FINANCIAL STATEMENT. (In Committee of Supply, 30th July, 1931.) BY THE RIGHT HON. G. W. FORBES, P. C., MINISTER OF FINANCE.

Appendix to the Journals of the House of Representatives, 1931 Session I-II, B-06-part01

8.—6

INDEX.

VASE. Adjustment Commissioners .. .. .. ' .. .. .. 15 Agriculture, expenditure on .. .. .. .. .. .. 4 Arbitration Court .. .. .. .. .. .. .. 14 Bank deposit and overdraft rates, reduction in .. .. .. 17 Banking and currency .. .. .. .. .. .. 18 Banking position .. .. .. .. .. .. .. 2 Beer duty .. .. ' .. 20, 24 Budget estimates .. .. .. .. .. .. .. 24 Classification of public debt .. .. .. .. .. .. 10 Coinage profits .. .. .. .. .. .. .. 23 Combined State Balance-sheet .. .. .. .. .. 10 Crown-lands development .. .. .. .. .. .. 13 Currency and banking .. .. .. .. .. .. 18 Customs and excise duties, increases in .. .. .. .. 24 Customs revenue .. .. .. .. .. .. 2, 19, 24 Defence expenditure .. .. .. .. .. .. 4 Development of Crown lands .. .. .. .. .. 13 Domicile of public debt .. .. .. .. .. .. 10 Duty on wheat and flour to be reduced .. .. .. .. 15 Economic position .. .. .. .. . - .. . • 2 Economies in expenditure .. .. .. .. . • . • 20 Economy Committee .. .. .. .. .. .. • • 20 Education Economy Committee .. .. .. .. 4, 23 Education expenditure .. .. .. .. . • . ■ 4 Estimates, 1931-32 .. .. ~ .. . • • • • • 24 Expenditure, summary of .. . . .. .. . • 4, 6 Exchange rates .. .. .. .. . • • • • • 18 Exports .. .. .. .. • • • • • • • • 1 External trade .. .. ... .. .. . • ■ • 1 Earmers' finance ... .. .. .. .. • • • • 15 Fertilizers, assistance towards purchase of .. .. .. .. 16 Hawke's Bay Adjustment Court .. .. .. .. .. 12 Hawke's Bay earthquake .. .. .. .. .. 6, 11, 21 " Hoover" proposals .. .. .. ".'."" .. • ■ 22 Hydro-electric works .. .. .. ■• •• •-."]_ 7 Imports .. .. .. .. •• •• •• '.•'•'. 1 Income-tax .. .. .. . • ■ ■ • • 3, 20, 24 Interest rates, reductions in .. .. .. .. .. 17 Land-settlement .. .. •• •• •• •• ..12 Land-tax .. .. .. • • • • .. 3, 20 Local-government inquiry .. .. .. .. ■ • ■ • 16 London loan, 1931 .. .. .- .. .- •• •• 7 Main Highways Account ' .. .. .. .. .. •■ 21 Mortgagors Eelief Act .. .. '.. .. '" • - - • 15

I—B. 6.

8.—6

PAGE Native-land settlement .. ~ .. .. .. .. 13 Niemeyer report .. .. .. .. .. .. .. 19 Ordinary Eevenue Account— Expenditure .. .. .. .. .. .. .. 3 Eevenue .. .. .. .. .. .. .. 2 Summary of year's operations .. .. .. .. .. 5 Estimates, 1931-32 .. .. .. .. .. .. 24 Pensions and family allowances, expenditure on .. .. .. 4 Petrol-tax .. .. .. .. .. .. .. .. 21 Price indices .. .. .. .. .. .. 1, 14 Price investigations by Industries and Commerce Department . . . . 15 Prices, disparity between external and internal .. .. .. 16 Post Office-Savings-bank interest .. .. .. .. .. .. 18 Increased charges .. .. .. .. .. .. 23 Prospective budgetary position .. . . . . .. .. 19 Public buildings, expenditure on .. .. .. .. .. 6 Public debt .. .. .. .. .. .. 8, 10, 21 Public-health expenditure .. .. .. .. .. .. 4 Public works .. .. .. .. .. .. .. 6 Railway Board .. .. .. .. .. .. 3, 17 Railway-construction works .. .. .. .. .. .. 7 Reductions— Duty on wheat and flour .. .. .. .. .. 15 Interest rates .. .. .. .. .. .. .. 17 Salaries and wages .. .. .. .. .. .. 14, 22 Rehabilitation Committee .. .. .. .. .. .. 12 Remedial measures .. .. .. .. .. .. .. 22 Reserve funds, utilization of.. .. .. .. .. .. 12, 23 Revenue .. .. .. .. .. .. .. .. 2 Revenue shortages .. .. .. .. .. .. .. 3 Roads and highways expenditure .. .. .. .. 4, 17 Rural Intermediate Credit Board .. .. .. .. 5, 16 Salaries and wages adjustment .. .. .. .. .. 14, 22 Social services, expenditure on .. .. .. .. .. 4 Stamp and death duties .. .. .. .. .. 2, 20, 24 State Advances Office .. .. .. .. .. .. 18 State Balance-sheet.. .. .. .. .. .. .. 10 State Fire Insurance Office .. .. .. .. .. .. 12 State lending Departments .. .. .. .. .. .. 16, 18 Subsidies to local authorities .. .. .. .. .. 21 Summary— Debt transactions .. .. .. .. .. .. 9 Savings .. .. .. .. .. .. .. 24 Year's operations .. .. .. .. .. .. 5 Taxation proposals .. .. .. .. .. .. .. 24 Transport .. .. .. .. .. .. .. .. 17 Treasury bills .. .. .. .. .. .. .. 6 Unemployment relief .. .. .. .. .. 5, 10, 11, 21 War-debts postponement .. .. .. .. .. •. 22 Westport Harbour Account, advance to .. .. .. .. 6

II

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1931. NEW ZEALAND.

FINANCIAL STATEMENT. (In Committee of Supply, 30th July, 1931.) BY THE RIGHT HON. G. W. FORBES, P. C., MINISTER OF FINANCE.

Mr. Chairman, — The honour once again devolves upon me of laying before honourable members a statement of the Dominion's finances, together with an explanation of the circumstances which have given rise to the position thereby disclosed, and the proposals which the Government intends to submit to this House with a view to providing for the existing conditions. As honourable members are aware, the year through which we have just passed has been probably the most difficult in the history of this Dominion. The general economic depression, although world-wide in its effects, has been felt very severely by primary-producing countries such as New Zealand, the value of primary products having fallen to an even greater extent than that of manufactured goods. Dealing first of all with the external trade —with which the prosperity of the Dominion is so intimately bound up —the exports for the year totalled £39,500,000, a reduction of no less than £9,500,000 compared with the previous year and £17,600,000 as compared with the year ended 31st March, 1929. The decline in the value of exports was due principally to a further sharp fall in prices, the " all groups" export-prices index showing a decline of over 28 per cent, for the year. The falling-ofi in value, however, was not the result of a reduction in the actual volume of exports, considerable quantity increases being shown in butter, frozen meat, and gold. Wool was the only important item showing a reduction in quantity; but this was due not to decreased production, but to the carry-over of stocks in anticipation of an improvement in prices. Imports amounted to a total of £38,300,000, being £10,900,000 less than for the previous year. Thus, although the value of exports fell to an unprecedented extent, imports were curtailed to an even greater amount, with the result that the year closed with a favourable recorded balance of trade —an excess of exports over imports to the extent of approximately £1,200,000. The equilibrium in external trade has thus been largely preserved, but the general contraction in the value of this trade has seriously affected the public finances, as well as all internal business, either directly or indirectly.

External trade.

2—B. 6.

8.—6

Turning now to the banking figures, wherein the general economic position of the Dominion is reflected, it is found that at the beginning of the financial year bank deposits exceeded advances by £326,000, whereas by the end of the year advances had exceeded deposits by approximately £3,080,000. A further symptom of the economic position is the relationship between fixed and free deposits. On the 31st March, 1930, fixed deposits represented 56 per cent, of the total, whereas by the following 31st March the proportion had increased to 64 per cent., indicating that in periods of economic depression investors display a preference for gilt-edged investments rather than for the greater return but less security offered by the average commercial enterprise. Arising out of the trade conditions which I have just described, and the consequent heavy falling-off in various kinds of revenue —Customs, stamp and death duties, interest-recoveries, &c. —particularly during the last quarter of the year, the financial year closed with a deficit of £1,639,000. In this connection it will be remembered that in preparing last year's Budget a decrease in revenue amounting to £2,830,000 was anticipated, and steps were taken to meet the position. As soon as it became apparent, during the second half of the year, that the revenue was likely to fall short of the Budget estimate, efforts were made to meet the situation by. further economies, but the sudden decline in revenue in the closing months of the financial year was so heavy that it was impossible in the time available to avoid the deficit which resulted. In fact, while the rate of decline was accelerating so rapidly, it was a very difficult matter even to forecast what the final result would be. Reviewing the economic position for the year, one is forced to the conclusion that prices are down to practically pre-war level, and that until conditions improve overseas we must accustom ourselves to a smaller income than has obtained for a number of years past. Signs are not wanting, however, that the general level of world prices has now reached its lowest point, and there has even been a slight recovery in some lines. Such being the case, it is anticipated that, perhaps slowly at first but later with increasing momentum, conditions will improve in our principal markets overseas, and this, of course, with internal stability and confidence, will materially assist in again placing this Dominion on the high road to prosperity. It appears quite likely, however, that prices will stabilize at a level lower than we have been accustomed to in recent years. REVENUE. Details of the year's operations of the Ordinary Revenue Account of the Consolidated Fund will be found in the published statements, and are summarized in the comparative tables attached to this statement. The total revenue for the year amounted to £23,068,931, a net shortage of £2,051,069 compared with the • estimate, or a reduction of £2,280,930 compared with the previous year. Of the total revenue, £18,599,980 was derived from taxation, and the balance of £4,468,951 from interest-earnings and sundry revenues from State activities. Included in the revenue from taxation is an amount of £1,840,590, representing petrol-tax, motor-license fees, &c, specially earmarked for main highways, so that the revenue actually available for general purposes was £21,228,341, which represents a decrease of no less than £2,610,730 compared with the previous year. The items chiefly concerned in the revenue-shortage are as follows : — Customs .. .. .. .. .. 924,024 Interest on railway capital .. .. .. 695,000 Stamp and death duties .. .. .. .. 392,665 Interest on Public Debt Redemption Fund .. .. 126,107 Land-tax ~ ~ .. .. .. 94,383 £2,232,179

Banking position.

Decreased State revenue.

General economic position.

Revenue.

2

B. —6

In reduction of these shortages must be offset certain revenue increases, leaving a net shortage, as previously stated, of £2,051,069. The shortage in Customs revenue —namely, £924,024 —is, of course, the result of the heavy decline in imports, to which I have already referred. The principal items concerned in the shortage were apparel and textiles (£465,316), and motorvehicles and parts (£579,132). The revenue received on account of interest on railway capital amounted to £685,000, compared with a Budget estimate of £1,380,000. In spite of certain increases in fares and freights, the railways failed to meet the estimate for the year to the extent of £695,000. Considerable savings were effected in Eailway expenditure, but' these economies, as the results indicate, were much more than offset by a heavy shrinkage in revenue, due to an unprecedented falling-off in passenger and goods traffic. The interest due to the Consolidated Fund on railway capital amounted to approximately £2,255,000, but £1,570,000, or more than two-thirds of it, had to be provided out of taxation. Honourable members are already aware of the steps which the Government has taken with a view to placing the railways on a sound business basis, freed from the influences which must inevitably be associated with direct political control. The Board appointed pursuant to the relative legislation of last session has now taken charge, and it is hoped that their efforts will enable the burden on taxation to be materially lightened without detriment to the standard of service given to the people. Eegarding stamp and death duties, the total revenue under this heading for the year was £3,387,335, which amount fell short of the estimate by £392,665. Of this amount, stamp duty on instruments accounted for a shortage of £104,479, as a result of the general falling-off in property transactions, while duties payable by racing clubs accounted for a further shortage of £85,857, due to a substantial reduction in the amount passing through the totalizator. Death-duty revenue is obviously a more or less unknown quantity, and for the year under review contributed a total of £1,744,697, compared with an estimate of £1,830,000 —a shortage of £85,303. As showing the fluctuation in the rate at which death-duty revenue is received, it may be mentioned that the earlier half of the year produced £991,785, whereas the revenue of the latter half fell to £752,912. Land-tax contributed a total revenue of £1,145,617, compared with an estimate of £1,240,000—a shortage of £94,383. This shortage was due to the non-receipt of tax as a result of the prevailing economic conditions, together with extensive revaluations of rural lands during the year. As an offset to some extent against the shortage in land-tax, the income-tax for the year totalled £4,003,606, which was £43,606 in excess of the amount estimated. The only other item of importance in which the revenue fell materially short of the estimate was in respect of interest on the Public Debt Redemption Fund, the deficiency being £126,107. A large portion of this fund is invested in discharged-soldier-settlement mortgages, and on account of the prevailing conditions it has not been possible to collect the whole of the interest due. EXPENDITURE. Honourable members may recollect that in submitting last year's Budget, attention was drawn to the fact that in order to avoid as far as possible any increases in taxation the Government had carefully reviewed the whole of the State expenditure, and as a result succeeded in reducing the estimates of expenditure to a total of £24,997,000, which was over £200,000 less than the net expenditure of the previous year, notwithstanding the fact that provision had to be made for increases in debt charges, pensions, and other fixed items amounting to £415,000. Under these circumstances it is satisfactory to record that the year's expenditure was £289,067 less than the amount provided for in the estimates. Interest was £97,902 less than was anticipated, chiefly on account of the low rates that ruled

Customs.

Railway interest.

Stamp and tieith duties.

Land-tax.

Income-tax.

Interest on Publie Debt Redemption Fund.

Expenditure.

3

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for Treasury bills in London, while the expenditure under Eepayment of the Public Debt Act was £17,441 less than the estimate. The net decrease under other permanent appropriations was £138,374, the principal items concerned being subsidies to Hospital Boards, £25,553, and disbursements of motor taxation, £73,639, while a saving of £35,350 was effected under the annual votes. These savings are all the more satisfactory when it is realized that a large portion of the State's expenditure does not permit of economies being effected. This will be apparent from the following summary of last year's net expenditure : — £ Public-debt charges .. .. .. ..10,952,505 Social services— Education .. .. .. .. 3,354,545 Pensions and family allowances .. .. 3,025,206 Health and hospitals .. .. . . 1,219,184 Roads and highways .. .. .. .. 1,875,609 Defence —land, sea, and air . . .. . . 821,644 Agriculture .. .. .. .. .. 418,913 All other items .. .. .. .. 3,040,436 £24,708,042 The largest single item in the State expenditure was debt charges, amounting to £10,952,505. A substantial part of this amount, however—namely, £1,638,672 — was on account of debt-repayment, which must be regarded as an investment rather than an expense. Education expenditure, together with payments from loan-moneys in respect of school buildings, &c, resulted in a total cost for the year in excess of £4,500,000. Annual increases under this heading are to a large extent the result of the increased number of children attending school, consequent upon increased population; but the time has now arrived when we must take stock of our educational system and endeavour to effect economies, while at the same time maintaining the present high standard. With this in mind, the Government has decided to set up a special Economy Committee to investigate the whole matter. The expenditure under the heading of " Pensions and family allowances " consisted of £1,245,499 war pensions, £1,118,286 old-age pensions, £325,998 widows' pensions, £63,608 in family allowances, and the balance of £271,815 in respect of miscellaneous pensions and administration expenses. The cost of pensions has increased during the past few years, due partly to normal population-increases, and more recently to the prevailing economic conditions. The health and hospitals expenditure during the year consisted of grants and subsidies totalling £670,847 to public hospitals ; maintenance of mental hospitals, £303,667 ; and £244,670 in respect of public-health administration. Roads and highways accounted for a total allocation from revenue of £1,875,609. Including loan-moneys, the total expenditure on roads and highways for the year amounted to approximately £3,700,000. In this connection the Government's proposals with respect to the co-ordination of the national transport system will be fully dealt with later. The Defence expenditure involved £229,051 in respect of land defence, £543,845 for naval defence, and £48,748 for air defence. Expenditure on defence generally was rigorously curtailed during the year, principally in connection with the suspension of compulsory military training, but the full effect of the savings will not be felt until the current financial year. Expenditure on agriculture accounted for a total of £418,913, approximately half of which was in respect of subsidies and grants of various descriptions. This completes a review of the principal headings of expenditure out of the Consolidated Fund. The balance of the expenditure, to which I have not drawn special attention, is fully accounted for in the public accounts, and represents general administration expenses for the most part.

Expenditure summary.

Debt charges.

Education.

Pensions and family allowances.

Public health.

Roads and highways.

Defence.

Agriculture.

4

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SUMMAEY OF THE YEAE'S OPERATIONS. The transactions for the year resulted in a deficit, as follows : — Expenditure. £ £ Permanent appropriations .. .. .. 20,738,422 Less credits in reduction .. .. 3,702,559 17,035,863 Annual appropriations .. .. .. 9,063,321 Less credits in aid .. .. .. 1,391,142 ' 7,672,179 Net expenditure chargeable against revenue .. .. 24,708,042 Revenue. TaxationDirect .. .. .. .. 8,972,111 Indirect .. .. . . .. 9,627,869 18,599,980 Other receipts .. .. .. .. 4,468,951 23,068,931 Deficit .. £1,639,111 The following shows the year's results as reflected in the Ordinary Revenue Account of the Consolidated Fund :— £ Balance brought forward, Ist April, 1930 .. .. ..2,356,337 Less — £ Deficit, 1930-31 .. .. .. :. 1,639,111 Subsidy on expenditure out of Unemployment Fund .. .. .. .. 159,247 Subsidies to local authorities in respect of unemployment relief . . . . . . 116,768 Advances to Rural Intermediate Credit Board 127,900 Expenditure in connection with Hawke's Bay earthquake . . . . .. .. 29,536 Expenditure in connection with West Coast earthquake .. .. .. . . 174 Advance to Westport Harbour Account . . 5,000 2,077,736 Balance, 31st March, 1931 .. .. .. £278,601 This balance was made up as follows:— £ Cash 151,105 Imprests outstanding .. .. .. 127,496 £278,601 The subsidy on expenditure out of the Unemployment Fund is payable in terms of the Unemployment Act passed last year. The Act provides for the payment of a subsidy equivalent to £l for £l on expenditure out of the fund. In addition to subsidizing the Unemployment Fund, the Consolidated Fund also provided subsidy to the extent of £116,768 in connection with unemploymentrelief works undertaken by local authorities. This expenditure represents charges incurred prior to the coming into force of the Unemployment Act. Advances totalling £127,900 were made to the Rural Intermediate Credit Board to provide capital moneys for the purpose of enabling advances to be made to farmers. These advances to the Board represent the last instalment of the total advance of £400,000 authorized in terms of the Rural Intermediate Credit Act, 1927.

