HIGHER EXCHANGE

Waipukurau Press, Volume XXVIII, Issue 31, 28 January 1933, Page 3

HIGHER EXCHANGE

AND BUDGETARY POSITION

STATEMENT OF MR. 'COATES

Further to the statement delivered in the House of Representatives yesterday afternoon by the Minister of Finance (Rt. Hon. J. G. Coates) and published (as received up till 4 p.m.) in the “Press” the following information was supplied to Members: — Gap of £9,850,000 To sum up the prospective budgetary position it would appear that wo arc faced with a gap in the finances of £9,850,000 made up as follows:—■ £ Equivalent of current year’s shortage 700.000 Revenue Decreases —• Customs 1,400,000 Income Tax 750.000 Stamp and Death Duties . 250,000 Interest receipts 220,000 Post and Telegraph profits 470.000 Other Items 260,000 Reserves 2.500,000 £5,850,000 Expenditure Increases— £ Exchange—Extra cost external debt charges on account of full year at 110 per cent 330,000 Extra cost of external debt charges by reason of exchange increase to 125 1,050,000 Allowed for cost of exchange on surplus bank funds, London 1,000,000 £2,400,000 Other Items— £ Additional interest and other debt charges ... 350,000 Motor taxation payable to Main Highways Fund .. 5(0,000 Pensions 50,000 £3,300,Q00 Total £9.850,000 The grand total of the relief to the Consolidated Fund from these savings and adjustment since the depress.o:; developed amount to no less than £9,400,000 briefly made up as follows: — SAVINGS £ Reductions in salaries and wages 2.310,000 Suspension of war debts (net saving) 1.370,000 Reductions in grants and subsidies 440,000 General reductions in departmental votes 1,760,000 Reductions in Railways and Post and Telegraph expenditure 1,53'.’, 000 Reductions in Pensions .. . 300,000 £7.710,000 ADJUSTMENTS Abolition of unemployment subsidy 950,000 Benefit from motor taxation 500.000 Other adjustments 330.0. )e £1,780.000 £9.490.000 Some of the adjustments admittedly represent only a transfer o p the burden to other accounts, but they do provide additional relief to the general Budget. The p resent book value of past surpluses invested in the discharged soluior settlement mortgages is £10.5 10,(00; £2,500.000 will bo drawn upon for the current financial year, and we. will doubtless eventually have to write off substantial losses. Evon so. an ample margin will remain, and I. hope to arrange to liquidate up to a lurtlmr £2,000,000 to .augment the revenues for next financial year. Additional Taxation For the rest, to bring the prospective deficit down to say what may be regarded a safe amount I am afraid there will be no alternative but to have further recourse to additional taxation. Details of this cannot be given at present., us the proposals have not vet been finalised, but it may bo necessary to find ways and means of raising up to £2,400,000, which with the other items I have mentioned will be sufficient to bring the deficit down to about £4,500,000.

This will mean increasing our floating debt by that amount, but against that it should not he overlooked that the expenditure will include provision for £1,500,000 under the statutory debt repayment scheme. This will mean that the nett increase in debt as a result of the prospective shortage will not. be much in excess of £3,000,Q00, which amount may be considered as safe; that is to say, it will not be largo enough in any way to endanger the financial stability of the country which must bo safeguarded at all costs.