FINANCIAL STATEMENT. (In Committee of Supply, 17th September, 1935.) BY THE RIGHT HON. J. G. COATES, MINISTER OF FINANCE.

Appendix to the Journals of the House of Representatives, 1935 Session I, B-06

B,—6.

INDEX.

PAGE Allowances for war veterans .. .. • ■ - • • ■ 21 Annual Appropriations, 1935-36 .. . . .. • • 21 Assembly of British motor-vehicles in New Zealand .. .. 4 Assistance to engineering trades, &c. .. .. • • 17 Assistance to new industries . . .. . . • • • • 16 Banking . . . . ■ ■ • • • • • • • • 5 Borrowing-policy for Public Works .. . . • • • • 12 Budgetary position, 1935-36 . . .. . • • ■ • • 19 Budget surplus .. . . • • • • • • • • 22 Building subsidy . . .. • • • • • • • ■ 17 Business recovery .. .. • • • • ■ • • • 21 Capital expenditure . . . ■ • • • • • • • • 11 Capital programme, summary of . . .. • • ■ ■ la Co-operation among manufacturers .. . ■ • • • • 4 Customs .. • • • • • • • ■ • • • • 6, 19 Dairy industry .. • • • • • ■ • • • • Debt domicile .. . • • • ■ • • • • • Debt redemption .. . ■ • • • • • ■ • • 9 Debt services .. • • • • • • • • • • 20 Debt summary . . • • • • • • • • ■ • 9 Discussions in London: Meat Agreement .. •• •• Disparity between costs and income bridged .. .. • • « Domicile of Public Debt Engineering trades, &c., assistance to . . • • • ■ 17 Estimated expenditure, 1935-36 .. .. • • -' 20 Exchange .. • • • • • • • • • • . . . 5,7,2U Executive Commission of Agriculture .. . . • ■ • • 3 Expenditure, 1934-35 .. • ■ • • • • • • 7 Expenditure, 1935-36 . . • • • • • • ■ • Export prices Forecast for 1935-36 .. . . ■ • • ■ • • • • 19 Further debt conversion foreshadowed .. .. . • • • 10 Gold-mining, revival of . . • • • • • • • • Health insurance .. . . , .. • • • • • • 6 Highways expenditure . . • • • • • • • • 20 Highways revenue . . • • ■ • ■ • • • • • Housing proposals .. • • • ■ • • • ■ ■ • 5 Hydro-electric works . . . • • • • • • • • ■ 16 Improving economic conditions. . . • • • • • • • 4 Income-tax .. • ■ • • • • • • • • Increases in salaries and wages. . .. ■ ■ • • • • -4 Indices of recovery .. .. • • • • • • ■ ■ 5 Interest and other receipts, 1934-35 . . .. .. .. b, /, zu Interest concession to ex State mortgagors .. .. • • 3 Irrigation .. • • • • • • ■ • Land improvement and development .. • • • • 90 Land-tax .. • • • • • • • • • • • • 20 Loan conversion, Public Debt . . . • • • • • • • jU Loan programme .. • • • • • • • • 'mil Local-body loan conversion . . . • • • • • • • IU , IJL London loan conversion . . ■ • • • • • • • 10 Long-term debt redemption . . . . • • • • • • J 19 Main highways . . ■ ■ • • • ■ • • • • Meat Agreement .. • • • • • • • • • • * Meat market • • • • • • • • • • • • * Milk for children . . • • • • • ■ ■ ■ • ■ ° Motor-vehicles: Assembly in New Zealand .. .. • • 4 Mortgage Corporation • . • • • • • • • • Mortgagors relief

i—B. 6.

8.—6.

, T J- n . PAGE .National superannuation .. . . . . .. _ _ 0 Native-land development . . .. .. .. . , 14 New industries, assistance to .. . . .. .. .. 16 New overseas markets.. .. .. . . .. ~ 4 New works . . . . . . . . . . . . _ _ 13 New Zealand conversions .. .. .. .. .. 10 Old-age pensions, increase . . .. .. . , ~ 21 Other receipts .. . . . . . . . . _ _ 7, 20 Pensions, restoration .. .. .. .. .. ~ 21 Permanent appropriations .. .. .. .. .. 21 Post and Telegraph concessions . . . . . . .. 18 19 Primary production .. .. . . . . .. . _ '2 Public Accounts, 1934-35 . . . . .. . , 6 Public buildings .. .. . . .. .. , _ 12 Public Debt .. .. .. .. .. .. g Public Service regrading . . .. .. .. .. 21 Public Works .. .. .. .. .. .. 11, 13 Recovery in Great Britain .. . . .. . . .. 1 Recovery of Budget stability . . .. . . .. .. 7 Reduced borrowing .. .. .. .. . . _ _ 9 Reduction in costs . . .. .. .. .. .. 2 Regrading Public Service .. . . .. .. .. 21 Reserve Bank .. .. . . .. .. .. 8 Restoration of cuts in salaries and wages, partial .. . . .. 21 Restoration of old-age pensions, &c. . . .. . . 21 Revenue, 1934-35 . . .. .. . . .. .. 6 Revenue, 1935-36 . . .. .. .. .. ~ 20 Revenue, unemployment . . . . . . .. .. 17 Revival of gold-mining . . .. .. .. .. 16 Roading .. .. .. .. .. .. ~ 12 Salaries and wages, partial restoration of cuts .. . . .. 21 Sales tax . . . . .. . . .. .. . . 19 Savings, debt services. . .. . . .. .. , . 10 Share-milkers' cottage scheme . . .. .. .. .. 15 Small Farms Board . . .. . . .. .. .. 15 Small Farms Scheme .. .. .. . . .. . . 15 Social services . . .. . . .. .. .. 21 Soldiers' widows pensions . . . . . . . . .. 21 Stamp and death duties . . . . . . .. . . 6, 20 Standard rates of pay ... . . . . .. . . 16 Sterling, disposal of . . . . . . .. . . .. 8 Summary of budgetary position . . . . . . . . 19 Summary of expenditure, 1935-36 . . .. . . .. 22 Summary of revenue, 1935-36 . . .. . . . . .. 22 Summary of year's operations . . . . .. . . . . 7 Superannuation funds . . .. .. .. .. 20 Surplus . . . . .. .. .. .. .. 22 Taxation .. . . . . .. . . .. .. 6, 19 Taxation, unemployment reductions . . .. .. 17, 18 Telegraph charges . . . . . . .. .. .. 18 Toll charges .. . . . . . . .. .. .. 18 Treasury bills .. .. . . . . .. .. 8 Unemployment .. . . . . . . .. . . 5, 16 Unemployment expenditure . . . . . . .. . . 18 Unemployment finance . . .. .. .. .. 17 Unemployment revenue, 1934-35 . . . . .. .. 17 Unemployment revenue, 1935-36 .. .. .. .. 18 Unemployment, taxation reductions . . . . .. .. 18 War veterans' allowances . . .. .. .. . 21

II

8.—6.

1935. NEW ZEALAND.

FINANCIAL STATEMENT. (In Committee of Supply, 17th September, 1935.) BY THE RIGHT HON. J. G. COATES, MINISTER OF FINANCE.

Mr. Chairman, — At this time last year we were able to note with satisfaction a decided movement towards better times. This movement continued, and it is now clear that there has been a further substantial improvement m the economic position of the Dominion during the past twelve months. Conditions are better and the trend is definitely upward. Since we are dependent to an exceptional degree upon our export trade, the continued progress towards recovery m Great, Britain provides a hopeful augury for the future. No one visiting the Mothercountry in recent months could fail to notice the great improvement m economic conditions and the spirit of optimism that now prevails Unless the horizon becomes unduly clouded with the danger of international complications, the prospects of continued recovery in our main market seem most ended mh June lagt were valued at £42,954,000, or approximately £6,000,000 less than for the previous year. The decrease is more i than accounted for by a fall of £7,000,000 in the value of wool exported, this being due to a sharp fall in wool prices from the levels of 1933-34 and to a substantial carry-over. The wool situation is generally favourable to producers and it is expected that better prices "will be obtained at the sales this year. „ n . As a result of the exceptionally dry summer, production and exports of dairyproduce showed a decrease last season of about 5 per cent. On the other hand, the average price on the London market was 4s. to ss. higher than during the previous season. Factory pay-outs to farmers were about 9fd. per pound, this being approximately |d. per pound better than for the previous season. Recent prices have shown an upward tendency, and there seems a reasonable prospect that returns will be better during the coming season. Exports of meat showed an increase in both quantity and total value. U1 special interest is the substantial increase in the export of pork. During the past four years the quantity of pork exports has increased fivefold, and their value has now reached a total of £1,313,000. . , , , . , ~ , Although meat prices during the past season continued to be relatively stable at a fairly satisfactory level, the outlook was uncertain on account of the proposals suggested by the United Kingdom to place a levy on all meat imported into the United Kingdom. While the Ottawa Agreement and the Treaty with the Argentine remained in force a levy could not be imposed without consent, but, failing such consent the British Government considered it would have no option but to impose drastic restrictions on imports in order to restore live-stock prices m the Home market to a remunerative level.

Recovery in Great Britain.

Export Prices.

Wool.

Dairy-produce.

I Meat market.

I—B. 6.

8.—6.

Since nearly a third of our export values consists of meat, it will be realized that the levy in the form proposed would have been a heavy burden for our producers to carry. After protracted negotiations in London we have readied an agreement covering the period up to the end of 1936 under which our principal meat exports, mutton and lamb, are to be entirely exempt from the imposition of any tax or levy. The quantities agreed upon will be ample to meet our export requirements, and it is believed that by careful regulation of supplies from the supplying countries to _ the market reasonable prices can be ensured to the producers concerned. Provided the Dominions supplying mutton and lamb can agree with the United Kingdom as to the quantities to be sent to the British market, the present arrangement will continue after 1936 and be the means of avoiding any question of a levy. It is a relief to know that as matters now stand any meat levy will be confined to beef, and that chilled beef, if foreign suppliers agree, will carry the main cost. I hough an agreement has been reached concerning chilled beef as between the Dominions and the United Kingdom, there can be no finality until foreign meat-supplying countries have also agreed. The matter is complicated by the fact that existing agreements outside the Empire do not expire until 1936. There is room for increased development and opportunities in the United Kingdom market under the arrangements made. Arrangements have also been made for a continued development of our exports of pig-meat to the United Kingdom market. Here I would again stress the necessity for producing as many pigs of the baconer type as possible, the reason being that New Zealand already holds a large share of the imported porker trade, and this trade is mainly reserved for the United Kingdom producer. While New Zealand will receive fair consideration for future requirethe market for pork is definitely limited. On the other hand, our share in the baconer trade is relatively insignificant, although the volume of baconers imported into the United Kingdom is eleven times that of porkers. It is to the baconer type that our producers should look for future developments. . At the lowest point in the depression export prices were about half those in 1928—29, but costs did not fall in anything like the same proportion. It is now generally realized that this disparity between farming-costs and sellingprices was at the root of our troubles and threatened the economic and social structure of New Zealand. _ It was evident that recovery was impossible until the disparity was substantially removed. Far-reaching measures were urgently required, and the Government did not hesitate to act. On the one side the exchange-rate on London was raised as the quickest and most effective means of augmenting the return from exports. On the other hand everything possible was done to bring down farmers' production costs. Land-tax was ' reduced rates and fertilizers were subsidized, labour was made available by the Unemployment Board, and a series of operations was undertaken to' brino- down interest-rates, and finally to reduce excessive liabilities. These measures were necessary not only to rehabilitate the farming industries, but also to restore the foundations of prosperity for New Zealand as a whole. The success which has attended efforts to bridge the gap between costs and income is illustrated by the following indices compiled by the Government Statistician : —

Discussions in

London and meat agreement.

Primary production,

Reduction in costs,

2

Farm Production. Farm Ex- Gross Farm penditure. Income. Volume. Prices. . _ . _ iQ9Q _ Qn 100 100 100 100 q 9 Sl' 3 ? 100 103 83 86 91 1° 8 61 66 l\)ol—oA .. .. .. .. 76 112 53 59 1932-33 70 126 $ g 1933-34 .. .... .. .. 70 126 60 76 Note—The farm expenditure index is for the calendar years 1929 to 1934.

8.—6,

These figures are a composite index covering all farm-production —agricultural, i pastoral, and dairying. The position of each industry varies somewhat from the« average, but even in the case of the dairy industry, which received very little benefit from increased prices for the 1933-34 season, the gross farm income index figure for the year was 70. The index of farm expenditure is not a complete measure of farm working-expenses, and therefore is not strictly comparable with that for gross farm income. Nevertheless the trend of the figures is unmistakable. For 1930-31 the index number of farm expenditure was 9 per cent, below the figure for 1928-29, but export prices were 39 per cent, lower. During the next year the effect of the Government's policy of cost-reduction is apparent in a fall in the farm-expenditure index to a level 24 per cent, below the 1929 figure, though the benefit was partially offset by a further fall in export prices. By 1933-34 the combined effects of the increase in exchange, the reduction in costs, and the increase in the volume o production had brought about a substantial improvement in the position of the farming industries. . . , . While evidences of improvement are clear and unmistakable it is tar trom being . maintained that the farming industries have been restored to the relative prosperity ; of the years immediately prior to the crisis. In particular, the problem of excessive capital liabilities remains serious. As honourable members know, a great many farmers are still battling along amidst financial difficulties, and we have still to clean up the aftermath of the past four years. The Rural Mortgagors Final Adjustment Act and the Mortgage Corporation Act passed last session were designed to do this. |The former Act provides the machinery for adjusting a farmer's liabilities on as fair and equitable a basis as is possible, so as to bring them within his capacity to pay. It is hoped and anticipated that most cases will be settled by voluntary arrangement between the farmer and his creditors. If necessary, the Mortgage Corporation can assist _ by making loans to repay existing mortgages at its recently announced rate of per cent. Furthermore, for this purpose the Act empowers the Mortgage Corporation to lend _ up to 80 per cent, of the valuation on a productive basis, the State guaranteeing the Corporation against loss on the difference between its normal maximum of 66# per cent, and the higher percentage. Apart from this special provision it is anticipated that the operations of the Mortgage Corporation will stabilize mortgage-rates of interest at a lower level and be the means of placing mortgage finance generally on a sounder and more liquid basis from the point of view of both the borrower and the lender. ... The State Advances Office has already been merged in the Corporation, and under the legislation all mortgagors concerned in the transfer have the right, on certain specified conditions, to claim a reduction in interest to the Corporation s current lending rate of 4-|- per cent. It is generally intended that the Lands Department's mortgages shall also be transferred as soon as the necessary administrative arrangements for the purpose can be made, and when the transfer is made these mortgagors will also receive the concession in interest. For the £50,000,000 of mortgages the concession will cost the Consolidated E und about £600,000 per annum, but lower mortgage-rates are an essential element in the economic rehabilitation of the Dominion, and the State must lead the way. Further, lower interest-rates will mean less capital losses, and, to the extent that the reduction improves business generally, it will also mean more revenue to The other aspect of what is hoped is the final phase of the rehabilitation of the primary industries is the effort being made to obtain a better return through an improvement in the quality of our products and greater efficiency in production and in marketing. To promote and co-ordinate efforts in these directions, the Agriculture (Emergency Powers) Act was passed, setting up an Executive Commission oi Agriculture. The Commission is charged with the duty of co-ordinating the work of the different Produce Boards, and serves as a connecting-link between those Boards and the different Departments of State. For the it is largely concerned with the problems of the dairying industry. In conjunction wit J: the Treasury, the Unemployment Board, and the Court of Review, it has formulated a scheme whereby dairy-factory companies and dairy-farmers are enabled, at a low rate of interest and on easy terms, to finance improvements tc

Disparity between costs and income bridged.

Mortgagors relief and Mortgage Corporation.

1 Interest concession to ex State mortgagors.

e Executive Commission of Agriculture.

3

8.—6

buildings and equipment. In association with the New Zealand Dairy Board, the Commission has been engaged in investigating, and, where possible, arranging for amalgamation of dairy-factory companies and the rationalization of cream and milk collection, with a view to saving costs and improving quality. Discussions have been initiated in regard to local marketing of dairy-produce, as well as the revision of the overseas marketing regulations. The reorganization of the group herd-testing movement and the initiation of a system of universal farm-dairy instruction, as well as the development of the export trade in baconer pigs, and problems relative to breeding, feeding, grading, trim, and methods of handling, are receiving attention. Efforts are being made by the Commission to place the marketing of honey abroad on a sound basis, while the question of effecting a better co-ordination between local and export marketing of fruit is the subject of discussion with the New Zealand Fruit-export Control Board and the New Zealand Fruitgrowers' Federation. Proposals for the development of the citrus-growing industry and institution of a system of grading to assist the marketing of New Zealand lemons are also under consideration. The whole question of additional markets is under review, and a number of preliminary inquiries have already been made as to the possibilities of other overseas markets for New Zealand primary products. At the present time the possibilities of extending trade to Eastern markets are limited by the lack of direct shipping facilities and other difficulties, but inquiries have been set on foot by the Department of Industries and Commerce with a view to improving the position. Finally, it may be mentioned that the Commission, with the Departments of Agriculture, Industries and Commerce, Scientific and Industrial Research, and the Unemployment Board, is taking part in the investigation of the possibilities of a wider and more varied utilization of flax. Efforts are also being made to bring about a closer relationship between scientific research and agriculture. : I may mention here that local manufacturers generally are taking action in the direction of co-ordinating their efforts towards increasing efficiency and generally paving the way for an expansion of their activities. Certain proposals designed to improve their organization for these purposes have recently been submitted to the Government, and, if it is found practicable to give effect to them, the result should be a further stimulus to our manufacturing industries. During my recent visit to England I took the opportunity of discussing with the Society of Motor Manufacturers and Traders the question of assembling motor-vehicles in New Zealand. As a result of these discussions British manufacturers have agreed to export their vehicles to the Dominion in a " completely knocked down" condition. The assembly of these vehicles in New Zealand will give employment to a large number of people. Furthermore, the Government is assured of the co-operation of the manufacturers in the utilization of as much New Zealand material as is economically possible. In trade and commerce generally there is ample evidence that the position is steadily improving. For the year ended 30th June last imports increased by £7,600,000 over the previous year, and are now more in keeping with the value of exports, having regard to the amount of debt charges payable overseas. The latest complete figures available for factory production in New Zealand, 1933-34, show an increase of £5,660,000, or 8-6 per cent., over the previous year. From a wide and representative sample taken from the incomplete returns for 1934-35 it would appear that factory production for last year showed a further increase of from 10 to 15 per cent. In consequence, it is estimated that the number of factory employees increased by 9,000 during the past twelve months. An improvement in the turnover of business is also indicated by the following increases for last financial year in comparison with the previous year: — Per Cent. Bank debits .. .. .. .. ..10-8 Sales tax .. .. .. .. 17 "5 Railway revenue .. .. .. .. . . 6-4 Post Office revenue .. .. .. .. .. 4.5 Land transfers registered .. .. .. .. 27 • 7 Motor-vehicles licensed .. .. .. .. 6-2

New overseas markets.