Summary of year's operations.

Result in funds of Ordinary Revenue Account.

Subsidies on account of unemployment relief.

Rural Intermediate Credit Board.

5

8.—6

Earthquakes expenditure.

Expenditure during the year in connection with earthquakes totalled £29,710, of which the Hawke's Bay District accounted for £29,536 and the West Coast of the South Island for the balance. I will deal later in detail with the action which the Government has taken and proposes to take in connection with the rehabilitation of the Hawke's Bay District. The advance of £5,000 to the Westport Harbour Account was made in terms of the Westport Harbour Act, 1920. The advance, together with interest thereon, is repayable to the Consolidated Fund. TREASURY BILLS. Treasury bills totalling £2,950,000 in anticipation of revenue were issued during the year. It may be explained that financing by means of Treasury revenue bills is, under existing conditions, unavoidable, as the working balance carried forward in the Consolidated Fund is now practically exhausted and a large portion of the revenue —-namely, from land and income tax—is not received until towards the end of a financial year, whereas expenditure is continuous throughout the year. Of the total issue of £2,950,000, the sum of £1,100,000 represented internal transactions between Treasury accounts. A further £1,100,000 was raised in New Zealand at rates varying from 4 to 5j per cent., and the balance of £750,000 was raised in London at from to per eent. All these bills were duly paid off when the proceeds of land and income tax were received, and no revenue bills were outstanding at the close of the financial year. In addition to revenue bills, a series of Treasury redemption bills were sold in London during the year at rates of from to 2f per cent. The issue of these bills was necessary owing to the prohibitive rates for transferring money to London, the telegraphic rate at the close of the year being no less than 10 per cent. On the 31st March, 1931, redemption bills to the extent of £3,550,000 were outstanding, but were partially covered to the extent of £2,350,000 by temporary investments in New Zealand. Owing to the low rates of interest paid on the bills, their cost was offset by the interest earned on the fixed deposits in New Zealand. PUBLIC WORKS. I propose now to deal with that section of State activity on which the major portion of loan capital is expended each year — namely, public works. In this connection I may explain at the outset that it has been the Government's policy to restrict capital expenditure, as far as circumstances will permit, to works of a productive nature only, as it is fully realized that the expenditure of borrowed money on other than productive works imposes an increasing burden on the general taxpayer, and under a contracting national income would eventually tend seriously to affect the financial standing of the Dominion. The unemployment position has created a special problem, however, with the result that, while the principle of concentrating on essential productive works is being adhered to as far as possible, in some cases works have been undertaken in advance of the normal developmental programme in order to provide additional remunerative forms of employment. The necessity for such works will be appreciated when it is realized that the Public Works Department is the largest single employer of manual labour in the Dominion. The expenditure on public works during the year, under the relative headings, was as follows : — £ Railway construction, additions, and improvements . . 3,159,813 Main highways and roads . . . . .. ■ . . 2,341,902 Hydro-electric supply . . . . . . .. 1,230,172 Public buildings (including schools) . . . . 939,110 Telegraphs and telephones . . . . . . 434, 615 Irrigation, land and river improvements . . . . 252,585 Miscellaneous public works .. . . . . 129,398 £8,487,595

Advance to Westport Harbour Aeeount.

Treasury bills. Revenue bills.

Redemption bills.

Public works.

Summary of expenditure.

6

B.—o.

The railways expenditure consisted of £1,576,101 on construction, £526,515 on additions, and the balance of £1,057,197 on improvements. In pursuance of the Government's policy of reducing to a minimum all expenditure on railway-construction which is not economically justifiable at the present time, it was decided to close down several works as from the Ist January last. The principal lines so dealt with were the North Island Main Trunk line beyond Okaihau, the Dargaville to Kirikopuni, and Gisborne to Waikokopu lines, and also the Nelson to Xnangahua line, on which construction work was proceeding between Kawatiri and Murchison. Work on these sections has now ceased, the employees have been transferred to other works where possible, and the plant and materials on hand will be utilized elsewhere. Regarding the construction works still in hand, in the North Island the principal lines are the Stratford to Main Trunk and the Putorino to Wairoa sections, both of which are now rapidly approaching completion, and in the South Island work is proceeding in connection with the Main Trunk line between Wharanui and Parnassus, and also on the line between Westport and Inangahua to connect the Westport section with the main southern system. In this connection, I may explain that the Eailway Board is empowered to report on all works at present under construction, while no new works can be started until a report on the same by the Board has been laid before both Houses of Parliament and a resolutfon approving of any such work has been passed by both such Houses. The balance of the expenditure on railways represents additions to open lines — mainly in respect of new rolling-stock—and improvements such as new buildings, reclamation, and rearrangement works in connection with the existing railways. Expenditure under the heading of " Highways and Eoads " comprises £757,906 on main highways and £1,583,996 on roads. Compared with the previous year, the latter amount represents an increase of £392,927 in expenditure on ordinary settlement and backblock roads, as a result of the necessity to which I have already referred, of finding useful work for many of the unemployed. Regarding expenditure on hydro-electricity, I may explain that the various schemes earned a gross revenue for the year of £685,242, and after charging all expenses, including depreciation and interest, the accounts disclosed a loss over all schemes of £2,043. Had it not been for the stoppage at Arapuni, and the consequent necessity for purchasing supplies of electricity from local authorities, a profit would undoubtedly have resulted from the year's operations. The expenditure on public buildings includes school-buildings, post and telegraph offices, and hospitals. In terms of the amending legislation passed last year, the separate account in respect of education buildings—namely, Education Loans Account —-was abolished as from Ist April last, and in future the capital cost of school-buildings will be met out of the Public Buildings vote under the Public Works Fund, as obtained several years ago. The balance of the expenditure on public works was incurred in respect of irrigation, land and river improvements, &c. • This concludes a brief review of the Government's stewardship of public works during the past year. Complete details will be given in the Public Works Statement, which will be submitted later. LONDON LOAN, 1931. To provide the necessary funds for essential public works during the current financial year, a loan of £4,000,000 was raised in London on the Bth June, 1931, by means of 5-per-cent. bearer bonds, a further £1,000,000 being added to the issue for redemption purposes. The bonds were issued at £99, and are repayable at par on the 16th July, 1934, the Government having the option, however, to redeem at par, either in whole or in part, on or after the 16th July, 1932, on the giving of three months' notice. Including redemption of discount over the period of the loan, the return to investors is £5 7s. 3d. per cent., and the cost to the State, after allowing for expenses, amounts to £6 Is. 3d. per cent. This is certainly dear money, but the Dominion on this occasion had to go on the market in the face of complex and adverse circumstances, among which might be mentioned our heavy adverse exchanges and reactions from happenings in Australia. In addition, the general

> Expenditure on railways. - Works closed. 3

1 Construction work. t 3 b

5 Highways and j roads. T

3 Hydro-electricity. i i -

L Public buildings. 1

London Loan, 1931

7

8.—6

uncertainty brought about by the world-wide slump in prices seems to have made investors somewhat reluctant in the meantime to make further investments overseas. As evidence that the rate was by no means excessive under the circumstances, I may explain that the underwriters were left with approximately 68 per cent, of the loan, and that, after issue, the market price of the bonds fell temporarily to 97§ per cent., but later recovered to the issue price. It may have come as a surprise to some people that we had to pay such a high price for the loan, in view of the fact that the rates for Treasury bills and other short-term borrowing are so low at present. It may be explained, however, that long- and short-term borrowing are two different things, governed by different considerations. Arising out of the general slackness in trade, the supply of shortterm loan funds is greater in relation to the demand, and so interest-rates have fallen. In the long-term market, however, the slump in trade has had the opposite effect. Savings, and consequently the amount available for permanent investments, have decreased, in addition to which the uncertainty of the outlook and general lack of confidence resulting from the tremendous fall in prices have tended to harden interest-rates for long-term loans, and in the meantime make investors somewhat chary of lending overseas. The issue of short-dated bonds is a departure from the usual practice in issuing New Zealand loans in London, but in view of the present high cost of raising funds it was deemed advisable to make the period as short as possible, in the expectation that rates will tend to be reduced within the next three years. The only alternative to raising an overseas loan, as it was not possible to obtain sufficient funds within the Dominion under present circumstances, would have been to close down the public works in respect of which the funds are to be expended. Such action, I feel sure honourable members will agree, would have been disastrous at the present time, and would, directly and indirectly, have resulted in many thousands of men being added to the present number of unemployed. Opinions may vary as to what works should be carried out, but I think it will be generally agreed that this is not the time to go to the extreme of a complete stoppage in one step. Of the proceeds of the loan, £3,000,000 was allocated to the general Public Works Fund, out of which is met the expenditure for railway-construction, telephones and telegraphs, roads, buildings, and £1,000,000 to the Electric Supply Account for carrying on the hydro-electric works at present under construction. Details of the proposed expenditure will be submitted in the public-works estimates. In conjunction with the loan for new money, a further £1,000,000 was raised for redemption purposes. The amount will be applied in repayment of an equivalent amount of the Treasury redemption bills to which I have just referred. These bills were issued in redemption of securities held in New Zealand, so that the whole transaction represents a transfer of debt from New Zealand to London, which, while Regrettable, was practically unavoidable except at a prohibitive cost in exchange. PUBLIC DEBT. The public debt as at the 31st March, 1931, amounted to £276,033,358, compared with £267,383,343 for the previous year, a net increase of £8,650,015. The gross additions to the debt during the year totalled £11,123,700, and the repayments amounted to £2,473,685, leaving a net increase, as I have just stated, of £8,650,015. The following are the purposes to which the gross additions were applied:— £ Public works . . . . . . . . . . . 8,820,700 State advances.. . . .. .. . . 1,500,025 Land-settlement . . . . . . . . 514,000 State forests .. .. .. .. . . 285,000 Kedemptions (unexpended as at 31st March, 1931) . . 3, 975 £11,123,700

Long- and shortterm borrowing.

Allocation of proceeds.

Public debt.

Gross additions.

8

8.—6.

Of this total, £7,250,000 was raised in London, £5,500,000 being on account of the 1930 London loan, £685,703 was derived from various supplementary issues of the same stock, while the balance represents charges and expenses of raising the 1929 and 1930 loans and the remainder of the expenses in connection with the large conversions of 1929 consolidated stock. Local issues accounted for £3,873,700, of which £455,090 was derived from the sale of Post Office investment certificates and departmental investments bearing interest at from 4 per cent, to 5j per cent., while the balance of £3,418,610 was received direct from the public, and bears interest at 5| per cent. Of the new capital raised during the year £1,500,025 was for State advances, but in addition to this amount a further sum of £1,141,324 was received on account of the sale of rural-advances bonds, thus the total new moneys available for State advances purposes totalled £2,641,349. In this connection, I may explain that, in accordance with the legislation under which the rural advances system was set up, rural-advances bonds do not form part of the public debt. As a partial set-off against the new loans raised, debt totalling £2,473,685 was repaid during the year, £426,107 of which debt was domiciled in London and the balance of £2,047,578 in New Zealand. These repayments of debt were effected as follows: — £ Under Eepayment of Public Debt Act, 1925 .. 1,209,928 Under funded-debt agreement with British Government 426,107 Out of reparation-moneys, &c. .. .. •• 466,500 From Discharged Soldiers Settlement Account .. 157,350 From other accounts .. .. .. - - 213,800 £2,473,685 The payments of £.1,209,928 and £426,107 represent the operations under the debt-repayment schemes, the funds for which are drawn from the Consolidated Fund. As honourable members are aware, the funded-debt agreement provides for the repayment over a period of about thirty-six years from 1922 of an amount (originally £27,532,164) advanced by the British Government during the war. Further payments are to be partially suspended this year, but I will refer to that presently. The balance of the public debt, apart from certain minor exceptions, is automatically included in the general debt-repayment scheme, which provides for repayment upon an annuity basis over a period, of sixty years from 1925 in respect of the loans then outstanding, and from the year of issue in the case of subsequent loans. The transactions of the public debt during 1930-31 may be summarized as follows: — £ Debt as at Ist April, 1930 .. .." .. 267,383,343 Add new loans raised— £ Ordinary .. .. 9,623,675 State advances .. .. 1,500,025 11,123,700 278,507,043 Less redemptions— Ordinary .. .. 244,610 War .. .. .. 2,071,725 Discharged soldiers . . 157,350 2,473,685 Debt as at 31st March, 1931 .. £276,033,358

Local issues.

State Advances.

Debt repayments.

Summary of debt operations.

3—B. 6.

9

8.—6,

Classification of Debt. £ Ordinary .. .. .. .. .. 163,676,911 War .. .. .. .. .. 67,711,800 Discharged soldiers .. .. .. .. 7,704,536 State advances .. .. .. .. 36,940,111 £276,033,358 Domicile of Debt. £ London .. .. .. .. .. 154,546,941 Australia .. .. .. .. .. 4,175,350 New Zealand.. .. .. .. .. 117,311,067 £276,033,358 Before leaving the subject of the public debt, I would like to take this opportunity of again stating that the Government fully realizes the necessity for reducing to a minimum further additions to the debt, and, as I have previously stated, the raising of loans, especially overseas, is being curtailed as much as is possible under the circumstances, having in mind the needs of the Dominion and the effect of recent economic changes. In passing I may add that the financial aspect of the various State activities is reflected in the relative departmental accounts and balance-sheets, all of which are now presented on approved commercial lines. Last year, honourable members may recollect, a preliminary State balance-sheet was prepared, showing in concise form the position of the national finances, and I am pleased to be able to announce that this year, for the first time in our history, a complete combined balance-sheet has been prepared, duly audited, and will be published in parliamentary paper 8.-] [Part IV]. UNEMPLOYMENT BELIEF. The principal problem which is engaging the earnest attention of most countries at the present time is that of providing suitable work for the large number of workers who, under existing conditions, are unable to obtain remunerative employment. The most recent statistics available in this connection indicate that the proportion of unemployed to the total population is substantially lower in New Zealand than obtains in most countries overseas, but while this is so the Government considers the matter to be of such vital import as to justify the adoption of special measures in order to meet the position. With this end in view, and in accordance with the recommendations of the Unemployment Committee which submitted its report last year, legislation was enacted whereby a Board was. set up to administer unemployment relief on a national basis. The Act, however, did not divest local authorities of any of their responsibilities in regard to unemployment in their districts, and the closest co-operation between them and the Unemployment Board is essential to the granting of relief. In terms of the Act a special fund was instituted, to comprise the net proceeds of the levy of £l 10s. per head on all males (with certain exceptions) of twenty years of age or over, together with a subsidy from the Consolidated Fund equivalent to the Board's expenditure. By this means provision was made to meet the requirements of what the Unemployment Committee estimated would be a maximum of 15,000 unemployed men. With the continued fall in the Dominion's national income, however, the number of unemployed steadily increased, and on taking office in November, 1930, the Unemployment Board was faced with the immediate necessity of providing relief, as the funds previously voted for subsidizing relief works undertaken by local authorities had by this time become exhausted. Various schemes were accordingly initiated forthwith, and these succeeded in materially relieving the position and at the same time ensured as far as possible that useful works were undertaken. In spite of all efforts, however, which

Classification of debt.

Domicile of debt,

Combined State balance-sheet.

Unemployment Relief.

Unemployment Board.

10

8.—6

necessarily were limited by finance, there was still a large number of unemployed, so in February last the Unemployment Board introduced a scheme for providing rationed relief work through the medium of local authorities. This marked the first occasion when some work was offered to all registered unemployed, with the result that there was a large increase in the number of registrations. At the inception of this last-mentioned scheme, there were 17,000 registered unemployed, and the number rapidly rose to 37,600 by the end of the financial year, when the Board was incurring expenditure at the rate of, approximately, £2,000,000 per annum. The fund was obviously not equal to such a drain, and on the exhaustion of the available moneys it was publicly announced that further commitments would have to be suspended until Parliament had met. In view, however, of the wide appeal made for the continuation of the scheme and the near approach of the session, the Government subsequently decided to arrange the necessary finance in the meantime, and, as honourable members are aware, legislation has now been passed imposing the maximum taxation for relief schemes that it is considered the country could reasonably afford, having regard to the economic position and demands on the taxpayers for other purposes. Honourable members and the country generally will, I feel sure, agree that everything possible should be done to reduce unemployment to a minimum, and while additional burdens must necessarily be imposed on those of us who are employed, I am convinced that the majority of citizens will agree that there is no reasonable alternative under the circumstances. During my visit to the Imperial Conference, I both saw and heard of the demoralizing effect of the dole system, and I am satisfied that in the long-run damage will be done to the morale of those in receipt of pay without work. It is thus essential that work should be provided, and, although it is a difficult matter, every effort must be made to provide work of a productive nature in order to lessen the economic burden of the taxation imposed to finance the schemes. In addition to subsidizing expenditure totalling £319,141 incurred by the Unemployment Board, the Government has provided employment for as many men as possible on public works, and during the financial year ended the 31st March last the following expenditure on relief was incurred by the State : — £ Subsidy paid to Unemployment Board . . .. 159,247 Public Works Department (including main highways) 1,249,446 State Forest Service .. .. .. .. 85,000 Department of Lands and Survey.. .. .. 21,933 Subsidies to local authorities .. .. .. 116,768 Total .. .. £1,632,394 Wherever practicable, men engaged on public relief works are employed on a co-operative contract system whereby they are paid by results. I might add also that the number of men employed by the Public Works Department during the past two years on all its works (including relief works) was the highest in the history of the Department. The Government, I may add, fully recognizes the necessity for a permanent solution of the unemployment problem, and is taking all steps possible in this direction. HAWKE'S BAY EARTHQUAKE, 1931. I propose now to refer to the earthquake which occurred in the Hawke's Bay District on the 3rd February last, resulting both in loss of life and material damage to property. Immediately advice was received as to the nature and extent of the damage the Government issued instructions for the organization of relief measures, the success of which may be judged from the fact that within forty-eight hours of the earthquake adequate medical assistance and supplies, temporary accommodation, and food were available in the stricken areas. Great credit in this connection is due to the Navy for the quick response and valuable assistance rendered, and also

Expenditure on unemployment relief.

