FINANCIAL STATEMENT

Wanganui Chronicle, Volume LXXXII, Issue 19367, 25 July 1925, Page 12

FINANCIAL STATEMENT

DOMINION’S AFFAIRS REVIEWED A SATISFACTORY YEAR SURPLUS OF £1,243,800 In the House of Representatives last evening, the Minister of Finance (Hen. W. Nosworthy) submitted the Financial Statement. In doing so lie said:

Tn submitting this satisfactory Statement of the finances of the Dominion for the past year, it is my sincere regret that my predecessor is not here to deliver it. as it is mainly due to his sound administration that the present excellent position has been attained. The late honourable gentleman had in the post-war years the onerous task of bringing about a considerable reduction in expenditure, and despite adverse pressure and risk of unpopularity he consistently held to a policy that has so improved this Dominion financially as compared with any other country in the world affected by the Great War. This result was achieved, moreover, while substantial remissions in taxation and charges were granted of the annual value of £3,750,000. Tn preparing this Statement T have endeavoured to reduce the volume of the Budget and confine it to finance as affecting the general accounts. The departmental reports presented to members, and in the last two years commercial balance-sheets of Departments and undertakings, render it unnecessary to duplicate in the Budget matters that are amply covered in other papers. The course adopted should ensure a clearer and more compact presentment of our finances. As this Statement is circulated to honourable members with the estimates. accounts, and tables. I consider :hat in future it should be laid on the table without a formal reading. CONSOLIDATED FUND. REVENUE. The total revenue received was £28,643.000. After deducting £883,000, the estimated value of concessions granted during 1924. the estimate was £27,974,020. The amount actuallv received was thus £668,380 in excess of the estimate, and when compared with the revenue for 1923-24, of £27,960.370, shows an increase of £652,630. The Customs revenue accounted for an increase of £331.174 over the previous year, the result of heavier imports.. There is ?. comparative increase of £542.22S in interest on public moneys, but this is due tn the payment of interest by the Discharged Soldiers’ Settlement Account for 1924-25, whore- , as in 1923-24 the amount was utilised i for discharged soldier housing. The ' outstanding interest for 1923-21 is meantime treated as a liability of the account. The other principal increases over the previous year are—Railways. £150.637; Post and Telegraph, £25.642; departmental and other receipts, £119.103; and miscellaneous, £110,172. There was a decrease of £395.480 in income-tax and £91.211 in land-tax compared with the previous year; but. as the remissions granted in the 1924 session were estimated at. £718,000, the loss is much less than anticipated, the 1

recoveries of out standing tax being a substantial set-off. Other decreases were—stamp and death duties. £103.499; registration ond other fees. £25,975; and territorial revenue, £10,629. The amounts of revenue received under the various headings are set out I in full in Tabic No. 3 attached to this I Statement. EXPENDITURE. i The year’s expenditure was £27,399. ; 200, being £867,271 less than the ! amount appropriated, but £1,251,195 . ovor the actual expenditure of 1923-24. I Jr was expected that owing to the reI grading of the Public Service, railway i employees, and teachers during 1924, ■ the departmental charges would be j higher, and of the increase of £1,063.1000 under this heading £672,000 is attributable to these causes, while old-age pensions and widows’ pensions increased by £69.000, and hospital subsidies by £149,000. The methods of check on expenditure which have been appiied since 1921 are still operating, and the saving of £867,271 on the appropriations serve to indicate the continual exercise of economy by Departments. The principal increases on expenditure compared with 1923-24 were:— Under Special Acts (mainly on account of hospital subsidies under the new legislation of 1923) 206,309 Railways 483,442 Post and Telegraph 295.484 Education 172,763 Public Health 36,966 Department of Agriculture . . 55,568 Industries and Commerce (due to Exhibition grants and expenses') 52,34'} Customs (principally due to transfer of tyre-tax to Main Highways Account) .. .. 50,619 There were decreases in:— Internal Affairs 44,541 Maintenance of roads 26,821 Services not provided for .. 166,857

