NATIONAL STOCKTAKING

Taranaki Daily News, 26 April 1930, Page 11

NATIONAL STOCKTAKING

DOMINION’S FINANCES REVIEWED STEWARDSHIP OF THE GOVERNMENT UNEMPLOYMENT RELIEF SCHEMES (Government Message.) Rotorua, April 24. “I am now in a position to announce some preliminaryfigures of the results for last financial year,” states Sir Joseph. Ward m Ms promised statement. “The returns are not-yet absolutely complete, and the accounts are all subject to audit, but m the Pp^ inlr J' ary figures I have indicated that the year ended on Mai eh 31 closed with I surplus Of approximately £150,000. Taking a 1 the rnreumstances into account Tthink it will be agreed that the position d ■ closed is a satisfactory one.

“It will bo remembered that on taking office the Government were unfortunate office the Government was unfortunate in falling heir to a deficit The Government, however, did not hesitate to do its duty and, notwithstanding strenuous opposition in tho House, prompt steps were taken to remedy matters. In this connection when the Government taxation proposals were under discussion it was maintained by the Opposition that they were entirely unnecessary, and a surplus of f 1,000,000 or more was freely predicted in and out of Parliament. Now that the year is over it will be seen that the additional taxation was in fact absolutely necessary. “A State, with its large resources, can bolster up an unhealthy position for a much longer period than is possible for a private business, but the ultimate result must be the same in either case. .A Government’s term of office depends in the long run on its management of the public finances, and solid progress cannot be made unless the State pays its way. We as a country cannot afford to ; have a deficit very often while we are ‘ dependent upon overseas investors to provide a large part of the capital for developmental purposes. Putting on additional taxation is never a popular thing to do, but the facts have proved that the Government was acting in the true interests of the Dominion in puting forward proposals last year to ensure a balanced Budget. REVENUE ABOVE ESTIMATE. i “The revenue received during the year j amounted to approximately £25,350,000,| which is about £1 SO,OOO in excess of the Budget estimate. The Customs revenue I exceeded expectations and was nearly i £500,000 in excess of the estimate. A substantial falling off in the last few months of the financial year was anticipated, but it did not eventuate. Incometax exceeded the estimate by £130,000, and land tax by about £lO,OOO. Against these increases the estimates of stamp and death duties failed to materialise, to the extent of approximately £210,000. The petrol tax and other revenue ear-marked for highways showed an increase of nearly £70,000 over the estimate, but this item, of course, is offset by an equivalent additional amount transferred to the highways account, or distributed to local authorities. Then the writing off of £8,100,000 of railway capital, effected by the legislation passed last session, resulted in tho interest receipts from the railways being £310,000 below the amount allowed for in the estimates. “In round figures the expenditure amounted to £25,200,000, including £17,230,606 under permanent appropriations and £7,970,000 under annual votes. Under permanent appropriations is included tho expenditure on interest and debt repayment) pensions, subsidies to hospital boards and to local bodies, and ■other permanent items payable under various Acts of Parliament. Debt charges all told absorbed £10,695,000 and other payments under the Acts amounted to £6,535,000. Details of these payments are not available at present, but the expenditure will, of course, be fully analysed in tho Budget. "The position in regard to departmental expenditure included in the annual votes is very satisfactory. As stated in the Budget the estimates for last year were most carefully overhauled before being finalised. Even so, a rigorous control over expenditure during the year resulted in savings under mo'4 of the votes, and these savings in the aggregate amounted to about £220,000. TRADE AND BANKING. “Having such a relatively large external trade this Dominion is very much concerned with the state of trade in other countries, and particularly in Great Britain, where the greater part of our exports are sold. Happenings in the realm of international finance and tho "eneral economic conditions operatin'' abroad have in. the last few months brought about a marked change in the economic position and outlook of the Dominion. As a result, qf falling prices and delay in realisation the value of exports has declined, considerably and during the last financial year were hardly sufficient to pay for the year’s imports, which showed an increase of vious financial years, however, there was about £4,000,000. During the two prean excess of exports amounting to approximately £22,500,000, so that over the longer period the trade balance is satisfactory. ‘‘The published banking figures for the March quarter of 1930 show an excess of deposits of £355,000, as compared with £8,985,000 for tho same quarter of the previous year. This decline in the relative position was brought about by a slight fall in the volume of deposits and a considerable increase in advances. The change in tho banking figures, of course, is largely the effect of the change in the trading figures. The rise in imports and advances, however, indicates increased activity in business.