Hawke's Bay earthquake.

11

8.—6

to the various private organizations for supplies and assistance which were immediately forthcoming. The various Government Departments were called upon for tents and medical and other supplies, &c, and railway facilities were made available, free of charge, for the carriage of goods and the transport of refugees from the earthquake areas. Following upon the more urgent relief work, road and railway repairs were put in hand, and complete temporary communication was quickly restored. In the meantime, local committees were organized, and these attended in a very efficient and expeditious manner to the distribution of food, clothing, and the provision of accommodation, in order to ensure that none were in want. Right throughout New Zealand —and, indeed, throughout the Empire—there was a spontaneous response in providing funds for the relief of distress, and to date a total sum of approximately £381,000 has been received in voluntary subscriptions. Following the experience in connection with the Murchison earthquake, a central fund was established and a Central Committee formed to co-ordinate the various relief activities in the affected areas, and to ensure that the best possible use is made of the funds subscribed. The fund is being administered by the Public Trustee as executive officer of the Central Committee, and the accounts are subject to audit by the Controller and Auditor-General. No organizing or administrative costs will be charged against the relief fund, so that the whole of the amount subscribed will be directly applied in relief of distress caused by the earthquake. As a preliminary to restoration, a fairly general liquidation of the liabilities existing at the time was obviously necessary, and a special Court—the Hawke's Bay Adjustment Court —was set up and given wide powers to deal with this phase of the matter. To facilitate the actual work of restoration, a Rehabilitation Committee was set up to investigate claims and make recommendations to the Government as to the extent and nature of assistance to be granted. As will be readily appreciated, the State has been committed to considerable expense in connection with the restoration and rehabilitation of the affected areas. Restoration of and repairs to roads, schools, and public buildings, &c, are estimated to cost approximately £500,000, resurveys and restoration of land transfer titles, &c, a further £150,000, while sundry grants, including an amount of approximately £85,000 representing ex gratia payments by the State Fire Insurance Office, account for a further £110,000. The Government has also made sundry grants from the Consolidated Fund for relief of immediate distress, clearing of streets, re-erection of chimneys in private residences, &c. In addition, provision was made in the Hawke's Bay Earthquake Act, 1931, authorizing the Government to make use of reserve funds to the extent of £1,500,000 to enable loans and grants to be made both to local authorities and to private persons, with a view to enabling rehabilitation to be speedily effected in the earthquake areas. Thus the total expenditure from public funds will amount to over £2,250,000. Pending complete rehabilitation, the towns concerned are being resurveyed and laid out in accordance with modern town-planning principles. Occupational activities are now in full swing again, and in the near future we may expect the district concerned to be restored to its previous position of being one of the most productive and prosperous in the Dominion. LAND-SETTLEMENT. The Government fully recognizes the necessity, especially in a primary producing country such as New Zealand, for the prosecution of a vigorous policy of land development and settlement, and since assuming office has taken all steps possible both to bring into production all idle lands and to foster closer settlement. The matter is of particular importance at the present time owing to the necessity for increasing the Dominion's exports to offset the reduction in prices received in the overseas markets, and also with a view to assisting in the relief of unemployed. ! Successful land-development is one of the best possible means in which the financial position generally may be improved, for primary production is the basic industry of the Dominion, and increased purchasing-power for the farmers means better times for the rest of the community.

Public subscriptions.

Hawke's Bay Adjustment Court and Rehabilitation Committee.

State expenditure.

Land-settlement,

12

8.—6.

In so far as Crown lands are concerned, as many as possible of the available areas have been opened for selection. During the period Ist December, 1928 (when the United Government took office), to the 31st May, 1931, a total area of over 940,000 acres of all classes of Crown lands has been selected on various tenures, involving over 4,350 subdivisions, which include some 700 entirely new rural sections selected on permanent tenures. The number of settlers actually placed on the land, however, while considerable, does not cover the whole of the Government's activities in this respect, as the areas which are being developed by the Crown have not yet been offered for selection. It is satisfactory in this connection to note that every unoccupied block of Crown land in the Dominion has been specially reported upon, and as a result arrangements are being made to settle a large number of sections, the settlers to receive financial assistance for the further development of the land in terms of the Land Laws Amendment Act, 1929. Good progress is also being made in the development of large areas of gum and pumice country in various localities. The Ngakuru blocks of pumice land in the Eotorua district are breaking in satisfactorily, and the results so far achieved in the laying-down of pastures and general development are most encouraging. Satisfactory progress is also being made with the development of certain estates purchased under the Land for Settlements Act. Approximately 3,000 acres has so far been laid down in pasture in various blocks and further large areas are in preparation, incidentally giving employment to a large number of men. In addition to the development of Crown lands, the Government has also acquired some fifty-four properties, covering a total area of approximately 110,388 acres, and capable of subdivision into over 350 farms. Included in the purchases were nineteen properties, totalling 10,940 acres, which were acquired under Part II of the Land Laws Amendment Act, 1928, on behalf of sixty-seven approved applicants. In this connection I may mention that strict supervision is exercised over the purchase of private estates, for, as a general rule, it is preferable to expend the funds available in developing Crown land rather than in the purchase of private estates. Most of the properties purchased for ordinary settlement have been subdivided and selected, but amongst those not yet offered are two or three estates on which development work prior to selection is being carried out by the Crown; and in this connection I would specially mention the Galatea Estate (between Whakatane and Lake Taupo), which it is proposed to cut up into blocks ranging from 100 to 200 acres, the objective being to place 120 settlers in occupation on these holdings. In the meantime the roading and general development of the estate is providing employment for several hundred men. Before leaving the subject of land-settlement, I desire to refer to the very successful results which have been accomplished in connection with the Native-land-development schemes. In the North Auckland province development work is being proceeded with energetically, and some 404 separate holdings are at present under supervision. In the Waikato and King-country districts several large areas are being broken in for settlement, while in the Kotorua - Bay of Plenty districts the area under development exceeds 30,000 acres. Work is also being carried out in the East Coast, Poverty Bay, and Wairoa districts, and at Wairau (Marlborough) and Southland in the South Island. A feature of the Native-land development is that all labour, both skilled and unskilled, is recruited from the Maoris, who, I am pleased to state, have so far fulfilled every requirement, which augurs well for their adaptibility to farm-manage-ment when the lands are eventually settled by them. The full advantage of these schemes will, of course, accrue in the future, but from the brief outline which I have supplied it will be agreed, I feel sure, that both the intensive and extensive cultivation of the land is being encouraged by the Government in every possible way.

Crown lands.

Land purchases.

Native-land settlement.

13

8.—6,

1931-32.

1931 1932. The current financial year is likely to be remembered as a difficult one of economic readjustment, although a great deal has already been accomplished in this direction. Further, it would appear that we now know the worst, and that is half the battle, for there is no doubt that uncertainty as to what is going to happen is a powerful psychological factor in retarding trade and industry. It appears reasonably certain now that prices have reached bottom, and there is evidence of some movement in an upward direction. Economists in all countries, however, seem to be in agreement that prices will stabilize on a lower level than we have been accustomed to in recent years; but stability is the essential factor, for without that there can be no confidence in business. Given the foundation of stability, we have but to complete the task, onerous though it is, of adjusting our economic structure by bringing it into alignment with the new price-level, and then the way is clear for a revival of business and a general return to prosperity, which alone can provide a permanent remedy for the distressing problem of unemployment. The public finances reflect the position of the country generally, and the restoration of budgetary equilibrium on a permanent and secure basis is a practical impossibility unless and until general economic equilibrium is restored. The Government's proposals have accordingly been aimed primarily at assisting the solution of the larger problem, which involves the adjustment of the finances of our farmers, the lowering of working-costs, both direct and overhead, and the writing-off of losses incurred. These adjustments are largely matters for private initiative, and the most the Government can do, short of a radical change in the economic system, is to give a strong lead and endeavour to prevent exploitation of the situation. For these purposes this House was called together for the special session held in March last. ADJUSTMENT OF SALARIES AND WAGES. As honourable members are aware, the Finance Act, 1931, made provision for an all-round 10-per-cent. reduction in the salaries and wages of the Public Service, and provided authority for the Arbitration Court to review award rates of wages, taking into account the economic and financial conditions affecting trade and industry in New Zealand, and all other considerations which it deemed to be relevant. This authority was exercised by the Court, which, after hearing all sides of the question, came to the conclusion that a 10-per-cent. reduction in award rates was necessary to enable trade and industry to carry on and provide employment for the workers. It further reached the conclusion that the reduction ordered could be made without impairing the standard of living. This is borne out by the index figures of the Government Statistician, which show that between May, 1929, and May, 1931, the " all groups " index declined from 60-9 per cent, to 48 per cent, above July, 1914 —a fall of about 8 per cent. In the same period the food-group index fell from 47-5 per cent, to 24-8 per cent, above July, 1914 — a fall during the period of over 15 per cent. In general, the effect of the world-wide fall in prices was that the purchasing-power of money was increased. This being so, if the country could have afforded to allow money wages to remain unaltered, it would have meant that real wages would have been increased. The Government would have been very pleased indeed if the standard of living could have been raised in this way, for cutting wage-rates is neither a pleasant nor a popular task. The hard facts are, however, that the money income of the country as a whole is substantially reduced, and the question was whether a steadily decreasing number of men were to receive higher real wages while a large and increasing number of their fellow-workmen were to have no wages at all, or whether real wages were to be kept at the same level as heretofore, with a consequent revival of business and more employment. It will thus be seen that a reduction in money wages is not only essential for the economic recovery of the country, but is in the real interests of the workers as a whole. It is not the money wages, but the purchasing-power received by the workers, that is the important factor. If money wages and prices are both reduced the worker in employment is no worse

General level of prices.

Public finances.

Salaries and wages adjustment.

Cost-of-living index.

Real wages maintained.

14

8.—6

off, but the consequent saving in working-costs will enable industry to meet competition and carry on successfully under the altered conditions and provide the only permanent cure for unemployment, to the lasting benefit of the workers and the country generally. The latest cost-of-living figures that I have quoted are for May last, whereas the reductions in award rates were effective from the beginning of June only. The consequent savings in working-costs will enable prices to be still further reduced. The Government has all the necessary authority to ensure that the savings are passed on in one form or another, and, if necessary, the Government will not hesitate to use its powers. The Industries and Commerce Department is keeping in touch with the matter, but is not confining its attention to this point alone ; it is busy investigating the relationship between the cost and selling price of various articles in all its aspects. As regards food, inquiries have been made, for instance, into prices of bread, meat, fish, sugar, butter, eggs, and bacon ; while in other lines the inquiries have been extended to bran and pollard, gas, petrol, cement, bricks, earthenware pipes, fertilizers, coal, woollen goods, hosiery, and boots and shoes. It may be added that over an extensive field price investigations are rendered unnecessary by energetic price competition, but special attention is being given to trades and industries where monopolistic or semi-monopolistic conditions appear to exist. In regard to bread, I have previously announced the intention of the Government to submit to the House proposals for a reduction of the duty on wheat and flour. An undertaking has been given by the Government that no alteration will be made in the duties until the crop harvested this year has been marketed, but it is intended as from early next year to make substantial reductions in the duty on both wheat and flour. These reductions, while still giving the wheatgrower reasonable protection, will enable substantial reductions to be made in the retail price of flour and bread, and will assist the poultry-farmer and other users of wheat. FARMERS' FINANCE. As practically the whole prosperity of New Zealand is based on primary produce—which fact is only too evident at a time like the present —the Government is much concerned about the position of the farmers, many of whom have been placed in a serious financial position, through no fault of their own, as a result of the sudden unprecedented fall in world prices, which fall, as I have already indicated, has been particularly severe in the case of primary products. These prices, in fact, are back to the pre-war level, and, as farm lands are worth only the capitalized value of what they will produce at current prices, the hard fact must be faced that unless overseas markets rapidly recover—and the best informed opinion holds out little hope of that—many of our unfortunate farmers will have lost the equity in their farms, representing perhaps the hard-won savings of a lifetime, and, in addition, some mortgagees will have lost part of the capital invested by them. These facts are inescapable, and if the mortgagor of land that is now over mortgaged is a good farmer doing his best the mortgagee cannot hope to gain anything by driving him off the land. Accordingly, I repeat my earnest appeal to mortgagees to review all the circumstances in an equitable spirit and recognize their losses by easing the mortgage charges or otherwise granting every relief possible. This appeal extends also to the stock and station agents, and the banks and others who have lent money on the security of the farmers' stock and chattels, with or without collateral security. The readjustment of internal prices generally should bring a certain measure of relief to farmers, and in some cases all that is required is a postponement of the instalments of principal due under the contract for a limited period. lam pleased to say that the finances of many farmers have been rearranged in a spirit that does much credit to the mortgagees, but to prevent any exploitation of the situation, or the infliction of undue hardship on any mortgagor by hasty action on the part of the mortgagee, the Mortgagors Relief Act was placed on the statute-book. This measure is, however, only intended to be a precautionary one, and it is hoped that in most cases matters will be equitably arranged between mortgagor and mortgagee in a spirit of co-operation without outside assistance or interference. lam glad to say that it would appear

Steps taken to ensure prices reduced.

Reduction of duty on wheat and flour.

Farmers' finance.

Effect of fall in prices.

Mortgagors Relief Act.

Adjustment Commissioners,

15

8.—6,

that this is happening in the majority of cases. To assist parties where any mediation or assistance was required, the Commissioners of Crown Lands in the various districts have been appointed Adjustment Commissioners. The work of the Commissioners is, of course, confidential, but I may say they have assisted to bring about a number of amicable settlements. In general, however, they have not been called upon to any great extent; and it is also a matter for satisfaction that applications to the Court under the Mortgagors Relief Act have been relatively few. In so far as the State lending Departments are concerned, I can assure this House and the country generally that every application for relief is being dealt with on its merits in as sympathetic a manner as is practicable, with due regard to the exceptional economic conditions that prevail at present. The fall in land-values, while perhaps the most complicated and difficult matter to adjust, is only part of the farmer's problem. His difficulties are increased _ by the fact that, whereas he is receiving only pre-war prices for his products, the prices he has to pay for the goods he buys are still nearly 50 per cent, above the pre-war level. This wide disparity between the external world prices and New Zealand internal prices is, of course, the basic cause of a great many of our difficulties, and, as we cannot control world price-levels, the only way to remedy matters is to bring our internal prices down. They would be forced down in any case, but the aim of the Government's proposals in bringing about a prompt reduction in salaries and wages, &c, is to reduce the loss and suffering involved to a minimum by having the necessary adjustment made in as short a time as possible. The disparity in the price-levels to which I have referred is the principal difficulty to overcome before we can expect a return to more prosperous times. As prices fall, the purchasing-power of the farmers will rise, and this will benefit the secondary industries and the whole community. Local industries, with their costs and prices both governed by internal conditions, are not directly affected by the fall in prices overseas, and their troubles arise from the fact that at present prices the unsheltered industries can afford to buy only a much smaller quantity of their goods. Hence, the most urgent need of the all-round reduction in working-costs and prices which the Government is endeavouring to bring about. The Government is assisting farmers in connection with the supply of fertilizers, for it is realized that a marked decline in the use of these manures would react seriously upon next season's production. The Government has accordingly made available to the Rural Intermediate Credit Board the sum of £100,000, and has authorized the Board to lend this amount to farmers, with a limit of £75 to any one farmer, on much easier terms than apply to the ordinary business of the Board. An undertaking has been given that the Board will be recouped from the Consolidated Fund for any losses incurred on these special advances. At the same time, notwithstanding the urgent need for reduction in expenditure out of the Consolidated Fund, the Government has continued to subsidize the carriage of lime and fertilizers on the railways. The cost to the Consolidated Fund this year is estimated at about £140,000. One of the most onerous items in the overhead costs of farming is rates, and, as a further means of assisting the farmers, the Government has prepared an order of reference, and is at present selecting the personnel of a Royal Commission to explore the possibilities of giving relief to rural ratepayers by a general overhaul and reorganization of the system of local government. The statistics show that, apart from Power Boards and Harbour Boards, there are no less than 299 rural local authorities, collecting rates approximating £2,240,000 annually. The administration of these authorities costs about £330,000 a year, which represents 11 per cent, of their total revenue from all sources, or, alternatively, nearly 15 per cent, of the receipts from rates. Good communications and the revolutionary development of road transport in recent years have rendered it quite unnecessary to have so many local authorities, and it is evident that if the number can be reduced not only will there be large savings in the cost of administration, but larger districts will enable modern roadmaking machinery to be kept fully employed, which would mean, of course, cheaper maintenance and construction of roads. I may add that the proposed inquiry will cover the whole incidence of local bodies' taxation, and the expenditure of all local authorities, including Hospital and Charitable Aid Boards.

State lending Departments.

Disparity between external and internal prices.

Purchase of fertilizers.

Local Government inquiry.

16

8.—6

TRANSPORT. Another field that presents great scope for national economy is transport. References have been made in previous Budgets to the huge economic waste that arises from the lack of any form of co-ordination between rail and road transport, and a Transport Law Amendment Bill, designed to cope to some extent with the problem, was introduced in 1929. This Bill was not proceeded with, but a short measure was passed constituting a Ministry of Transport and a Department. The economic position of the country is now such, however, that the Dominion can no longer afford the economic waste involved, and it is essential in the public welfare that action should be taken without further delay to cope with the whole problem. As honourable members are aware, steps have already been taken to place the railways under the control of a non-political Board with a view to reducing the burden on taxation as much as possible. This step was taken on the recommendation of the Royal Commission which investigated the position of the railways. This Commission also pointed out that unrestricted motor transport along routes adequately served by railway increased the total cost of transport, particularly of primary products, and recommended that consideration be given to the question of making legislative provision for the license, control, and regulation of motor transport throughout the Dominion. The essence of the problem is to determine the proper economic spheres of the railways and motor transport respectively, and to provide adequate machinery for regulating the traffic accordingly. In most other countries it has been found necessary to take steps in this direction. Information in regard to the action taken in other countries has been collected by the Transport Department, which has made a careful investigation of conditions in New Zealand. A report on these investigations was published last year in parliamentary paper H.-40. The legislation which has already been submitted to honourable members is based on these investigations and the experience of other countries. The principal effect of this legislation will be the elimination, in the course of time, of unnecessary and wasteful competition between motor transport and the railways. The benefits will be a decrease in railway losses, improved conditions within the motor transport industry, and some relief to county rates consequent upon the reduction of traffic to a minimum consistent with the requirements of each area. REDUCTION IN INTEREST-RATES. Another matter in which the Government has endeavoured to assist primary producers, and indeed the whole Dominion, is in connection with a reduction in interest-rates. It is realized that interest charges form a considerable proportion of the overhead expenses in connection with most business activities, and with this in mind, and as part of the policy of encouraging a reduction in internal costs generally, the Government has for some time past been negotiating with various financial authorities throughout the Dominion, and as a result a voluntary arrangement has been agreed upon which will have the effect of cheapening the price of money by at least J per cent. The Government rate of per cent, for overcounter sales of inscribed stock or debentures maturing Ist September, 1937, will be reduced to 5 per cent. The present issue of Rural Advances bonds will be closed and replaced by a new issue of 5-per-cent, bonds at par, to mature on 15th September, 1947. In regard to the investment certificates on sale at the post-offices, it has been decided to reduce the return on two-year currency certificates to 4f per cent., and on five-year certificates to 5 per cent. No further issues will be made of one-year certificates after the 31st July. The Public Trustee will reduce by § per cent, the rate to be paid for new deposits by way of investment agencies in the Common Fund for a fixed term of years, and in addition will pass on to his clients the benefits accruing from such new deposits. Unexercised loan authorities held by local bodies will also be reduced by \ per cent. The maximum rate on such loans in future will be 5 per cent., but authority is contained in the Local Bodies' Loans Act, 1926, to increase this rate if necessary. Negotiations in respect of loans at present under action will, of course, be safeguarded.