Co-operation among manufacturers.

Assembly of British vehicles in New Zealand.

Improving economic conditions.

4

8.—6

The unemployment tax on salaries and wages was reduced from Is. to lOd. i in the pound as from Ist October, 1934. Had this reduction not taken place the yield from the tax would have shown an increase of approximately £190,000, or 6-6 per cent. Another pleasing feature is that the number of unemployed at present a charge on the Unemployment Fund is 4,880 less than it was a year ago. The progressive improvement taking place is also reflected in the banking' figures. While the total deposits of the trading banks (apart from Government deposits) for the June quarter of this year were approximately £2,460,000 less than for the same period of last year, free deposits used for current business increased by £1,557,000, or 6-8 per cent. The general welfare of the people shows more directly in the savings-bank figures. During the three financial years ended 31st March, 1933, withdrawals from savings-banks exceeded deposits by no less than £12,226,000. In the two years and a quarter to 30th June last deposits exceeded withdrawals by £5,698,000, a significant indication that conditions are on the mend. The substantial progress made towards recovery since the lowest point in the depression is strikingly illustrated by the statistics to be found in Table No. 21 appended to this Statement. It is sometimes argued that the increase in exchange has been offset by an increase in prices in New Zealand. The following statistics comparing prices in New Zealand in 1932 with the latest figures available show that prices in New Zealand have not risen to the same extent as the improvement in export prices due to the rise in exchange. m«« inoK Per Cent. Wholesale — of Change. Export prices .. . . 892 (June) 1038 (+l6) Locally produced items .. 1298 ~ 1427 (+10) Imported items . . .. 1296 ~ 1331 (+ 3) All groups .. .. .. 1297 ~ 1383 (+ 7) Retail prices . . . . .. 838 (May) 833 (— 1) Nominal wages . . . . .. 1418 (June) 1408 (— 1) Effective wages .. . . .. 1063 (June 1062' 1 " *t> • • i quarter) * Provisional. 1 ' It may be added that the increases shown for " locally produced items " and " all groups " are due mainly to a rise in the prices of export items. There are two important problems affecting the welfare of the people to which the Government has given special consideration. The first is in respect of housing, which is a vital factor in the health and happiness of the community. In last year's Budget I indicated that the Government was willing to co-operate as far as possible with local bodies in any projects designed to improve housing conditions in what are usually termed slum areas, although I am thankful to say we have nothing in New Zealand to compare with what is understood by that term in Europe. During my absence I have had a departmental committee at work on the matter, and our recent visit to England has enabled the Prime Minister and myself to gain an insight into the manner in which a similar problem, but of much greater magnitude, has been tackled in London and other great cities. Experience there has shown that the only satisfactory way of destroying slums is to demolish the dwellings that fall below a given standard and concurrently build other places sufficient to accommodate the people displaced. An important factor is that the weekly cost of the new places must be in keeping with the income of the lowest-paid class of the community. In England the work of demolition and construction is arranged by the local authorities, with financial and technical assistance from the State, and it is considered that the problem should be tackled along similar lines here. The first essential is to lay down a standard of fitness and have a detailed survey made in order to ascertain exactly what is required in each city or borough. Accordingly Parliament will be asked to pass legislation this session requiring local bodies to make such a survey and report to the Government. Next session a complete Housing Bill will be submitted designed to solve the slum problem by eliminating overcrowding and unhealthy dwellings, while making better provision to enable other classes of the community to obtain healthy homes for themselves on terms within their means. From the point of view of cost and as a means_ of extending useful employment the time is opportune for embarking on housing schemes.

Unemployment.

Banking.

Indices of recovery.

Exchange and prices.

Housing proposals.

5

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Tlie second problem the Government lias in mind is the desirability of a national superannuation and health-insurance scheme to provide against the risk of destitution in old age and the hazards of sickness, invalidity, orphanhood, and widowhood. A number of other countries have schemes of this nature in operation, although the scope of the schemes varies considerably from country to country. A departmental committee has been at work for some time past collecting data and working out costs. The crux of the problem is how such a scheme can be financed. It is, of course, intended that persons covered by the scheme should pay in weekly contributions, but if anything like adequate benefits are to be provided it is evident that these contributions must be supplemented by subsidies from the State and the employers. The big hurdle is the initial cost in respect of those who join at the higher ages. This initial deficiency could, of course, be avoided by restricting entry to those under a certain age, say, twenty-five, but that would mean that the payment of superannuation under .the scheme would not commence for about forty years. There are some who say that every person should have the right to obtain a superannuation allowance and protection from sickness, invalidity, &c., from the State without any contribution on his part, but to provide for a universal pension after the age of sixty-five of £2 a week, and other allied benefits, would cost the State not less than £12,000,000 per annum, equal to 60 per cent, of the present revenue from taxation. Such a proposition is impracticable, but it should be possible to devise a contributory scheme that will bring the cost to the State down to a reasonable amount per annum. As we are still faced with a serious unemployment problem, and the Dominion is just emerging from a prolonged depression, the present is hardly an appropriate time for launching such a far-reaching proposal. However, the Government intends as a matter of policy to pursue the subject with the idea of promoting a suitable scheme as soon as financial conditions permit of it being done without imposing any undue increase in the burden of taxation. In order that honourable members and the people generally may have some idea of the cost of a suitable scheme, I propose at a later date to table the preliminary report of the departmental committee on the matter. Another important proposal which is receiving the attention of the Government is the encouragement of increased consumption of milk amongst children. A scheme with this object in view has already been prepared, and it is proposed to make funds available for the purpose. It is anticipated that other interested organizations and institutions will co-operate in making effective a scheme that will be of great benefit to the health of the rising generation and, incidentally, increase the local consumption of milk and thereby benefit the dairy industry, PUBLIC ACCOUNTS. Honourable members will recollect that last year's Budget was based upon an expectation that improving economic conditions would be reflected in a revenue increase of £2,460,000 compared with receipts (apart from reserves used) for 1933-34. This expectation, rather doubted in some quarters at the time, was more than realized, with the result that the year closed with a surplus of £1,626,000. As will be seen from comparative tables attached to this Statement, the total revenue for the year amounted to £26,126,094 and exceeded the Budget estimate by £1,874,094. Taxation receipts amounted to £20,177,607 and exceeded the Budget estimate by £872,607. Stamp and death duties contributed £790,723 towards this excess, the cause being abnormal receipts from death duties. The latter is an item that from its nature cannot be estimated in advance apart from averages, and the extra amount received last year must be regarded as largely fortuitous. Apart from death duties, the taxation estimates proved fairly accurate, the net difference being an excess of £81,884 only. Customs revenue fell short of the estimate by £176,403, but this is little more than 2 per cent, of the estimate and the shortage was more than offset by the fact that practically every other item exceeded, the estimate, the principal amounts in excess being income-tax (£146,477), highways revenue (£50,452), beer duty (£46,008), and sales tax (£20,504), Interest receipts in the aggregate showed a net excess of £45,245 over the estimate. The net- receipts from the railways exceeded anticipations by £138,050, but this excess was partly offset by the fact that interest on Post Office capital

National superannuation and health insurance.

Milk for children.

Public accounts.

Revenue.

Taxation,

Interest receipts.

6

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amounted to £19,000 less than the estimate, while interest on the Public Debt Redemption Fund fell short by £12,935, and on " other public moneys " by £60,870. The reason for the latter shortage was the low rate of interest received on temporary investments of cash. All the miscellaneous items grouped under the heading of other receipts " returned a net excess of £956,242 over the Budget estimate, but this large amountis due to a " windfall " item—profits on sale of gold by the Reserve Bank. These profits amounted to £1,864,000, but in the accounts they are offset to the extent of £300,000 by not drawing upon reserves as was allowed for in the Budget. On the other side of the picture the net expenditure for the year amounted to £24,499,596, which is £260,739 in excess of the estimates for the year. It may be mentioned, however, that the item for the transfer of revenue to Highways Account was £225,465 above the estimate, due partly to the fact that highways revenue exceeded expectations and partly to the fact that the amount retained in the Consolidated Fund, approximately £322,000, was less than the amount of £500,000 which was allowed for in the Budget. Apart from this transfer item the net excess of expenditure over the estimate was £35,274, clearly indicating that the expenditure generally was kept closely in accord with the estimates. Exchange-costs on remittances to meet requirements overseas proved to be £154,159 above the estimate, but this was partly offset by a saving of £124,561 on the expenditure under departmental votes. The year's transactions may be concisely summarized as follows : — SUMMARY OF THE YEAR'S OPERATIONS. Revenue. £ £ Taxation .. .. .. •• •• 20,177,607 Interest .. .. . . • • • • 2,930,245 Other receipts .. .. • • • • 3,018,242 26,126,094 Expenditure. Permanent appropriations — Debt services .. .. •• 9,780,628 Exchange .. .. •• •• 1,459,159 Highways .. .. •• 1,586,965 Other services .. . . . . • • 615,010 Annual appropriations —- Social services .. .. • • • • 7,144, 736 Other services .. .. . • .. 3, 913,098 24,499,596 Surplus .. .. •• £1,626,498 As previously indicated, the large surplus shown is due to the profits from the ] sale of gold and the abnormal amount received from death duties, both being items ] of a non-recurring nature. The surplus is thus fortuitous and cannot be used as a basis for taxation-reductions or increases in expenditure during the current year. It was, nevertheless, welcome, as it provided the means of substantially reducing the accumulated deficits from the years 1931-32 and 1933-34. Important aspects of last year's operations were the buoyancy of the revenue and the return to stable budgetary conditions. Contrast this position with that which existed two or three years ago, when the revenues were shrinking rapidly and everything was so uncertain that budgeting was almost impossible. In the 1930 Budget a decrease in revenue of £2,830,000 was allowed for, but the returns fell short of the estimate by £2,050,000, making a total shrinkage for the year of £4,880,000. The next year, 1931, provision was made for a further shrinkage of £4,810,000, but

Other receipts.

Expenditure.

Exchange.

Summary of revenue and expenditure.

Recovery of Budget stability.

7

8.—6.

before the year was out it was realized that this was insufficient, and measures were taken to cope with a total shrinkage of £6,060,000. Even so, the year ended with a deficit of £2,140,000, bringing the aggregate shortage for the year up to the huge amount of £8,200,000, equal to about one-third of a normal year's revenue. The magnitude of the emergency was not generally realized at the time, but looking back now when the situation that existed can be viewed in a better perspective it will, I think, be generally agreed that the heavy reductions in expenditure and the additional burdens imposed upon taxpayers at a time when they could ill afford them were necessary to keep the financial position from getting out of hand. The experience of some other countries shows how far-reaching and disastrous are the effects of a national budget out of control. As a result of the stern measures adopted we have regained budgetary stability without a legacy of accumulated debt, which is a point that will doubtless be noted with envy by some of our less fortunate neighbours. It is true that accumulated deficits to the extent of about £1,000,000 remain, but it may be mentioned that these deficits accrued after making provision for the statutory scheme of debt-repayment. As a result, the public debt as at 31st March last was £1,360,000 less than it was at 31st March, 1932. TBEASUBY BILLS. As will be seen from the public accounts, Treasury bill transactions during the year were large, but for the most part these transactions consisted of renewals of £19,404,872 of bills issued under the Banks Indemnity (Exchange) Act outstanding as at the 31st March, 1934. New issues of bills under this Act between that date and the 31st July, 1934, when the buying of surplus exchange from the trading banks ceased, amounted to £7,247,750. All of these bills, amounting in the aggregate to £26,652,622 per annum, were redeemed. Notwithstanding the explanations previously made, it would appear that many people do not understand how these redemptions were effected. The amount involved was large, but otherwise there was nothing extraordinary about the transactions. Prior to the establishment of the Beserve Bank the position was that the Treasury bills in New Zealand were covered by liquid assets in London purchased with those Treasury bills; that is to say, the Government took over the surplus sterling in London and for the most part gave Treasury bills to the banks in New Zealand in payment for the same. After the establishment of the Beserve Bank, £20,229,700 of the sterling funds were transferred to New Zealand at the current rate of exchange in exactly the same manner as a private individual owning, say, £1,000 in London, might remit the same to New Zealand and use the local credit of £1,000 plus exchange to pay off a debt. The New Zealand credit received from the £20,229,700 sterling transferred through the Beserve Bank was £25,084,828, and this amount, with other funds then held, was sufficient to pay off all the bills outstanding at the time. Bevenue bills to the amount of £3,452,109 were carried forward from 1933-34, and during last financial year further accommodation was received up to a maximum of £6,917,022, of which £245,000 was obtained from the banks and £6,672.022 from Government accounts and the public. The bills issued had a currency not exceeding three months, and were discounted at rates ranging from 1 per cent, to 3 per cent, in the case of bills taken up by Government accounts and the public, and 5 per cent, in the case of bills issued to the banks. All such bills were repaid before the year closed ; thus no revenue bills were outstanding on the 31st March last. As a result of all these operations the floating debt, which amounted to £22,856,981 at 31st March, 1934, was extinguished. There is, however, a sum of £3,850,000 outstanding under a deed of hypothecation entered into under an arrangement for liquidating reserves invested in discharged-soldiers-settlement securities. This is held and in any case is not part of the public debt in the ordinary sense of the term. PUBLIC DEBT. While effecting this huge reduction in floating debt, the net increase in the long-term debt during last financial year was kept down to the relatively small amount of £646,202,

Treasury bills.

Bills redeemed.

Public debt,

8

8.—6

In New Zealand additional debt to the amount of £3,299,560 was incurred for the following purposes : — £ Investment in Reserve Bank . . . ■ 1 > 000 > 000 Public works (including hydro-electric supply) .. 1,647,400 Land for settlements .. .. •• •• 160,635 Main highways . . .. • • • • • • 431,500 State forests . . . . • • • ■ • • 60,000 Premiums under conversion operations .. . . 25 £3,299,560 Apart from the small amount involved in premium issues, £406,090 was obtained from the public at 3| per cent., while the balance of £2,893,445 was derived from departmental investments. „ Redemptions of long-term debt amounted to £2,653,358, the funds for the purpose i being derived from the following sources. Repayment of the Public Debt Act, 1925 .. .. 93,161 Reparations and war credits .. .. • • 750 Ordinary Revenue Account —Surplus as at 31st March, 1935 .. .. .. •• •• 1,600,212 Separate accounts .. .. • • • • 959,235 £2,653,358 Of the redemptions effected, £724,500 was held in Australia, £37,000 in London, and the balance in New Zealand. The debt operations for last financial year may be summarized as follows ; £ Debt as at 31st March, 1934 .. .. •• 302,791,996 Less net decrease in floating debt .. .. 22,856,981 279,935,015 Plus net increase in long-term debt — £ (a) Due to loan-conversion . . 25 (.b) Due to operations during year .. .. •• 646,177 646,202 £280,581,217 The domicile of the debt on 31st March, 1935, was : — £ London .. .. •• •• 160,972,230 Australia .. .. •• •• •• 2,183,550 New Zealand .. •• •• •• 117,425,437 £280,581,217 The debt total is approximately £1,360,000 less than it was on 31st March, 1932, a fact that will be regarded with satisfaction by taxpayers generally. The disastrous fall in prices which occurred in 1931 automatically increased the burden of all fixed charges, and, as is well known, one of the cardinal points in the Government s policy of readjustment and reconstruction is to lighten that burden in every way possible. So far as the public debt was concerned, obviously the first thing to do was to avoid increasing it. On the other hand, it was realized that a complete cessation of public works and other loan expenditure would increase unemployment and generally accentuate our already serious economic difficulties. In these circumstances loan expenditure was continued, but on a reduced scale and in directions that would increase debt-charges payable out of taxation as little as possible. Fresh debt to the extent of £7,687,000 was incurred during the three years, but was more than ofEset by redemptions to the amount of £9,049,000.

Long-term-debt redemptions.

Debt summary.

Debt domicile.

) Reduced borrowing,

2—B. 6.

9

8.—6.

The additional loan expenditure on hydro-electric schemes and other public works, land - settlement, forestry, &c., increased the wealth and productive capacity of the Dominion, and thereby placed the people in a better position to carry a debt reduced by £1,360,000. Another important factor in lightening the burden of debt-charges was the success of the Government's policy in bringing interest-rates down to a much lower level. The conversion of practically the whole of the internal public debt reduced the gross interest against the Consolidated Fund by approximately £1,000,000 per annum. In regard to the external debt, the Government has taken advantage of every opportunity that presented itself, but it is possible to take action only in the case of loans in respect of which the right to repay has accrued. However, in 1933 we were able to convert £5,000,000 5-per-cent. bonds into 3|~per-cent. stock at an issue price of £97 per cent. The next year, 1934, £3,989,100 of 4-per-cent. stock wa;s converted into 3|-per-cent. stock at par. Lastly, there was the recent successful operation whereby £10,135,800 of 5-per-cent. stock was dealt with. The maturity date of this stock was Ist July, 1945, but the Government had the right to redeem it on or after Ist July, 1935, on giving three months' notice. Prior to my departure for London negotiations with a view to early conversion of the loan were in train, and matters in regard thereto received my personal attention when I reached London. As a result of these negotiations, and having regard to the then-existing conditions of the London money-market, it was decided to utilize New Zealand resources to the extent of £2,1.35,800 in redemption of portion of the loan, leaving £8,000,000 subject to the final conversion offer, the object being to facilitate conversion and to ensure the most favourable terms. The interest-rate on the new issue is 3 per cent., which, in conjunction with an issue price of 98j per cent., gives a yield to the investor of £3 2s. Id. per cent, over the full twenty-year currency of the loan. These terms compared favourably with the price and return on comparable stocks on the market. The issue was an immediate success, and leading financial journals in London commented favourably upon the results achieved. Cash subscriptions for the purpose of repaying stock not converted amounted to £10,148,000. This, in conjunction with conversion applications from a majority of holders of the old loan, clearly indicated what a good reputation New Zealand has in London financial circles. Allowing for redemption of the discount on issue and other expenses over the period of the loan, the cost of the £8,000,000 converted works out at about £3 4s. Bd. per cent. Of the remaining £2,135,800, plus cost of exchange in remitting the same to London (£523,270), approximately £1,250,000 will be provided out of the Public Debt Repayment Account and the balance will be borrowed internally, but no public issue for the purpose will be necessary. As a result of all these external transactions the interest bill will be lightened by £300,000 sterling per annum, of which the 1935 conversion alone, after allowing for the exchange, saves £219,000. Next year we have the right to call £5,869,989 of 6-per-cent. debt, and the sound financial policy pursued by the Government should be reflected in satisfactory terms of conversion giving a further substantial saving in interest-charges. LOCAL-BODY CONVERSIONS. Honourable members will recall that in the financial statement presented in 1933 reference was made to the necessity for including in the general scheme of reconstruction some provision for a permanent lowering of the rate of interest on local-body securities. On that occasion I pointed out that, owing to the number and variety of the bodies concerned and the complications regarding differential rating over special areas, &c., immediate conversion on a comprehensive basis was not possible. The problem was therefore tackled in two phases. First, an immediate reduction of 20 per cent, in interest was provided by statute, superseding the previous provisions for stamp duty to the extent of 10 per cent, under the National Expenditure Adjustment Act, 1932. The 20-per-cent. reduction as provided by

New Zealand conversions.

