SURPLUS £1,812,365.

Star (Christchurch), Issue 17350, 24 July 1924, Page 12

SURPLUS £1,812,365.

BUDGET PROMISES TAX CONCESSIONS. GOOD YEAH PAST. T have again the pleasure to submit for the. consideration of honourable members annual statements of account which furnishes a record of progress-and unmistakable evidence of a continued return to prosperity. The revenue has been equal to expectations, and the expenditure has been kept down wherever possible to do so without loss of efficiency, with the result that there is a substantial surplus of revenue over expenditure. CONSOLIDATED FUND. REVENUE. I estimated to receive during the year a total ordinary revenue of £27.969,000; the actual amount received was £27,960,370. of £8630 short of the estimate, but £380,927 in excess of tho amount collected doling the previous financial year. The principal increases over 1922-23 were : Customs 1.205.923 Railways .... '234.605 Marine . 40.355 Registration and other fees 30,283 Territorial revenue . 30,192 The principal decreases were Interest on public moneys 657,075 ! Stamp and death duties 237,510 Departmental and other receipts .... 49,049 Land-tax .... 115,040 Income-tax .... 50,400 Post and telegraph . . 23,790 The decrease’ in interest on public moneys is due to the f£ct that the yearly interest due to the Consolidated Fund on the amount advanced to the Discharged Soldiers’ Settlement Account is outstanding. Tt is expected. however, that the account will be able to meet its obligations for tho current year. In view of the shortage of houses and the demand for homes b\ discharged soldiers, it was considered preferable to allow the account the temporary uso of the interest, amounting to £540,000, for advance to sol diers. rather than to increase the public debt by further borrowing. To have borrowed for the purpose of paying this interest would have merely inflated the surplus and increased the an - ■ nual charges of the public debt. The amount actually advanced to discharged soldiers for housing during, 1923-24 was £571.000 for 714 homes. The revenue derived from the national endowments is now transferred direct from the National F.n dowment Account, instead of being passed through the Ordinary Revenue Account, consequently a nominal decrease is shown in that respect. With the exception of the death duties, the cither decreases are attributable to reduced taxation and charges. EXPENDITURE. Tho amount appropriated to meet the expenditure of the year was £27.483.378, but the expenditure was £20,148,005, which, when compared with the expenditure of tho previous year, shows a net decrease of £115,755. Tho permanent charges on account of interest and sinking fund payments, including the Imperial funded debt contribution, have slightly decreased. The expenditure under special Acts is less by £505,*347, but the previous year’s expenditure included £250,000 paid to the Electric Supply Account under special enactment. In the departmental expenditure the principal increases over the expenditure of the previous 3’ ear were—- £ Railways , . •„ 206,960 Public buildings * , 14.782 Mines . , 10.838 Naval defence . •„ 74.49 S Defence « 63,519 Valuation „ . . 16.609 Education . 89.517 Services not provided for 123.747 An amount of £70.000 for wheat purchased in Australia is included in the last item, but this will be recouped. RESULT OF THE YEARS OPERATIONS, 1923-24. £ £ Balance brought forward, April 1. 1923 . ‘ 5,637.090 Revenue . . 27,960,370 Expenditure . 26 148,005 Add surplus of revenue over expenditure . 1,812,365 7,449,455 Plus payment by Native Land Settlement Account (Finance Act, 1923, sec 7 (3) (■transferred to Loans Redemption Account) 22,600 7,472.055 Loss transfers to £ Discharged Soldiers I>epre c i at io n Fund A ecu out . 50.000 Loans Redemption Account . . 1,367,341 Public Works Fund 1,000,000 Education Loans Account . . 100,000 Balance at March 31, 1924 .... £4,954,714 The balance was held as follows: — Cash £1,727.746, imprest £152,631, investments £3,074,337. Included in the investments are debentures issued for State Advances purposes amounting to no less than £2,326.150. This satisfactory result justifies the opinion expressed in last year’s Financial Statement that the Dominion had reached the end of the period of unrest and • uncertainty. and that natural causes, if supported by economical and careful administration, would ensure a speedy recovery. The trade returns conditions, and indicate that all this country produces can be sold or exchanged. For the financial year ended March 31, 1924, the value of the exports exceeded the value of the imports by £7,250.000, there being an increase both in volume and value. After making due allowance for, the interest payable in the United Kingdom on Government and local bodies’ loans, there remained • a balance in favour of the Dominion. It will, of course, be understood that any debit balance must ultimatly be transferred to the permanent or semipermanent debt; therefore, having re-