"The exceptional .conditions ruling

outside the Dominion have given rise to high rates of exchange, which rates arc by no means a true indication of the present financial position of the Dominion. In fact, tho position is quite a sound one and, but for outside influences, would have been regarded as normal. SPECIAL LAND TAX. “As additional taxation was unavoidable last year the Government endeavoured to place the additional burden equitably, and at the same time to cieato as little disturbance as possible in business and trade, in order that the economic progress of the Dominion should not be hindered. As it was considered that the large farming incomes had not borne their fair share of taxation in recent years a special land tax was imposed on large rural estates with an unimproved value of over £14,000. Large farming incomes were also made assessable for income subject to a set-off of the amount paid in land tax. In order to ensure that the special land tax should not impose undue hardship in particular cases provision was made in tho legislation for a special hardship commission to which land-own-ers were at liberty to state their case. This commission was given an entirely free hand by the Government, which has accepted its decisions in all cases. As a result the special land tax has been wholly or partly remitted in a number of cases.

“In matters of taxation, as in many other things governed by arbitrary rates, absolute justice can never be completely attained, but the provision for appeal in the case of the special tax at least prevented unduo hardship being imposed on particular individuals. After deducting remissions, amounting to nearly £106,006, tho special land tax brought about £250,000 additional revenue. The data obtained from the income tax returns of large farming incomes has not yet been fully analysed, but it is clear that the contention contained m last year’s Budget that the large farming incomes have not in recent years carried their fair share of taxation was in accordance with tho facts. This is proved by the fact that a considerable amount, definite figures not being available yet, -was derived from income tax ■on farming incomes after deducting land tax. both ordinary and special. This means that previously some farming incomes were contributing ‘ less than half of their fair share of taxation. It will thus be seen that the Government was justified in placing part of the necessary additional taxation on this section of tho community. ADDITIONAL PRIMAGE DUTY. “To provide the balance of the additional revenue that was required to bridge the gap between. the estimated revenue and expenditure for last year the primage duty on imports was increased from one to two per cent. Primage, of course, is purely a revenue duty imposed upon practically all imports, whether dutiable or not, so obtaining tho additional revenue through this channel meant spreading the burden equally over the whole community. “The additional impost on individual classes- of goods from a retail point of view is practically negligible, but even so tho Government did not desire the tax to remain upon food any longer than was absolutely necessary. Accordingly it was provided in the empowering legislation that the additional primage duty on foodstuffs and manures was to be liften automatically on March 31, J 930. Accordingly, all such goods are now subject to the normal 1 per cent, primage duty only. “In regard to the additional primage duty on other classes of goods it is. prescribed in the Customs Amendment Ait, 1929, that this may bo terminated at any time by Order-in-Council. It is not usual, however, between parliamentary sessions to make any forecast as to what will be done regarding Customs taxation, and I do not intend to make any pronouncement concerning it at this [juncture. The matter will be dealt with i when tho whole of the financial pro- . posals for tho current year are finally under review.

"With a view to ensuring that the financial year will close satisfactorily and in the interests of the taxpayers it will be necessary for all items of expenditure to be overhauled with a view )to possible curtailment. Accordingly, as [already announced, it has been decided to suspend all territorial camps, .pending a careful consideration by tho Government of the wholo system of land defence. Tho Government’s proposals on the matter will be submitted to Parliament in due course, when the whole matter will bo open for discussion. In the meantime no further camps will take place.

SUPERANNUATION AND SALARIES.

"As indicated in my last Budget the financial position of the State superannuation funds was found io be very unsatisfactory, owing to the neglect in the