London conversions,

Further conversion foreshadowed.

Local-body loanconversion.

10

8.—6.

Part I of the Local Authorities Interest Reduction and Loans Conversion Act, 1932-33, operated from the Ist April, 1933, then by Part II of the same Act the necessary machinery was set up to enable local authorities to formulate conversion schemes applicable to their particular circumstances. When discussing this matter in 1933 an appeal was made to all local bodies to give serious consideration to this important phase in the scheme of national reconstruction with a view to a permanent rearrangement of that portion of their debt which was subject to the conversion legislation —namely, the New-Zealand-domiciled debt on which the interest rate was in excess of 4j per cent. The response to that appeal has been extremely gratifying. Of a total convertible debt of £48,340,586 as at the Ist April, 1933, conversion of £40,930,760 had been approved up to 30th June last by the Local Government Loans Board, while a further portion involving over £2,750,000 had been dealt with by way of renewal loans, leaving only £4,650,597 subject to the conversion legislation. The greater portion (approximately £2,500,000), of this latter amount represents loans raised by County Councils, and it is here that the major difficulties affecting local-body conversions have been encountered in that numerous loans had been raised on the security of rates over special areas. Legislation to overcome such difficulties was passed last session in the Local Authorities Interest Reduction and Loans Conversion Amendment Act, which opened the way for complete consolidation of special area loans. The essential features of that legislation dealt with the spreading of the charges on non-convertible loans over the whole county and the providing of an alternative method of opening up back country by means of loans secured over the whole county. Honourable members will be interested to learn that, largely as a result of the amending legislation, county debt totalling £3,500,000, out of a convertible debt of £6,000,000, has already been dealt with. _ _ The original legislation relating to conversion of local-body securities limited to the 31st March, 1935, the period within which the Governor-General's consent to conversion might be obtained, but, in view of the circumstances relating to special-area loans as mentioned above, it was deemed advisable to _ extend the period to the 31st December, 1935, such extension having been provided by the amending Act of last session. It is confidently anticipated that the bulk of the outstanding loans will have been dealt with before expiry of the legislation, and, having regard to the magnitude of the conversion scheme generally, it can be said that the results achieved have been of inestimable value to the country as a whole. I would here stress the desirability of total conversion, and to the local authorities which have not yet moved in this direction would point out the duty devolving on them to obtain the benefit of the legislation enacted not only to afford a measure of relief to ratepayers, but also to obviate the recurring difficulties of refinancing loans, especially as, in many cases, adequate provision for repayment does not exist. Until the conversion operations are completed it is not possible, however, to give accurate figures relating to the savings effected. The 20-per-cent. reduction in interest provided a saving to local bodies of approximately £400,000 per annum, and as a result of the conversion operations further reduction in annual charges to the extent of £117,000 has been effected, bringing the saving to local bodies to a total in excess of £500,000 per annum. . . In addition, local-body finance has been placed upon a much sounder basis m that under the terms of conversion provision has been made, in one way or another, for the repayment of the whole debt over a period of years, thus obviating the necessity for further renewals. CAPITAL EXPENDITURE. For the reasons already indicated, both the volume and the character of the ] expenditure on public works have undergone considerable change in recent years. This will be clear to any honourable member who cares to compare the estimates for the current year with those for 1931-32 or financial years prior to then. When prices fell so disastrouslv the whole outlook was changed, and immediate steps were taken to bring the programme of public works into accord with the new conditions.

Progress of conversion.

Public works.

11

8.—6,

An important factor influencing the Government was the desire to refrain from hampering the policy of reducing interest-rates by entering into competition on the loan market. Certain types of constructional operations have diminished or cêased, while in other directions there has been increased activity. Projects are segregated into those that are or will be fully reproductive — such as hydro - electric extensions, buildings for office purposes — and, secondly, those from which an immediate and even ultimate total return to the country is likely to be appreciably less than the total charges (including redemption) if financed from borrowed money. Defence works have been entirely eliminated as an object of loan expenditure. Reproductive works are still being financed from loan ; but proposals that cannot be placed in this category are analysed and finance arranged partly from current revenue (including Unemployment Fund subsidies) in proportions varying mainly with the merit of the proposition but based also upon the need' for meeting urgent demands for relief of unemployment. If this policy is maintained its result must be the entirely desirable one of keeping any increase in fixed debt charges approximately in balance with the increased net value of productivity. _ A considerable amount is still being expended on buildings and accommodation for Post and Telegraph needs. This expenditure may be regarded as entirely reproductive, as also will be the proposed expenditure on centralized and modern buildings for office purposes in Auckland and Wellington. To a small extent there has been some replacement of buildings, and' provision is made for a contribution from the Consolidated Fund so that loan expenditure will not be duplicated. Incidentally this conservative policy of financing renewals as far as possible from revenue is being pursued in regard to other public works such as bridge renewals and replacement of wharves. Roadwork formation, widening, metalling, deviations, &c.—involving as it does a substantial proportion of outlay for labour, has been a principal means for providing work for unemployed ; but unemployment taxation has been utilized in addition to loan-money for the type of work which otherwise could not be wholly justified if financed entirely from borrowed money. Although a greater proportion of roadwork now comprises the metalling and improvement of existing routes rather than the formation of new roads the importance of opening up any land capable of economic development has not been overlooked, and in most such cases the metalling is done at the same time as formation. Metalled roads, providing swifter and more continuous means of communication, tend to reduce the cost of marketing and, apart from the social aspect of establishing closer contact with the amenities of civilization, are in that respect alone a desirable form of public work. Main-highways improvement, necessitating a higher standard of work and relating to a much greater length of roads, calls for considerably more expenditure, and the expenditure on construction and maintenance for last financial year, including £325,483 of loan-money for constructional work, reached £1,322,592, the highest level for some years. With main-highways work, however, which consists more of the maintenance and improvement of existing lines of communication than the creation of new ones, it is desired to attain as soon as practicable the basis of meeting the annual works programme wholly from current revenues. Land improvement and development has become a very important part of the programme for public works and settlement of unemployed workers. It is considered that swamp drainage, flood-prevention, clearing and breaking in new land, mangroveflat reclamation, and similar undertakings are a very useful and desirable avenue for the combined expenditure of low-interest loan-money and unemployment taxation. The number of men employed on works of this nature is now approximately 3,000. Irrigation is another phase of land-development which has been carried on fairly steadily for a considerable number of years. So far as Government works are concerned they were until recently confined wholly to Central Otago, but a considerable area is now being _ developed in Canterbury. From the financial point of view, the history of irrigation has not been entirely satisfactory, but few will

Borrowing-policy for public works.

Public buildings,

Roading.

Main highways.

Lands improvement.

Irrigation,

12

8.—6.

question the potential value of tliis development, and it is expected that by reducing the loan outlay to payable limits, and financing the balance of the construction cost from annual taxation including unemployment funds, future earnings will cover loan charges. Last, but by no means least in the narration of public works activities, is the i development of hydro-electricity. The capital outlay to the 31st March last amounts to about £13,000,000. but is now tapering off following the completion of the major schemes. The revenue last year was approximately £941,000. It is pleasing to record that after paying all expenses, including interest and depreciation, a small net profit was realized. This is a better result than was anticipated and it will enable the undertaking as a whole to reduce the accumulated losses from past years and pay some arrears of sinking fund. Although debt redemption has in the past had to' be postponed, any loan expenditure on these works in the future may be regarded as wholly reproductive from the outset. The programme of public works for the current financial year is embodied in the estimates to be tabled to-night. A perusal of the votes will show that £530,000 is to be provided toward the completion of Wellington railway terminal facilities — the Tawa Flat Deviation combined with the new station and yards and electrification of the line to Paekakariki. By the end of the financial year these works should be well on towards completion. * Goods trains with steam engines are already using the deviation. The most prominent feature in the programme is Public Buildings for which £561,000 is set down on the estimates. In addition to provision for a few large buildings such as Dunedin Post-office and the new departmental offices at Wellington and Auckland, and a further contribution of £30,000 for the National Art Gallery at Wellington, there is £180,000 for school-buildings and £90,000 for additional accommodation in mental hospitals. These buildings are all necessary, costs are down to a low level, capital is relatively cheap, and the Unemployment Board is anxious to stimulate building owing to its far-reaching effect on the employment of labour. Thus the time is opportune to undertake building projects, some of which have been held over for some years. In the aggregate £595,000 is to be provided for roads and bridges, but as road works are being carried out to some extent to relieve unemployment, £150,000 of the estimated expenditure will be financed out of the Unemployment Fund. In addition, the estimates provide for the expenditure of £1,150,000 on maintenance and improvement of highways and £520,000 on construction work. Under hydro-electric supply £402,000 additional capital will be required this year for extensions at Arapuni and further developments at Waikaremoana and other stations. Other items in the programme are £300,000 for telephone and telegraph improvements and extensions and, including £120,000 to be recouped from the Unemployment Fund, a total of £330,000 for the irrigation, lands-improvement, and swampdrainage works previously mentioned. The complete capital programme provides for a net expenditure out of loanmoneys of £3,750,000 broadly made up as follows Public works .. .. . • •• •• 2,960,000 Small farms .. .. • • • • • • 350,000 Land settlement and development .. .. 150,000 Native-land settlement .. .. .. •• 160,000 Dairy industry loans .. .. •• •• 100,000 Forestry .. .. • • • • • • 30,000 £3,750,000 This amount can be provided from Government Accounts, so no public issue will be necessary for the purpose.

Hydro-eleetrie works.

Public-works programme.

- Summary of loan programme.

13

8.—6.

It may be mentioned that the £2,960,000 shown for public works is the amount of loan capital involved in the programme for the year. This amount will be augmented from the Unemployment Fund for certain classes of work, and there is also the expenditure on highways out of revenue. In fact, the estimates provide for a gross expenditure of £5,630,000, an increase of £1,480,000 over the actual expenditure for last financial year. This increase is desirable for several reasons. In the first place it will have direct and indirect effects in relieving unemployment and increasing the national income and taxable capacity. Further, many works, otherwise unremunerative, can be made profitable at the present low rate of interest if financed partly from unemployment funds. The time has now arrived when it is desirable to formulate a long-range public-works programme covering a period of years. In order to provide the basis for such a programme it is proposed to undertake a survey of suitable developmental works. This will enable works to be selected well in advance in order of urgency, after estimates of capital costs and probable returns and of labour requirements have been prepared. An important advantage of such a programme is that the use of unemployment funds for the promotion of full-time work can be planned in advance. In this way we can be sure of getting the utmost value for the money expended. LAND-DEVELOPMENT. During last financial year the Land Development Board concentrated attention upon the prosecution of work on areas where operations had already been commenced and upon the granting of loans in approved cases to Crown tenants who had chosen to select undeveloped sections. The £150,000 set down in the capital programme for this year will enable these operations to be continued. Summarizing the situation from a financial point of view, it may be stated that to 31st March last the Board had expended a sum of £317,400 in the surface development of twelve blocks of Crown land, the erection of fencing, buildings, &c., thereon, and in the survey and roading of thirty-four blocks, making provision for approximately 592 farms. The net expenditure on live-stock for farming-operations stands at £21,700. Sections permanently selected number 304, and the total arrears of rent and deferred-payment instalments outstanding at the end of last financial year were £1,492 against annual charges of £3,420. In addition, loans totalling £210,000 have been granted to 488 Crown tenants to assist them in developing their own selections. In the North Auckland district particularly, settlers have taken advantage of the financial accommodation that has been made available for the conversion of waste areas held by them into productive pasture. The general financial success of the loan scheme may be gauged from the fact that, as at the 31st March last, arrears of interest outstanding amounted to only £7,830, despite comparatively adverse markets and the fact that loans have been made on lands not immediately productive. In the latter cases the return from the properties will rise as areas in pasture are increased and the grass becomes established. The disturbed economic conditions that have existed have operated against settlement in some cases, and the four larger blocks of land which have been or are being developed, comprising the Galatea, Ngakuru, Kakariki, and Tapuwae estates, have not yet been permanently selected. In the meantime, the Board is farming these blocks or has arranged for share milkers to occupy portions of them. With the exception of one of the blocks where dairying is predominant, the farmingoperations over the last two years taken together have resulted in surpluses after providing for interest on the capital invested. Thus practically without loss it has been possible to test and demonstrate the developmental possibilities in the districts concerned. Good progress has also been made with the development of Native-owned lands for the settlement thereon of the owners or other selected Natives. The number of separate holdings in active production has increased from 1,050 at the 31st March, 1933, to 1,541 at the 31st March, 1935.

Land-development.

Progress recorded.

Native land development.

14

8.—6.

The total gross expenditure on the development schemes and unit farms at the I 31st March last was approximately £905,623, while credits amounted to £315,350, leaving a net expenditure to that date of £590,273. The gross expenditure for the year ended on the 31st March last amounted to £191,726. Credits during the year reached the sum of £104,382, leaving a net increase of £87,344 in the expenditure on development. The collections from the schemes for the first three months of the current financial year show an increase of 55 per cent, on the figures for the corresponding period of last year, leading to the justifiable expectation of further substantial progress over the full year. SMALL-FABMS SETTLEMENT. As a partial remedy for unemployment the original Small Farms Scheme l was inaugurated. Areas ranging from 5 acres upwards were acquired under agreement to lease and suitable unemployed workers were chosen as occupiers. The intention underlying this scheme was to provide holdings where the tenants could have a garden, run a cow or two, fowls, &c., and also obtain two or three days' work each week from outside sources. The administration of this scheme was placed in the hands of the Department of Agriculture, and while it was in operation some 488 men were placed. It was soon realized, however, that this method of settling men could only be regarded as a temporary palliative, except in localities where plenty of seasonal work was available over a fairly long period, such as near freezing or other works. The Small Farms Board was then constituted in April, 1933, and immediately commenced a programme of acquiring areas which would provide the occupier with a living without relying on outside work. Applicants lor farms were advised to try to obtain options over properties which could be purchased, developed, and stocked at a total cost not exceeding £1,200. The Board also acquired several areas of undeveloped and partially improved land and properties which had been gradually deteriorating because the original owners lacked sufficient finance to farm the land successfully. These areas are being developed by the use of unemployed labour, and all improvements are being carried out prior to settlement. The method of selection of permanent occupiers for the subdivisions is by ballot among the most suitable of the married workers engaged on the development-work. Since its inception the Board has established 359 individual settlers on an area of 24,035 acres, while the development of a further 38,711 acres now in hand will eventually provide another 491 holdings. While the total figure of 850 farms may not appear to be large in comparison with the total number of unemployed in I\ew Zealand, it should be realized that the settlement of this number means the building of 850 cottages, cowsheds, and outbuildings, the erection of many miles of boundary and subdivisional fencing, the clearing and grassing of thousands of acres, and the construction of new roads and schools to cater for new settlements. It is interesting to note that up to the present on fifteen of the blocks under development over 120 miles of new fencing have been erected. Bight hundred and fifty new settlers, with their wives and families, means a total population of about 3,500 people. Established farms also provide indirect employment to other workers. In connection with the development operations referred to previously, 1,257 unemployed men are at present employed on definitely reproductive work, and, of these, 491 may ultimately expect to get sections on completion of the work. These men have shown great keenness and, with the incentive of obtaining good farms to spur them on, excellent results are being obtained. All cottages on small-farms and development blocks are being erected by contract, hence the building and allied trades are also benefiting to some extent by the scheme. Another scheme of which considerable advantage has been taken, and which still offers some scope, is known as the | Share Milkers' Cottage Scheme." The Small Farms Board is prepared to advance up to £300 for the erection of a cottage and/or a cow-shed on privately-owned farms on condition that the owner engages

Finance.

Small Farm Scheme.

Small Farms Board.

I Share Milkers' ; Cottage Scheme. 3

15

8.—6.

an unemployed married man to milk additional cows either on a wage basis of £2 per week or on a guaranteed share basis of £104 per annum. The advance is repayable on an instalment plan over a period of ten years. Under this scheme advances have been made and unemployed men placed in 328 cases. To summarize the results to date, the following is the position Placed on small holdings . . . . . . . . 488 Placed on full-time farms . . . . . . . . 359 Established as share milkers . . . . . . .. 328 Number on sections under development . . . . 491 Total . . .. .. . . . . 1,666 UNEMPLOYMENT. Although the recovery in industrial and economic conditions during the past twelve months has been reflected by an improvement in the position, unemployment still constitutes a major problem, and one requiring long-range consideration if anything approaching rehabilitation is to be obtained within the next few years. The latest figures reveal that the number who are a charge, in one way or another, on the Unemployment Fund, has fallen from 62,451 in August, 1934, to 57,571 for August, 1935 —a drop of 4,880. The commencement of seasonal occupations will, in the ordinary course, result in the numbers being materially reduced during the summer months. Increasing difficulties are being encountered in finding suitable work under Scheme No. 5. The policy of the Unemployment Board to co-operate with the State and generally encourage all employing authorities to put in hand works for the full-time employment of relief workers at standard rates of pay has been continued during the year, and over 8,000 workers are employed on this basis. At the present time a number of local bodies have under consideration major schemes for the employment of relief workers on this basis, and it is anticipated that the number of men in receipt of full-time employment at standard rates will be materially increased in the near future, thus securing a corresponding reduction in the numbers on sustenance or employed on a rationed basis under Scheme No. 5. In public works also much importance is attached to the value of employment that can be provided for a given expenditure of loan-money. While this will lead to a decided improvement in the position, there can be no question that the only permanent solution of the problem is the reabsorption of the unemployed in trade and industry, and it was with this object in view that the Unemployment Board decided, in July, 1934, to set aside the sum of £250,000 for assisting private enterprise in the promotion of new industries and the assisting of languishing industries so that a larger number of men could be absorbed into private employment. A number of new industries has been assisted by means of grants and loans from the Unemployment Eund, and the Board is at present examining proposals which, if successfully inaugurated, will be of great value, not only in relieving unemployment but to the Dominion as a whole. Gold-mining and prospecting are proving successful avenues of employment fostered by the Unemployment Board. Co-operation between the Board, the Mines Department, and the Department of Scientific and Industrial Research, coupled with the high market price of gold, is bringing about a great recovery in gold-mining. Apart from " grub-staking " unemployed men, finance has been provided from the Unemployment Eund for geophysical and geological surveys carried out on potential auriferous areas. Special prospecting parties have been sent out into likely back-country areas at standard rates of wages, and several additional mining engineers have been appointed to direct and assist the operations of subsidized prospectors. In various parts of the Dominion 400 men are engaged at special rates of pay in testing areas reserved for prospecting by unemployed labour—by means of shaft-sinking, tunnelling, &c., or in providing access to such areas.

