BALANCING THE BUDGET

Taranaki Daily News, 3 May 1933, Page 9

BALANCING THE BUDGET

INTEREST IN THE METHODS, EFFECT OF EXCHANGE PURCHASE. PROBLEM OF UNEMPLOYMENT. UPPER HOUSE APPOINTMENTS. (News Parliamentary Reporter.) Wellington, May 1. The outstanding and most heartening announcement last week was the statement by the Minister of Finance (the Rt. Hon. J. G. Coates) that the financial year ended on March 31 had closed with a small surplus instead of an estimated deficit of £700,000. This is the first surplus since 1930, when there was a balance of £148,979 in the Consolidated Fund. In 1931 there was a deficit of £1,639,111, and in 1932 another deficiency of £2,140,819. Pending the final audited accounts, which will be published in the Gazette next month, Mr. Coates Would not make any definite announcement as to the amount of the surplus, but he indicated that it would be only “a few thousand pounds.” In a statement to the House on January 27 the Minister estimated a deficit in the vicinity of £700,000, and added that the immediate effect on the Budget of the raising of the exchange rate would be an adverse one “pending the time when business generally can be adjusted to the changed conditions.” Even with the expenditure of £470,000 for purchase of exchange under the Banks (Indemnity) Exchange Act, which had not been previously allowed for, a fairly substantial deficit has been converted into a surplus.

The Minister" states that the altered position is due to continued improve-; ment in the revenue position and substantial savings in expenditure. As it would not be possible to effect great savings in two months of the year, the greater part of the improvement .must be attributed to. revenue buoyancy. Income tax might help to account for this, and there would be almost two months’ returns from the new sales tax and customs duties. These were originally estimated to produce £2,540,000 for a full year, and concessions were made which had a tendency to reduce the amount. Even allowing for one-sixth of this amount, however, there remains a big gap, and it will be interesting to learn how it has been bridged."

"BENEFICIAL EFFECTS.

The unexpected turn in the Budget position will have a. beneficial effect on the State finances for the current year, as... a carry-over of a deficit of £700,000 was allowed for in the forecast which Mr., Coates gave to the. House last session. He hoped then that the shortage for 1933-34 would not be in excess of £3,000,000, but .this was calculated on an estimate of £1,000,000 for the purchase of surplus bank funds in London. The fact that in two months of the export season the Government has already had to find £470,000 for purchase of exchange has been taken to indicate that the State’s liability for this item will greatly exceed that Minister’s estimate, but it is too early yet to make a reliable prophecy on this question.

It is true that before the financial year ends in March next there will be another export season, but it must be remembered also that, there are several months in the year when there are practically no exports and the periodical debt payments overseas by both the Government and local bodies also help to eliminate exchange surpluses. Because the Government has surplus. exchanges on Hand now does not mean that it will not have the opportunity of disposing of these, and in the absence of details of the agreement with the banks and other items it is idle to speculate on the probable liability of the Government. A big factor in the amount of overseas exchanges that will be. utilised is the amount of stocks held by traders, and here again it is impossible to make any reliable estimation. There appears to be a contradiction between the statement . made by Mr. Coates in reply to the Importers’ Federation and the announcement on the Budgetary position. To the unporters he said that in the terms of the agree-, ment with the banks the Government had taken over the surplus London funds, but 'these funds had not so far exceeded the amount needed to meet the Government’s ordinary requirements in London. A few hours later, on the same day, he stated in his review of the financial position that the expenditure from the Consolidated Fund included £470,000 for the purchase of exchanges under the Banks (Indemnity)'Exchange Act; These two announcements appear to be entirely contradictory, although they could be reconciled on the assumption that they referred to different periods. The importers ■ are now urging that the position should be cleared up.

WINTER UNEMPLOYMENT. Further conferences between Cabinet and the Unemployment Board were held this week, and it is expected that the Government will shortly organise ways and means of assisting the board during the winter. With the seasonal, occupations nearly ended the total number of registered unemployed is beginning to climb again, and, although, the board has been conserving its funds, it is making no secret of the fact that it cannot meet the coining winter unaided.. Faced with a deficit the position of the . Government is a difficult one, but it is generally expected that it will give the board some help during the next few months. Some members of Cabinet are of the opinion that the Government shoiild make bulk purchases of foodstuffs and distribute them through the local committees. Another matter on which the Government is expected to make an early announcement is the future policy .in regard to appointments to the Legislative Council. The next retirement due. is that of the Rt. Hon. Sir Francis Bell, whose term expires on May 21. Sir Francis was appointed Leader of the Council in 1912 by the latfe Mr. Massey, and held that office until the defeat, of the Reform Government under Mr. Coates in 1928. He assumed the Prime Ministership after the death of Mr. Massey until the party elected a new leader. During the last two or three years he has been a trenchant critic of the Government on one or two matters of policy, but it is not expected that this will weigh against him when it comes to considering his re-appointment. Sir Francis is recognised as one of the ablest brains in the General Assembly. On June 17 the Hon. J. A. Hanan is due to retire, and he too has had long service in Parliament. He was a member of the Lower House from 1899 to 1925, and held office in the Mackenzie Ministry and the National Government during the war. He is deputy-Speaker of the Council and chairman of the Statutes Revision Committee, which is looked upon as the Council’s most important committee. He, too, would have strong claims for re-appointment BIGGER ISSUE AT STAKE. There is a bigger issue at stake, however, nominally the Council is half the / strength of the Lower House, though it has been much higher and even as

low as 16. At the present time there are 22 members, and some of the members of the Government who have given the matter consideration are of the opinion that the number of Councillors should be limited to 30. It is also held that appointments should be limited to men who have shown administrative capacity or who have been outstanding figures in the community. It is common knowledge that appointments in the past have often been the result of party loyalty, and there is no doubt that the reputation of the Upper House has ,suff- * ered because of this practice.' Party loyalty does not make for independence of thought, which is necessary if the Council is going to bring a critical attitude to bear on' the measures' it is called upon to consider. 1 The new Minister of Public Works (the Hon. J. Bitchener) is now well established in office, but it'is evident that he is not finding the portfolio as onerous as it was when the department was* spending as much as £8,000,000 a year. At the present time there are no policy matters to decide as the department is practically confining its . activities to the completion.of a.few existing works and the maintenance of others. So long as the Government re-' Trains from borrowing this position will be maintained, and it is generally considered that Mr. Bitchener could very well take over some of the work at present handled. by the Minister of Employment (the Hon. A. Hamilton), who is also Postmaster-General and Minister of Labour. The handling of the uneniployment situation is a full-time job, especially as. the Minister is also the chairman of the Unemployment Board;