RESULT OF THE YEAR’S OPERATIONS. The outcome of the year’s finance again discloses a substantial surplus of rovenuo over expenditure, viz.:— £ Balance brought forward, April 1, 1924 4,954,714 Revenue—£2B,643,ooo; net expenditure, £27,399,200. Add surplus of revenue over expenditure 1,243,800 Add net miscellaneous receipts credited to Ordinary Revenue Account 4,422 6,202,936 Less transfer during the year— To Public Works Fund — £1,000,000; to Loans R e de m p t i 0 n Account, £1,052,130 2.052.130 Balance at March 31, 1925 £4,150,806 The balance was held as follows: £ Cash 1.113,219 Imprests outstanding .. 304,651 Investments 2,732,936 £4,150.806 In terms of section 12 of the Bank of New Zealand Act .1920, the Government exercised its option to take up on Ist April last a further 375,000 £1 preference U B” shares, which will go

to augment these investments. It is estimated that these accumulated revenue surpluses, as at 31st March, 1925, are worth £1,175.000 per annum to the Consolidated Fund, made up as follows: £ Interest on investments .. 780,000 Saving on using money for capital purposes. Public Works, Loans Redemption, etc. 395.000 Total £1,175,000 The results of the year’s operations amply confirm the buoyancy of the revenue expected by the late Finance Minister. It is. however, to some extent due to causes which may, if unchecked, react to the detriment of our present prosperity, by leading to overimporting and a disturbance in our trade balance which the recent fall in wool-prices will appreciably affect. We have in the last few years transferred a large sum to the Public Works Fund and to other debt-saving purposes out of accumulated revenue, which is con sequently much reduced. The use of revenue for capital purposes will for this reason be much restricted in future. Capital for further development will require to be met in larger proportions out of loan, and borrowing should be closely confined to interestearning or directly productive purposes in order to avoid unduly increased debt I charges to the taxpayer.

The Minister refers briefly to the details of the various accounts and summarises them as follows: RESULTS, 1924-25. Consolidated Fund— Ordinary Revenue Account — Revenue . . .. .. .. .. .. .. 28,643,000 Expenditure .. .. .. .. .. .. 27,399.200 Excess of revenue over expenditure .. .. .. £1.243,800 Estimated revenue. 1924-25 .. .. 28,857,620 Less estimated value of concessions granted 883,000 £27,974,620 Actual revenue .. . • •. .. .. £28,643,000 ’ £ Revenue greater than .1923-24 by .. •• .. .. 682,630 I Expenditure exceeded previous year by .. .. .. 1,251.195 | Salaries and wages increased by .. .. .. .. 672,000 Balance forward at 31st March, 1925 .. .. .. .. 4,150,806 Transferred from accumulated surpluses to— Public Works Fund 1,000,000 Loans Redemption Account .. .. .. .. .. 1,052,130 Relief from use of surjilus revenue-- £ Interest-earning investments produce ». .. 780.000 Saving on utilization of money for capital purposes 395,000 Total relief thus afforded .. .. .. .. £1,175,000 No Revenue Treasury bills outstanding. £ Public-works expenditure, (including transfer to Main Highways) 4.357,440 Electric-supply expenditure .. .. .. .. .. 847,478 Main highways— £ Receipts (a) Revenue Account .. .. 495,150 (b) Construction Fund .. .. 226,000 ■ 685,150 Expenditure (a) out of revenue .. .. .. 127,458 (b) Construction Fund .. .. 225.454 352,912 New agreement in respect of migrants from United Kingdom. Customs and excise revenue .. .. .. .. .. 7.689.192 Increase in Customs revenue over 1923-24 .. .. .. 327.409 £ Exports for financial year .. .. .. .. 54,771.158 Imports for financial year .. .. .. .. 49.821,095 Total trade £104,592,253 Excess of exports over imports .. .. .. .. .. £4.950,063 | Inland revenue — Land-tax .. .. .. .. .. .. .. .. 1.335,251 Income-tax .. .. .. .. .. .. .. 3,386,052 Land and income tax loss than previous year, due to reductions and concessions .. .. .. .. 486,691 Stamp and death duties .. .. .. .. .. 3,240,332 Working Railways— £ Receipts .. .. .. .. .. .. 7,112,524 Working expenses .. .. .. r . 5,545,416 Excess of receipts .. .. «. .. .. £1,567,108 Post and Telegraph— £ Receipts .. .. .. .. ~ .. 2,866,882 Expenditure .. .. .. .. .. 2,413,436 Excess of receipts .. .. .. .. .. £153.446 Post Office Savings-bank— £ Number of depositors, 735,158. Amount at credit .. 45,267,708 War-loan certificates redeemed during year .. .. .. 675,163 Duplication of Pacific cable. Education expenditure .. .. .. .. .. .. 3.649.875 Expenditure on school buildings. 1924-25 .. .. .. 462.212 Expenditure on school buildings since Ist April, 1919 .. 2,340,542 Subsidies to Hospital Boards .. .. .. .. .. 561,708 Pensions— Total expenditure on Avar pensions .. .. .. .. .11,382,178