past to give effect to tho actuarial reports and certificates in respect to subsidies. A special committee of inquiry has been set up and is now exploring the position fully. In the meantime I am pleased to say that I have been able to do something during the past year m the direction of increased subsidy payments, which were long overdue. An additional amount of £175,000 is being paid for this purpose. I am also glad to say that in respect to tho lower paid Post and Telegraph employees an improved scale of salaries has been adopted and put into operation. “The public debt on March 31 last amounted to approximately £267,380,000, tho figures again being provisional and subject to audit. This is a net increase of £3,130,000 for the year. _ It may be explained, however, that this unusually small increase was due to the fact that £5,380,000 of the new loan moneys raised in the previous financial year, being part of the £7,000,000 London loan raised in January, 1929, was really part of this year’s finance. The now loan moneys received during 1929-30 totalled approximately £5,700,000, including £1,620,000 in London, being the last instalment of the £7,000,000 loan of January, 1920, and £4,080,000 obtained from local issues. As a partial set-off against these new issues there were redemptions of debt dining the year amounting to about £2,510,000, leaving the net increase at £3,190,000. “As already stated, of the redemptions some £406,000 represented funded debt payments to the British Government and £1.160,000 the operations under the statutory debt repayment scheme, while £260,000 came from reparations and the balance from other accounts. The most important debt operation during the year was the satisfactory arrangements made for dealing with the balance of the 4 per cent. New Zealand consolidated stock, which was due on November 1; 1929. On April 1, 1929, there was still £11,274,000 of this stock in the hands of the public. A further conversion offer to convert up to £5,000,000 of the 4 per cent, 1929 stock into 5 per cent, stock at par to mature July 1, 1945 (with an option to tho Government to redeem on or after July 1, 1935), together with a cash payment of £2 per cent, on November 1, was made to holders of the old stock in September, 1929. This ofler was underwritten and was taken up by the holders to the extent of £3,628,000. “In view of the fact that the London money market at that time was seriously disturbed by the reactions from the boom on the New York Stock Exchange, coupled with the Hatry affair and the outflow of gold to the European market the Dominion was fortunate in placing the stock on these terms, which were favourably commented upon by London financial papers. The remaining £6,274,000 of the 1929 stock was cither purchased before maturity or repaid at maturity. The necessary funds for these operations were provided from New Zealand, £672,0'0'9 being provided out of debt | repayment moneys and the balance from j the proceeds of local issues in redeinp- ! tion.

LARGEST TRANSACTION RECORDED

“The conversion and redemption of tho £29,496,060 of 4 per cent, consolidated stock was the largest and most im-’ portant financial operation in tho Dominion’s experience and, when it is remembered that it had to bo largely carried out over a period when the London money market was adversely affected by international complications, it will be realised that the Dominion is to be congratulated on the successful termination of these large operations. It may bo added that the transaction resulted in approximately £1,170.000 of the debt being repaid and in about £6,C00,060 of debt being transferred from London to New Zealand, which fact is of considerable significance economically. “While dealing with the public debt I i would like to refer briefly to the rise in tho interest rates at which local issues are made. The rate was increased from 5 1-8 per cent, to 5} per cent on January 9, 1930, and I have received many protests against the action taken. In this connection I need hardly say that the Government is desirous of obtaining as cheaply as possible the necessary capital for carrying out its policy in connection with public works, laud settlement, State advances, etc. It was found, however, that as a result of the high rates offered in Australia and the relative scarcity of capital that the amount required by trie' Government could not be obtained at the rates previously offered.

“The local requirements of the Government were also affected by the large sums it was found advisable to provide for the redemptions of 4 per cent; consolidated stock already referred to. The Government cannot control the price of money any more than it can control the price of butter or any other commodity for which there is a world-wide market. The Government, in order to carry on its programme approved by Parliament, thus had no option but to increase tho rate of interest on debentures and inscribed stock issued in New Zealand. LOANS FALLING DUE. “During tho current financial year loans falling due in New Zealand include the following amounts held by the public: £1,6-11,680, bearing interest at 5.} per cent., due July 1 next; £326,900, .bearing interest at 5 per cent., due on July 15 next; £4,887,840, bearing interest at 4} per cent., due on September 1 nex£. “In regard to tho first two loans I have to announce that holders of the securities will be offered a renewal for a further period from the respective maturity dates to February 15, 1937, with interest at 5Ya per cent., payable on August 15 and February 15. Holders of inscribed stock will shortly be communicated with direct from the Treasury. The terms to be offered to the holders of securities in the £4,887,846 4J per cent, loan will be announced later.

“One of the chief planks of the Government’s policy on taking office was to provide all. the capital necessary to enable the State Advances Office to cope with the demand for loans. When the Government took office I found that there were several thousands of applications on hand, involving an amount of about £4,660,660. In these circumstances tho Government gave the matter of State advances its immediate attention, and in a few months the accumulation of applications was overtaken.

"Since the Government assumed office in December, 1928, up to March 31 about 11,800 applications for loans, totalling £13,350,000, were received. Loans authorised in this period totalled approximately £0,540,000, including £5,195,000 to 4330 settlers and £4,345,000 to 5170 workers. Tho loans actually paid amounted to £8,070,000, including £0,920,000 during the last.financial year. This last item constitutes a record for the

office. This achievement of the Government, in addition to providing capital for tho purchase and development of rural lands, enabled many farmers to rearrange their finances and obtain the savings arising from, long term instalment mortgages with freedom from financial worry. The assistance thus rendered has undoubtedly aided in carrying out the Government policy of closer land settlement.