Summary of results,

Unemployment,

Standard rates of pay.

Assistance to new industries.

Revival oi goldmining.

16

8.—6

Increasing attention is being paid to large-scale operations, as against prospecting on small individual claims, with tlie object of providing permanent employment in the industry for increased numbers of men. Near Hokitika an old water-race is being reconditioned and en tended with a view to working a large area of virgin alluvial ground, a project that is employing some two hundred men full time at standard rates of wages, which are paid by the Board. On completion it is estimated by experts that constant and profitable employment on sluicing operations will be provided for about one hundred and fifty men over a period of ten to fifteen years. The developments in dredging are most encouraging. Fifteen dredges are operating at present, and, from information received by the Mines Department, it is anticipated that the number will be increased to twenty-three in 1936 and probably forty in 1937. „ The dredges of to-day, compared with those operating at the beginning of the century, are much larger and more powerful. In 1902, which can be taken as the peak of the previous dredging boom, there were 201 dredges in operation, averaging per dredge 16 h.p., or a total of 3,216 h.p., but the fifteen operating this year total approximately 2,500 h.p. Even larger dredges than those now operating are contemplated, and by .1937 it is quite possible that the horse-power of the dredges then in operation will total 12,000. The Building Subsidy Scheme (No. 12) which has now been in operation for: over twelve months has proved a very successful method of stimulating industries in general, as it is estimated that, directly and indirectly, over 87 per cent, of the cost of building-construction comprises wages paid in New Zealand. Up to the 20th July, 1935,4,960 applications had been approved, involving subsidies totalling £229,356. The 'actual value of the work put in hand a§ a result of the granting of subsidies under this scheme amounts to £3,208,361, of which £2,791,274 is estimated to represent the amount which will be directly and indirectly paid in wages in Nevv Zealand. In other words, the expenditure by the Unemployment Board of £229,356 represents only 8-21 per cent, of the total wages paid to workers employed as a result of the introduction of this scheme. During the year the scheme was extended to cover alterations and additions to dwelling-houses, and recently a further scheme on similar lines has been introduced to give employment to workers in the engineering and metal-working trades. This latter scheme (B. 2) provides for the granting of subsidies to dairy factories and dairy-farmers on the purchase of machinery manufactured in New Zealand calculated to improve the quality of the Dominion's butter and cheese output. Concerning the financial position of the Unemployment Fund, it may be mentioned that in spite of the reduction in taxation to lOd. in the pound from Ist October, 1934, and the exemption from wages-tax granted to persons under twenty years of age (which applied from 12th November, 1934), the total revenue from unemployment taxation exceeded that of the previous year by £163,350. The actual receipts from taxation amounted to £4,590,219, of which £419,165 was derived from the levy, £2,821,824 from tax on salary and wages, and £1,349,230 from the special charge on " other income." The tax on salary and wages yielded less than for the previous year. This of course is accounted for by the reduction in taxation, and by the exemption granted to persons under twenty. But for these alterations it is estimated that the receipts for the last year would have shown an increase of about £190,000. Such an increase represents an addition to the Dominion wages bill of approximately £3,800,000. . . The receipts from the special tax on " other income " (after allowing for revenue received in advance, £38,225) amounted to £1,311,005, or £204,403 in excess of the previous year. Allowing for the reduction in the rate of tax to lOd. in the pound for the second half of the year, this result indicates an increase in incomes " other than salary or wages " of over £6,500.000. The Unemployment Board commenced the year with a cash balance of £621,518, and with the £4,590,219 from taxation, and other miscellaneous receipts from' interest, repayments of loans, &c., it had. available for the provision of unemployment relief the sum of £5,245,078.

Building subsidy.

Assistance to engineering trades, &c.

i Finance. L

f Revenue. 3

3—B. 6.

17

8.—6.

Expenditure.

Disbursements from the fund totalled £3,912,000 during tlie year, the sum of £3,397,000 being expended in direct relief payment to the unemployed under the Board's various schemes; £73,900 in the purchase of food, clothing, and other necessities for distribution to relief workers ; £240,000 in sustenance payments, where work could not be provided ; £62,000 in loans and grants made by the Board for the creation of employment, mostly in new channels; and £139.000 in administration expenses, representing 3-55 per cent, of the actual expenditure. The year closed with a balance of £1,333,000 to the credit of tlie fund, against which there are considerable commitments. For the current year it is estimated that on the present basis of taxation the revenue of the Unemployment Fund would amount to £4,200,000, and, with the balance carried forward on Ist April last, the aggregate amount available would be £5,533,000. With the general increase granted to relief workers in January last, and the further increase in the form of a bonus given in July, the relief payments, except for a few months in the early stages of the Board's activities, are now higher than they have been at any time since the inception of the emergency legislation. In addition to providing increases in monetary payments to relief workers, further assistance has been provided in the form of" a free issue of boots and blankets, by the extension of the rationing-system to all the larger secondary towns, and by increasing the amount of outside earnings that a worker may receive before his relief is affected. The policy of the Board to concentrate upon the promotion of full time employment at standard rates of pay will involve greater expenditure out of the Unemployment Fund, but, in view of the buoyancy of the revenue and the declining numbers of unemployed, it is considered that the position of the finances permits of a further reduction in the rate of taxation. It is accordingly proposed to reduce the tax from the present rate of lOd. to Bd. in the pound as from Ist October. This will reduce the revenue by £370,000 for the balance of this financial year. Even so, the amount available for this year will be £5,160,000 as against an expenditure of £3,912,000 for last year. The additional £1,248,000 that is available, combined with the increased activity in specially selected public works, should materially assist the solution of the problem, especially as the continued improvement in economic conditions will tend to increase the revenue and reduce the demand on the funds. POST AND TELEGRAPH CONCESSIONS. From the inception of the telephone toll system in the Dominion, the method of charging for toll communications has been based upon the length of circuit connecting any two points. While this method has, up to recent times, been generally convenient and equitable, the steady development of toll communication along with the employment of new methods of transmission has led to difficulties, and in some instances anomalies in charging. Moreover in many cases it has led to disturbing alterations in charging arising from deviations in routing. With a view to stabilizing the charging system the Government has approved of toll distances between any two points being calculated upon the nearest practicable vehicular route or pole-line distance, whichever is the shorter. This innovation will result for the time being in a fairly substantial loss of revenue, but will no doubt prove very acceptable to many users. The alteration is in accord with the aim of the Government to afford every encouragement to the public to make use of the comprehensive boll system which is steadily being built up within the Dominion. For many years the progressive loss upon the handling of telegraph traffic has been a matter of serious concern. With a view to devising some practicable remedy for this state of affairs, the working of the telegraph branch of the Post and Telegraph Department was the subject of exhaustive investigation by a select committee of departmental experts. The inquiry covered every aspect of telegraph working, and, as a result, the flat rate method was discarded in favour of what_ is termed the "zone" system of charging. This system was based substantially upon the principle that the charges should, as far as possible,

Estimated Revenue, 1935-36,

Reduction in taxation.

Toil charges.

Telegraph charges.

18

8.—6

be in direct ratio to the cost of handling. It was not in any way calculated to increase the aggregate cost to the users, but was designed essentially to ensure a more equitable return upon the handling of long-distance traffic. Conversely, the charges for short-distance traffic were reduced. The new system met with much criticism, particularly from some of the business community. The opposition was not based upon any inherent weakness in the principle of charging according to distance, but the new method was apparently looked upon as too radical a departure from the flat rate system of charging, which, from long usage, had been regarded as a fixed policy in respect of telegraph charges. Having regard to the objections raised to the graduated method of charging, and with a view of giving every consideration to the wishes of users, the Government has agreed to revert in the near future to the flat rate method. This will be in the direction of resuscitating in a measure the one-time popular sixpenny telegram. The new charge will be on a flat rate basis at the rate of Id. per word, with a minimum charge of 6d. The following are a few of the many concessions recently granted by the < Post and Telegraph Department to its clients : — 1. Removal of certain restrictions on the posting of business accounts and circulars : 2. Reduction in postage on registered newspapers from Jd. for 3 oz. to |d. for 8 oz : 3. Free medical advice by radio-telegram to ships at sea: 4. Abolition of telephoning fee for inward and outward telegrams : 5. Half-toll rates from 6 p.m. instead of 8 p.m. on week-days, also all day on Sundays and holidays: 6. Toll charges reduced to one-fourth rate from 10 p.m. to 6 a.m., with maximum charge for three minutes of Is. within either Island and Is. 6d. inter-Island : 7. Reduction in " No-reply " toll charge : 8. Reduction from 4d. to 2d. in minimum charge for short distance telephone toll communciations : 9. Extension from 2 hours to 12 hours Sunday service in 108 exchanges : 10. Extension of Auckland Exchange base-rate area : 11. Overseas radio-telephone charges reduced 25 per cent. : 12. Initiation of " Person to Person " call. From these it will be evident that valuable concessions have been given to both city and country subscribers. BUDGETARY POSITION FOR 1935-36. I come now to the general budgetary position for this financial year. As one would expect from the progressive improvement in economic conditions reviewed in my opening remarks, the public revenues continue to be buoyant. Increasing imports mean additional customs revenue, and, after a careful survey of results to date and the prospects for the remainder of the year. I have set down the estimate of Customs revenue for the year at £7,900,000, a comparative increase of £476,000, or approximately 6 per cent., over receipts for last year. Then the rising volume of factory production and the improvement in local trade and industry generally must substantially increase the yield from the sales tax at the existing rate. The estimate of the comparative increase is £304,000. In these circumstances it is also reasonable to expect an increase in the yield from the petrol tax, while it is known that there is an appreciable rise in the number of motor registrations. Accordingly it is anticipated that highways revenue will exceed last year's receipts by £130,000. Income-tax is always difficult to gauge, and last year's receipts were substantially higher than was anticipated. For this year we can confidently expect the yield from the tax to rise to £4,250,000, an increase of £404,000, oi about 11 per cent.

Other concessions.

Customs revenue.

Sales tax.

Highways revenue.

Income-tax.

4—B. 6.

19

8.—6

As last year's receipts from land-tax were inflated somewhat by collection of arrears, I have allowed for a comparative reduction of £23,000 in this item. The yield from beer duty and gold-export duty should be much the same as last year, but 1 anticipate an increase of £10,000 in film-hire tax. As previously indicated, death fluties paid during last financial year were abnormally high. On this account I have deemed it advisable to allow for a fall of £810,000 in the returns from stamp and death duties. The increases that 1 have mentioned must thus be offset to this extent, leaving an estimated net increase in the revenue from taxation of £542,000. In the aggregate, it is anticipated that interest receipts on the existing basis oi operations would produce £196,000 less than was received last year. Interest on the Public Debt Redemption Fund is expected to show a decrease of £72,000, mostly due to the reduction in mortgage interest granted to State Advances mortgagors on transfer to the Mortgage Corporation. With a smaller volume of investments than was the case last year, interest on public moneys will show a decrease estimated at £146,000. Under " Other Receipts " the land revenues and departmental receipts are expected to be much the same, but the miscellaneous item last year included gold profits to the amount of £1,364,000. This year gold profits' to the extent of £231,000 have been received. With the virtual completion in the change over to our own silver coin, £575,000 of profits from this source can be transferred to the Consolidated Fund. Chiefly on account of those items " Other Receipts "in total will show a net decrease of £610,000. The net result of all of the items I have reviewed is an estimated revenue for the year of £25,862,000, which is £265,000 less than was received during last financial year. ESTIMATED EXPENDITURE. On the other side of the account the estimates of expenditure show a net saving of £340,000 in debt charges. Interest paid on the Treasury bills for last year amounts to £397,000, whereas for the current year it is considered necessary to allow only £35,000. Against this, the reduction in interest granted to State Advances mortgagors on transfer to the Mortgage Corporation will mean a reduction in interest recoveries of £200,000. I may say that the total cost of this reduction for the balance of this financial year is estimated at £260,000, but, as previously indicated, £60,000 is reflected in the revenue estimates for interest on the Public Debt Redemption Fund. Other savings in debt charges are £32,000 under the Repayment of the Public Debt Act due to the reduction in the debt last year, £82,000 in management charges, and £12,000 in payment of guaranteed loans. For exchange there is an estimated increase of £177,000 due to the fact that last year the net expenditure was reduced by a special recovery arising out of the liquidation of accounts under the Banks Indemnity (Exchange) Act. Payments for highways purposes this year will exceed those for 1934-35 by £454,000. To the extent of £130,000, this is the counterpart of the estimated increase in highways revenue, while the balance is accounted for by the fact that last year £322,000 of these revenues were retained in the Consolidated Fund for general use. This year it is not proposed to retain any part of these revenues, but it is intended to repeat last year's provision for payment out of the Main Highways Account of a special 12f per cent, subsidy on rural rates. Even so, the Highways Board, will have at its disposal for this financial year additional funds to the amount of £445,000. An increase of £16,000 for " Other Special Acts " is due mostly to an increase in Endowment Revenue available for Education and Pensions. I may mention that the expenditure grouped under this heading includes £200,000 for a special subsidy to the Government Superannuation Funds. An additional subsidy of a like amount was paid last year to enable current pensions to be paid without further depleting the existing capital of the funds. It has not been found possible to deal with the whole problem this year as was intended, so it is proposed to repeat the special subsidy to maintain the position of the funds until next year, when it is the intention of the Government to give the matter the serious consideration it warrants.

Other taxation,

Stamp death duties.

Interest receipts.

Other receipts.

Total revenue.

Debt services.

Exchange.

Highways.

Other Special Acts.

Superannuation Funds.

20

8.—6.

The net result of these increases and decreases is an increase of £310,000 in j the expenditure under Permanent Appropriations. Under the " Annual Votes " the estimates for this year are £400,000 in excess f of the expenditure for last year. Social services account for £150,000 of the increase. This includes £100,000 s for the normal expansion in pensions, £24,000 additional for Education, and an increase of £27,000 in the vote for the National Provident Fund and Friendly Societies. Concerning the latter increase, it may be mentioned that as an emergency measure tlie National Provident Fund provided for its own administration expenses for a period of four years out of surpluses, but could not continue to do so, as this was not contemplated when the original Act was passed. The general elections will increase the electoral vote by £73,000, while the l programmes for Naval, Land, and Air Defence will require votes increased by 1 £52,000. Other increases are £47,000 for maintenance of buildings, roads, irrigation works, &c., £23,000 for Agriculture, £16,000 for Industries and Commerce, and £36,000 for External Affairs. The last mentioned is for the reparation estates and the banana trade with Samoa, and will be offset by additional revenue. In the aggregate the main estimate of expenditure amounts to £25,211,000, i a net increase of £710,000 over the amount expended during last financial year, but, as already indicated, £454,000 of this amount is on account of Highways. The estimated revenue for the year is £650,000 in excess of the main] estimates of expenditure, but about £200,000 of this amount will be required for 1 Supplementary Estimates. The best way of utilizing the remaining margin in the Budget was a matter that received much consideration from the Government. All things taken into account, it was thought reasonable and fair that there should be some further restoration of the cuts in the salaries and wages of the Public Service. It is accordingly proposed to grant a7| per cent, general increase in salaries and wages as from Ist October. The net cost to the Budget will be approximately £300,000, of which £120,000 will be reflected by a reduction in the revenue item of " Interest on Railway Capital," while the balance will mean additional expenditure out of the Consolidated Fund. This increase, with that granted last year, will go a long way towards restoring the reductions made, so far as the lower paid men are concerned. Another matter that concerns the Public Service is the postponement of the general regrading that was due in 1934. As a result a number of anomalies in grading may not yet have been removed, although individual cases are continually being dealt with. ' Under the legislation a date for the next general regrading has to be fixed by Order in Council. If the present improvement in conditions continues, as seems likely, it may be found possible to fix a date next year. It is also proposed to take the opportunity of completing the restoration of the 10-per-cent. cut made in old-age pensions. This will operate as from Ist October, the cost for the balance of this financial year being £63,000. From the same date it is intended to increase by 1\ per cent, the pension rates for widows and miners and for dependants of soldiers whose pensions were reduced. The rates of Economic Pensions under the War Pensions Act are also to be increased by the same percentage. The cost of these increases for the half' year is estimated at £32,000. At present a returned soldier's widow is entitled to a pension only if married within two years of the soldier's discharge. Experience has shown that this has occasioned hardship, so legislation is to be brought down to give a widow the right to a pension under the War Pensions Act if she was married within seven years of her husband's discharge from the Forces. It is anticipated that the additional cost for the half-year will be £12,500. The Government has also been concerned about the number of returned soldiers who, quite apart from any wounds or other injuries during their war service, are ageing prematurely or otherwise becoming unemployable by reason of physical or mental disability. A War Veterans' Allowances Bill is to be brought down to provide for special pensions for such cases. The cost for the balance of this financial year is estimated at £30,000. The additions thus made to salaries, wages, and pensions in conjunction with the reduction to be made in unemployment taxation, should give a further impetus to the recovery in trade and industry now taking place.

Permanent Appropriations.

Annual Votes.

Social services.

Increases in other votes.

Main Estimates.

Increase in salaries and wages.

Public service regrading.

Restoration of old-age pensions.

Increase in other pensions.

Soldiers' widows pensions.

Allowance for veterans.

Impetus to trade.

21

8.—6.