i Total paid. 1924-25 2,403,614 1 Paid for war pensions .. .. .. .. .. 1,212,182 ! Pensions for the blind established. National Provident Fund— Contributors, 24,231. £ ■ Total fund .. .. .. .. .. .. .. 1,165.284 Maternity allowances paid .. .. .. .. .. 40.292 I Superannuation—i Total Funds — Public Service .. .. .. .. .. .. 2.197,400 Railways .. .. .. .. .. .. .. 734,112 Teachers .. .. .. .. .. .. .. 942,755 Since Inauguration of the Funds — 'l'otal contributions by employees of all services .. 5,500,000 Total subsidies by State .. .. .. .. 2,409,500 Cost-of-living bonuses paid to annuitants .. .. .. 42,782 i Purchase of wheat to supplement supplies grown in the Dominion, j Financial assistance provided for New Zealand South Seas Exhibition. Land Settlement—--182,789 acres subdivided into 1.009 holdings opened for selection. 461.000 acres subdivided into 1,280 holdings taken up. 480,000 acres of Crown settlement and National-endowment lands now open fur selection. Discharged soldiers settlement — £ i Total advances in 1924-25 .. .. .. .. .. 717,340 | Receipts .1,591,483 Total capital provided for soldiers settlement . . .. 26,576.386 Revaluation of farms by Dominion Revaluation Board— Reductions in capital value of leaseholds 1,608,800 Reductions in mortgages . . . . . . 672,000 Total reductions .. .. .. .. .. £2,280.800 . State advances— Total number of loans granted, 1924-25 .. .. .. 5 322 Amount, .. .. .. .. .. .. ~ 5,880,485 ' Granted for repayment of mortgages since October. 1922 .. 7.345 295 j Total advances by Department since 1914 .. .. .. 26,143.1*9.1 I Housing— Assistance rendered by the Government during the last six financial years Number of Amount. Houses. £ State Advances* .. .. .. .. .. 17,056 9,940 317 Discharged soldiers (urban areas) .. .. 11.456 8.345 311 Discharged soldiers (farm properties) .. .. 4,063 J.LB6MOO Railway Department (State employees) .. .. 543 465,655 Public Works Department (State employees) .. 247 227 640 33.365 £20,165,923 ! Western Samoa—Crown estates show profits and satisfactory leases effected. German reparation payments received to 30th Juno, 1925 .. 103 669 Public debt— ’ 3 1 Gross debt, at 31st March, 1925 .. .. ~ 227.814 647 Subdivided— £ Ordinary 119,936.859 War 76,631,722 State advances .. .. .. 2.1,436,180 Discharged soldiers settlement .. 9,809,886 227,814,647 Sinking funds accrued .. 13,462,839 | T ct debt £214,351,808 £ Loans paid off during the year .. .. .. .. ~ ' 3 249 966