gard to borrowing in the United Kingdom by the Government and local bodies, it is incumbent on me to point out that a credit balance can only be sustained by increased production. Borrowing abroad must therefore be kept within relative limits, and care taken that imported capital is strictly applied to productive purposes. ACCUMULATED SURPLUSES. The balance of accumulated surpluses brought forward on April 1, 1923. amounted to £ £ 5.637,090 Less transferred. 192-3-24, to— Discharged soldiers depreciation fund account . 50.000 Public works fund 1.000.000 Loans redemption account 1,367,341 Education loans account . 100.000 3,119.749 Add surplus,of revenue over expenditure, 1923-24 1,512,365 Add recdupment from Native land*.Settlement account of amount previously transferred to loans redemption account . 22,600 Balance forward on April 1, 1924 4,954,714 Balance made up of Investment— ft State advances securities . . 2.326,160 Bank of New Zealand shares 375,000 Sundry securities 373,187 Cash, including imprests , 1,850,377 £4.954,714 The accumulated revenue surpluses have been applied either to capital or to debt-reduction purposes. Education and soldier settlement have been provided for. whilst unemployment and the provision of homes for settlers and workers have received attention. The amounts transferred to the various funds and accounts have relieved the permanent annual charges for interest and sinking fund to the extent .of £442,000. while the annual revenue of the interest-bearing investments amounts to no less than £775.000, thus affording an annual relief to taxpayers of approximately £1,217,000. ECONOMIES The expenditure of the Consolidated. Fund for 1923-24 continues to reflect the policy of systematic economy inaugurated in 1921, the expenditure for the I>ast three years being: 1921-22 , . . 25.466.53 S 3922-23 . . . 26.263,760 1923-24 . . . 26,148,005 The reduction in expenditure in 192223 over that of the previous year totalled £2.203,078, and this contraction has not only been sustained but a still further reduction of £115,755 is recorded. LOAN STOCK. Temporary investments in British war-loan stock held by certain accounts were realised during 1923-24 totalling £945,000, of which £815,000 was purchased in 1917 at 95, and the remainder in 1922 at about 99. The profits on these transactions amounted t0,£46,424. I referred last year to a reduction in tho Bank of England charges for the management of New Zealand Inscribed Stock in London dating as from 1913. and that a. refund of £30,676 would he made, but subject to Imperial taxation paid by the bank amounting to £ll,383. were made as to a remission of this taxation, and I hare since, been advised that £23.293 has been refunded. As regards loan expenses, further minor reductions in charges should result in a, saving of £8,750 on the last loan. I was recently able to effect a purchase at a profitable discount of our four per cent .stock maturing in 1929. An amount of £250,000 was secured for cancellation in terms of section 24 of tho Finance AcU 1921-22. The transaction will represent a saving oYer the period of fire years of about £OO,OOO in premium and interest. 1924 LOAN Although 1 was able to satisfactorily finance the last year, and provide ad ditional large sums for the Advances Offices without borrowing, T decided in May to place a Jean of £5,000,000 in London, £5.000.000 of which was for public works, £1.000.000 for advances to settlers, and £1,000,000 for advances to workers. The issue was four and a half per cent at £9-5, and I am pleased to state that the loan was subscribed fourfold, and, moreover, immediately went tc a small premium. The interest yield of the loan to investors is £4 14s 9d per cent per annum. To assist in meeting the heavy demands that have been made. I have ai ranged to obtain some additional capital on the same terms for Stateadvances purposes CONCLUSION. Many suggestions have been made with regard to borrowing a large sum of money for mortgage purposes. It is my duty to point out that this is a matter about which we require to be very careful if we are to maintain our credit in London. The credit of New Zealand stands high at present, but any appearance of recklessness or extravagance in finance would have a. very bad effect, and must be. avoided by every means possible. Development is going on steadily, and our producers have done wonders during the last two years. Their industry and energy have made New Zea’and the most prosperous country in the British Empire, but there are still enormous possibilities in front of us—new lard to be brought into cultivation, and that which is already cultivated made more productive still. Science has done much for the primary industries, but I believe it will do a great deal more in the future. I want particularly to strike a note of warning about overborrowing, and in doing so I admit that we cannot go on developing without a certain amount of loan money, but it has to be remembered that every million borrowed increases the annual charges upon the country, and in most cases the burdens upon tho taxpayer. This is the case whether the money is borrowed by the General Government cr the local bodies: the effect, is the same. Care should be taken, therefore, to see that borrowed money should, as far as possible*, be used only for revenue-earning purposes. This is the policy which the Government have followed since the end of the war—tfiat of building up against the public debt a collection of assets which will go a long way towards providing the interest and sinking fund on the borrowed millions: and 1* am glad to be able to say that both the values and earning power of these assets are steadily increasing. That the operations of countries borrowing are very closely watched by the financial authorities in London is quite evident from what took place quite recently, when a British country asked for a fairly large loan at what seemed a reasonable rate of interest, and the underwriters were left with 85 per cent of the proposed amount on their hands. Our credit is a most valuable asset, and :t requires to be safeguarded accordingly. The year’s operations are proof of the industry and energy of the people of New Zealand, especially of its pro-

ducers. Economy and self-reliance are qualities that should be encouraged and must be observed if the character of the people is to be maintained and the country is to prosper as we hope and believe it will. We are now in a fairly good position. With proper management we should be able to retain our prosperity and keep development going for a long time to come. What we have to avoid is an era of extravagance, of which there are already indications; but I hope the good oCtise of the great mass of the people will be used to prevent any possibility of the earnings of the community being squandered for unnecessary purposes