SUMMARY OF POSITION. To sum up the whole position, the estimates of revenue are as follows: — Taxation— £ £ Customs .. .. . . . . 7,900,000 Beer duty . . . . . . . . 675,000 Sales tax . . . . . . . . 2,475,000 Film-hire tax . . . . . . . . 55,000 Gold export duty. . . . . . . . 100,000 Highways . . . . . . . . 2,040,000 Stamp and death duties . . .. . . 2,710,000 Land-tax . . . . . . .. 470,000 Income-tax .. . . .. . . 4,250,000 Miscellaneous . . . . . . . . 45,000 Total taxation . . . . . . . . . . 20,720,000 Interest receipts . . . . . . . . . . 2,734,000 Other receipts .. . . . . .. . . 2,408,000 £25,862,000 Less reductions in Railway Interest on account of increase in salaries . . . . . . . . 120,000 £25,742,000 The Budget estimate of expenditure may be summarized as follows:— £ £ Debt services . . . . . . . . 9,441,000 Exchange . . . . . . . . . . 1,636,000 Transfer of highways revenue. . . . . . 2,041,000 Other Permanent Appropriations . . . . 633,000 Annual votes— Social services . . . . . . . . 7,295,000 Other votes .. .. . . . . 4,165,000 Total, Main Estimates .. . . . . . . 25,211,000 7-J per cent, increase in salaries and wages . . . . 180,000 Full restoration of old-age pensions . , . . . . 63,000 7\ per cent, increase in other pensions . . . . . . 32,000 Extension of pension rights for returned soldiers' widows 12,500 War Veterans allowances . . . . . . . . 30,000 Other Supplementary Estimates . . . . . . 200,000 £25,728,500 On this basis there will remain a small balance of £13,500 to provide for contingencies. I may say that the Government is not unmindful of the fact that the burden of taxation is heayy, and it is regretted that there was not sufficient scope in the Budget to make further reductions this year, having regard to the prior claims of the Public Service for restoration of cuts in salaries and wages. However, with the increasing j)rogress now being made towards economic recovery, a substantial reduction in taxation should not be long delayed. Looking back over the last few years, I consider the Government can justly claim to have piloted the Dominion successfully through the worst economic storm in its history. A considerable measure of success has been achieved in bridging the gap between costs and income in our basic industries, and, with the readjustment of liabilities already provided for by statute and the heartening rise in prices now apparent, there should soon be an improvement in farming profits. This will be reflected in a general improvement in trade and industry. Prospects are definitely good. In the sphere of public finance, not only has Budget stability been restored but we have come through the depression without any legacy of accumulated floating debt. Unemployment funds have been provided out of revenue and the public debt is less now than it was three years ago. Thus the financial record of the Dominion through the depression compares favourably with that of any other country.

Summary of revenue.

Summary of expenditure.

Budget surplus.

Conclusion.

22

B= —6.

TABLES TO ACCOMPANY THE FOREGOING STATEMENT.

Page Table No. 1. —Abstract of Receipts and Expenditure op the Financial Yeab ended 31st March, 1935. See Parliamentary Paper 8.-l [Pabt I]. Table No. 2,—The Public Debt on 31st March, 1935. See Parliamentary Paper 8.-l [Part lII]. Table No. 3. —Revenue for the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934 .. .. .. .. • • • • • • .. ii Table No. 4. —Comparative Statement oe the Estimated and Actual Revenue op the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1935 .. .. .. • ■ ■ • • • • • • • • • . - iii Table No. s.—Estimated Revenue for 1935-36, compared with the Actual Revenue pop 1934-35 .. ir Table No. 6.—Stamp and Death Duty Revenue for the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934 .. .. .. .. .. .. iv Table No. 7.—Statement op the Customs Duties collected por 1934-35, compared with 1933-34 .. v Table No. 8. —Statement op the Actual Net Expenditure op the Consolidated Fund (Ordinary Revenue Account) por the Financial Year ended 31st March, 1935, compared with the Year ended 31st March, 1934 .. .. .. .. .. v Table No. 9. —Comparative Statement op the Appropriated and Actual Expenditure op the Consolidated Fund (Ordinary Revenue Account) por the Financial. Year ended 31st March, 1935 .. .. .. .. • • ■ • • • .. vii Table No. 10,—Estimated Net Expenditure por 1935-36, compared with the Actual Net Expenditure POR 1934-35 .. .. .. .. •• •• • • • • • • * x Table No. 11'.—Public Works Fund—Statement showing Net Expenditure under Appropriations por the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934 x Table No. 12,—Statement showing the Total Ways and Means op the Public Works Fund, General Purposes Account, and the Total Net Expenditure to 31st March, 1935 .. xi Table No. 13,—Statement showing the Amount charged to " Unauthorized " in each Financial Year prom Ist April, 1924, to 31st March, 1935 .. .. .. .. ~ xii Table No. 14. —Statement showing the available Financial Resources op the various Accounts on the 31st March, 1935, as compared with the 31st March, 1934 .. .. .. xiii Table No. 15. —Statement op Amounts paid on account op Pensions por the Financial Years ended 31st March, prom 1931 to 1935 .. .. .. .. .. .. • • xiii Table No 16. —Education Expenditure—Total Expenditure on Education out or Public Funds since 1913-14 .. .. .. •• •• •• <• •• .. xiv Table No. 17.—State Balance-sheet as at 31st March, 1934 .. .. .. xv Table No. 18. —Statement op Half-yearly Instalments of Principal and Interest for Repayment op Debt funded with Imperial Government .. .. .. .. .. ' xvi Table No 19.—Statement showing Maturity Dates and Domicile of Debt outstanding as at 31st March, 1935 .. .. .. .. .. . • •. • • xvii Table No. 20.—Statement showing Values of Imports and Exports of the Dominion in each Financial Year ended 31st March, from 1930 to 1935 .. .. . •• xv i« Table No. 21. —Table showing Improvement in Economic Conditions .. .. .. .. xviii Copy of Prospectus op 1934 London Loan .. .. ■ • • ■ • • ■ • • • • • xlx Copy op Prospectus of Mortgage Corporation op New Zealand .. • • • • • • • • xxi

i—B. 6.

8.—6.

Table No. 3. Revenue for the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934.

II

Year ended j Year ended 31st March, | 31st March, ! Increase. Deorease 1935. 1934. Taxation— £ j £ £ . £ Customs .. .. .. .. 7,423,597 6,485,014 938,583 Beer duty .. .. .. .. 671,008 655,464- 15,544 Sales tax .. .. .. .. 2,170,504 1,847,333 323,17] Film-hire tax .. .. .. .. 44,49] 32,960 11,531 Gold-export duty .. .. .. 102,617 117,090 .. 14 473 Highways .. .. .. .. 1,910,452 1,703,527 206,925 Stamp and death duties .. .. .. 3,520,723 2,712,855 807,868 Land-tax .. .. .. .. 492,526 498,978 .. 6 452 Income-tax .. .. .. .. 3,796,477 2,961,243 835,234 Miscellaneous .. .. .. .. 45,212 45,366 .. 154 Total—Taxation .. .. .. 20,177,607 17,059,830 3,138,856 ' 21,079 Interest — On capital liability— Working railways .. .. .. 1,088,050 1,085,000 3,050 Postal and telegraph .. .. .. 546,000 553,000 . . 7 000 On Public Debt Redemption Fund .. .. 632,065 629,496 2 569 On other public moneys .. .. .. 664,130 596 '36O 67,770 Total—Interest .. .. .. 2,930,245 2,863,856 73,389 7,000 Other receipts— Registration and other fees .. .. . 228,563 218,248 10,315 National-endowment revenue .. . 147 76] 134 94Q 1^19 Territorial revenue .. . . .. 24M62 W>'M External affairs .. .. .. .. 97,110 76,379 20 731 Justice 144,197 138,171 ô'o26 Marine i 139,168 133,110 6,058 Native •• •• •• 5,204 3,876 1,328 Post and Telegraph Department profits .. 13,000 154,388 141 388 Printing and Stationery .. .. 175,656 160,925 14^731 Stamp duties .. .. .. i 45,048 39,198 5'850 Tourist and Health Resorts .. .. 77,308 65,700 11'608 Miscellaneous .. 1,628,777 196,048 1.432J29 Recoveries on account of expenditure of 25,035 3,609 2],426 previous years From reserves .. .. .. .. .. 2,000,000 .. 2,000,000 Total—Other receipts .. .. 3,018,242 3,569,063 1,590,567 j 2,141,388 4,802,812 2,169,467 2,169,467 Totals •• •• •• 26,126,094 23,492,749 2,633,345

8.—6.

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, 1935.

III

Difference. Estimate for Actual for |_ 1934-35. 1934-35. j More . Less . Taxation — £ £ £ £ Customs 7,600,000 7,423,597 .. 176,403 Beer duty .. .. .. .. 625,000 671,008 46,008 Sales tax 2,150,000 2,170,504 20,504 Film-tire tax .. .. .. .. 45,000 44,491 .. 509 Gold-export duty .. .. .. 120,000 102,617 .. 17,383 Highways .. .. .. .. 1,860,000 1,910,452 50,452 Stamp and death duties .. .. .. 2,730,000 3,520,723 790,723 Land-tax 480,000 492,526 12,526 Income-tax 3,650,000 3,796,477 j 146,477 Miscellaneous .. .. .. .. 45,000 45,212 212 Total—Taxation .. .. .. 19,305,000 20,177,607 1,066,902 194,295 Interest — On capital liability—■ Working railways .. .. •• 950,000 1,088,050 138,050 Postal and telegraph .. .. .. 565,000 546,000 .. 19,000 On Public Debt Redemption Fund .. 645,000 632,065 .. 12,935 On other public moneys .. .. .. 725,000 664,130 .. 60,870 Total—Interest .. .. .. 2,885,000 2,930,245 138,050 92,805 Other receipts — Registration and other fees .. .. 220,000 228,563 8,563 National-endowment revenue .. .. 130,000 147,761 17,761 Territorial revenue .. .. .. 240,000 51,415 External Affairs .. .. .. .. 90,000 97,110 7,110 Justice 155,000 144,197 .. 10,803 Marine .. .. .. .. .. 131,000 139,168 8,168 Native .. .. .. .. •• 4,000 5,204 1,204 Post and Telegraph Department profits .. .. 13,000 13,000 Printing and Stationery .. .. .. 160,000 175,656 15,656 Stamp duties .. .. .. . • 40,000 45,048 5,048 Tourist and Health Resorts .. .. 68,000 77,308 9,308 Miscellaneous _ .. 520,000 1,628,777 ■ 1,108,777 Recoveries on account of expenditure of 4,000 25,035 21,035 previous years From reserves .. .. .. .. 300,000 .. .. 300,000 Total —Other receipts .. .. 2,062,000 3,018,242 1,267,045 310,803 2,471,997 597,903 ! 597,903 I Total revenue .. .. .. 24,252,000 26,126,094 1,874,094

B.—l>.

Table No. 5. Estimated Revenue of the Consolidated Fund (Ordinary Revenue Account) for the Year ending 31st March, 1936, compared with the Actual Revenue received for the Year ended 31st March, 1935.

Table No. 6. Stamp and Death Duty Revenue for the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934.

IV

Estimate Actual Differences. "" ~ for (or 1935-36. 1934-35. T _ Increase. Decrease. Taxation— £ I £ £ £ Customs .. .. .. .. .. 7,900,000 7,423,597 476 403 Beer duty 675,000 671,008 3,992 Sales tax.. .. .. .. .. ,,, 2,475,000 2,170,504 304,496 Fjlm-hire tax 55>000 44,491 10 509 Gold-export duty . . .. .. .. .. 100,000 102,617 . . "2 617 Highways •• .. .. .. .. 2,040,000 1,910,452 129,548 Stamp and death duties .. .. .. .. 2,710,000 3,520,723 . 810 723 Land-tax .. .. .. .. 470,000 492,526 " 2*>V6 Income-tax .. .. .. .. .. 4,250,000 3,796,477 453,523 Miscellaneous .. .. .. .. 45,000 45,212 .. "212 Total—Taxation .. .. 20,720,000 20,177,607 1.378,471 836^078 Interest— On capital liability— Working Railways .. .. .. .. 980,000 1,088,050 108 050 Postal and Tefegraph .. 556,000 546,000 10,000 . ' On the Public Debt Redemption Fund .. .. 560,000 632 065 72 065 On other public moneys .. .. .. .. 518,000 664J30 " 146^130 Total—Interest .. .. 2,614,000 2,930,245 326^245 Other receipts— Registration and other fees.. .. .. .. 230,000 228,563 1 437 National-endowment revenue .. .. .. 135,000 147'761 ' 12 761 Territorial revenue 260,000 " 31 41« External Affairs .. .. .. .. .. 140,000 97,110 42 890 Justice .. .. .. .. .. .. 146,000 144,197 l'803 a " ne 134,000 139,168 .. "sios Native 5,000 5,204 904 Printing and Stationery .. .. .. .. 175,000 175,656 " tit Stamp duties 45>0 00 45,048 " Ā Tourist and Health Resorts.. .. .. .. 85,000 77 308 7 692 Miscellaneous .. .. .. .. .1,048,'000 1, ' 593 777 Recoveries on account of expenditure of previous years.. 5,000 25,035 .. 20 035 Total—Other receipts .. 2,408,000 3,018,242 664^064 1,442,293 1,826,387 1,442,293 Totals 25,742,000 ~ 384~094

Year Ended 31st March, 1935 _ 1934 _ J Increase. Decrease. £ £ £ £ Adhesive stamps .. .. 125,954 80,581 45,373 Duty on instruments.. .. 238,093 199,639 38'454 Estate and succession duty .. 2,159,990 1,327,508 832'482 Gift duty .. .. .. 45,404 63,032 .' 17 ' 628 Impressed stamps, and duty on 186,741 173,311 13 430 cheques Stamp duty on interest .. 68 78,974 .. 78 906 Company licenses .. .. 83,856 84,984 I '' j'loa Sharebrokers'licenses .. 2,051 j 2,178 j '107 Bank-note duty .. .. 218,017 279,'244 j "61927 Totalizator revenue .. .. 371,985 j 340,740 I 31, 245 Amusements-tax .. .. 49,526 ! 48,715 'sil Lottery duty .. .. 18,000 15,245 2,755 Overseas-passenger duty .. 18,455 j 15,348 3'107 Rates, fines, and miscellaneous 2,583 3,356 .' '773 967,657 159,789 ! 159,789 Totals .. .. 3,520,723 2,712,855 I 807,868 ~

B.— 6

Table No. 7. Statement showing Customs Duties collected for Year 1934-35 compared with the Year 1933-34.

Table No. 8. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1935, compared with the Financial Year ended 31st March, 1934.

V

1934-35. 1933-34. Increase. Decrease. £ £ £ £ Spirits, wine, and beer 679,930 675,096 4,834 Tobacco, cigars, and cigarettes .. .. 1,665,726 | 1,611,678 54,048 Apparel and textiles 814,187 686,175 128,012 Motor-vehicles and parts* 487,240 168,854: 318,386 Motor-spirit* .. .'. .. ■■ 1,057,598 960,028! 97,570 Other goods 1,988,843 1,826,679 162,164 Primage and surtax .. .. .. 730,073 556,503 173,570 Totals 7,423,597 6,485,013 938,584 * Excluding tire-tax and petrol-tax earmarked to Main Highways.

— 1 I J Year ended Year ended 31st March, 31st March, Increase. Decrease. 1935. 1934. ___] , Permanent Appropriations : — £ £ I £ £ Under special Acts of Legislature,— Civil List .. .. .. .. •• 23,100 | 22,505 j 595 Debt Services — Interest .. .. .. .. .. 8,023,812 8,836,467 .. 812,655 Amortization of debt— Sinking fund .. .. .. •• 10,859 10,859 .. Repayment of Public Debt Act, 1925 .. 1,578,293 1,392,257 186,036 Transfers to Loans Redemption Account .. 7,326 9,843 .. 2,517 Administration and management .. .. 117,733 61,045 56,688 Payments on guaranteed loans .. .. 42,605 86,861 .. 44,256 Total—Debt Services .. .. •• 9,780,628 10,397,332 242,724 859,428 Other Services — Education .. .. .. •• •• 87,207 53,221 33,986 Contribution towards Singapore Naval Base .. 100,000 100,000 Other grants and subsidies .. .. • • 242,949 35,875 207,074 Salaries and honoraria .. .. • • 60,224 56,013 4,211 Pensions .. .. .. •• •• 40,057 25,081 14,976 Highways— Transfers to Main Highways Account .. 1,455,143 1,079,097 376,046 Paid to boroughs .. .. •• •• 110,748 100,060 10,688 Expenses of collecting, &c... .. •• 21,074 22,680 .. 1,606 Advances .. .. Cr. 6,123 Cr. 4,630 Cr. 1,493 Other special ActsCost of exchange on the purchase from banks of 1,190,265 1,737,745 .. 547,480 surplus sterling in London Exchange on remittances of public moneys to 268,894 59,443 209,451 or from countries overseas Miscellaneous .. .. •• •• 67,596 65,732 .1,864 Total —Other Services .. • • 3,638,034 3,330,317 856,803 549,086 Total—Permanent Appropriations .. 13,441,762 13,750,154 1,100,122 1,408,514

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, 1935, compared with the Financial Year ended 31st March, 1934—continued.

VI

Year ended Year ended 31st March, 31st March, Increase. Decrease. 1935. 1934. | n L J L Annual Appropriations:— £ £ £ £ Vote, — Legislative.. .. .. .. .. 88,273 74,107 14,166 Prime Minister's Department .. .. 22,596 23,991 .. 1,395 Finance — Treasury .. .. .. .. .. 37,722 31,080 6,642 Customs .. .. .. .. .. 87,627 83,511 4,116 Land and Income Tax .. .. .. 64,604 59,367 5,237 Stamp Duties .. .. .. .. 81,902 77,400 4,502 . ' Audit .. .. .. ... ..I 26,738 22,218 4,520 Total —Finance .. .. .. 298,593 273,576 25,017 General Administration— Public Service Commissioner's Office .. .. 4,377 4,349 28 Internal Affairs .. .. 367,802 320,414 47,388 External Affairs .. .. .. .. 95,353 81,160 14,193 Printing and Stationery .. .. .. 155,015 137,901 17,114 Marine .. .. .. .. .. 109,182 103,488 5,694 '! Labour .. .. .. .. .. 39,961 35,484 4,477 Native .. .. .. .. .. 61,584 65,163 .. 3,579 Valuation .. .. .. .. .. 38,953 36,608 ! 2,345 Electoral .. .. .. .. .. 5,148 5,642 .. 494 Total—General Administration .. 877,375 790,209 91,239 4 073 Law and Order— Justice and Prisons .. .. .. .. 239,239 241,207 .. 1,968 Crown Law Office .. .. .. .. 5,625 4,723 902 Police .. .. .. .. .. 435,545 427,344 8,201 Total —Law and Order .. .. 680,409 673,274 | 9,103 1,968 Defence — Naval Defence .. .. .. .. 437,840 397,384 40,456 Defence .. .. .. .. ...J 465,232 264,724 200,508 Total—Defence .. .. .. 903,072 662,108 240,964 Maintenance of Public Works and Services .. 91,845 72,403 19,442 Development of Primary and Secondary Industries — Lands and Survey .. .. .. .. 160,215 151,658 | 8,557 Agriculture .. .. .. .. 539,247 675,464 .. 136,217 Industries and Commerce, Tourist, and Publicity 133,996 118,235 15,761 Scientific and Industrial Research .. .. 53,127 48,749 4^378 Mines .. .. .. .. .. 19,567 19,540 '27 !! Transport.. .. .. .. .. 27,469 23,096 4,373 Total — Development of Primary and 933,621 1,036,742 33,096 136,217 Secondary Industries — Social Services— Health .. .. .. .. .. 779,216 741,846 37,370 Mental Hospitals .. .. .. .. j 252,442 233,501 18,941 Education.. .. .. .. .. 2,595,661 2,526,078 69,583 Pensions .. .. .. .. .. 3,439,879 3,260,109 179,770 National Provident and Friendly Societies .. 77,538 80,285 .. 2,747 Total—Social Services.. .. .. : 7,144,736 6,841,819 305,664 2,747 Unauthorized Expenditure,—Services not provided for .. .. .. 17,314 3,644 13,670 Total—Annual Appropriations .. .. 11,057,834 10,451,873 752,361 146,400 1,852,483 1,554,914 1,554,914 Total Expenditure .. .. .. 24,499,596 24,202,027 297,569 j

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, 1935.