Imperial funded debt— £ Principal repaid, 1924-25 .. •• .. 507.718 Interest, .1924-25 .. .. .. .. 1.244.212 Total payment. 1924-25 .. .. .. .. .. 1,851.93 Further purchase of New Zealand 4-pcr-ccnt. stock . - • . 100.0(1 Saving on principal and interest effected through cancellation before maturity of total stock purchased to date .. .. 94,00' Volume of free-of-incorne-tax securities reduced to .. .. 39,706,29 Exchange rates, London-New Zealand, now at par. amounts advanced to release mortgages on house property. CONCLUSION. The Statement 1 have made presents to honourable members the satisfac tory state of our finances, and particularly so will this be realized when com pared with other countries economically affected by the post-war upheaval It is true that wo. in common with the rest of the world, are not back to ; pre-war basis either in values or expenditure, but since 1920 the country ha. made a remarkable recovery in banking and trade, and it is reasonable ti claim for the Government some share in assisting to bring this about, by ad herence to economy in administration while meeting requirements for the fur ther development of our resources so as to increase output, improve markets and thus stabilize the overseas trade balance. A table is attached to thi: Statement showing in statistical form the Dominion's progress for the last ter years. Our exports have increased but, so have imports, and for last year the margin is less than for the two previous years. I trust this margin will not further diminish, as the evils of over-importing have been abundantly e.xpcri e.nced with unpleasant results in recent years. Ido not want to see our trade balance drift back to the adverse conditions obtaining four years ago, wher my predecessor had the difficult task of restoring a sound state of affairs. •Since assuming this portfolio, I have had before me heavy demands foi increased expenditure, but I propose to adhere to the* policy of the late Min ister of Finance in cheeking any tendency to overburden our resources, and J will continue to encourage the closest, economy and scrutinize carefully al. applications for expenditure that do not, in my opinion, corm; within the Government's necessary requirements for the efficient performance of its services Borrowed money adds to our charges, and this is apt 1o be overlooked in the requests for increased expenditure. The immediate results of capital expenditure are apparent in the development and improvements effected, but n spending-power is created that tends to engender public and private extravagance. Wo must not ignore the fact that the contingent liability placed on the. Consolidated Fund may have to be carried at times when cur resources arc affected by adverse conditions. Just one other matter should be mentioned—that of our future requirements for capital expenditure. The prospects of borrowing in London on easv terms in the near future are not good, and it is advisable to look carefully ahead to ensure that the purposes for which we borrow money are directly interest-earning. The present conditions may bo temporary, but the indications cannot bo disregarded, and I wish to emphasize again the danger of outside borrowing on a large scale while there are signs that the excess of exports over imports is not sufficient, to cover our charges for interest payable overseas. The Government’s programme for the future development of our resources, extending and improving communications and facilitating our trade generally, now involves heavy commitments, but with the application of energy and industry by all classes of the community, we should, with our productive soil and favoured climate, be able to justify our efforts 1o progress on sound lines that will make for the betterment of the people and the maintenance of the high credit of this Dominion.

ESTIMATES AND PROPOSALS, 1925-26. Consolidated Fund - Ordinary Revenue Account— f Estimated revenue ~ .. .. .. .. 29,600.000 Estimated expenditure .. .. .. .. .. 29,024,616 Available lor supplementary estimates and taxation reductions JI and concessions, etc. ' £ Estimated Customs revenue .. ~ .. .. 7,800,000 I Estimated stamp and death duties 3.340,800 Estimated land ami income tax .. .. .. .. .. 4.600,000 transfer from surplus revenue to Public Works Fund, up to «. 1,000,000 London loan, 1925 26, for public works and State advances . . 7,000,000 Life-insurance policies up io £l,OOO to be exempt from death duties. Reduced use of revenue for capital purposes. Provision for progress of developmental operations. Proposed changes in preferential Customs conditions. | Provision for school buildings. Extension of allowance of 2s. 6d. per week as an addition to the old-age pension of 15s. per week and also to pensions for blind. Continuation of cost-of-living bonus to annuitants. Additional Naval expenditure for second cruiser. Introduction of competitive schemes in connection with the planning of model suburbs. Proposed measures against, la ml aggregation. Kcadvances for more fully developing of soldier farms. Review by Dominion Board of current account advances to discharged soldiers. Fostering of programme of reclamation of waste lands. Encouragement of system of table mortgages. Empowering legislation governing the lending rates of the State Advances Office. Legislation providing for Ihe closing of War Expenses Account and transfer of remaining liabilities to Consolidated Fund. Reduction of limit of expenditure out of “ Unauthorized. ’ ’ Cancellation of local bodies’ unexpired loan authorities in. respect of completed works. Further reductions in taxation. Proposed adoption of straightout schedule and reduction of income-tax to a parity with debenture-tax. Repeal of mortgage duty. Improved measures for repaying public debt.