Transport,

Railways control.

Transport co-ordination,

Reduction in interest-rates.

Government rates.

Local authorities' rates.

4—B. 6.

17

8.—6

The associated banks have also agreed to participate in the arrangement, and have made a public announcement regarding a reduction in deposit-rates of \ per cent, for two-year deposits, and | per Cent, for shorter periods, to operate as from Ist August. The minimum rate for advances will be reduced by \ per cent, from Ist November next. The Post Office Savings-bank deposit rate, which has remained at 4 per cent, since 1920, will be reduced to 3f per cent, on Ist August, being the rate which operated in 1914. Similar adjustments in deposit rates have also been agreed to by the private savings-banks, the reduction in most cases being \ per cent. In the case of the Auckland Savings-bank, the deposit rate will be reduced by \ per cent., but the lending-rate is to be reduced by |- per cent, the latter reduction to apply to both current and future mortgages. Similar adjustments have also been agreed to by the principal building societies, trustee, investment, mortgage, and deposit companies, and it is confidently anticipated that the remainder will agree to fall into line, and thus bring about an all-round reduction in interest rates. These reductions in deposit rates will take effect as from the Ist August next, and corresponding reductions in lending-rates will be made as soon as practicable thereafter. I feel sure all sections of the community will appreciate the efforts that have been made on their behalf with a view to reducing the cost of living generally. In so far as the State Advances Office is concerned, honourable members will realize that it is not possible in the meantime to reduce the rate of interest on existing mortgages, owing to the very small margin between the borrowing and lending rates of the Office, the borrowing rate being fixed by the cost of the longterm loan capital. Where circumstances justify it, however, the State Advances Board will extend sympathetic consideration in cases of genuine hardship by extending the period of the balance of the loans or otherwise easing the burden of the half-yearly payments. BANKING AND CURRENCY. Arising out of the economic depression and the fairly general dissatisfaction at the present unprecedented rates of exchange on London, the question of banking and currency is at present receiving a good deal of attention throughout the Dominion, and I have received many —and in some cases distinctly novel —suggestions for remedying matters. In fact, many seem to think that the quickest way out of our present troubles lies in the direction of a reform of our banking and currency legislation ; but lam afraid no change in our banking system could possibly compensate us for the shrinkage in the value of our exports in the overseas markets or overcome the fact that the relative weight of fixed charges for interest and debtrepayments has been proportionately increased by the fall in world price-levels. A change in monetary policy at the other end of the world, and more especially co-operation between the principal central banks of the world, may, however, materially benefit us in these matters. At the same time, our difficulties are being accentuated by rates of exchange being at present up to 10 per cent., and it is within our power to do something to hasten a return to more normal rates and make such provisions as will greatly minimize the chances, if not entirely obviate the possibility, of a recurrence of such abnormally high rates of exchange. There is no doubt that the high rates of exchange and especially the uncertainty as to future movements in the rates are a considerable factor in the business stagnation that prevails. Further, the exchange-rates have seriously affected our credit abroad, increased the cost of new borrowing, added a further 10 per cent, to the weight of interest payments abroad, and prevented prices and the cost of living falling as much as they otherwise would have done. It is true that exporters are receiving an exchange bonus of approximately 10 per cent. ; but it is not very long before any temporary advantage obtained thereby is cancelled out in the higher rates and taxes, higher cost of goods, and the general reaction from slackness in trade. I do not propose at present to go into the question of the causes of the current rates of exchange, or whether or not they are wholly justified by New Zealand conditions.

Bank rates.

Savings-banks 1 rates.

Building societies, &c.

State Advances Office.

Banking and currency.

Exchange-rates.

18

8.—6.

Apart from such questions, however, I consider it is time steps were taken to repeal the War Regulations still governing banking and currency in the Dominion, and place this vital factor in our economic life upon a permanent and secure basis. As it appeared that a return to the pre-war basis was not altogether practicable, or even desirable, the Government took the opportunity of the visit of Sir Otto Niemeyer, of the Bank of England, to this end of the world to seek his advice on the matter. This gentleman, who is a banker of international repute, was able to visit New Zealand and investigate our problems on the spot. Following his return to London, he has forwarded to me a report and certain definite recommendations, which I propose to lay on the table for the information and consideration of honourable members and the people generally. The main recommendations are summarized in the report as follows— (1) That permanent legislation should be passed making the New Zealand note inconvertible in New Zealand but convertible into sterling at rates fixed within certain limits ; (2) That an independent Reserve Bank should be set up charged with responsibility for the stability of New Zealand currency, invested with the privilege of note - issue, and charged with holding the Government account and the banking reserves of New Zealand ; (3) That the note-issue should be unified and concentrated in the Reserve Bank, the note-issuing powers of existing banks being abrogated ; (4) That the trading banks should be required to transfer to the Reserve Bank the gold they now hold in New Zealand in exchange either for Reserve Bank notes, with which they can pay off their own notes, or for credit at the Reserve Bank ; (5) That the trading banks should be required to keep with the Reserve Bank minimum reserves of 7 per cent, of their demand liabilities in New Zealand and 3 per cent, of their time liabilities in New Zealand ; (6) That thereafter the existing prohibition on the export of gold coin from New Zealand should be withdrawn. It is believed these recommendations will provide the basis for the amendments required to our legislation to secure for this Dominion a sound and well organized banking system in keeping with modern developments throughout the rest of the world. At the same time, as some far-reaching changes are involved, and the matter is a very important one, it is felt that it should not be rushed. PROSPECTIVE BUDGETARY POSITION. The various matters to which I have just referred deal for the most part with the broader aspects of the economic crisis with which we are now faced, and also with the Government's plan of campaign for stimulating national economy for the purpose of reducing working-costs and the cost of living; in short, for hastening the restoration of economic equilibrium without which, of course, we cannot get the wheels of trade and industry running smoothly again. I now want to place before honourable members, as concisely as possible, the position of the public finances, which is a more direct responsibility of the Government. The economic situation will undoubtedly mean a large shrinkage in practically all State revenues during the current financial year. The results during the closing months of last financial year and also the experience of this financial 3 ear up to date are ample evidence of that. Although imports for last financial year showed a decline of 20 per cent, compared with the previous year, the total for this year is likely to be several million less than for last year. The Customs revenue will be lowered proportionately to an even greater extent as, in times like the present, the falling-off in imports is always heaviest in luxury lines where, generally speaking, the rates of duty are highest. Forecasting this, our largest item of revenue, is always a difficult matter, and the difficulties are greatly accentuated under present conditions; but, having regard to all the circumstances, it is considered that on the present tariff the

Niemeyer report.

Summary of recommendations,

Prospective budgetary position,

Shrinkage in State revenues.

Customs duties.

19

8.—6

receipts would be £1,100,000 less than for last year, or a falling-off of approximately £2,030,000 compared to the amount budgeted for last year. The last figure is the measure of the shortage that has to be provided for to obtain a balanced budget for this year, for, as previously explained, the total revenue received last year was insufficient to the extent of £1,639,000. In regard to income-tax, which will be based on the trading results and incomes during last financial year, it is obvious that a substantial decrease is to be expected. On the best information at present available, the comparative decrease is estimated at £460,000. As for land-tax, this item fell short of last year's estimate of £1,240,000 by £94,000, and collections this year will probably show a further decline. The estimate for this year has accordingly been set down at £1,100,000. Stamp and death duties will also be considerably affected by the prevailing economic conditions. The decrease in values will mean less in death duties, while returns from racing taxation and amusement-tax are also seriously affected. A decrease in the volume of business means less revenue from impressed stamps. The total revenue from stamp and death duties for last financial year fell short of the estimate by approximately £390,000, and a further falling-off of about £300,000 is expected this financial year. Beer duty reflected the shrinkage in the purchasing-power of the people by falling short of last year's estimate by £40,000, and it is estimated that this year will show a further falling-off amounting to about £75,000. Railway interest is another item which is a considerable factor in the prospective deficit for this year. Last year's receipts amounted to only half the estimate of £1,380,000, and apart from the benefit from the salary reductions which come in as part of the provision made to meet the situation, there is likely to be a further decline estimated at £235,000, due to the continued shrinkage in the railway revenue. Another interest item that is affected to a considerable extent is interest on the Public Debt Redemption Fund. About £10,850,000 of this fund is invested in advances to soldier settlers through the Discharged Soldiers Settlement Account, and it is anticipated that under present economic conditions there will be a considerable shrinkage, set down at £165,000, in the amount of interest that can be collected. In addition to the items that I have mentioned, many of the smaller items will be adversely affected by the prevailing economic conditions, the net decrease being estimated at £280,000. In regard to expenditure, honourable members were acquainted during the special emergency session with the work done by the Economy Committee set up by the Government as soon as the present trend of affairs in public finance became apparent. This Committee was continuously engaged for about four months in painstakingly investigating every item of expenditure in turn, with a view to effecting all possible reductions consistent with the maintenance of services considered necessary for the welfare of the community. A study of the summary of expenditure included in my review of last year's transactions will indicate how much more limited than is generally supposed is the scope for practical reductions. Cutting down expenditure is not a popular or an agreeable task, but it must be generally realized that it is absolutely necessary at a time like the present, when the Dominion is faced with a serious contraction in the national income. Economy in expenditure is generally approved, but, unfortunately, there is not the same unanimity of opinion in regard to what items should be reduced. Still, while no effort is being spared to obtain economy in administration, a substantial reduction in expenditure can only be obtained by curtailing or, in some cases, eliminating some of the services hitherto supplied by the State, either free or below cost. By services I mean not only work done by the departments of State, but also monetary grants. In effecting economies every endeavour has been made to avoid inflicting undue hardship, but in private life most of us in hard times have to forgo many desirable things simply because we cannot afford them, and the same economic laws apply to public expenditure.

Land and income tax.

Stamp and death duties.

Beer duty.

Interest on railway capital.

Interest on Public Debt Redemption Fund.

Economies in expenditure.

20

8.—6.

However, in carrying out their somewhat invidious task, the Economy Committee and the Government have been actuated solely by a desire to promote the public welfare. In order that honourable members and the people generally may appreciate the magnitude of the problem that faced the Government and the country, I propose, before reviewing the reductions effected or other steps taken to meet the position, to indicate the Budgetary position as it would have been if operations had been continued on the same basis as for last financial year, which in itself represented a considerable effort to keep expenditure down to a minimum. The largest additional item to be provided for this financial year is subsidies under the Unemployment Act. As honourable members are aware, the Consolidated Fund subsidizes expenditure out of the Unemployment Fund on a pound-for-pound basis, and as a result of the measure recently placed on the statute-book it is estimated that subsidies for this year will amount to £1,100,000. Then there is the increase in debt charges. Provision has to be made for additional interest amounting to £250,000, while under the funded-debt agreement and the repayment of the public debt scheme there is, or would have been in the ordinary course, an automatic increase amounting to approximately £100,000. Pensions normally show an increase, but this year, owing to economic stress, it is anticipated that the increase will be larger than usual. Old-age pensions is the principal item concerned, but fairly substantial increases are also expected for family allowances and war pensions. The total increase for pensions is set down at approximately £200,000, while other permanent appropriations involve a net increase of £75,000. Failing new legislation, a further increase in this year's expenditure will arise from the return to the Consolidated Fund of the charges for subsidies to local authorities and other items transferred to the highways revenue pursuant to sections 36 to 38 of the Finance Act, 1930. Honourable members will recollect that these sections are operative to the 31st August next only, although there is no such limitation on the 2d. additional petrol-tax imposed to cover the charges in question. The intention in imposing a limitation on the transfer of the charges was that the matter should be reconsidered this year. For the balance of this financial year the charge to the Consolidated Fund would be about £125,000, but under present circumstances I think it will be generally agreed that the items in question must remain a charge on the Main Highways Account, or else the 2d. per gallon petrol-tax imposed to cover the charges must be retained for the Consolidated Fund. In addition to the items that I have mentioned, further increases in expenditure arise from various unavoidable new items or increases under the annual votes. An increase of about £130,000 in the net expenditure comes from an estimated decrease of that amount in the credits in aid. These receipts, like the revenue, are seriously affected by the economic conditions prevailing. The general election this year will add £75,000 to the expenditure, while the normal increase in the cost of education, assuming operations were continued on the same basis as heretofore, would amount to £100,000. Then surveys in Hawke's Bay will entail extra expenditure this year amounting to about £22,000, while various other items will have to be increased as a result of the earthquake. The particular items I have mentioned mean an increase in the vote expenditure of £327,000, and numerous other items scattered through the votes bring the total additional expenditure under annual appropriations up to approximately £480,000. Details of the expenditure are included in the estimates, which will be laid before the honourable members. For last financial year, however, the expenditure as a whole was approximately £290,000 less than the amount provided for, and as the estimated revenue for this year has been compared with last year's estimates and not receipts, to arrive at the true position this £290,000 should be deducted from the expenditure increases.

Unemployment subsidies.

Debt charges.

Pensions.

Subsidies to loeal authorities.

Expenditure increases.

21

8.—6

To sum up the position that faced the country, the effect of the economic crisis on the public finances is now found to be fsuch jthat when this financial year opened the Government, as the executive head of the Dominion, had to grapple with the stupendous task of providing, in one way or another, for a prospective deficit of no less than £6,850,000, made up as follows:— Shrinkage of revenue — £ £ Customs .. .. .. .. 2,030,000 Land and income tax . . .. .. 600,000 Stamp and death duties .. .. .. 690,000 Beer duty .. .. .. .. 115,000 Railway interest. . .. .. .. 930,000 Interest on Public Debt Redemption Fund .. 165,000 Other items (net) .. .. .. 280,000 4,810,000 Expenditure increases—■ Unemployment subsidies .. .. .. 1,100,000 Debt services .. .. .. .. 350,000 Pensions .. .. .. .. 200,000 Subsidies to local authorities, &c. .. .. 125,000 Education .. .. .. .. 100,000 General election .. .. .. .. 75,000 Decrease in credits to votes .. .. 130,000 Other items (net) .. .. .. 250,000 2,330,000 Less adjustment (equivalent to underexpenditure for 1930-31) .. .. 290,000 2,040,000 £6,850,000 REMEDIAL MEASURES. This was the total amount that had to be provided for, but as honourable members are aware, a great deal has already been accomplished towards bridging the gap. In accordance with the provisions of the Finance Act, 1931, the salaries and allowances of Cabinet Ministers, members of Parliament, and the whole Public Service have been reduced by 10 per cent., while corresponding reductions have been made in the wages of all temporary men, whether employed by the day or by the hour or otherwise. Provision was also made for the reduction of various grants and subsidies that are or could be used for the payment of wages and salaries. These reductions relieve the expenditure of the Consolidated Fund to the extent of £1,390,000. Apart from salaries, the work of the Economy Committee has enabled substantial reductions to be made in the expenditure. From its nature, the expenditure under Permanent Appropriations does not offer a great deal of scope for reductions. Of the £17,000,000 expended last year, £15,650,000 was for debt charges, pensions, and transfers of motor-taxation. In the ordinary course, relief from debt charges can come only from conversions at lower rates of interest and repayments of debt, but some unexpected assistance will be obtained this year, and also next year, as a result of the proposals of President Hoover, of the United States of America, for one year's suspension of payments on account of reparations and inter-Governmental war debts. This proposal only directly affected New Zealand through the cessation of reparation payments. It will remembered that this year it was intended to apply reparationmoneys as a credit in reduction of the amount to be provided under the Repayment of the Public Debt Act, 1925, and about £85,000 has already been received during this financial year. The British Government, however, with characteristic generosity, in spite of its own great financial difficulties, extended President Hoover's proposal to cover the war debts owed to Great Britain by the Dominions. The offer was gratefully accepted by the Government. The war debt in question is included

Summary.

Remedial measures.

Reduction in salaries, &e.