VII

Net Actual Net Difference. Appropriations, Expenditure, 1934-35. 1984-85. More | Less Permanent Appropriations : — £ £ j £ £ Under Special Acts of the Legislature, — Civil List .. .. .. .. .. .. 25,226 | 23,100 j .. 2,126 Debt servicesInterest .. .. .. .. .. .. 8,119,497 8,023,812 .. 95,685 Amortization of Debt— Sinking Fund .. .. .. .. .. 10,859 10,859 .. .. Repayment of Public Debt Act, 1925 .. .. 1,546,000 1,578,293 32,293 Transfers to Loans Redemption Account .. .. 9,500 7,326 .. 2,174 Securities redeemed .. .. .. .. 1,000 .. .. 1,000 Administration and Management .. .. .. 49,500 117,733 68,233 Payments on Guaranteed Loans .. .. .. 40,840 42,605 1,765 Total—Debt services .. .. .. 9,777,196 9,780,628 102,291 98,859 Other services— Education .. .. .. .. .. .. 87,207 87,207 Other Grants and Subsidies .. .. .. .. 335,500 342,949 7,449 Salaries and Honoraria .. .. .. .. 60,908 60,224 .. 684 Pensions .. .. .. .. .. .. 40,375 40,057 .. 318 Highways .. .. .. .. .. .. 1,361,500 1,586,965 225,465 Exchange .. .. .. .. .. .. 1,305,000 1,459,159 154,159 Other Special Acts .. .. .. .. .. 63,550 61,473 .. 2,077 Total—Other services .. .. .. 3,254,040 3,638,034 387,073 3,079 Total —Permanent Appropriations .. .. 13,056,462 13,441,762 489.364 104,064 Annual Appropriations : — Vote,— Legislative .. .. .. .. .. 86,013 88,273 2,260 Prime Minister's Department .. .. .. .. 23,006 22,596 .. 410 Finance — Treasury .. .. .. .. .. .. 39,437 37,722 .. 1,715 Customs .. .. 88,404 87,627 .. 777 Land and Income Tax .. . . .. . . 66,862 64,604 .. 2,258 Stamp Duties .. .. .. .. .. 80,273 81,902 1,629 Audit .. .. .. .. .. .. 27,677 26,738 .. 939 Total—Finance .. .. .. .. 302,653 298,593 1,629 5,689 General Administration — Public Service Commissioner's Office .. .. .. 4,969 4,377 .. 592 Internal Affairs .. .. . . . • • • 368,042 367,802 .. 240 External Affairs .. .. .. .. .. 95,429 95,353 .. 76 Printing and Stationery .. .. .. .. 154,654 155,015 361 Marine .. .. .. .. •• ■■ 112,296 109,182 .. 3,114 Labour .. .. .. 39,898 j 39,961 63 Native .. .. .. .. .. .. 62,665 j 61,584 .. 1,081 Valuation .. .. .. .. .. ■■ 42,888 38,953 .. 3,935 Electoral .. .. 5,452 j 5,148 .. 304 Total —General Administration .. .. 886,293 877,375 424 9,342 Law and Order — Justice and Prisons .. .. .. .. .. 250,660 239,239 .. 11,421 Crown Law Office .. .. .. .. .. 5,728 5,625 .. 103 Police .. .. .. .. .. .. 440,685 435,545 .. 5,140 Total—Law and Order .. .. .. 697,073 680,409 .. 16,664 Defence —■ Naval Defence .. .. .. .. .. 454,020 437,840 .. 16,180 Defence .. .. .. .. .. •. 532,151 465,232 .. 66,919 Total—Defence .. .. .. .. 986,171 903,072 .. 83,099 Maintenance of Public Works and Services .. .. 85,397 j 91,845 6,448

8.—6.

Table No. 9—continued. NET EXPENDITURE—continued. Comparative Statement of the Appropriated and Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1935—cntd.

VIII

j Net Actual Net j Difference. ! Appropriations, Expenditure, T 1934 -35. 1934-35. More. Less. Annual Appropriations—continued. £ £ £ £ Vote—continued. Development of Primary and Secondary Industries— Lands and Survey .. .. .. .. .. 176,393 160,215 .. 16 178 Agriculture. .. .. .. .. 523,498 539,247 15,749 Industries and Commerce, Tourist, and Publicity .. 130,004 133,996 3,992 Scientific and Industrial Research .. .. .. 53,337 ' " 210 ines - •• •• •• •• •■ 19'567 !! 5,273 -transport .. .. ...... .. j 26,072 27,469 1,397 Total —Development of Primary and Secondary! 934,144 933,621 j 21,138 21 661 Industries I ' Social Services— S ea '-I , 762,532 779,216 16,684 Mental Hospitals .. .. .. .. .. 249,788 252,442 2,654 Education .. .. .. .. : 2,649,443 2,595.661 .. 53 782 Pensions 3,438,826 3,439,879 1,053 JSlational Provident and Friendly Societies .. .. 81,056 77,538 3 518 Total—Social Services .. .. .. 7,181,645 7,144,736 j 20,391 57,300 Unauthorized Expenditure,— Services not provided for .. .. .. j ., 314 j 314 Total- -Annual Appropriations .. ..,11,182,395 11,057,834 69,604 ~194~165 | i ' 558,968 298,229 298,229 TOTAL Expenditure .. .. .. 24,238,857 24,499,596 1 260,739

8.—6.

Table No. 10. Estimated Net Expenditure of the Ordinary Revenue Account for 1935-36, compared with Actual Net Expenditure for 1934-35.

(a) For purposes of comparison £12,859 expended under Subdivision II (Cook Islands) of vote, "Native," is included in vote, " External."

ii—B. 6.

IX

Estimate I Actual Difference. — for | for 1935-36. 1934-35. Increase. Decrease. ' Permanent Appropriations, — £ £ £ £ Civil List .. .. .. .. .. 25,428 23,100 2,328 Debt services— Interest .. .. .. .. .. 7,810,010 8,023,812 .. 213,802 Sinking Fund .. .. .. .. .. 10,859 10,859 .. Repayment of Public Debt .. .. .. 1,546,280 1,578,293 .. 32,013 Administration and Management .. .. .. 35,500 117,733 .. 82,233 Payments of Guaranteed Loans, Redemptions, and 38,300 49,931 .. 11,631 <. . - . — .— Total —Debt services .. .. .. 9,440,949 9,780,628 339,679 Under Special Acts of the Legislature— Education .. .. .. .. .. 95,968 87,207 8,761 Salaries and Honoraria .. .. .. .. 63,692 60,224 3,468 Pensions .. .. .. .. .. 44,352 40,057 4,295 Highways .. .. .. .. .. 2,041,000 1,586,965 454,035 Exchange .. .. .. .. .. 1,636,000 1,459,159 176,841 Other Special Acts .. .. .. .. 403,900 404,422 .. 522 4,284,912 3,638,034 647,400 522 Total—Permanent appropriations .. 13,751,289 13,441,762 649,728 340,201 Annual Appropriations, — Legislative .. .. .. .. .. 79,878 88,273 .. 8,395 Prime Minister's Department .. .. .. 23,000 22,596 404 FinanceTreasury .. .. .. .. .. 39,216 37,722 1,494 Customs .. .. .. .. .. 91,907 87,627 4,280 Land and Income Tax .. .. .. .. 73,045 64,604 8,441 Stamp Duties .. .. .. .. .. 81,800 81,902 .. 102 Audit .. .. .. .. .. .. 29,000 26,738 2,262 314,968 298,593 16,477 102 General Administration—■ — Public Service Commissioner's Office .. .. 5,210 4,377 833 Internal Affairs .. .. .. .. .. 353,360 367,802 .. 14,442 External Affairs .. .. .. .. 144,248 (a) 108,212 36,036 Printing and Stationery .. .. .. .. 155,000 155,015 .. 15 Marine.. .. .. .. .. -. 114,625 109,182 5,443 Labour .. .. .. .. .. 42,800 39,961 2,839 Native.. .. .. .. .. .. 46,200 (a) 48,725 .. 2,525 Valuation .. .. .. .. .. 42,900 38,953 3,947 Electoral .. .. .. .. .. 77,972 5,148 72,824 982,315 877,375 121,922 16,982 Law and Order — — Justice and Prisons .. .. .. .. 244,997 239,239 5,758 Crown Law .. .. .. .. .. 5,918 5,625 293 Police .. .. .. .. .. .. 445,500 435,545 9,955 696,415 680,409 16,006 Defence - .... ,.... Naval Defence .. .. .. .. .. 450,000 437,840 12,160 Defence ... .. .. .. .. 505,000 465,232 39,768 955,000 903,072 51,928 Maintenance of Public Works and Services .. .. 138,500 91,845 46,655 Development of Primary and Secondary Industries — Lands and Survey .. .. .. .. 162,000 160,215 1,785 Agriculture .. .. .. .. .. 562,557 539,247 23,310 Industries and Commerce, Tourist, and Publicity .. 150,000 133,996 16,004 Scientific and Industrial Research .. .. .. 53,400 53,127 273 Mines .. .. .. .. .. .. 20,000 19,567 433 Transport .. .. .. .. .. 26,500 27,469 .. 969 974,457 933,621 41,805 969 Social Services—■ Health.. .. .. .. .. .. 780,000 779,216 784 Mental Hospitals .. .. .. .. 250,000 252,442 .. 2,442 Education .. .. .. .. .. 2,620,000 2,595,661 24,339 Pensions .. .. .. .. .. 3,540,000 3,439,879 100,121 National Provident and Friendly Societies .. .. 105,000 77,538 27,462 7,295,000 7,144,736 152,706 2,442 Services not provided for .. .. .. .. .. 17,314 .. 17,314 Total —Annual appropriations .. .. 11,459,533 11,057,834 447,903 46,204 1,097,631 386,405 386,405 Totals .. .. .. .. 25,210,822 24,499,596 711,226

8.—6.

Table No. 11. PUBLIC WORKS FUND. Statement showing the Net Expenditure under Appropriations for the Year ended 31st March, 1935, compared with the Year ended 31st March, 1934.

X

Vote Year ended Year ended , ~ Slat March, 1935. Slat March, 1934. Increase. Decrease. £ £ £ £ Public Works, Departmental .. .. 76,486 98,703 .. 22 217 Railway-construction .. .. Or. 29,373 Or. 13,894 .. 15^479 Railways Improvement and Additions to 154,973 146,005 8,968 !. Open Lines Publio Buildings— General .. .. .. .. 30,801 642 30,159 Courthouses ...... 533 72 461 Education Buildings .. ., 51,506 52,239 .. 733 Prison Buildings and Works .. 1,605 1,018 587 Police-stations ... .. .. 2,754 74 2,680 '' Postal and Telegraph .. .. 100,484 21,078 79'406 !! Mental Hospital Buildings .. .. 98,630 73,021 25,609 Health and Hospital Institutions ., 656 1,248 .. 592 Lighthouses .. .. .. 4,020 1,276 2^744 Harbour-works .. .. .. 2,581 11,988 .. 9,407 Development of Tourist Resorts .. 12,880 13,510 .. 630 Roads, &c. .. .. .. .. 371,573 359,671 11,902 Telegraph Extension .. .. .. 135,933 144,160 .. 8,227 Lands, Miscellaneous .. .. 82,092 71,825 10,267 Irrigation, Water-supply, and Drainage.. 91,241 66,838 24^403 Swamp Land Drainage .. .. 15,019 13,959 l[060 Plant, Material, and Services .. .. Cr. 10,513 1,421 .. 11.934 Settlement of Unemployed Workers .. 222,309 172,109 50,200 Native Land Settlement .. .. 125,668 179,485 . 53^817 Totals, annual appropriations 1,541,858 Unauthorized— Services not provided for .. .. 122 .. 122 Totals .. .. .. 1,541,980 1,416,448 248,568 123,036 123,036 125,532

8.—6

Table No. 12. Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to the 31st March, 1935.

XI

WAYS AND MEANS. Loans £ s- d- £ a " d ' Immigration and Public Works Loan, 1870 .. .. •• 4,000,000 0 0 Immigration and Public Worka 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,°°0,(»0 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, 1864 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 II New Zealand Loan Act, 1888 .. •• •• •• a a 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 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'aaa'aaa a a 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' 522' ??? .at? Finance Act, 1921, Section 10 .. •• •• •• .'„„„'111 ,2 1 Finance Act, 1923, Section 2 .. •• - • o'?or'onn a i? Finance Act, 1924, Section 2 .. •• •• 2,120,009 6 11 Finance Act, 1925, Section 2 •• ,2 2 Finance Aot, 1926, Section 2 .. .. •• •• 6,220,134 1.0 7 Finance Act, 1927 (No. 2), Section 2 .. .. •• • • 4,319,594 10 3 Finance Act, 1928, Section 2 .. •• •• 3,185,13-. 14 8 Finance Act, 1929, Section 2.. .. -• • •• 4,097,119 4 o Finance Act, 1930 (No. 2), Section 2 .. .. .. •• 4,386,910 0 0 Finance Act, 1931 (No. 4), Section 2 .. .. •• 1.358,380 0 0 Stock issued for Expenses of Conversion, 1930-31 .. •• db0,835 1» 0 Post and Telegraph Act, 1908 .. •• •• •• a a 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 .. •• ? X Appropriation Act, 1912 .. .. •• ® ® Irrigation and Water-supply Act, 1912 .. •• • 100,000 0 0 Balances transferred from Separate Accounts, 1931-32 — £ s. d. Waihou and Ohinemuri Rivers Improvement 5,518 10 10 Account Education Loans Account .. .. .. 12,867 3 9 Railways Improvement Authorization Act 1914 420,783 17 4 Account Native Land Settlement Account .. .. 3,445 4 10 £ s. d. Hauraki Plains Settlement Account 44 10 4 Rangitaiki Land Drainage Account 10,797 5 0 Swamp Land Drainage Account .. 9,008 19 1 19,850 14 5 Utilized for redemptions .. 19,850 14 5 11— 442,614 16 9 108,939,453 0 8 Receipts in 4.id i — Amount transferred from Consolid.ated 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 4,963 7 4; Stamp Duties to 31st December, 1876 .. .. 264,657 16 4 Transfer from Confiscated Lands Liabilities Account .. .. 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 Carried forward .. .. •• 14,922,474 9 4 | 108,939,453 0 8

8.—6.

Table No. 12 —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, 1935—continued.

Table No. 13. Statement showing the Amount charged to "Unauthorized" in each Financial Year from 1st April, 1924, to 31st March, 1935.

XII

WAYS AND MEAN'S—continued. £ 8. d. £ ad Receipts in Aid—continued. BrOU S ht forward 14,922,474 9 4 108,939,453 0 8 Special Receipts under Section 9 of the Railways Construction Act, 60,616 3 0 1878 Special Receipts under the Ellesmere Lake Lands Acts, 1888 and 69,446 3 2 1893 Special Receipts under the Railways Authorization and Manage- 2 2S7 1 9 ment Act, 1891 s ' Special Receipts under the North Island Main Trunk Railway Loan 114,550 19 6 Application Act, 1886 Sinking Funds released .. .. .. trnfi siq iq s Finance Act, 1932, Section 7 (4) — " ™ * Sale of land under Hauraki Plains Act, 1926 .. .. .. 4,148 4 4 Settlement of Unemployed Workers .. .. .. 26'558 0 3 Receipts under Section 12 of Native Land Amendment Act, 1932.. 5,'027 2 0 15,711,898 2 7 £124,651,351 3 3 NET EXPENDITURE. Expenditure on— Immigration .. .. .. .. .. 3,313,421 4 10 Public Works, Departmental .. .. .. ,, ., 3 Q2o 723 2 10 Railways, including Surveys of New Lines and Payment to Midland 12 0 Railway Bondholders ®' oa( J a •• •• •• •• •• 22,542,180 3 10 Land-purchases .. .. .. .. .. .. 2,054,023 13 8 Settlement of Unemployed Workers .. .. .. .. 513 139 jg 4 Development of Mining .. ... .. .. .. 881'oi5 0 11 Telegraph Extension | !! 11,560,'537 15 6 I Public Buildmgs .. .. .. .. .. 11,722,277 15 10 ! Lighthouses, Harbour-works, and Harbour-defences .. .. 1 319 126 17 4 Contingent Defence l| 5 3 Kates on Native Lands .. .. .. .. . gg g7j jg ]q Thermal Springs J4,'599 13 2 -Development of Tourist Resorts .. .. .. ,. 703 473 7 ]0 Lands Improvement .. .. .. .. .. _ 891 133 3 5 Swamp Land Drainage .. .. .. .. 43'257 18 4 Plant, Material, and Services .. .. .. .. , _ 118 *966 9 10 Charges and Expenses of raising Loans .. .. .. .. 3,828'307 3 7 Coal-mines •• .. .. .. .. .. ' 10,'835 8 0 Interest and Sinking Eund .. .. .. ., .. qqq q q Irrigation and Water-supply .. .. .. .. 1,217 '765 5 5 Motor Transport Service .. .. .. .. ., ' 33' 635 5 3 Transfer to Main Highways Account, Construction Fund .. .. 1,226,'000 0 0 Native Land Settlement .. .. .. .. .. 295' 561 2 1 1 123,458,019 19 1 Balance on 31st March, 1935, — Cash in the Public Account .. .. .. ., .. 8J8 037 0 1 Investments.. .. .. .. .. .. 375'294 4 1 1,193,331 4 2 £124,651,351 3 3

Consolidated Fund.—Revenue Account. Financial Year. — — Other Public Works m ~ . , Accounts. Fund. i J-otal. Services not pro- „ X7 , m . , vided for Excess of Votes. Total. £ s - £ s. d. £ s. d. £ s. d. £ s. d £ s d 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 30,81119 2 23,665 13 8 111000 4 2 1926-1927 .. 27,913 18 1 45,418 12 4 73,332 10 5 1,581 10 7 2,801 18 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 •• 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 1 134,488 7 1 3,450 8 7 1,586 13 11 139'525 9 7 1931-1932 .. 18,698 6 0 19,182 17 10 37,881 3 10 21,577 6 4 1,376 10 3 6o'835 0 5 _1 no? " 18 4 16,005 18 3 61,730 16 7 57,667 1 10 40,160 8 3 159,558 6 8 1933-1934 .. 3,643 17 10 8,326 0 3 11,969 18 1 8,288 2 5 1 12 5 20 259 12 11 1934-1935 .. 17,313 13 4 69,966 7 1 87,280 0 5 47,973 11 7 21,384 12 0 156]638 4 0

8.—6.

