REDUCTIONS IN PENSION PAYMENTS.

Star (Christchurch), Volume XLIV, Issue 370, 11 March 1932, Page 7

REDUCTIONS IN PENSION PAYMENTS.

(Special to the “Star.”) WELLINGTON, March 11. A SAVING of £3,231,262 during the financial year 1932-33 /A is recommended to the Government in the interim report of the National Expenditure Commission. The Prime Minister, Mr Forbes, presented the report to Parliament to-day. Further savings may be recommended when the Commission has examined other branches of the Government service. “ Our recommendations must involve hardship, hut a drastic curtailment of national expenditure is imperative,” states the report. The principal recommendations are as follows: — The imposition of an emergency stamp duty on the interest of all internal loans bearing interest at 4J per cent or over, the rate of duty to lie commensurate with the sacrifices demanded of other classes of income. The possibility of making an appeal to investors to convert their securities into loans carrying a reduced rate of interest should be considered by the Government. An annual saving of £564,000 could be achieved by this method. A general reduction of 10 per cent in salaries and wages of all public servants as from April 1, 1932. A reduction in the size of Parliament. To reduce interest on mortgages would he merely a palliative and would be, in many cases, futile. The all important question of capital value is involved. Admiralty control of the New Zealand Division of the Navy would be more economical. No reduction in pensions to disabled soldiers. Old age pensions to be reduced to 15s a week. Reductions in miners’ pensions, Maori War pensions, the pensions paid to the wives and children of deceased soldiers and epidemic pensions. The continuance of economic pensions to disabled soldiers is not justified. Family allowances, maternity allowances and university busaries to cease. The abolition of the Main Highways Revenue Fund and the Capital Fund; motor revenue to be credited direct to the Consolidated Fund. All highway construction work should cease. The abolition of education hoards, closing the Wellington and Dunedin training colleges, curtailment of the free conveyance of school children, inductions in the salaries of female teachers in primary schools. The proceeds of the unemployment levy and tax should be paid direct to the Consolidated Fund. All expenditure should be under the annual review of Parliament. The following are the savings urged in the three main categories of Government expenditure; Permanent appropriations, £1,409,422; salaries and wages, £1,164,000; annual appropriations, £402,840; contingent saving, £225,000. No class of expenditure has been finally dealt with. The Commission is composed of Messrs G. Shirtcliffe (chairman), J. J. Esson, A. Macintosh, James Begg and J. L. Griffin.

t wholly operative until 1933-34, and these . are listed as follows: Estimated r saving. Pensions Act, 1926 £ I Miners’ widows’ pensions (additional) 6,000 War pensions (economic) .. 90,000 Vote, Education—- , Allowances to Training College students 65,000 Free post-primary education 30,000 £191,000 Xo account has been taken by the Commission of: (a) The possible sav- , ings through the imposition of revenuestamp duty on interest on the internal public debt; (b) the issue of a volun- | tary conversion loan at a lower rate of interest; (c) the abolition of the permanent appropriation for subsidy to the Unemployment Fund. A Further Review. “ In the time at our disposal it has been quite impossible for us to examine in detail the whole of the public expenditure, but we have dealt with certain departments which seemed to offer scope for considerable economies,” states the report. “ In order to become effective, many of our recommendations, both as regards permanent charges and annual votes, will involve legislation. We shall, in the continuation of our inquiry, further review, if necessary, those departments we have so far dealt with and additional economies may be recommended later in regard to those departments. We do not wish to give the impression that we have dealt finally with any class of i expenditure. “ In submitting these recommendations for reductions of expenditure we 1 have proceeded on three general principles, which may be summarised here: , (1) The rise in the value of money in recent years makes a revision of money obligations both reasonable and necessary. (2) The existing position of the public finances makes it necessary for the State, no less than the individual, to consider seriously what it can afford, and not merely what is desirable. From this standpoint much expenditure is unwarrantable which in normal times might be permissible. (3) The trade and industry of the Dominion can be restored only by the strictest regard to economy. “ We have endeavoured to frame our recommendations in accordance with these principles. * f We feel that a more rigid system of control of public expenditure must be maintained. We cannot help being impressed with the continued increase in the cost of government under practically all headings. In our view, one reason to which this increase may be ascribed is the system which has been in vogue in the past of apparently first of all estimating the expenditure and then providing revenue to meet it. The various departments must be told just how much money has been allocat-