War-debts postponement,

22

8.—6

in the Funded Debt, on which one half-year's payment for this financial year has already been made. Allowing for the reparation-moneys already received, the net saving to the Consolidated Fund for this financial year is approximately £870,000. Apart from the 10-per-cent. reduction in economic pensions, which are intended to be a cost-of-living allowance, no reductions have been made in pension rates. The balance of the Permanent Appropriations consists largely of various subsidies, the largest item being subsidies to Hospital Boards. Reductions have been made in this item, and also in various grants and subsidies for education purposes. It was also found possible to reduce the subsidy to the National Provident Fund without endangering the financial stability of the Fund. The reductions which were made under Permanent Appropriations apart from salaries total approximately £125,000, including a reduction of £25,000 in the annual contribution to the Singapore Base. The economies under annual votes, apart from salaries and wages, amount to approximately £470,000. Savings were effected in nearly every vote, and details of the same were supplied to the House during the emergency session. In regard to education, I may say that some of the proposed economies were held over pending the investigation by the special Economy Committee which the Government is setting up to overhaul thoroughly the financial side of this important social service. All will agree that we should strive to obtain as high a standard of education as possible, but at the same time it must be recognized that there is a limit to what the country can afford. As has previously been pointed out, including the debt charges on the loan expenditure on buildings, education is at present costing the Dominion about £4,500,000 per annum, which is too heavy a burden on taxation under present economic conditions. There is no doubt that in this matter, as in most other things at present, we shall have to concentrate more on essentials and see that we obtain the greatest possible value for the money expended. Provision has also been made to augment the revenue in various ways. An equitable agreement has been made with the Royal Mint for the Dominion to receive half the profits on the future supplies of silver and bronze coin ordered for this Dominion, less worn coin returned. The other half of the profit will compensate the Mint for loss of metal on worn coin returned and provide a manufacturing profit for the Mint. The agreement is based on the average over a period of years, and we have already received on account of the current year an amount of £13,820. The abolition of the Land Assurance Deposit Account provided for in last session's legislation will benefit the revenue to the extent of £22,000. Provision was : also made last session for the profits of the Post Office to be paid to the Consolidated Fund, so that this fund will receive the benefit from the reduction in salaries and other economies that have been effected. In addition it will be remembered that steps were taken to increase the postal rates with a view to augmenting considerably : the assistance that can be given to the Consolidated Fund. Apart from reductions ! in salaries and wages, which I have already included under that heading, it is expected that the Post Office surplus will amount to about £900,000. The state of the public finances during the current financial year is probably more serious than at any time during the past fifty years, if not during the whole history of the Dominion. Further, the economic position generally is such that it is imperative that increases in taxation be kept down to an absolute minimum. Under these circumstances, the Government considers that this is a time when any reserves that can be legitimately drawn upon should be used. Accordingly, i it is proposed that the balance of the Reserve Fund held in London, over and * above the £1,500,000 earmarked for earthquake restoration, shall be realized and paid into the Consolidated Fund, which will benefit to the extent of about £550,000. I may add that it is proposed to obtain legislative authority to utilize any surplus there may be in the Consolidated fFund to time towards the restoration of this Reserve Fund. It is also proposed to utilize an amount of about £590,000 at present held in the Discharged Soldiers Settlement Depreciation Fund. This fund was built r up by transfers from the Consolidated Fund, together with accumulated interest on j investments, and was established for the purpose of maintaining the value of the securities issued in connection with the discharged-soldiers-settlement loans. It is no longer required for this purpose, however, and it was intended to use it for debtredemption purposes, but the present circumstances justify transferring the money back to the Consolidated Fund.

Reductions in Permanent Appropriations.

Education Economy Committee.

Coinage profits.

Land Assurance Deposit Account.

Post Office surplus.

Utilization of Reserve Fund.

Discharged Soldiers Settlement Depreciation Fund.

23

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All these proposals will provide towards making good the prospective Budget shortage of £6,850.000, a total of £5,056,000 made up as follows :— £ Keductions in salaries and wages .. .. .. 1,390,000 Benefit from suspension of funded-debt payments .. 870,000 Other economies in expenditure . . . . .. 595,000 Post Office surplus and other additional revenue .. 936,000 Use of reserves .. .. .. . . .. 1,140,000 Subsidies to local authorities, &c, to remain a charge on Highways Account .. .. .. .. 125,000 £5,056,000 This leaves approximately £1,800,000 to be provided for by additional taxation. TAXATION. Needless to say, it is with much reluctance and regret that the Government brings down any proposals for additional taxation under present circumstances, but it will be clear from what has already been explained that every effort has been made to meet the situation by other means. Let me say, quite sincerely, that I have well thought over the consequences that would result were the Government to budget for a deficiency, and after careful consideration I am satisfied that the only course to pursue, if the interests of our people are to be properly safeguarded, is to keep the ship of State on an even keel, and maintain our public finances on a sound basis. Towards the last £1,800,000 reqiiired to obtain a balanced budget, it is proposed to obtain £730,000 from additional income-tax. For last financial year the tax was levied at certain prescribed rates, plus 10 per cent., but for this year the surtax will be increased to 30 per cent. In addition, the present general exemption of £300, diminished £l for every £2 of income between £450 and £750, and £1 for £l between £750 and £900, will be cancelled and replaced by a general exemption of £260, diminished £l for every £3 of income between £260 and £560, and £2 for every £3 between £560 and £800. It is proposed to obtain a further amount, estimated at £50,000, from additional stamp duties. A duty of 5 per cent, will be imposed on overseas steamer tickets, and a duty of 10 per cent, on art union tickets in the case of art unions for mineral specimens of a value in excess of £100. The balance of the amount required will come from Customs and Excise duties, and I will give details of these to honourable members presently when moving the necessary resolutions. BUDGET ESTIMATES. Allowing for these increases in taxation, and also for the economies and adjustments previously enumerated, it is estimated that the revenue for the year will be as follows : — £ Customs .. .. .. .. .. 7,410,000 Beer duty .. .. .. .. .. 650,000 Film-hire tax .. .. .. .. .. 50,000 Mo tor-vehicles —Duties and licenses .. .. 1,760,000 Stamp and death duties .. .. .. 3,140,000 Land-tax .. .. .. .. .. 1,100,000 Income-tax .. .. .. .. .. 4,230,000 Interest receipts— £ Eailway capital .. .. .. 930,000 Post Office capital .. .. 535,000 Public moneys .. .. .. 745,000 Public Debt Kedemption Fund .. 820,000 3,030,000 Miscellaneous— Post Office surplus .. .. 1,090,000 From reserves .. .. .. 1,140,000 Other .. .. .. .. 1,346,000 3,576,000 £24,946,000

Summary of savings.

Taxation.

Income-tax.

Stamp duties.

Customs and excise duties.

Estimated revenue.

24

8.—6

The estimated expenditure for the year is set out in the estimates supplied to honourable members. To sum up, the position on the basis of the Government's proposals is estimated to be— £ Eevenue .. .. .. .. .. 24,946,000 Expenditure— £ Permanent appropriations .. 17,679,904 Annual votes .. .. 7.083,877 24,763,781 Leaving .. .. .. £182,219 to provide for supplementary estimates and contingencies. I have now reached the end of what I venture to predict will prove to be in years to come a document of great historic interest. The economic storm has been felt severely even in the older countries of the world, where the very foundations of leading nations have been severely shaken. This Dominion had to withstand the full force of the storm, for the prices of primary products fell first and most heavily. So far this Dominion has responded well to my earnest appeal to put our house in order, and I am confident that the spirit of the people is such that a real desire exists to have the task completed as soon as possible. In this fair land we have a wonderful heritage. Our people are a vigorous and virile race, strong in resource and rich in experience and tradition. I see no reason to doubt in even the smallest degree either the will of the inhabitants to survive our troubles, as has frequently been done in the past, or their readiness to make the required effort or to accept whatever sacrifice may be needed as soon as the nature of and necessity for such is clearly explained and understood. I referred at the outset to our heavy loss of national income, and just let me explain that in the last analysis, income depends on work, saving, and management. The State has no magic purse out of which the loss of income represented by the heavy decreased values of exports can be made up. Our objective, therefore, must be such a readjustment of the relation between costs and prices as will restore the main industries of the Dominion to a healthy state. Some improvement in prices has already taken place, and the indications are that once confidence through oiit the world is restored a general improvement will follow. Finally, let all sections of the community realize that the simple key to the solution of our problems lies in hard and honest toil, in the exercise of thrift, and in the fostering of a spirit of reasoned enterprise. Given these simple factors and stability in Government, it requires no great effort to prophesy that we will soon reach a road that will lead to greater prosperity and happiness. I conclude with the confidence that the Government will receive the assistance and support of the people to attain that goal.

Estimated results.

Conclusion,

s—B. 6.

25

8.—6

SUMMARY. Consolidated Fund— Ordinary Eevenue Account— £ Expenditure .. .. .. .. .. ..24,708,042 Revenue .. .. .. .. .. "'.. 23,068,931 Deficit .. .. £1,639,111 £ Balance brought forward, Ist April, 1930 .. .. .. 2,356,337 Less — £ Deficit, 1930-31 .. '.. . - 1,639,111 Subsidy on expenditure out of Unemployment Fund .. .. •• •• 159,247 Subsidies to local authorities in respect of unemployment relief .. .. 116,768 Advances to Rural Intermediate Credit Board 127,900 Expenditure in connection with Hawke's Bay earthquake .. .. .. 29,536 Expenditure in connection with West Coast earthquake .. ... .. 174 Advance to Westport Harbour Account .. 5,000 2,077,736 Balance, 31st March, 1931 .. ... .. £278,601 This balance was made up as follows : — £ Cash .. 151,105 Imprests outstanding .. .. .. 127,496 £278,601 Revenue apart from items earmarked for highways showed a compara- £ tive decrease compared with the previous year of .. .. 2,610,730 Customs revenue shortage ~ . . .. .... 924,024 Interest on railway capital—shortage .. . . -. . ■ 695,000 Stamp and death duties —shortage .. .. .. .. 392,665 Income-tax —surplus .. .. .■ .. •- •• 43,606 Summary of Expenditure. £ Public-debt charges .. .. .. ..10,952,505 Social services— Education .. .. .. .. 3,354,545 Pensions and family allowances . . . . 3,025,206 Health and hospitals .. .. .. 1,219,184 Roads and highways . . .. . . . . 1,875,609 Defence-—land, sea, and air . . . . . . 821,644 Agriculture .. .. .. . . .. 418,913 All other items .. .. .. . . 3,040,436 £24,708,042 No Treasury revenue bills outstanding at end of year.

26

8.-6

Public Works. Summary of Capital Expenditure. Railway construction, additions, and improvements .. 3,159,813 Main highways and roads .. .. .. • • 2,341,902 Hydro-electric supply .. .. .. •• 1 ,230,172 Public buildings (including schools) .. .. 939,110 Telegraphs and telephones .. .. .. 434,615 Irrigation, land and river improvements .. .. 252,585 Miscellaneous public works .. .. .. 129, 398 £8,487,595 Railways. Several construction works closed down. Railway Board appointed. London Loan, 1931. £4,000,000 raised in June, 1931, for— £ Public Works—General purposes .. .. 3,000,000 Development of hydro-electric-power works . . 1,000,000 £4,000,000 Also further £1,000,000 for redemption purposes. Summary of Debt Operations. £ Debt as at Ist April, 1930 .. .. .. 267,383,343 Add new loans raised— £ Ordinary .. .. 9,623,675 State advances .. .. 1,500,025 11,123,700 278,507,043 Less redemptions —■ Ordinary .. .. 244,610 War .. .. .. 2,071,725 Discharged soldiers .. 157,350 2,473,685 Debt as at 31st March, 1931 .'. £276,033.358 Classification of Debt. £ Ordinary .. .. .. ~ ■• 163,676,911 War .. ~ .. •• •• 67,711,800 Discharged soldiers .. .. .. .. 7,704,536 State advances .. .. .. ... 36,940,111 £276,033,358 Domicile of Debt. £ London ■"■.; •• •• ' •• •• 154,546,941 Australia .. ... .. .. •• 4,175,350 TSTew Zealand.. .. .. •• ■■ 117,311,067 £276,033,358

27

8.—6

Debt redeemed during year totalled £2,473,685 Government's policy is to reduce further additions to debt to a minimum. Combined State balance-sheet prepared on commercial lines, showing in concise form position of national finances. Unemployment Relief. Unemployment Board constituted to administer relief on national basis. Necessity for recent additional levy, &c. Objections to institution of dole. Total expenditure on relief for last year approximately £2,000,000. Government recognizes necessity for permanent solution of problem. Hawke's Bay Earthquake. Successful relief measures. Public subscriptions to fund exceed £381,000 to date. Central Committee appointed to administer relief. Adjustment Court set up to facilitate liquidation of liabilities, &c. Government utilizing reserve funds amounting to £1,500,000 to enable loans and grants to be made in affected areas. In addition to use of reserve funds, Government committed to expenditure exceeding £500,000 for repairs, roads, public buildings, resurveys, &c. Land Settlement. Government prosecuting vigorous policy of land-development and settlement. Since United Government took office to 31st May last, total area of 940,000 acres Crown lands selected on various tenures, involving 4,350 subdivisions. Approximately 3,000 acres unproductive land brought into pasture. Every unoccupied block of Crown land specially reported upon, and arrangements being made to settle 100,000 acres of such land. Government has also acquired fifty-four properties, involving 110,388 acres, and capable of subdivision into over three hundred and fifty farms. Also very promising results in connection with Native-land-settlement schemes, a feature being that all labour involved is supplied by the Natives who are eventually to settle on holdings. 1931-32. Government's proposals aim at the lowering of working-costs to offset decreased returns received from overseas. 10-per-cent. reduction in salaries and wages of Public Service. Legislation passed last session authorizing Arbitration Court to review award rates of wages. After considering all aspects, Court decided a 10-per-cent. reduction in award rates was necessary to enable trade and industry to function and provide employment. Cost-of-living showing substantial decline, thus reduction in wages will not impair standard of living. Industries and Commerce Department investigating selling-prices of standard lines. Farmers' Finance. Appeal to mortgagees to grant relief wherever possible. Commissioners of Crown Lands appointed Adjustment Commissioners t6 mediate between mortgagors and mortgagees. " u "'" ~ Mortgagors' Relief Act passed to prevent any exploitation arisittg'oirtrof existing conditions. ' Special advance, to Rural Intermediate Credit Board to assist farmers to purchase fertilizers.

28

8.—6

Royal Commission to investigate system of local government with view to reduction in rural rates. Subsidy on carriage of lime and fertilizers continued at estimated cost of £40,000. Transport. Object of legislation is to eliminate unnecessary and wasteful competition between motor-transport and railways. Reduction in Interest Rates. Government successful in arranging general reduction in interest rates as from Ist August. i Associated banks have agreed to make reductions in both deposit and overdraft rates. State savings-bank rate reduced to 3f per cent, per annum. Banking and Currency. Return to normal rates of exchange desirable. Sir Otto Memeyer's report —summary of recommendations. Prospective Budgetary Position. Expenditure carefully reviewed by Economy Committee and savings effected. Reductions in revenue, together with unavoidable expenditure increases, total £6,850,000. Remedial Measures. Ten-per-cent. reductions in salaries and allowances of Cabinet Ministers, members of Parliament, and Public Service. Suspension of war-debt payments following proposals of President Hoover, of United States of America. Annual contribution to Singapore Base reduced to £100,000. Sundry reductions in annual votes, in addition to savings by 10-per-cent. reduction. Economy Committee on Education to be set up, with view thoroughly to overhaul financial aspect of problem. British Government has agreed in future to pay Dominion half profits on silver and bronze coins. Balance to compensate Mint for losses on worn coin, &c. Sundry accounts to be abolished and balances transferred to Consolidated Fund. ' ' Balance of Reserve Fund held in London to be utilized. Summary of Proposals. £ Reductions in salaries and wages .. .. .. 1,390,000 Benefit from suspension of funded-debt payments . . . . 870,000 Other economies in expenditure . . . . . . . . 595,000 Post Office surplus and other additional revenue .. .. 936,000 Use of reserves . . . . . . . . . . 1,140,000 Subsidies to local authorities, &c, to remain a charge on Highways Account .. .. .. .. .. 125,000 £5,056,000 leaving approximately £1,800,000 to be provided for by additional taxation. Taxation Proposals. Government reluctant to impose additional taxation, but balanced Budget essential to maintain public finances on sound basis. Income-tax—Surtax to be increased from 10 per cent, to 30 per cent.; also present general exemption of £300 to be reduced to £260. Estimated to provide an additional £730,000.

29

8.—6

Stamp duty of 5 per cent, on overseas steamer-tickets, and duty of 10 per cent, on art-union tickets for mineral specimens of value in excess of £100. Estimated to produce a total of £50,000. Balance of amount required to be obtained from additional Customs and excise duties. Budget Estimates. £ Customs .. .. .. .. .. 7,410,000 Beer duty .. .. .. .. .. 650,000 Film-hire tax .. .. .. .. .. 50,000 Motor-vehicles—Duties and licenses .. .. 1,760.000 Stamp and death duties .. .. .. .. 3,140,000 Land-tax .. .. .. .. .. 1,100,000 Income-tax .. .. ... ■}.-■ .. 4,230,000 Interest receipts— £ Railway capital .. .. .. 930,000 Post Office capital .. .. 535,000 Public moneys .. .. .. 745,000 Public Debt Eedemption Fund .. 820,000 3,030,000 Miscellaneous— Post Office surplus .. .. 1,090,000 From reserves .. .. .. 1,140,000 Other .. .. .. .. 1,346,000 3,576,000 £24,946,000 The position on the basis of the Government's proposals is estimated to be— £ Revenue .... ~ .. .. 24,946,000 Expenditure— £ Permanent appropriations .. 17,679,904 Annual votes .. .. 7,083,877 24,763,781 Leaving .. .. ~ £182,219 to provide for supplementary estimates and contingencies.

30

8.—6

TABLES TO ACCOMPANY THE FOREGOING STATEMENT. Paste Table No. I.—Aestbaot of Receipts and Expenditure of the Financial Year ended 31st March, 1931. See Parliamentary Paper B.—l [Part I]. Table No. 2. —The Public Debt on 31st March, 1931. See Parliamentary Paper 8.-l [Part lII]. Table No. 3. —Revenue fob the Year ended 31st March, 1931, compared with the Year ended 31st March, 1930 .. .. .. .. .. .. . ■ • • i> Table No. 4. —Comparative Statement of the Estimatei vnd Actual Revenue of the Consolidated Fund (Obdinaey Revenue Account) fok the Financial Yeab ended 31st March, 1931 .. .. .. .. .. .. • • • • • • .. ii Table No. s.—Estimated Revenue for 1931-32, compared with the Actual Revenue for 1930-31 .. iii Table No. 6. —Stamp and Death Duty Revenue for the Year ended 31st Makch, 1931, compared with the Yeab ended 31st Makch, 1930 .. .. .. •■ •■ ..iii Table No. 7.—Statement of the Customs Duties collected for 1930-31, compared with 1929-30 .. iv Table No. B.—Statement oe the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1931, compared with the Year ended 31st March, 1930 .. .. .. .. iv Table No. 9. —Comparative Statement of the Appropriated and Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Yeab ended 31st Mabch, 1931 .. .. .. . ■ • • • • • • .. vi Table No. 10. —Estimated Net Expenditure fob 1931-32, oompabed with the Actual Net Expenditure FOR 1930-31 .. .. .. .. . • • • • • • • .. vii Table No. 11. —Statement showing how Accumulated Subpluses have been applied .. .. viii Table No. 12. —Public Works Fund—Statement showing Net Expenditure under Appbopbiations fob the Year ended 31st Mabch, 1931, compared with the Yeab ended 31st March, 1930 ix Table No. 13.—Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to 31st March, 1931 .. x Table No. 14. —Statement showing the available Financial Resources of the various Accounts on the 31st March, 1931, as compared with the 31st March, 1930 .. .. .. xii Table No. 15.—Statement showing the Amount charged to " Unauthorized " in each Financial Year fbom Ist Apbil, 1920, to 31st March, 1931 .. .. .. .. .. xiii Table No. 16.—Summary of the Public Debt and of the State Assets which may be set off against it, as at 31st March, 1931 .. .. .. .. • • • • ■ • xiii Table No. 17. —Statement showing Loans falling due in the Seven Years ending with the Year 1938, excluding Imperial Debt Repayments .. .. .. .. .. xv Table No. 18. —Statement of Half-yearly Instalments of Principal and Interest fob Repayment of Debt funded with Imperial Government .. .. .. .. xv Table No. 19. —Education Expenditure—Total Expenditure on Education out of Public Funds since 1913-14 .. .. .. .. •• •■ •• ■■ .. xvi Table No. 20. —Statement of Amounts paid on account of Pensions fob the Financial Years ended 31st March, 1927 to 1931 .. .. .. .. .. .. • • xvii Table No. 21. —Statement showing Imports and Exports of the Dominion in each Financial Yeab ended 31st March, 1922 to 1931 .. .. .. .. .. .. xvii

i—B. 6.