Table No. 14. Statement showing the available Financial Resources of the various Accounts on the 31st March, 1935, as compared with the 31st March, 1934.

Table No. 15. PENSIONS. Statement of Amounts paid on Account of Pensions for the Financial Years ended 31st March from 1931 to 1935.

XIII

1935. 1034 - Account. Balance Liabilities Authority lor Balance Liabilities j Auttfority for 31st.March, 31st March, ™ t g A° r ™ 31st March, 31st March, j ™ t g AprU, 1935. 1935. 1935; 1934, | 1934. .. •• 236,879 500,000 16,027,720 221,773 Pl Geneml% k urposet" .. .. 1,193,331 234,656 6,255,634 825,960 184,202 3,761,634 Electric Supply 332,458 84,035 1,347,590 416,260 51,274 488,990 Electric Supply Sinking Fund .. 1,669 .. .. 107,871 Bank of New Zealand Shares .. 1,859,375 .. .. 1,859,375 Discharged Soldiers Settlement .. 594,148 35 .. 427,969 109 0 „ō' n nn Land for Settlements .. .. 269,981 2,803 6,278,000 72,570 3,963 6,278,000 Loans Redemption .. .. •• 476,400 .. .. 414,500 M Rev^n S ue W Fuiid 33,568 104,062 .. 181,907 71,672 < Construction Fund ., .. 182,136 30,210 1,055,900 68,507 28,637 487,400 Public Debt Repayment .. •• 3,469 .. .. 47,963 Reserve Fund .. .. • • 339,228 .. .. 406, 69-j .. • • Samoan Loan Suspense .. .. •• •• 4,800 .. 4,800 Silver and Bronze Coinage Account .. 558,426 .. •' ™',vT i r m, K r'nnn State Coal-mines .. .. .. 71,073 12,985 55,000 66,101 15,094 55,000 State Coal-mines Sinking Fund .. 8,591 .. .. 8,422 .. ; ■ State Forest" .. •• 41,852 5,396 546,225 25,792 7,025 606,225 Unemplovment Fund .. .. 1,332,946 250,000 .. 621,518 220,000 1,840,174 218,877 1,731,561 208,392 State Advances Loan .. •• 171 i 10,198,730 171 .. 10,263,115 Additional Unexhausted Authorities for raising Loans. \ Government Accident Insurance Act, 1908 .. j •• 23,000 .. .. 23,010 State Fire Insurance Act, 1908 .. .. j •• 98,000 .. .. 98,0 Totals .. .. .. 9,343,831 j 1,179,938 26,362,879 23,333,573 j 1,012,448 22,066,164

Year ended 31st March, i 1931. 1932. 1933. 1934. I 1935. I ' J £ £ £ £ £ War .. .. •• 1,245,499 1,261,778 1,217,586 1,246,441 1,264,110 Old-age .. .. .. 1,158,788 1,277,107 1,271,157 1,350,982 1,519,889 Widows' .. .. 325,998 340,162 311,317 302,020 296,565 Miners' .. .. .. 58,441 69,785 62,563 56,810 58,740 Maori War .. .. •• 9,101 7,582 5,831 4,522 3,607 Epidemic .. .. 6,322 5,580 4,197 3,290 1,983 Civil Service Act, 1908 .. 9,251 7,861 6,453 5,917 5,211 Defence Act, 1909 .. 2,620 2,483 2,176 2,163 2,084 Judicature Act, 1908 - • 2,285 1,833 1,833 2,272 2,682 Police .. .. •• 1,741 1,054 1,166 1,384 1,449 Blind .. .. 15,796 16,710 18,065 19,306 21,227 Family Allowance .. .. 63,608 90,100 122,810 146,766 152,818 Sundrv .. .. • • 6,588 6,501 6,627 8,022 7,989 Totals .. .. 2,906,038 i 3,088,536 3,031,781 3,149,895 3,338,354

8.—6.

Table No. 16. EDUCATION EXPENDITURE. Total Expenditure on Education out of Public Funds, including University, Primary, Secondary, and Higher Education, Technical and Special Schools, and Child Welfare, 1913—14 to 1934-35.

Additional amounts are available from revenue from reserves vested in postprimary schools and University colleges as follows: — £ Post-primary schools .. .. .. 30,469 University colleges .. .. .. .. 18,970 £49,439 The following amounts were paid out of the Government Fire Insurance Fund for rebuilding school buildings destroyed by fire f 1916-1 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 1931-32 7,768 1932-33 .. .. .. .. ..6,424 1933-34 .. .. .. 3,846 1934-35 .. .. .. .. .. 8,541

XIV

Loan-money: Erection Consolidated Fund. i of School Buildings : j and Residences. Per Head Vote, " Subsidies ar " National Education „ to r , ■,.. Total. Mean Special Endow- (excluding B ® velrae Teachers' bI , lc Education PopulaActs. ment Superannua- from g Works Loans tion . Revenue. tion Reserves. an J ation Fund. Account. Subsidies). li'iind. £ £ £ £ £ £ £ £ £ 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 .. 1,811,563 111 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 2,752,271 118,973*68,000 .. 462,212 3,617,046 2 13 2 1925-26 .. 111,389 87,512 2,854,719 119,978* 70,952 .. 564,946 3,809,496 2 14 9 1926-27 .. 115,499 88,545 2,954,597 119,073* 71,452 550,954 3,900,120 2 14 11 1927-28 .. 127,289 90,518 2,974,615 123,247* 71,497 .. 369,134 3,756,300 2 12 1 1928-29 .. 137,233 94,934 3,067,296 127,444* 71,749 .. 375,423 3,874,079 2 13 1 1929-30 .. 140,561 87,420 3,193,828 129,531*146,781 .. 428,764 4,126,885 2 15 10 1930-31 .. 125,331 94,506 3,230,200 i 106,405* 46,907 .. 491,974 4,095,323 2 14 8 1931-32 .. 82,163 79,375 2,851,922 88,207*46,935 259,148 .. 3,407,750 2 4 11 1932-33 .. .. 51,938 2,574,929 85,716* 47,043 52,623 .. 2,812,249 1 16 9 1933-34 .. .. 53,221 2,480,055 107,129 46,784 51,435 .. 2,738 624 1 15 6 1934-35 .. .. 87,207 2,550,1001128,738 47,712 51,289 .. 2,865,046 116 11 J I I 1 * Not revenue after deducting expenses and cost of collection. f Includes £2,151 charged to " Unauthorized."

8.—6.

Table No, 17. State Balance-sheet as at 31st Makch, 1934. Liabilities. I Capital £ s. d. I Land and buildings, including Crown, settlement, and £ s. d. Public debt* .. .. •• 306,841,996 311 endowment land, departmental land and buildings 41,968,995 15 5 Rural Advances bonds . 4,213,050 0 0 State forests, nurseries, and plantations .. .. 38,037,640 7 1 Public Debt Redemption Fund .. 19,225,644 10 6 Railways, including permanent-way and works, " Creditors rolling-stock, and unopened lines .. .. 59,029,270 lb 8 Sundry .. .. •• 2,185,547 6 9 Telegraphs, telephones, and wireless systems .. 10,964,418 19 11 Interest on debentures and stock Electrical schemes .. .. .. •• 12,578,497 14 6 due and mroaid* .. .. 52,416 17 3 Drainage and irrigation schemes .. .. 4,042,5d7 14 b Interest accrued but not due* .. 2,331,491 0 0 Collieries, sawmills, quarries, &c. _ _ .. .. 396,649 0 3 Wages and other payments accrued 7,085 18 4 Armament and military stores, aviation equipment 2,871,437 19 2 Payments in advance, &c 408,358 3 11 Oyster-beds, fish-hatcheries, equipment &c. .. 123,647 10 7 Tfpaervpq Wharves, bridges, harbour-works, lighthouses, &c... 828,864 3 4 General .. •• •• 3,891,384 9 3 Plant, material, and furniture .. .. 3,229,994 5 8 Sinking fund and reserves for loan- Libraries, books, museum exhibits, stationery, redemption .. .. 3,296,319 8 2 stamps,&c... .. .. •• •• 376,794 6 3 Depreciation .. 7,996,371 5 1 Live and dead stock, farm crops, &o. .. .. 234,511 8 0 Fire, accident, and marine insurance, Government steamers, launches, motor-cars, &c. .. 566,656 6 7 bad debts, &c. .. •• 893,244 10 3 Advances on loan or mortgage .. .. .. 57,47b,457 8 b Amount held on deposit .. .. 1,027,210 17 1 Debtors Suspense .. 258,935 14 11 Sundry .. .. .. •• 2,275,020 13 8 Post Office investment and war-loan Unpaid purchase-price of land and buildings and certificates .. •• 1,560,673 210 interest thereon .. .. .. •• 2,264,759 2 4 Miscellaneous liabilities .. .. 49,217 19 6 Postponed rents, &c A " 370,816 14 10 Excess of assets over liabilities .. 48,638,674 2 I Interest and rent, due and unpaid, and due and 0 . accrued*.. .. .. .. . • d,bi)d,lol iz 4 Special investments — Nauru phosphate rights .. .. .. 565,040 0 0 Bank of New Zealand shares .. .. .. 2,109,375 0 0 Public Trust Office (Public Debt Redemption Fund, &c.) .. .. .. •• 8,137,529 5 2 Special assets of various accounts — Native land schemes, &c. .. .. •• 921,356 3 1 Unallocated loan charges .. .. .. 750,660 5 8 Earthquake expenditure .. .. 22,725 7 11 Payments in advance .. .. .. •• 315,007 13 1 Properties acquired by Crown and properties in course of realization .. .. . • 990,110 7 2 Investments — Reserve Fund .. .. •• 327,702 3 4 Sinking funds .. .. •• •• 372,652 16 7 Miscellaneous, including investment of Treasury accounts .. •• •• 24,788,639 14 0 National Development Account — Expenditure on— £ s. d. Main highways, roads, &c. 27,844,621 17 7 Development of mining .. 867,467 15 11 Education .. .. 8,161,201 15 6 Immigration .. .. 3,319,398 15 7 Harbour-works .. .. 1,042,508 9 6 Land-development .. 696,454 2 8 Cost of raising loans .. 358,092 3 0 42,289,744 19 9 Other loan expenditure— War expenditure .. .. 66,528,021 0 2 Naval defence .. ■ • 1,389,656 1 5 Local bodies .. .. 3,037,229 19 2 Maori-land settlement .. 247,050 0 0 Miscellaneous .. .. 6,163,496 18 8 77,365,453 19 5 Cash — New Zealand Government Indemnity Exchange Account 1,000,000 0 0 Public Account .. .. 778,179 3 6 Receiver-General .. .. 2,818 811 State Advances Office Account 62,568 1 11 Post Office or Post Office Savings-bank .. .. 464,151 7 8 Deposit accounts .. .. 118,718 18 7 In hand and in transit .. 83,742 5 9 Deposit with Bank of Internationa] Settlements .. 36,023 0 0 2,546,201 6 4 Miscellaneous assets .. .. ■ ■ 45,297 8 9 £402,877,621 9 10 £402,877,621 9 10

* See Note (2) on following page.

XV

8.—6.

Table No- 17- - continued. State Balance-sheet as at 31st March, 1934—continued. w w^ B 'T ( ij T ° i OT * he whole public debt, loan expenditure on war and other purposes not represented by tangible assets expenditure under the heading Other Loan Expenditure." Interest is received in respect of portion of the local bodies' loan (2) Of the amount shown above as public debt, £451,163 is held by investment accounts within the Public Account Interest accrued and interest due and unpaid in respect of this sum is also shown in both sides of the Balance-sheet. (3) Contingent liabilities :— Subsidies (not including accumulated interest) short paid to— £ s. d. Teachers' Superannuation Fund .. .. . . .. 1 340 084 0 0 Public Service Superannuation Fund .. .. .. .. 2 104 067 0 0 t, . , 3,444,151 0 0 Jixcess of subsidies recommended by Actuary over subsidies paid : Railway Superannuation Fund .. .. .. ~ 1,190,000 0 0 T , , . . , , 4,634,151 0 0 IjOcal authorities loans guaranteed by the Govern- £ • s. d. men t ■■ .. .. .. .. 2,978,075 o' 0 Less Accumulated sinking funds .. 880,107 13 5 — 2,097,967 6 7 £6,732,118 6 7 The analysis of the pubiie debt on 31st March, 1934, was as follows — ~~£ Ordinary debt .. .. 171,130,858 a J '• •' '• ■■ •• 66,724,765 fetate Advances debt .. .. .. . # gg 235 841 Discharged soldiers debt .. .. .. ~ ~ 6'843'551 Treasury bills issued in anticipation of revenue outstanding, 31st March, 1933 3'452,109 Treasury bills issued under Banks Indemnity (Exchange) Act, 1932-33, outstanding, 31st March, 1934 .. . . .. .. .. 19 404 872 v. • n , , „ . n 302,791,996 Advances obtained by hypothecation of Discharged Soldiers Settlement securities .. 4.050,000 £306,841,996

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.

XVI

Date Instalments paid. I Interest. j Principal. ! Ba,an ° e ! ? 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 1st June, 1931 604,930 221,035 ! 24,100^199 1st December, 1931f .. .. .. .. 24 100 199 * 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. ' . t Following on the " Hoover " moratorium, the Imperial Government agreed to postpone the instalments of P™°\P al a 5, d interest due in December, 1931, and June, 1932, only one half-yearly payment was therefore made in 1931-32. Further postponements from 1st July, 1932, were agreed to by the Imperial Government. No payments were therefore made from 1932-33 to 1934-35. l y

8.—6.

Table No. 19. PUBLIC DEBT. Statement showing Maturity Dates and Domicile of Debt outstanding as at 31st March, 1935.

iii—B. 6.

XVII

! I Due in Year of Maturity I , T (Year ended 31st March). New Zealand. Total. London. Australia. j Public. Departments. £ £ £ £ £ Overdue .. .. .. .. 1,200 2,420 .. 3,620 1925-45 .. .. .. 2,090,909 .. .. .. 2,090,909* 1933-43j •• •• •• •• 10,900 .. 10,900 1935-36 .. .. .. 120,800 186,700 22,470 .. 329,970 1935-45f .. .. .. 10,135,800 .. .. .. 10,135,800 1936-37 .. .. .. 7,500 667,750 31,230 .. 706,480 1936-51f .. .. .. 5,869,989 .. ... .. 5,869,989 1937-38 .. .. .. .. 92,600 752,000 .. 844,600 1937-40} .. .. .. 101,125 .. 12,334,915 .. 12,436,040 1938-39' .. .. .. 4,000 3,000 265,130 .. 272,130 1938-41$ .. .. .. .. .. 3,842,885 .. : 3,842,885 1939-40' .. .. .. 17,173,191 .. 15,141 .. 17,188,332 1940-431 .. .. .. .. .. 13,745,930 .. 13,745,930 1940-41 .. .. .. .. 500,015 .. 500,015 1941-42 .. .. .. .. 17,300 39,600 .. 56,900 1943-44 .. .. .. 7,339,656 .. .. .. 7,339,656 1943-46} .. .. .. .. .. 10,304,240 .. 10,304,240 1943-63} .. .. .. 10,505,989 .. 378,639 .. 10,884,628 1944-45 .. .. .. 7,780,408 .. .. .. 7,780,408 1945-46 .. .. .. 22,543,590 .. 2,500 .. 22,546,090 1946-49J .. .. .. .. .. 9,476,595 .. 9,476,595 1947-48 .. .. .. 11,221,609 .. .. .. 11,221,609 1948-49 .. .. .. .. .. •• 10,500 10,500 1948-58f .. .. .. 19,225,465 .. .. ■■ 19,225,465 1949-50 .. .. .. 7,500,000 .. .. .. 7,500,000 1949-52} .. .. 13,723,145 .. 13,723,145 1949-54} .. •• • • 5,000,000 .. .. .. 5,000,000 1950-51 .. .. .. 1,250,000 1,215,000 250,000 .. 2,715,000 1952-55} .. .. .. .. .. 10,656,740 .. 10,656,740 1955-56 .. .. .. .. .. •• 354,456 354,456 1955-60} .. •• ■■ 3,989,100 .. .. .. 3,989,100 1956-71} .. .. .. 5,000,000 .. .. .. 5,000,000 1956-57 .. .. .. 12,900 .. .. 4,033,490 4,046,390 1957-58 .. .. .. 24,100,199§ .. .. 13,421,545 37,521,744 1958-59 . .. •• 15,638,066 15,638,066 1959-60 .. .. •• 7,612,885 7,612,885 2,183,550 76,354,495 41,070,942 280,581,217 I I * Advances by Imperial Government for State Advances purposes. } Government has option to redeem on or after the earlier date on giving notice in the London Gazette. t Government has option to redeem on or after the earlier date on giving three months notice in New Zealand Gazette. § Imperial Government advances funded in terms of section 8, Finance Act, 1922.

8.—6.

Table No. 20. EXTERNAL TRADE. Statement showing the Recorded, Sterling, and New Zealand Currency Values of Imports and Exports of the Dominion in each Financial Year ended 31st March, from 1930 to 1935 (excluding Specie).

Table No. 21. IMPROVEMENT IN ECONOMIC CONDITIONS. Table of Miscellaneous Statistical Information showing the most Recent Figures compared with the Lowest Point reached in the Depression.

XVIII

Exports. Imports. Excess of Exports. Year ended Full 'NewZealand On New „ Q . ,. New Zealand Sterling 0 , \ n r* i j n On Sterling o™»,. ( Equivalent. 1 "gg,, 2%iSZ »*• £ (000) £ (000) £ (000) £ (000) , £ (000) £ (000) 1930 .. .. .. 48,412 47,933 49,085 49,430 ! -1,018* -1,152* 1931 .. .. .. 39,527 37,198 37,656 39,833 i —306* —458* 1932 .. .. .. 33,943 30,857 22,510 24,761 : 9,182 8,347 1933 .. .. .. 37,510 32,677 22,049 25,059 i 12,451 10,628 1934 .. .. .. 46,043 36,834 , 20,908 26,136 19,907 15,926 1935 ... .. .. 44,918 . 35,985 26,082 32,568 i 12,350 j 9,903 . I I * J _J * Excess of imports.