“Further, the expenditure of a large sum of money in providing comfortable homes for the people has very materially assisted in solving tho housing problem throughout tho Dominion and lias incidentally been the moans of stimulating tho timber industry and of providing work for a large number of people, including builders, carpenters, painters, plumbers and other tradesmen. In thia way the activities of the State Advances Office have indirectly been of considerable assistance to the country in dealing with tho unemployment problem. INTERMEDIATE RURAL CREDITS. “Complimentary to the State Advances Office there is the system of rural intermediate credit which was designed and constituted to bridge the gap between the long term instalment mortgages and the day to day current account facilities offered by the banks. Accordingly ] tho Rural Intermediate Credit Board is empowered and intended to assist the man on tho land by granting advances as cheaply as possible (the present rate of interest being 6% per cent.) for clearing, fencing, draining, buildings and other farm improvements and the purchase of implements, stock, seeds, etc., tho marketing of produce and generally tho year to year finance of farming operations. “During the last session of Parliament an amending act was passed to make the system more workable, and among other things the maximum amount that could bo loaned to a farmer was increased from £l6OO to £2060. Following this amendment arrangements have been made by the board to grant special credit facilities calculated to be of particular benefit to sheep farmers and grain growers. Under these special arrangements the board will fix the limit of advances for individual farmers, who will then be able to draw the money as they require it, interest being charged on the amount outstanding only. "RELIEF OF UNEMPLOYED. "Unemployment velief is a matter which has been receiving the earnest attention of tho Government ever since it assumed office. It was recognised from the start that a permanent solution of the problem was a matter that would take time, involving as it does the stimulation and expansion of industries, primary and secondary, and particularly the former. In this connection every endeavour is being made to foster a farming spirit, to have more land brought under cultivation, to obtain closer settlement of existing farm lands and generally to assist the farmers to increase the total production of primary produce. “Pending tho working out of these far-reaching economic changes the Government has not neglected the question of providing immediate work for the unfortunate members of the community who otherwise would suffer. Arrangements were made to provide additional employment on public works in various parts of the Dominion. The necessary financial provision was made during tne short session in December, 1928, when Parliament also authorised an increase from £306,000 to £406,0'00 in the total amount of the subsidy which could be paid to local bodies in respect of relief works undertaken by them. Later a special committee of Cabinet was set up to .organise additional work through l the various State departments and generally to deal with unemployment. ADDITIONAL WORKS PROVIDED. “Additional works provided have, for the most part, been on road and main highways construction and afforestation, while railway trunk lines completion and lands improvement and irrigation works have been speeded up. These are all. useful and necessary developmental works. As most of the work was undertaken on the co-operative principle and the men paid by results at prices which would enable men of fair average ability, working industriously, to earn the Government standard daily rate of wage the taxpayers have generally received value for the money expended and the workers a reasonable reward for their labour.

"Since the present Government assumed office 26,635 men have been provided with employment through Government labour bureaux throughout the Dominion. Of that number 16,380 were placed on Government works, 6106 with local bodies and 4146 with private employers. When men are sent to Goveminent works they are given orders for their fares and meals en route and the cost is later deducted from their earnings. It may bo added that 3766 men have refused Government work offered to them while 9735 have left Government relief works of their own accord.

“As is well known, in accordance with the undertaking given by tho Government last year practically every ablebodied man who was registered as unemployed at Government labour bureaux •was provided with work in October and November, 1929, if he, was willing to accept it.

THE CABINET COMMITTEE.

“The Cabinet employment committee still holds frequent meetings ami the position regarding unemployment in the various parts of tho Daminion is reviewed and instructions are issued for tlio placing of additional men on Government works when other employment is not available. Tho expenditure by tho Government in providing additional work during the last financial year (1929-30) amounted to approximately £1,300,066. This ' includes £906,000 expended by the Public Works Department, principally on roads and highways; £206,000 by the State Forest Service in accelerating the programme of afforestation; £180,600 by tho Railway Department and about £20,000 by the Lands Department. In addition, subsidies to local bodies on account of relief works amounted to £112,500, so that tho total cost to the State for the year was £1,412,500.

"The period in which local bodies, could raise relief of unemployment loans without taking a poll of ratepayers, was extended last session. to June 30, 1930. During tho last financial year 18 applications from local bodies to raise such loans, totalling approximately £.12,000, were sanctioned by the Local Government Loans Board. Subsidies to local bodies authorised during tho year

amounted to about £117,606, and' the amount which was actually paid to local bodies?, was £112,500.

“Finally I may say that the special committee set up to investigate the problem of unemployment has submitted its final report, which is being very carefully considered by the Government. Definite proposals arising out of the work of this committee and the investigations made by. the Government itself will be submitted for the cration of Parliament jiext session.”