task. However, reductions in expenditure are the only alternative to heavy increases in taxation, and in the interests of the country must be made.

“Accordingly I appeal to the people to view the matter from a national standpoint and support the Government in carrying out an unpleasant duty.” The Prime Minister then goes into mies. He gives notice of curtailment the question of the suggested econoof subsidies for public purposes; of reduction in the expense on education, and on naval and military defence; of an economy overhaul of the Railway Department; and the curtailment of services performed by State departments that aye not strictly essential. A special commission is proposed to investigate all branches of the Railway Department's activities. The Prime Minister also announces that hospital boards will be required to reduce capital expenditure on which State subsidies are payable. It is probable, Mr. Forbes states, that some additional taxation will he unavoidable. Mr. Forbes’s actual statement of the -finances appears on Page 10, and * his suggested economies on Page 13.