B.—■ 6.

Table No. 3. Revenue for the Year ended 31st March, 1931, compared with the Year ended 31st March, 1930.

Table No. 4. Comparative Statement of the Estimated and Actual Revenue of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1931.

II

Year ended Year ended 31st March, 31st March, Increase. Deorease. 1931. 1930. Taxation— £ £ £ £ Customs .. .. .. .. 7,605,976 8,897,046 .. 1,291,070 Beer duty .. .. .. .. 575,100 620,312 .. 45,212 Film-hire" tax .. .. .. .. 41,756 .". 41,756 Motor-vehicles—Duties,' licenses, &c. .. 1,840,590 1,510,790 329,800 Stamp and death duties .. .. ..I 3,387,335 3,405,292 .. 17,957 Land-tax .. .. .. .. 1,145,617 1,506,911 .. 361,294 Income-tax .. .. .. .. 4,003,606 3,533,764 469,842 Interest — On capital liability — Working railways .. .. .. 685,000 2,132,324 .. 1,447,324 Postal and telegraph .. .. .. 504,000 481,000 23,000 On the Public Redemption Fund .. .. 858,893 996,695 .. 137,802 On other public moneys .. .. .. 866,981 803,491 63,490 Other receipts— Justice .. .. .. .. .. 220,321 193,409 26,912 Marine .. .. .. .. .. 103,811 114,267 .. 10,456 Printing and Stationery .. .. 244,780 247,686 .. 2,906 Other departmental receipts and recoveries .. 169,378 190,105 .. 20,727 National Endowment revenue .. .. 118,869 .. 118,869 Registration and other fees .. .. 223,206 253,788 .. | 30,582 Territorial revenue .. .. .. 187,409 214,229 . . 26,820 Miscellaneous .. .. .. .. 286,303 248,752 37,551 1,111,220 3,392,150 1,111,220 Totals .. .. .. 23,068,931 25,349,861, .. 2,280,930 I

Difference. Estimate for Actual for 1930-31. 1930-31. More _ Legs £ £ £ £ Customs .. .. .. .. .. 8,530,000 7,605,976 .. 924,024 Beer duty .. .. .. .. 615,000 575,100 .. 39,900 Film-hire tax .. .. .. .. 30,000 41,756 11,756] Motor-vehicles—Duties, licenses, &c. .. .. 1,915,000 1,840,590 .. 74,410 Stamp and death duties .. .. .. 3,780,000 3,387,335 .. 392,665 Land-tax .. .. .. .. .. 1,240,000 1,145,617 .. 94,383 Income-tax .. .. .. .. 3,960,000 4,003,606 43,606 Interest on capital liability— Working railways.. .. .. .. 1,380,000 685,000 .. 695,000 Postal and Telegraph .. .. .. 510,000 504,000 .. 6,000 Interest on Public Debt Redemption Fund .'. 985,000 858,893 .. 126,107 Interest on other public moneys .. .. 805,000 866,981 61,981 Other receipts — Justice .. .. .. .. .. 198,000 220,321 22,321 Marine .. .. .. .. .. 115,000 103,811 .. 11,189 Printing and Stationery .. .. .. 230,000 244,780 14,780 Other departmental receipts and recoveries .. 182,000 169,378 .. 12,622 National Endowment revenue .. .. .. 118,869 118,869 Registration and other fees .. .. 235,000 223,206 .. 11,794 Territorial revenue .. .. .. 198,000 187,409 .. 10,591 Miscellaneous .. .. .. .. 212,000 286,303 74,303 347,616 2.398,685 347,616 Totals .. .. .. 25,120,000 23,068,931 .. 2,051,069

8.—6

Table No. 5. Estimated Revenue of the Consolidated Fund (Ordinary Revenue Account) for the Year ended 31st March, 1932, compared with the Actual Revenue received for the Year ended 31st March, 1931.

Table No. 6. Stamp and Death Duty Revenue for the Year ended 31st March, 1931, compared with the Year ended 31st March, 1930.

III

Estimate Actual Differences. for for 1931-32. 1930-31. Increas0 . Decrease. I Taxation— £ £ £ £ Customs .. .. .. .. .. .. 7,410,000 7,605,976 .. 195,976 Beer duty .. .. .. .. .. 650,000 575,100 74,900 Film-hire tax .. .. .. .. .. 50,000 41,756 8,244 Motor-vehicles—Duties, licenses, &c. .. .. 1,760,000 1,840,590 .. 80,590 Stamp and death duties .. .. .. .. 3,140,000 3,387,335 .. 247,335 Land-tax .. .. .. .. .. 1,100,000 1,145,617 .. 45,617 Income-tax .. .. .. .. .. 4,230,000 4,003,606 226,394 Interest— On capital liability— Working Railways .. .. .. .. 930,000 685,000 245,000 Postal and Telegraph .. .. .. .. 535,000 504,000 31,000 On the Public Debt Redemption Fund .. .. 820,000 858,893 .. 38,893 On other public moneys .. .. .. .. 745,000 866,981 .. 121,981 Other receipts— Justice .. .. .. .. . .. 209,000 220,321 .. 11,321 Marine .. .. .. .. .. .. 105,000 103,811 1,189 Printing and Stationery .. .. .. .. 210,000 244,780 .. 34,780 Other departmental receipts .. .. .. 147,000 154,249 .. 7,249 National-endowment revenue .. .. .. 110,000 118,869 .. 8,869 Registration and other fees .. .. .. 205,000 223,206 ... 18,206 Territorial revenue .. .. .. .. 165,000 187,409 .. 22,409 Post Office profits.. .. .. .. .. 1,090,000 .. 1,090,000 From reserves .. .. .. .. .. 1,140,000 .. 1,140,000 Miscellaneous .. .. .. .. .. 185,000 286,303 .. 101,303 Recoveries on account of expenditure of previous years.. 10,000 15,129 .. 5,129 2,816,727 939,658 939,658 Totals .. .. .. .. 24,946,000 23,068,931 1,877,089

Year Ended 31st March. Item. Increase. Decrease. 1931. 1930. £ £ £ £ Adhesive stamps .. .. 91,483 115,463 .. 23,980 Duty on instruments .. 326,121 457,148 .. 131,027 Death duty (estate and succes- 1,744,697 1,662,163 82,534 sion duty) Gift duty .. .. .. 65,038 65,276 .. 238 Impressed stamps, and duty on 198,512 209,476 .. 10,964 cheques Company licenses .. .. 87,490 76,066 11,424 Sharebrokers'licenses .. 1,470 912 558 Bank-note duty .. .. 233,318 193,017 40,301 Duties payable by racing clubs 529,143 542,899 .. 13,756 Amusements-tax' .. .. 105,936 79,887 26,049 Kates, fines, and miscellaneous 4,127 2,985 1,142 162,008 179,965 162,008 Totals .. .. 3,387,335 3,405,292 .. 17,957

8.—6

Table No. 7. Statement showing Customs Duties collected for Year 1930-31, compared with the Year 1929-30.

Table No. 8. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1931, compared with the Financial Year ended 31st March, 1930.

IV

1930-31. 1929-30. Increase. Decrease. ! I £ £ £ £ Spirits, wine, and beer 1,079,881 1,172,199 .. 92,318 Tobacco, cigars, and cigarettes .. .. 1,544,412 1,472,662 71,750 Apparel and textiles 1,401,232 1,866,548 .. 465,316 Motor-vehicles and parts* .. .. ..' 637,447 1,216,579 j .. 579,132 Other goods | 2,072,189 2,399,207 .. 327,018 Primage and surtax .. .. ., 870,815 769,851 100,964 172,714 1,463,784 172,714 Totals .. 7,605,976 8,897,046 .. 1,291,070 \ _____ * Excluding tire-tax and petrol-tax earmarked to Main Highways.

Year ended Year ended 31st March, 31st March, Inorease. Decrease. 1931. 1930. _ j Permanent appropriations — £ £ £ £ Under special Acts — Civil List ... .. .. .. 30,862 j 30,528 334 Debt services— Interest .. .. .. .. 9,266,676 9,136,301 130,375; Sinking fund .. .. .. 3,119 2,889 230 | Repayment of Funded Debt .. .. 425,540 | 405,136 20,404 Repayment of Public Debt Act, 1925 .. | 1,207,059 ; 1,154,245 52,814 Transfer to Loans Redemption Account 2,954 j 1,374 j 1,580 j Administration and management .. 44,584 31,168 13,416 Payments on guaranteed loans .. i 2,573 1,022 1,551 Grants and subsidies — Hospitals and charitable institutions* .. 670,847 743,847 .. 73,000 Education ! 124,345 j 139,171 .. 14,826 Superannuation Funds and National Pro- 165,096 j 381,548 .. 216,452 vident Fund Local authorities on rates .. .. .. 219,688 .. 219,688 Working Railways Account .. .. .. 29,929 j .. 29,929 Contribution towards Singapore Naval Base 125,000 j 125,000 j Miscellaneous .. .. .. 78,062 85,637 | .. 7,575 Salaries and honoraria .. .. .. 101,538 107,173 j .. 5,635 Pensions — Family allowances 63,608 j 60,876 2,732 Old-age pensions .. .. .. 1,118,286 1,067,603 i 50,683 Widows' pensions .. .. .. 325,998 322,886 j 3,112 War pensions .. .. .. 1,245,499 1,204,422 41,077 Other pensions 98,639 94,196 4,443 Motor taxation — Transfers to Main Highways Account .. 1,742,194 1,420,460 j 321,734 Paid to boroughs .. .. .. | 83,012 74,565 j 8,447 Expenses of collecting and making refunds 17,555 14,385! 3,170 Advances — On account of other Governments .. 6,617 10,000 .. 3,383 To Working Railways Account .. .. 150,000 .. 150,000 Miscellaneous .. .. .. 2,906 15,000 .. 12,094 Other special Acts — Maintenance of overseas war graves and 30,750 30,750 | memorials Compensation for stock destroyed or con- 30,610 30,203 407 demned Transfer to Discharged Soldiers Settlement ... 50,000 .. 50,000 Loans Act 1920 Depreciation Fund Miscellaneous 21,934 87,603 .. 65,669 Total permanent appropriations .. 17,035,863 17,227,605 656,509 848,251 i * Includes subsidy to Jubilee Institute for the Blind, which is really educational.

8.—6,

Table No. 8—continued. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1931, compared with the Financial Year ended 31st March, 1930 — continued.

V

Year ended ; Year ended 31st March. 31st March, Increase. Decrease. 1931. 1930. I Annual appropriations — £ £ £ £ Legislative Departments .. .. .. 98,990 99,251 .. 261 Prime Minister's Department .. .. 14,665 13,817 848 Treasury Department .. .. .. 40,329 41,941 .. 1,612 National Provident and Friendly Societies De- 25,096 25,586 .. 490 partment Land and Income Tax Department .. .. '66,262 65,314 948 Stamp Duties Department .. .. 104,839 99,339 5,500 Public Buildings 62,381 69,451 .. 7,070 Government and other Domains .. .. 4,498 4,939 .. 441 Maintenance and Repairs to Eoads .. .. 32,848 j 79,504 .. 46,656 Maintenance of Irrigation Works .. .. 16,242 16,310 .. 68 Native Department .. .. .. 35.720 35,714 6 Department of External Affairs .. .. 41,213 36.612 4,601 Cook Islands .. 42,895 34,389 8,506 Department of Industries and Commerce, 132,532 .. 132,532 Tourist, and Publicity Department of Industries and Commerce .. .. 9,356 .. 9,356 Department of Justice .. .. .. 135,702 135,383 319 Prisons Department .. .. .. 100,713 88,443 12,270 Crown Law Office.. .. .. .. 5,727 5,824 .. 97 Police Department .. .. .. 456,672 452,883 3,789 Pensions Department .. .. .. 173,176 176,743 .. 3,567 Mines Department .. .. .. 30,934 27,531 3,403 Department of Internal Affairs .. .. 278,517 351,039 .. 72,522 Audit Department .. .. .. 27,773! 27,260 513 Public Service Commissioner's Office .. 7,140 6,374 766 Printing and Stationery Department .. 228,287 214,976 13,311 Mental Hospitals Department .. .. 303,459 307,040 .. 3,581 Department of Health .. .. .. 244,671 247,250 .. 2,579 Naval Defence .. .. .. .. 418,837 437,573 .. 18,736 Defence Department 277,799 454,828 .. 177,029 Customs Department .. .. .. 111,532 112,087 .. 555 Marine Department ... .. .. 172,509 133,706 38,803 Department of Labour .. .. .. 55,400! 60,985 .. 5,585 Department of Lands.and Survey .. .. 165,146 192,819 .. 27,673 Scenery-preservation .. .. .. 2,303 | 2,391 .. 88 Valuation Department .. .. .. 55,027 55,566 .. 539 Electoral Department .. .. .. 9,991 11,266 .. 1,275 Department of Agriculture.. .. .. 388,277 435,283 .. 47,006 Department of Tourist and Health Resorts .. .. 92,383 .. 92,383 Department of Education .. .. .. 3,230,139 3,218,828 11,311 Department of Scientific and Industrial Research 63,371 65,774 .. 2,403 Transport Department .. .. .. 5,982 5,313 669 Services not provided for .. .. .. .4,585 22,206 .. 17,621 7,672,179 7,973,277 238,095 539,193 i 894,604 1,387,444 894,604 Total expenditure .. .. 24,708,042 25,200,882 .. 492,840

8.—6.

Table No. 9. NET EXPENDITURE. Comparative Statement of the Appropriated and Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1931.

VI

Net Actual Net ! Difference. — Appropriations, Expenditure, ■ : 1930-31. 1930-31. More _ Permanent appropriations— £ £ £ £ Civil List .. .. .. .. 30,918 I 30,862 .. 56 Interest .. .. .. .. .. 9,364,578! 9,266,676 .. 97.902 Sinking Fund .. .. .. .. 2,921 I 3,119 198 Seduction of Funded Debt .. .. .. 425,540 425,540 Repayment of Public Debt .. .. .. 1,224,500 1,207,059 .. 17,441 Miscellaneous debt services .. .. .. 38,030 50,111 12,081. Other services .. .. .. .. 6,203,093 6,052,496 .. 150,597 ! i 17,289,580 17,035,863 12,279 265,996 Annual appropriations — Legislative Departments .. .. .. 92,368 98,990 6,622 Prime Minister's Department .. .. 14,656 14,665 9 Treasury Department .. .. .. 40,350 40,329 .. 21 National Provident and Friendly Societies 25,350, 25,096 .. # 254 Department Land and Income Tax Department .. .. 66,026! 66,262 236: Stamp Duties Department .. .. .. 106,645 104,839 .. 1,806 Public Buildings .. .. .. .. 75,575 62,381 .. 13,194 Government and other Domains .. .. 5,055 4,498 .. 557 Maintenance and Repairs to Roads .. .. 46,000 32,848 .. 13,152 Maintenance of Irrigation Works, &c. .. 15,000 16,242 1,242 Native Department .. .. .. 38,426! 35,720 .. 2,706 Department of External Affairs .. .. 22,121.1 41,213 19.092 Cook Islands .. .. .. .. 42,924 42,895 .. 29 Department of Industries and Commerce, Tourist, 135,313 132,532 .. 2,781 and Publicity Department of Justice .. .. .. 134,000 135,702 1,702 Prisons Department .. .. .. 90,033 100,713 10,680 Crown Law Office .. .. .. .. 5,800 5,727 .. 73 Police Department.. .. .. .. 451,099 456,672 5,573 Pensions Department .. .. .. 165,270 173,176 7,906 Mines Department .. .. .. 36,381 30,934 .. 5,447 Department of Internal Affairs .. .. 291,192 278,517 .. 12,675 Audit Department .. .. .. | 28,450 27,773 .. 677 Public Service Commissioner's Office .. 7,480 7,140 .. 340 Printing and Stationery Department .. 220,196 228,287 8,091 MentafHospitals Department .. .. 310,843 303,459 .. 7,384 Department of Health .. .. .. 248,202 244,671 .. 3,531 Naval Defence .. .. .. .. 450,480 418,837 .. 31,643 Defence Department .. .. .. 275,000 277,799 2,799 Customs Department .. .. .. 114,002 111,532 .. 2,470 Marine Department .. .. .. 180,757 172,509 .. 8,248 Department of Labour .. .. .. 60,034 55,400 .. 4,634 Department of Lands and Survey .. .. 174,099 165,146 .. 8,953 Scenery Preservation .. .. .. 2,801 2,303 .. 498 Valuation Department .. .. .. 58,051 55,027 .. 3,024 Electoral Department .. .. .. 11,212 9,991 .. 1,221 Department of Agriculture .. .. .. 404,445 388,277 .. 16,168 Department of Education .. .. .. 3,193,524 3,230,139 36,615 Department of Scientific and Industrial Research 62,012 63,371 1,359 Transport Department .. .. .. 6,357 5,982 .. 375 Services not provided for .. .. .. .. 4,585 4,585 7,707,529 7,672,179 106,511 141,861 118,790 407,857 118,790 Totals .. .. .. .. 24,997,109 24,708,042 .. 289,067

8.—6

Table No. 10. Estimated Net Expenditure of the Ordinary Revenue Account for 1931-32, compared with Actual Net Expenditure for 1930-31.