The following statement shows what the effect of the Commission’s recommendations would be on the budgetary position for 1932-33: Estimated saving. Permanent appropriations— £ Civil List Act, 1920—Native purposes <,ooo Debt services—Operation of Hoover moratorium IuO.OOO Hospital and Charitable Institutions Act, 19 26—Subsidies on voluntary bequests .... Ij,ooo Education grants and subsidies—Subsidies on voluntary bequests 6,000 Subsidy. Jubilee Institute for the Blind 2.500 University bursaries 9,000 Workers’ extension lectures 1,800 Subsidies and allowances, National Provident Fund— Subsidies on contributions £SOO, maternity allowances to contributors £7OOO, maternity allowances for friendly societies £36,500 . . -14,000 Finance Act, 1925—General expenses, New Zealand Institute 350 Fire Brigades Act, 1926 Subsidies 3,492 Rotorua Borough Act, 1922 Payment portion bath fees 1,170 Pensions— Family Allowance Act, 1926, £121,000. Pensions Act. 1926 Miners’ pensions £6200, miners’ widows’ pensions £6OOO. military pensions (Maori War) £1225, widows’ pensions £95,000, old-age pensions £200,000. War pensions—Economic £90,000. dependants’ pensions £45,000, double pensions £30,000, epidemic pensions (Pensions Vote) £5500 599,925 Motor-taxation 500,000 Finance Act, 1929—Advances to Native Land Settlement Account for loans to natives . 8,500 Appropriation Act, 1925 Maintenance of overseas war graves 15,375 Slaughtering and Inspection Act, 1908, and Stock Act, 1908—Compensation for diseased stock 29,500 Public Revenues Act, 1926 Fire Insurance Fund .... 10,000 Native Land Amendment and Native Land Claims Adjustment Act, 1928 3,610 Public Revenues Act, 1926 Postage-stamps to members of both Houses 2,200 Salaries and wages— Direct saving to Consolidated Fund 540,000 Indirect saving through Railways and Post and Telegraph Department . . 624,000 Annual appropriations— Legislative Department .... 32,890 Education 369,950 Total £2,976,262 There are further contingent savings which may affect the position during 1932-33. These are:— £ Contributions towards cost of Singapore Base 50,000 Pensions Act, 1926—Increase in duty on gold produced from quartz-mines 5,000 Naval defence 200,000 Total £255,000 Grand total £3,231,262 Further savings would not become

ed to each, and to frame their proposals for expenditure accordingly. We believe it is only by strictly adhering to such a system that continued increases in the public expenditure and corresponding increases in taxation can be avoided. National Income. “ The latest statistics available indicate that national production has fallen by approximately 30 per cent as compared with the value in 1928-29, which may be regarded as the peak year. In that year the value of production is given as £125,300,000; in 1929-30 a reduction of £7,000,000 occurred; while for 1930-31 production fell to approximately £98,000,000, or a decrease of approximately £27,000,000. It is estimated that for 1931-32 a further fall of £8,000,000 will be disclosed, bringing the value down to approximately £90,000,000. In other words, the Dominion has to accommodate itself to a fall in a period of four years of £35,000,000 in the value of production. This must not be confused with the national income, of which no reliable data is available, but it may be assumed that that income has fallen in approximately the same ratio as the value of production. “This fall is necessarily reflected in the State revenues, and it follows that there must be a corresponding reduction in the national expenditure, and that services which the Dominion could afford in more prosperous times must, of necessity, be severely curtailed or even discontinued. “ We have in the limited time available carefully considered many aspects of Government expenditure, and have come to the conclusion that there are numerous economies which could be effected and which would go far towards a balanced Budget. We refer particularly to the curtailment or abolition of services which the State has given to the taxpayer in previous years but can no longer be justified under existing conditions. “The expenditure of the State may briefly be divided into two categories:— (a) Permanent charges; (b) annual appropriations. We have found it desirable to consider first of all the question of permanent charges, as by far the greater part of the national expenditure comes under this category. The permanent charges do not come under the annual review of Parliament. They are fixed by various Acts of the Legislature, and, although shown in the annual appropriations, cannot be reviewed in Committee of Supply. Comparison with 1914.

“ A comparison of the amount provided in this year’s appropriations with the actual expenditure for the year ended March 31, 1914, is interesting. In that year the expenditure under all headings of the permanent and annual appropriations amounted to £11,825,864, but certain items must be deducted in order to get a true comparison with the current year. For instance, railways and post and telegraph expenditure is now chargeable direct to the accounts of those departments. In 1913-14, out of a total expenditure of £11,825,864, the sum of £4,175,064 was in respect of railways and post and telegraph departments, leaving the sum of £7,650,800 for other services, as compared with the amount of £24,627,561 appropriated this year for the same services. The increase is £16,976,761, or, in other words, the expenditure has more than trebled since 1914. “ Out of a total appropriation of £24,627,561 for the current financial year no less than £17,715,888 is under the authority of permanent appropriations not actively controlled by Parliament. Granting that more than half of this expenditure is in rspect of interest on and repayment of the public debt, we are of the opinion that considerable economies can be effected in respect of the remaining expenditure. It has not been possible for us to review the whole of the departmental expenditure before submittng this report, but we will deal with certain departments that offer scope for considerable economy. “ Before passing to detailed consideration of the national expenditure either by way of permanent or annual appropriations we should state that, in our view, the financial position is so serious that every section of the community must make some sacrifice. Our recommendations must involve hardship, but a drastic curtailment of national expenditure is imperative.”