VII

Estimate | Actual Difference. for lor j 1931-32. 1930-31. Iaorease j Decrea8e Permanent Appropriations,— Under Special Acts of the Legislature— &££,£, CivilList.. .. .. .. .. .. 28,673 30,862 .. 2,189 Debt Services — Interest.. .. .. .. .. .. 8,940,675 9,266,676 .. 326,001 Sinking Fund .. .. .. .. .. 3,202 3,119 83 Repayment of Funded Debt .. .. .. 236,796 | 425,540 .. 188,744 Repayment of Public Debt .. .. .. 1,203,298 1,207,059 .. 3,761 Transfer to Loans Redemption Account .. .. 3,000 2,954 46 Administration and Management .. .. .. 35,600 | 44,584 .. 8,984 Payments on Guaranteed Loans .. .. .. 4,800 2,573 2,227 Other Services .. .. .. .. .. 7,223,860 6,052,496 1,171,364 17,679,904 17,035,863 1,173,720 529,679 Annual Appropriations,— Legislative Departments .. .. .. ..I 88,568 98,990 .. 10,422 Prime Minister's Department .. .. .. 15,553 | 14,665 888 Treasury Department .. .. .. .. 37,686 \ 40,329 .. 2,643 National Provident and Friendly Societies Department .. 4,978 j 25,096 .. 20,118 Land and Income Tax Department .. .. .. 65,055 J 66,262 .. 1,207 Stamp Duties Department .. .. .. .. 103,043 i 104,839 .. 1,796 Public Buildings .. .. .. .. .. 67,347 i 62,381 4,966 Government and other Domains .. .. .. .. 4,498 j .. 4,498 Maintenance and Repairs to Roads .. .. .. 17,700 32,848 .. 15,148 Maintenance of Irrigation Works, &c. .. .. .. 14,750 16,242 .. 1,492 Native Department .. .. .. .. .. 74,393 35,720 j 38,673 Department of External Affairs .. .. .. 8,997 41,213 .. 32,216 Cook Islands .. .. .. .. .. .. 42,895 .. 42,895 Department of Industries and Commerce, Tourist, and 138,273 132,532 5,741 Publioity Department of Justice .. .. .. .. 140,591 135,702 4,889 Prisons Department .. .. .. .. .. 104,019 100,713 3,306 .'. Crown Law Office .. .. .. .. .. 5,266 5,727 .. 461 Police Department .. .. .. .. .. 424,188 456,672 .. 32,484 Pensions Department .. .. .. .. 162,649 173,176 .. 10,527 Mines Department .. .. .. .. .. 24,679 30,934 .. 6,255 Department of Internal Affairs .. .. .. 210,816 278,517 .. 67,701 Audit Department .. .. .. .. .. 24,896 27,773 .. 2^877 Public Service Commissioner's Office .. .. .. 5,859 7,140 .. 1,281 Printing and Stationery Department .. .. .. 194,267 228,287 .. 34^020 Mental Hospitals Department .. .. .. 270,743 303,459 .. 32,716 Department of Health .. .. .. .. 220,859 244,671 .. 23^812 Naval Defence .. .. .. ., .. 444,045 418,837 25,20 ] Defence Department.. .. ., .. .. 240,000 277,799 .. 7,799 Customs Department .. .. .. .. 99,290 111,532 .. 12'342 Marine Department .. .. .. .. -.. 110,614 172,509 .. 61,895 Department of Labour .. .. .. .. 62,942 | 55,400 7,542 Department of Lands and Survey .. .. .. 186,320 165,146 21,174 \ Scenery-preservation.. .. .. .. .. .. 2,303 .. 2 303 Valuation Department .. .. .. .. 46,979 55,027 .. 8^048 Electoral Department .. .. .. .. 81,518 9,991 71,525 Department of Agriculture ... .. .. .. 414,255 388,277 25,978 ! Department of Education .. .. .. .. 2,912,536 3,230,139 .. 317,603 Department of Scientific and Industrial Research .. 54,916 63,371 .. 8 355 Transport Department .. .. .. .. 5,287 5,982 .. '695 Services not provided for .. .. .. ,. .. 4,585 .. 4 585 7,083,877 7,672,179 209,892 798,194 1,383,612 1,327,873 1,327,873 Total expenditure .. .. .. £24,763,781 £24,708,042 £55,739

8.—6

Table No. 11. Statement showing how Accumulated Surpluses have been applied.

VIII

To Accumulated surpluses £ By Transfers to — £ £ at 31st March, 1931 30,395,817 Discharged Soldiers Settlement Account — 1920-21 .. .. 13,330,000 1921-22 .. .. 170,000 13,500,000 Discharged Soldiers Settlement Loans Act 1920 Depreciation Fund Account — 1920-21 .. .. 50,000 1921-22 .. .. 50,000 1922-23 .. .. 50,000 1923-24 .. .. 50,000 200,000 Public Works Fund— 1920-21 .. .. 500,000 1923-24 .. .. 1,000.000 1924-25 .. .. 1,000,000 1925-26 .. .. 500,000 1927-28 .. .. 250,000 3,250,000 Reserve Fund Account— For purchase of securities, 1920-21 .. .. 1,200,000 For redemption of loan, 1922-23 .. .. 800,000 2,000,000 Loans redemption — 1921-22 .. .. 560,011 1922-23 .. .. 2,337,360 1923-24 .. .. 1,367,341 1924-25 .. .. 1,052,130 1925-26 .. .. 566,161* 1926-27 .. .. 588,868f 1927-28 .. .. 95,980 1928-29 .. .. 50 6,567,901 Bank of New Zealand Shares Account— £ 1926-27 .. .. 808,594 1927-28 .. .. 117,187 1928-29 .. .. 58,594 984,375 Education Loans Account, 1923-24 .. 100,000 Subsidies for relief of unemployment .. 531,415 Assistance towards earthquake services .. 33,226 Advance to State Forests Account .. 45,000 Advance to Rural Intermediate Credit Board .. .. .. .. 400,000 /Advance to Westport Harbour Account 5,000 Charges and expenses of renewing loans.. 4,105 Ordinary revenue — To balance revenue and expenditure— £ 1921-22 .. .. 279,831 1928-29 .. .. 577,252 1930-31 .. .. 1,639,111 2,496,194 Balance (cash and imprests) at 31st March, 1931 .. .. .. 278,601 £30,395,817 £30,395,817 * Includes £151,824 of reparation-moneys received from Germany. f Includes £73,710 of reparationmo asys received from Germany.

B—6

Table No. 12. PUBLIC WORKS FUND. Statement showing the Net Expenditure under Appropriations for the Year ended 31st March, 1931, compared with the Year ended 31st March, 1930.

ii—B. 6.

IX

Vnto Year ended Year ended . _ 31st March, 1931. 31st March, 1930. Increase. Decrease. 1 £ £ £ £ Public Works, Departmental .. .. 131,816 132,527 .. 711 Railway-construction .. .. 1,478,689 1,452,860 25,829 Additions to Open Lines .. .. 508,507 359,661 148,846 Public Buildings— General .. .. .. .. 100,927 28,748 72,179 Courthouses .. .. .. 19,572 15,765 3,807 Prison Buildings and Works .. 2,504 18,814 .. 16,310 Police-stations .. .. .. 8,360 8,442 .. '82 Postal and Telegraph .. .. 138,670 104,157 34,513 Agricultural .. .. .. 1,509 2,963 .. 1,454 Mental Hospital Buildings .. .. 134,140 152,096 .. 17,956 Health and Hospital Institutions .. 17,338 16,651 687 Timber-supply and Sawmills, &c. .. Cr. 2,271 Cr. 3,608 .. Cr. 1,337 Acquisition and Operation of Quarries.. 4,219 329 3,890 '.. Lighthouses .. .. .. 4,103 4,460 .. 357 Harbour-works .. .. .. 6,742 10,736 .. 3,994 Development of Tourist Resorts .. 60,288 20,547 39,741 Department of Immigration .. .. 33,544 41,756 .. 8,212 Roads, &c... .. .. .. 1,379,810 1,005,329 374,481 .. Roads to give Access to Outlying Districts 91,126 53,693 37,433 Roads on Goldfields .. .. .. 4,587 1,885 2,702 '.. Telegraph Extension .. .. .. 419,756 594,383 .. 174,627 Contingent Defence .. .. .. 13,812 46,766 .. 32,954 Lands, Miscellaneous .. .. 70,534 79,454 .. 8,920 Irrigation, Water-supply, and Drainage 62,614 69,657 .. 7,043 Plant, Material, and Stores .. .. Cr. 44,772 Cr. 31,813 Cr. 12,959 '.. Transfer to Main Highways Account, .. 200,000 .. 200,000 Construction Fund Services not provided f or .. .. 257 .. 257 731,149 471,540 471,540 Totals .. .. .. 4,646,124 4,386,515 259,609

8.—6

Table No. 13. Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to the 31st March, 1931.

X

WAYS AND MEANS. Loans :— £ s. d. £ 8. d. Immigration and Public Works Loan, 1870 .. .. .. 4,000,000 0 0 Immigration and Public Works Loan, 1873 .. .. .. 2,000,000 0 0 Immigration and Public Works Loan, 1874 .. .. .. 4,000,000 0 0 General Purposes Loan Act, 1873 .. .. .. .. 750,000 0 0 New Zealand Loan Act, 1876 .. .. .. .. 750,000 0 0 New Zealand Loan Act, 1877 .. .. .. .. 2,200,000 0 0 New Zealand Loan Act, 1879 .. .. .. .. 5,000,000 0 0 New Zealand Loan Act, 1882 .. .. .. .. 3,000,000 0 0 New Zealand Colonial Inscribed Stock Loan Act, 1882 .. .. 250,000 0 0 North Island Main Trunk Railway Loan Act, 1882 .. .. 1,000,000 0 0 New Zealand Loan Act, 1884 .. .. .. .. 1,500,000 0 0 New Zealand Loan Act, 1886 .. .. .. .. 1,325,000 0 0 District Railways Purchasing Acts, 1885 and 1886 .. .. 479,487 7 11 New Zealand Loan Act, 1888 .. .. .. .. 1,000,000 0 0 Native Land Purchase Act, 1892 .. .. .. .. 149,700 0 0 Lands Improvement and Native Lands Acquisition Act, 1894 .. 500,000 0 0 Aid to Public Works and Land Settlement Act, 1896 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Amendment Act, 1897.. 250,000 0 0 Aid to Public Works and Land Settlement Amendment Act, 1898.. 500,000 0 0 Aid to Public Works and Land Settlement Act, 1899 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Act, 1900 .. .. 1,011,600 0 0 Aid to Public Works and Land Settlement Act, 1901 .. .. 1,250,000 0 0 Aid to Public Works and Land Settlement Act, 1902 .. .. 1,750,000 0 f 0 Aid to Public Works and Land Settlement Act, 1903 .. .. 997,690 0 0 Aid to Public Works and Land Settlement Act, 1904 .. .. 750,000 0 0 Aid to Public Works and Land Settlement Act, 1905 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Act, 1906 .. .. 989,700 0 0 Aid to Public Works and Land Settlement Act, 1907 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Act, 1908 .. .. 1,250,000 0 0 Aid to Public Works and Land Settlement Act. 1909 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Act, 1910 .. .. 1,750,000 0 0 Aid to Public Works and Land Settlement Act, 1911 .. .. 1,500,000 0 0 Aid to Public Works and Land Settlement Act, 1912 .. .. | 1,748,900 0 0 Aid to Public Works and Land Settlement Act, 1913 .. .. , 1,750,000 0 0 Aid to Public Works and Land Settlement Act, 1914 .. .. 3,000,000 0 0 Aid to Public Works and Land Settlement Act, 1921 .. .. 5,060,613 0 3 Aid to Public Works and Land Settlement Act, 1922 .. .. 4,408,860 12 3 Finance Act, 1909 .. .. .. .. .. •• 1,250,000 0 0 Finance Act, 1915, and New Zealand Loans Act, 1915 .. .. 2,000,000 0 0 Finance Act, 1916 .. .. .. .. ■• •• 1,000,000 0 0 Finance Act, 1917 .. .. .. .. .. •• 850,000 0 0 Finance Act, 1918 (No. 2) .. .. .. .. .. 2,500,000 0 0 Finance Act, 1919, Section 5 .. .. .. •. 750,000 0 0 Finance Act, 1920, Section 15 .. .. .. .. 2,500,000 0 0 Finance Act, 1921, Section 10 .. .. .. .. 2,673,11110 11 Finance Act, 1923, Section 2 .. .. .. .. 4,306,608 17 6 Finance Act, 1924, Section 2 .. .. .. .. 2,065,883 12 6 Finance Act, 1925, Section 2 .. .. .. .. 4,151,450 10 2 Finance Act, 1926, Section 2 .. .. .. .. 5,220,134 10 7 Finance Act, 1927 (No. 2), Section 2 .. .. .. .. 4,319,594 10 3 Finance Act, 1928, Section 2 .. .. .. .. 3,185,132 14 8 Finance Act, 1929, Section 2.. .. .. .. .. 4,017,119 4 6 Stock issued for Expenses of Conversion, 1930-31 .. .. 360,835 18 0 Post and Telegraph Act, 1908 .. .. ■. .. 200,000 0 0 Midland Railway Petitions Settlement Acts, 1902 and 1903 .. 150,000 0 0 Paeroa-Waihi Railways Act, 1903 .. .. .. •• 75,000 0 0 Waikaka Branch Railway Act, 1905 .. .. .. .. 50,000 0 0 Wellington and Manawatu Railway Purchase Act, 1908 .. .. 1,000,000 0 0 Appropriation Act, 1912 .. .. .. .. .. 15,000 0 0 Irrigation and Water-supply Act, 1912 .. .. .. 100,000 0 0 103,611,422 9 6 Receipts in Aid : — Amount transferred from Consolidated Fund .. .. .. 14,555,000 0 0 Contributions of Canterbury Province for Railways .. .. 56,000 0 0 Proceeds of Railway Material handed over to Cook County Council i 4,963 7 4 Stamp Duties to 31st December, 1876 .. .. .. [ 264,657 16 4 Transfer from Confiscated Lands Liabilities Account .. .. j 19,963 1 3 Receipts under Section 16 of the Reserves and other Lands Disposal 21,890 4 5 and Public Bodies Empowering Act, 1912 Special Receipts under Section 9 of the Railways Construction Act, 60,616 3 0 1878 Special Receipts under the EUesmere Lake Lands Acts, 1888 and 67,584 12 11 1893 Special Receipts under the Railways Authorization and Manage- 2,257 1 9 ment Act, 1891 Special Receipts under the North Island Main Trunk Railway Loan 114,550 19 6 Application Act, 1886 Sinking Funds released .. .. .. .. .. 606,819 19 3 15,674,303 5 9 £119,285,725 15 3

8.—6

Table No. 13— continued. Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to the 31st March, 1931 — continued.

iii B. 6,

XI

NET EXPENDITURE. Expenditure on— £ s. d. £ s. d. Immigration .. .. .. .. .. .. 3,309,849 17 10 Public Works, Departmental .. .. .. .. .. 2,740,866 1 2 Railways, including Surveys of New Lines and Payment to Midland 56,117,712 4 8 Railway Bondholders Roads .. .. .. .. .. .. .. 20,334,817 2 2 Land-purchases .. .. .. .. .. .. 2,061,147 1 10 Development of Mining .. .. .. .. .. 881,065 0 11 Telegraph Extension .. .. .. .. .. .. 10,930,500 10 4 Public Buildings .. .. ' .. .. .. .. 11,099,894 14 8 Lighthouses, Harbour-works, and Harbour-defences .. .. 1,291,816 14 10 Contingent Defence .. .. .. .. .. .. 1,406,587 2 8 Rates on Native Lands .. .. .. .. .. 68,671 16 10 Thermal Springs .. .. .. .. .. .- 14,599 13 2 Development of Tourist Resorts .. .. .. .. 576,707 15 6 Lands Improvement .. .. .. .. .. .. 661,215 10 7 Plant, Material, and Stores .. .. .. .. .. 274,633 5 5 Charges and Expenses of raising Loans .. .. .. .. 3,713,744 9 1 Coal-mines .. .. .. .. .. .. .. 10,835 8 0 Interest and Sinking Fund .. .. .. .. .. 218,500 0 0 Irrigation and Water-supply .. .. .. .. .. 968,743 1 6 Timber Supply, Sawmills, &c .. .. .. .. .. On 5,489 0 10 Acquisition and Operation of Quarries .. .. .. .. 9,636 4 11 Motor Transport Service .. .. .. .. ■• 33,635 53 Transfer to Main Highways Account, Construction Fund .. .. 1,226,000 0 0 117,945,690 0 6 : Balance on 31st March, 1931,— Cash in the Public Account .. .. .. .. .. 811,999 12 I Imprests outstanding .. .. .. .. .. ■• 20,416 2 8 Investments.. .. .. .. .. .. .. 507,620 0 0 1,340,035 14 9 £119,285,725 15 3 'I

8.—6

Table No. 14. Statement showing the available Financial Resources of the various Accounts on the 31st March, 1931, as compared with the 31st March, 1930.

XII

1931. . 1980. Account. Balance Liabmties %££$& Liabilities I JX™ 31et March, 31st March, ™}?? j£rt 31st March, 31st March, raising Loan 1931. 1931. on 1 ' 1930. 1930. on Consolidated Fund— ££££££ Ordinary Revenue .. .. 278,601 261,203 .. 2,356,337 304,493 Nauru and Ocean Islands.. .. 3,056 .. .. 3,172 Nauru and Ocean Islands Sinking Fund 49 .. .. 312 Public Works Fund— General Purposes .. .. 1,340,036 441,295 5,141,050 348,125 629,649 5,061,050 Waihou and Ohinemuri Rivers Im- 5,519 1,933 .. 3,344 2,381 14,375 provement Electric Supply .. .. .. 150,009 134,835 2,533,990 341,881 122,816 1,243,990 Electric Supply Sinking Fund .. 42,655 .. .. 172,729 Advances to other Governments .. .. .. .. 21,045 Bank of New Zealand Shares .. 1,859,375 .. .. 1,859,375 Cheviot Estate .. .. .. .. .. .. 230,895 162 Deteriorated Lands .. .. .. .. .. 11,393 15 278,000 Discharged Soldiers Settlement .. 259,532 23 .. 240,223 44 Discharged Soldiers Settlement Loans 580,962 .. .. 558,735 Act 1920 Depreciation Fund Education Loans .. .. .. 12,887 6,33.1 .. 19,842 1,248 1,404,160 General Purposes Relief .. .. 23,756 .. .. 31,631 Hauraki Plains Settlement .. .. 13,941 3,692 91,000 24,252 5,519 115,000 Hunter Soldiers' Assistance Trust .. 6,837 .. .. 6,105 Hutt Valley Lands Settlement .. 139 .. .. 61 Kauri-gum Industry .. .. 1,588 .. .. 16,722 Land Assurance Fund .. .. .. .. .. 84.938 21 Land for Settlements .. .. 742,106 1,635 6,278,000 9,414 6,000,000 Loans Redemption .. .. .. 344,182 .. .. 220,150 Main Highway— Revenue Fund .. .. .. 339,886 77,124 .. 136,453 114,471 Construction Fund .. .. 102,637 57,018 1,070,400 160.567 112,553 1,620,375 Mining Advances .. .. .. 362 4 50,000 14,724 23 50,000 National Endowment .. .. .. .. .. 135,008 1,085 National Endowment Trust .. .. .. .. .. 42,202 Native Land Settlement .. .. 28,908 15,771 500,000 55,742 7,102 500,000 Public Debt Repayment .. .. 32 .. .. 3,053 Railways Improvement Authorization 420,784 61,995 .. 327 157 91 273 1 515 000 Act, 1914 Rangitaiki Land Drainage .. .. 5,306 667 7,000 2,418 766 7,000 Reserve Fund .. .. .. 2,068,563 .. .. 2,068,563 Samoan Loan Suspense .. .. .. .. 4,800 .. .. 4,800 State Coal-mines .. .. .. 40,810 20,935 55,000 59,057 22,547 55,000 State Coal-mines Sinking Fund .. 7,739 .. .. 7,945 State Forests .. .. .. 31,103 5,374 1,051,225 48,722 9,635 336,225 Swamp Land Drainage .. .. 6,338 2,617 150,000 7,008 6,169 150,000 Unemployment Fund .. .. 69,115 .. .. .. .. Westport Harbour .. 1,759 1,533 .. 6,000 1,292 Working Railways .. .. .. 496,463 272,550 .. 77,236 364,479 State Advances Loan .. .. 40,002 .. 10,280,510 100,397 .. 10,173,920 Additional Unexhausted Authorities for raising Loans. Government Accident Insurance Act, 1908 .. .. 23,000 .. .. 23,000 State Fire Insurance Act, 1908 .. .. .. 98,000 .. .. 98,000 Totals .. .. .. 9,325,017 1,366,535 27,333,975 10,361,138 1,807,157 28,649,895

B.—6

Table No. 15. Statement showing the Amount charged to "Unauthorized" in each Financial Year from 1st April, 1920, to 31st March, 1931.

Table No. 16. Summary of the Public Debt and of the State Assets which may be set off against it, as at 31 st March, 1931, together with Supporting Schedule showing Details of Assets. Debt. £ Ordinary debt .. •• •■ •• •• •• •• •• 163,676,911 Wardebt 67,711,800 State Advances debt .. .. .. •• •• •• •• •• 36,940,111 Discharged soldiers debt .. .. • • • • • • ■ • • ■ 7,704, 536 Surplus assets over debt .. .. •• ■• •• •■ •■ 5,697,260 £281,730,618 Assets. Cash and investments (Reserve Funds, Bank of New Zealand shares, Public Debt £ Redemption Fund, &c.) .. .. .. .. •• •• •• 31,174,939 Sinking funds accrued .. .. •• ■• •• •• •■ •■ 2,313,673 Loans and advances outstanding (Discharged Soldiers, State Advances, &c.) .. .. 46,344,564 Revenue Earning and Trading Accounts (Railways, Telegraphs, &c.) .. .. .. 81,772,208 Lands and forests (Crown lands, State forests, &c.).. .. .. ■ •■ 73,768,350 Indirectly productive expenditure —■ £ Roads and public buildings, &c. .. .. •• •• 43,047,034 Immigration .. .. •• •■ •- •• 3,309,850 46,356,884 £281,730,618

XIII

Consolidated Fund. —Kevenue Account. Otheb Public Wobks ■,„,„ Financial Yeab. Accounts. Fund. aoial. Ser ™ e^ n f o * P r °- Excess of Votes. Total. £ s. d. £ s. d. £ s. d. £ a. d. & s. d. £ s. d. 1920-1921.. .. 108,498 19 2 392,596 5 9 501,095 4 11 1,750 12 6 168,745 11 6 671,591 8 11 1921-1922.. .. 2,455 13 7 105,962 14 10 108,418 8 5 2,982 1 6 292,233 1 4 403,633 11 3 1922-1923 .. 65,687 7 9 76,710 6 9 142,397 14 6 754 10 10 41 4 2 143,193 9 6 1923-1924.. .. 189,384 15 11 1,983 3 1 191,367 19 0 33,123 3 1 41,944 10 2 266,435 12 3 1924-1925.. .. 22,526 15 9 63,690 15 3 86,217 11 0 27,390 19 0 101,970 16 2 215,579 6 2 1925-1926 .. 30,265 7 9 26,257 3 7 56,522 11 4 30,811 19 2 23,665 13 8 111,000 4 2 1926-1927.. .. 27,913 18 1 45,418 12 4 73,332 10 5 1,58110 7 2,80118 9 77,715 19 9 1927-1928.. .. 15,942 15 4 51,560 10 5 67,503 5 9 10,740 8 2 49,604 6 11 127,848 0 10 1928-1929 . I 7,959 7 3 43,312 14 4 51,272 1 7 11,891 14 4 20,639 17 2 83,803 13 1 1929-1930 22,205 12 8 41,407 0 0 63,612 12 8 111,438 6 11 24,827 8 0 199,878 7 7 1930-1931 . .. 4,585 0 0 129,903 7 1 134,438 7 1 3,450 8 7 1,586 13 11 139,525 9 7

8.—6

Details of Assets included above. (Note : Stores or supplies in hand not included in assets.) Cash and Investments :— *Cash in the Public Account and in the hands of officers of the £ £ £ Government .. .. .. .. .. 1,154,459 fLess liabilities outstanding, 31st March, 1931 .. .. 1,342,265 Dr. 187,806 *Investment of cash balances .. .. .. .. .. 4,181,000 Reserve fund (securities at cost) .. .. .. .. .. 1,996,725 Post Office Savings-bank Reserve Fund .. .. .. .. 1,000,000 Bank of New Zealand shares (nominal value) .. .. .. 2,109,375 JPublic Debt Redemption Fund .. .. .. .. .. 22,075,645 31,174,939 Sinking funds accrued— State Advances debt .. .. .. .. .. .. 1,982,814 State Coal-mines .. .. .. .. .. .. 7,739 Westport Harbour loans .. .. .. .. .. 261,676 Samoan loan .. .. .. .. .. .. .. 18,740 Nauru and Ocean Islands Sinking Fund Account .. .. .. 49 Electric Supply Sinking Fund Account .. .. .. .. 42,655 2,313,673 Loans and advances outstanding— Mining purposes .. .. .. .. .. .. 36,460 Local bodies (annuity value of interest receivable) .. .. .. 772,126 Samoan loan, less sinking fund .. .. .. .. .. 146,460 Repatriation advances outstanding, 31st March, 1931 .. .. 227,301 £ Discharged soldiers'mortgages and property held .. ..14,887,904 Less amount included in Public Debt Redemption Fund .. 10,850,000 4,037,904 State Advances —Mortgages and property held, less sinking funds and investments included elsewhere .. .. .. .. 40,689,289 General purposes relief—Advances outstanding .. .. .. 35,024 Rural Intermediate Credit Board —Advances outstanding .. .. 400,000 46,344,564 Revenue Earning and Trading Accounts— Railways (capital cost, including unopened lines and value of assets taken over from provinces, less capital written off to3l/3/31) .. 58,211,466 Telephones and Telegraphs (value of assets) .. .. .. 10,133,557 Electric-power supply and development (capital expenditure) .. 10,235,570 Westport Harbour-works (value of assets).. .. .. .. 489,087 Lighthouses and harbour-works (capital expenditure) .. .. 1,291,817 Tourist and health resorts (capital expenditure) .. .. .. 591,307 State coal-mines (value of assets) .. .. .. .. 241,154 Kauri-gum (trading capital) .. .. .. .. .. 13,210 Nauru and Ocean Islands (purchase price of rights).. .. .. 565,040 81,772,208 Lands and forests — Crown lands (estimated value, including settlement lands, Native lands, and .education reserves) .. .. .. .. 30,140,334 Land-drainage schemes (capital invested) .. .. .. .. 2,001,136 Irrigation and water-supply (capital expenditure) .. .. .. 968,743 Waihou and Ohinemuri Rivers improvement (capital expenditure) .. 709,740 Lands improvement (capital expenditure) .. .. .. .. 661,216 New Zealand Reparation Estates (value of Dominion's interest) .. 686,646 Howard Estate .. .'. .. .. .. .. 88,296 State forests (estimated value of forests, reserves, plantations, and nurseries) .. .. .. .. .. .. 38,512,239 73,768,350 Indirectly productive expenditure— Public buildings (including school buildings) .. .. .. 15,778,941 Roads (including roads on Crown lands and main highways).. .. 26,377,392 Quarries (acquisition and working) .. .. .. .. 9,636 Development of mining (capital expenditure) .. .. .. 881,065 Immigration (capital expenditure) .. .. .. .. 3,309,850 46,356,884 £281,730,618

* Does not include trust, deposit, or sinking funds, or certain other accounts included elsewhere. t After deducting £24,271. credits due from other Governments, from the total liabilities. } Includes £10,850,000 previously included under discharged soldiers mortgages, and £11,225,645 of accumulated sinking funds.

XIV

8.—6

Table No. 17. PUBLIC DEBT. Statement showing Loans falling due in the next Seven Years, ending with the Year 1938, excluding Imperial Debt Repayments.

Table No. 18. PUBLIC DEBT. Statement of Half-yearly Instalments of Principal and Interest for Repayment of £27,532,164 advanced by the Imperial Government and funded in Terms of the Agreement dated 6th September, 1922.

XV

I I Year ending 31st March, London. Australia. New Zealand. Totals. ! £ £ £ £ 1932 .. .. .. .. 200 320,900 6,948,856 7,269.956 1933 .. .. .. .. .. 393,850 5,219,163 5,613,013 1934 12,900* i 52,000 17,128,414 17,193,314 1935 .. .. .. .. 37.000 1,252,000 1,945,850 3,234,850 1936 .. .. .. .. ..' 213,800 5,885,760 6,099,560 1937 . .. .. .. .. 110,400 9,994,999 10,105,399 1938 .. .. .. .. .. .. 5,535,695 5,535,695 Totals .. .. .. 50,100 2,342,950 52,658,737 55,051,787 *In addition, £5,000,000 raised in London since the end of the financialyear falls due in 1934.

Date Instalments paid. Interest. Principal. outstanding. £ £ £ 1st December, 1922 .. .. .. 684,794 . 141,171 27,390,993 1st June, 1923 681,282 144,683 27,246,310 1st December, 1923 677,684 148,281 27,098,029 1st June, 1924 . 673,996 151,969 26,946,060 1st December, 1924 .. .. .. 670,216 355,749* 26,590,311 1st June, 1925 .. .. .. •• 661,367 164,598 26,425,713 1st December, 1925 .. .. .. 657,274 168,691 26,257,022 1st June, 1926 653,078 172,887 26,084,135 1st December, 1926 648,778 177,187 25,906,948 1st June, 1927 644,370 181,595 25,725,353 1st December, 1927 639,854 186,111 25,539,242 1st June, 1928 635,225 190,740 25,343,502 1st December, 1928 630,481 195,484 25,153,018 1st June, 1929 625,618 200,346 24,952,672 1st December, 1929 .. .. .. 620,635 205,330 24,747,342 1st June, 1930 .. 615,528 210,437 24,536,905 1st December, 1930 .. .. .. 610,294 215,671 24,321,234 * Includes £200,000 paid off the Naval Defence Loan in terms of the clause by which New Zealand has the right, on giving three months' notice, to repay at par any part of the principal.

8.—6

Table No. 19. EDUCATION EXPENDITURE. Total Expenditure on Education out of Public Funds, including University, Primary, Secondary, and Higher Education, Technical and Special Schools, 1913-14 to 1930-31.

* Net revenue after deducting expenses and cost of collection. t Excluding £25,000 for teachers' superannuation, included under that heading. J Includes £61 charged to "Unauthorised." In addition, secondary schools and University colleges derive direct income (amounting for 1930-31 to £72,922) from reserves vested in them. The following amounts were also paid out of the Government Fire Insurance Fund for rebuilding school buildings destroyed by fire : — £ 1916-17 .. .. .. .. ..2,127 1917-18 .. .. .. .. ..2,658 1919-20 .. .. .. .. .. 15,682 1920-21 .. .. .. .. ..16,162 1921-22 .. .. .. .. .. 27,103 1922-23 .. .. .. .. .. 8,542 1923-24 .. .. .. ~ .. 12,490 1924-25 .. .. .. .. .. 32,829 1925-26 .. .. .. .. ~4,938 1926-27 .. ~ .. .. .. 10,337 1927-28 .. .. .. .. . 12,474 1928-29 .. .. .. .. ..12,197 1929-30 .. .. .. .. .. 6,357 1930-31 .. .. .. .. .. 6,671

XVI

Loan-money: Erection Consolidated Fund. of School Buildings and Residences. Per Head of Year. Administra- Subsidies Total. Mean Special Sr' Votei *«™ Teachers' ™f Ration Acts. ment Education, R from Super- . hoans^ Revenue. Salaries and ! Reservea - annuation iund - Account, other Charges. Ifund. £ £ £ £ £ £ £ £ £ s. d. 1913-14 .. 27,742 50,681 1,131,756 71,803 17,000 121,954 .. 1,420,941 1 5 3 1914-15 .. 26,128 55,139 1,207,983 70,802 17,000 122,940 .. 1,499,992 1 6 2 1915-16 .. 46,874 64,858 1,329,166 84,390 17,000 97,972 .. 1,640,260 1 8 6 1916-17 .. 58,408 60,180 1,406,264 90,535 17,000 70,367 .. 1,702,754 1 9 8 1917-18 .. 59,362 70,345 1,511,256 90,518 17,000 63,082 .. 1,811,563 1 11 5 1918-19 .. 57,716 76,177 1,602,995 92,095 43,000 115,656 .. 1,987,639 1 14 1 1919-20 .. 79,747 78,988 2,031,825 99,352 43,000 195,500 .. 2,528,412 2 1 10 1920-21 .. 101,972 70,313 2,460,116 100,758 43,000 244,722 214,571 3,235,452 2 11 8 1921-22 .. 96,217 71,737 2,580,562 105,448 43,000 2,469 563,411 3,462,844 2 13 10 1922-23 .. 90,393 66,610 2,514,991 112,378* 68,000 .. 361,976 3,214,348 2 9 0 1923-24 .. 96,506 77,788 2,604,508 116,808* 68,000 .. 295,681 3,259,291 2 8 11 1924-25 .. 128,844 86,746 2,752,271f 118,973* 68,000 .. 462,212 3,617,046 2 13 2 1925-26 .. 111,389 87,512 2,854,719f 119,978* 70,952 .. 564,946 3,809,496 2 14 9 1926-27 .. 115,499 88,545 2,954,597f 119,073* 71,452 .. 550,954 3,900,120 2 14 11 L927-28 .. 127,289 90,518 2,974,615t 123,247* 71,497 .. 369,134 3,756,300 2 12 1 1928-29 .. 137,233 94,934 3,O67,296t 127,444* 71,749 .. 375,423 3,874,079 2 13 1 1929-30 .. 140,561 87,420 3,193,828tj 129,531*146,781 .. 428,764 4,126,885 2 15 10 1930-31 .. 125,331 94,506 3,230,200$ 106,405 46,907 .. 491,974 4,095,323 2 14 8

8.—6

Table No. 20. PENSIONS. Statement of Amounts paid on Account of Pensions for the Financial Years ended 31st March, 1927 to 1931.

Table No. 21. EXTERNAL TRADE. Statement showing Imports and Exports of the Dominion in each Financial Year ended 31st March, 1922 to 1931.

By Authority: W. A. G. Skinner, Government Printer, Wellington.—l93l.

XVII

Year ended 31st March, 1927. 1928. 1929. 1930. 1931. £ £ £ £ £ War .. .. .. 1,122,741 1,146,955 1,178,646 1,204,422 1,245,499 Old-age* .. .. .. 979,296 1,007,722 1.059,039 1,105,069 1,158,788 Widows' . .. .. 301,080 302,766 312,963 322,886 j 325,998 Miners' 41,947 45,083 48,102 51,676 58,441 Maori War .. .. .. 19,446 16,377 13,673 11,510 9,101 Epidemic 10,935 8,757 7,981 7,309 6,322 Civil Service Act, 1908 .. 16,724 13,206 12,192 10,547 9,251 Defence Act, 1909 .. .. 2,628 2,695 2,715 j 2,573 2,620 Judicature Act, 1908 .. 3,556 4,204 3,429 3,333 2,285 Police 406 457 671 789 1,741 Blind 10,304 12,249 13,339 14,716 15,796 Family Allowance 37,515 54,815 60,876 63,608 Sundry 5,945 6,273 5,698 6,589 6,588 Totals .. .. 2,515,008 2,604,259 2,713,263 2,802,295 2,906,038 * Includes payments of old-age pensions paid out oil national-endowment revenue.

xr i l «, i. nr i t i ci 4 Excess of Excess of Year ended 31st March, Imports. Exports. Exports. Imports. £ £ £ £ 1922 .. .. .. .. ' 36,123,256 43,802,326 7,679,070 1923 .. .. .. .. 36,975,583 45,548,700 8,573,117 1924 .. .. .. .. 44,401,756 51,652,606 7,250,850 1925 .. .. .. .. 49,821,095 54,771,158 4,950,063 j 1926 .. .. .. .. 53,025,856 48,697,587 .. 4,328,269 1927 .. ,. .. .. 48,192,670 45,682,338 .. 2,510,332 1928 .. .. .. ,. 44,419,357 54,962,031 10,542,674 1929 .. .. 45,105,865 57,154,343 12,048,478 1930 .. .. .. .. 49,167,914 49,045,817 .. 122,097 1931 .. .. .. .. 38,300,807 39,527,784 1,226,977 52,271,229 6,960,698 6,960,698 Totals .. 1445,534,159 490,844,690 45,310,531