Lowest Figure. Latest Figure Available. Year. Year. I Value of total production .. 1931-32 £83-6 millions 1933-34 £98-8 millions. Value of farm production .. 1931-32 £49-2 millions 1933-34 £63-3 millions. Value of exports .. .. Year ended £34-7 millions Year ended £43-0 millions 30/6/32 30/6/35 Value of imports .. .. Ditto £24-7 millions Ditto £34-3 millions. Bank deposits (excluding Go- 1932 £51-2 millions 1934 £62-3 millions, vernment) Bank debits .. .. 1932 £541-7 millions 1934 £676-2 millions. Building permits .. .. 1932-33 £2-5 millions 1934-35 £3-6 millions. Wages and salaries paid .. 1933 £58-9 millions 1935 £65-1 millions.* Mortgages registered .. 1933-34 £8-0 millions 1934-35 £12-0 millions. Mortgages discharged .. 1932-33 £8-1 millions 1934-35 £13-8 millions. Totalizator investments .. 1932-33 £3-7 millions 1934-35 £4-0 millions. Land transfers .. .. 1933-34 £9-6 pillions 1934-35 £12-2 millions. Gross farming income .. 1931-32 £39-3 millions 1933-34 £50-8 millions. Net note circulation .. .. 1931 £5-7 millions 1934 £6-3 millions. Railway goods traffic . . 1932-33 363 million ton 1934-35 420 million ton miles miles. Shipping—Total manifest ton- 1933 5-7 millions 1934 6-2 millions, nage Motor-vehicles registered .. 1932-33 193,800 1934-35 208,200 Unemployed on register .. Weekended 56,296 Weekended 48^205 17/6/33 22/6/35 Index numbers of— Share prices—Base: 1926= : 1932 703 1934 957 1000 Export prices—Base: 1909-13 1932-33 861 1934-35 1046 = 1000 * Provisional.

8.—6.

Copy of Prospectus of 1934 London Loan. NEW ZEALAND GOVERNMENT £3 10s. PER CENT. INSCRIBED STOCK, 1955-1960. (Interest payable Half-yearly at the Bank of England on the 15th April and the 15th October.) Issue of £3,989,100. Authorized to he raised under the New Zealand Loans Act, 1932. A First Payment of £1 15s. per £100 Stock, being a full half-year s interest, will be made on the 15th April, 1935. Price of Issue £100 per Cent. Payable as follows:— f On Application . . . • • • ■ • • • 5 per cent. On Monday, the 15th October, 1934 .. .. 95 „ £100 The Government of New Zealand undertake to observe forthwith the conditions prescribed under the Colonial Stock Act, 1900, as notified in the London Gazette of the 14th December, 1900, in order that Trustees may invest in this Stock under the powers of the Trustee Act, 1925, unless expressly forbidden in the instrument creating the Trust. The Governor and Company of the Bank of England give notice that, on belialt oi the Agents appointed for raising and managing Loans under the above Act, they are authorized to receive applications for £3,989,100 New Zealand Government £3 10s. per cent. Inscribed Stock, 1955-1960. If not previously redeemed, the Stock will be repaid at par at the Bank of Lnglana on the 15th October, 1960; but the New Zealand Government reserve to themselves the right to redeem the Stock, in whole or in part, by drawings or otherwise, at par on, or at any time after, the 15th October, 1955, on three calendar months' notice having been given in'the London Gazette and The Times of such intended redemption. In the latter event the Stock will cease to bear interest on the date fixed for such redemption. New Zealand Government Stock issued and payable in London and the interest thereon so payable, the property of persons not domiciled in New Zealand, are not, and will not be, subject to any taxes, duties, or levies by the Dominion. By Act 40 and 41 Vict. Cli. 59, the revenues of the Dominion of New Zealand alone will be liable in respect of this Stock and the dividends thereon and the Consolidated Fund of the United Kingdom and the Commissioners of His Majesty's Treasury will not be directly or indirectly liable or responsible for the payment of the Stock or of the dividends thereon, or for any matter relating thereto. The proceeds of the Issue will be used for the repayment on the 15th October, 1934, of the outstanding balance of the New Zealand Government £4 per cent. Inscribed Stock, 1933-1943, of which due notice is being given in the London Gazette and The Times. The present Issue does not, therefore, involve any increase in the New Zealand Public Debt. The transactions of the New Zealand Ordinary Revenue Account, for the year ended 31st March, 1934, including £1,413,000 provided from revenue for the redemption of debt, resulted in a deficit of £709,000. In this connection it was necessary to transfer to revenue during the year, the sum of £2,000,000 which was provided from surplus revenue accumulated since 1914. The Exports from New Zealand during the financial year ended the 31st March, 1934, amounted to £46,043,000 and the Imports to £26,136,000—a favourable visible balance of trade of £19,907,000. Returns at present to hand in respect of the current financial year indicate that a favourable balance is being maintained. The gross Public Debt of the Dominion on the 31st March, 1934, was £302,792,000 involving a gross increase for the year of £25,317,000. Against this gross increase, however, must be offset redemptions totalling £5,148,000 leaving a net increase of £20,169,000. This increase consists of £1,277,000 long-term debt, the balance of £18,892,000 being Treasury Bills issued principally under the provisions of the Banks Indemnity (Exchange) Act, 1932-1933. These " exchange " Bills will be redeemed in August, 1934, by utilizing London funds through the newly-constituted Reserve Bank of New Zealand. The new loan-moneys received during the year were applied principally to Public Works (Railways, Electric Power, Telephone and Telegraph Extensions and other productive works). Against the Public Debt of New Zealand must be set tangible assets valued on a conservative basis at approximately £305,000,000. Of these assets £265,000,000 are directly interest bearing and productive—e.g., Railways, Telephones and Telegraphs, Hydro-electric Development, Advances to Settlers and Workers, Crown Lands, Sinking Funds, &c.—and the remaining £40,000,000 are indirectly productive, such as Roads, Public Buildings, &c. Redemptions of Debt amounting to £5,148,000 were carried out during the year ended 31st March, 1934, of which £1,183,000 represents long-term debt. The redemptions include a portion of the War Debt, which lias been reduced from £81,840,000 in 1921 to £66,725,000 on 31st March, 1934. This shows a total reduction in the War Debt of over £15,000,000 since 1921. Approximately £24,100,000 of the present outstanding War Debt is funded

XIX

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With the Imperml Government on a 6-per-cent. Annuity basis, which provides for its extinction W W if tw 7 en y-seven years, with a proviso that the Debt may be redeemed at any time by the New Zealand Government. All Reparation moneys received from Germany have been applied m the reduction of War Debt 7 Sll , 1116,I 116 , Repayment of the Public Debt Act passed by the New Zealand Parliament in 1925 substituted for the long-term Sinking Fund system a method whereby the Dominion's Debt reduction resources are now made available to purchase New Zealand Government securities i °P. en market fot 6ancelteion or to pay them off at maturity, thereby ensuring an nnf U nf p 1 ™ Debt annually. For this purpose there is issued annually riA ? Consolidated Fund a sum equal to J per cent, of the Debt affected, and to this s added a sum equal to interest at 3| per cent, per annum on the Debt paid off under this t-wi means a portion of the savings in interest on the Debt paid off is applied to further repayments of Debt, so that the Debt reduction resources are increasing year by ™ iVf eS nTi r at the P r ,f e Jit Debt will be liquidated over a period of about sixty years, while all future Loans will be liquidated within a similar period from the date of t eir inception. The Sinking Sunds which accrued under previous legislation have been fnn Wl IZe +if+i V • mtaCt The P° rtlon of the De bt, referred to above, which is iunded with the Imperial Government, as well as certain other Loans which have their own separate Sinking Funds, such as State Advances, have been excluded from this scheme. On the 31st March 1934, approximately 46 per cent, of the total New Zealand Public ebt was domiciled m the Dominion, as against only 17 per cent, in 1914. „ , 7T e ® ooks °±' tbe Sto( ik will be kept at the Bank of England, where all assignments + + rS -R -ff e J Th ? Stock Wlll be convertible, in due course, into Stock St? 8 ' 0 ? e of £100, £500, and £1,000, with coupons attached and such Stock Certificates will be exchangeable for Stock, on payment of the usual fees Transfers and Stock Certificates will be free of Stamp Duty tw iSn 1 ,1 511 be T Payable half-yearly at the Bank of England on the 15th April and the 15th October. Interest Warrants will be transmitted by post. tiT r IC i at T-p W i f USt b e accompanied by a deposit of £5 per cent,, will be received at the Bank of England Loans Office, 3 Bank Buildings, Princes Street, London, E.C. 2. In case of partial allotment the balance of the amount paid as deposit will be refunded by Jf V r n ] b /- the 15th october > 1934 ' of the balance due that day will render the deposit liable to forfeiture and the allotment to cancellation. Applications may be for the whole or any part of the Issue in multiples of £100 No allotment will be made of a less amount than £100 of Stock. Allotment Letters will not be posted before Tuesday, the 3.lst July, 1934. „ , pnP Certificates to Bearer will be issued on or after the Bth August, 1934, in exchange or the Allotment Letters Certificates, when fully paid, may be lodged for inscription forthwith; or they may be retained to be exchanged, free of cost, for Stock Certificates iter'than Z Wtt mII. " W PreParcd ' SUOh excl, ™ ee " M NEW ZEALAND GOVERNMENT £4 PER CENT. INSCRIBED STOCK, 1933-1943. Holders of the above Stock, which will be repaid on the 15th October, 1934, may surrender their holdings in whole or m part and receive therefor New Zealand Government £3| per cent Inscribed Stock, .1955-1960, at the rate of £100 £34 per cent. Stock for each £100 nominal £4 per cent. Stock surrendered. Holders who accept this offer will receive on the 15th October, 1934, an interest payment of £1 3s. 2d. per £100 Stock, being interest at the rate of £4 per cent, per annum from the Ist July, 1934, to the 15th October 1934 m respect, of the New Zealand Government £4 per cent. Stock surrendered ' ' W p^^ ons for the conversion of Stock Certificates to Bearer must be accompanied Ist January 1935 Certificates bearing Coupons due on, and subsequent to, the A commission of 5s per £100 Stock will be paid to Bankers or Stockbrokers on Allotments made m respect of cash or conversion applications bearing their stamp t f fnoo™ n A will n be given t0 holders of £4 P er cent - New Zealand Government thiTpr ospMtus 1943 ' who surre nder their holdings for conversion in the terms of nffi Pr ° s P ect^ s ® s and Application Forms may be obtained at the Bank of England Loans Office, 3 Bank Buildings Princes Street, London, E.C. 2, or at any of the Branches of the Bank of England; of Messrs. Mullens and Co., 13 George Street, London, EC 4- at the fp 4 (th f Bankers to the Government of New Zealand), 1 Queen Victoria Street, London E.C. 4; of Messrs. J. and A. Scnmgeour, 3 Lothbury, London, EC 2- at any Stock Exchange m the United Kingdom; or at the Office of the High Commissioner for New Zealand, 415 Strand, London, W.C. 2. In the case of Conversion Applications, forms have already been sent by post to all holders of Inscribed Stock (m the case of joint accounts to the first holder). 1934 * cat io ns will be opened and closed on Monday, the 16th July, Monly! be ° Pene<l forth " th ™ U b « » Bank of England, London, 12th July, 1934.

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8.—6.

COPY OF PROSPECTUS OF THE MORTGAGE CORPORATION OF NEW ZEALAND. (To be established arid become a body corporate pursuant to the Mortgage Corporation of New Zealand Act, 1934-35.) Capital, £1,000,000. In 1,000,000 shares of £1 each carrying a cumulative Dividend of A\ per cent, on paid-up capital, in terms of section 7 of the Mortgage Corporation of New Zealand Act, 1934—35. Of the 1,000,000 shares to be issued, 500,000 are to be allotted at par to the Minister of Finance and held by him on behalf of the Crown. Offer of 500,000 Shares for Public Subscription. The Minister of Finance, pursuant to section 6 of the Mortgage Corporation _of New Zealand Act, 1934-35, hereby offers for public subscription at par the remaining 500,000 shares, subject to the provisions of the Act and the conditions of this Prospectus. Application for and Allotment of Shares. Application for shares should be made upon the form accompanying this Prospectus and forwarded to the Secretary to the Treasury, Wellington, together with accompanying remittance (plus exchange) or evidence of lodgment of the required amount to the Public Account at the Reserve Bank of New Zealand, or at any branch of the Bank of New Zealand, or to the Post Office, as hereinafter provided. Payments in respect of shares applied for are to be made as follows: — 2s. 6d. per share on application. 2s. 6d. per share on allotment. ss. per share on Ist April, 1936. 10s. per share on Ist June, 1936. Applications will not be accepted if for less than 5 or for more than 5,000 shares, and the Minister reserves the right to allot shares pro rata or otherwise in such manner as he may in his discretion determine. The allotment of shares shall be at the absolute discretion of the Minister. Where no allotment is made the application money will be returned in full, and where the number of shares allotted is less than the number applied for the balance of the application money will be credited in reduction of the amount payable on allotment, and any excess returned to the applicant. Demands for the amounts due on the Ist April, 1936, and Ist June, 1936, respectively, will be made by formal notice from the Mortgage Corporation of New Zealand, and payment of such amounts will require to be made in accordance with the directions to be given in such notice. Applicants for shares must be:— (a) British subjects who are ordinarily resident in New Zealand or who, having been so resident, may at the time of allotment be temporarily out of New Zealand for the purpose of their business or for other sufficient reason; (b) Any company or other corporation incorporated in New Zealand, or any company incorporated outside New Zealand but having a place of business in New Zealand. Not more than 5,000 shares will be allotted to any one person, whether in his own right or on behalf of any other person or persons. Applications will not be accepted from or on behalf of persons under the age of 21 years. Dividends on Shares. Each share will carry a cumulative dividend of 4-| per cent., payable out of the available profits of the Corporation. The dividend for the first year will be computed from, the date of allotment, and thereafter until such time as the share has been fully paid up will be computed monthly on the amount paid up at the beginning of each month of the financial year. Shareholders' Liability. The liability of every shareholder shall be limited to the amount (if any) for the time being unpaid on the shares held by him. Objects of the Mortgage Corporation. The Mortgage Corporation is a national institution which is designed to give a powerful lead in placing mortgage finance in New Zealand on a sounder basis. It is confidently expected that the Corporation will provide improved finance for farms, business premises, and houses for the benefit of the community generally. It will establish in New Zealand a system of mortgage finance that has been proved satisfactory in other countries. ' The principal business of the Mortgage Corporation will be the making of loans secured by first mortgage on land and improvements in accordance with the provisions of the Mortgage Corporation of New Zealand Act, 1934-35, the particular functions and limits of the Corporation being set out in Part 111 of the Act.

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For the purpose of providing funds for carrying on its business under the Act the Corporation may from time to time issue bonds, stock, or other securities at such rate of interest and on such conditions as it thinks fit, provided that the total amount borrowed and for the time being outstanding shall not at any time exceed an amount equal to fifteen times the sum of the subscribed capital of the Corporation and the amount then standing to the credit of the General Reserve Fund. Securities issued by the Corporation will constitute a floating charge on all the assets of the Corporation and shall be for such term, not exceeding fifty years, as the Board of Management of the Corporation may in any case determine. The Corporation may at any time purchase any securities issued by it, and such securities shall thereupon be cancelled. Incorporation. Incorporation of the shareholders as a body corporate with perpetual succession and a common seal will take effect on a date to be specified by the Minister of Finance in a public notice in the Gazette, such notice to be given after the full amount of the share capital has been subscribed. The legislation establishing the Corporation prohibits the formation in New Zealand or registration under any Act of a company or corporation with a name identical with or resembling that of the Mortgage Corporation of New Zealand. General Reserve Fund. Provision for the establishment of a General Reserve Fund is contained in section 33 of the Act, which requires the Corporation to credit the fund with an amount equal to the capital moneys secured by debentures or other securities vested in the State Advances Superintendent in respect of advances made to Local Bodies pursuant to Part 111 of the Local Bodies' Loans Act, 1926, or former enabling Acts, and to be transferred to the Corporation in terms of section 36 (1) (c) of the Act. The amount of securities coming within this category will be not less than £2,750,000, thus providing an adequate reserve fund at the outset of Jhe Corporation's activities. If at the end of any financial year, however, the amount at credit of the General Reserve Fund exceeds 10 per cent, of the nominal value of all bonds or other securities issued by the Corporation and for the time being outstanding, the excess shall be paid to the State in reduction of the amount originally provided as above; apart from this the Corporation will have no liability in respect of the State's contribution to the General Reserve Fund other than the payment of interest on the amount thereof in pursuance of section 35 of the Act. The General Reserve Fund will be further augmented by contributions by mortgagors of 2 per cent, of the loans granted to them and by interest on moneys credited to the General Reserve Fund. The Board must at all times keep invested in approved securities such amounts as it thinks fit, being not less in the aggregate than the amount for the time being credited to the General Reserve Fund. Management of the Mortgage Corporation. The management of the Corporation will be vested in a Board of Management consisting of eight directors, as follows:— (a) Four State Directors appointed by the Governor-General in Council, one to be appointed as Chairman of Directors and two to be appointed as joint Managing Directors, the latter appointments to be for a term of seven years. Of the State Directors other than the two Managing Directors, one will retire in 1939 and the other in 1940, but otherwise the term of their appointment will be five years. (&) Three shareholders' directors, appointed in the first instance by the GovernorGeneral in Council, and retiring in rotation in 1937, 1938, and 1939. Thereafter the shareholders' directors will be elected for a period of five years by the shareholders at a general meeting. No person may be appointed or elected as a shareholders' director who is not a shareholder of the Corporation. (c) An ex-officio director, being such officer of the Treasury as the Minister of Finance may approve for the purpose. Transfer of Established Business to the Corporation. The consolidation of the lending operations of the State Advances Office and the Lands Department will be effected by the transfer to the Corporation of certain mortgages now vested in the State Advances Superintendent and the Crown. The Corporation will thus take over as a.going concern practically the whole of the lending operations now conducted by these Departments and will, from the outset, be firmly established in a. manner- which will ensure that the- administrative costs per cent, of the capital employed will be. maintained at the lowest possible level. In gaining these important advantages the Corporation will be adequately safeguarded from loss in respect of these mortgages, firstly by the fact that such part of the purchase price as is agreed upon between the Minister of Finance and

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the Directors will be represented by a contingent liability to the State bearing no fixed interest, and secondly by virtue of section 38 of the Act, under which any capital kisses from such mortgages will be a charge against the State and not against the Reserve r und of the Corporation. Distribution of Profits. The financial year of the Corporation shall end 011 the 31st day of March. After such provision as the Board thinks proper has been made for dividends 011 shares, depreciation in assets, superannuation or retiring allowances for the officers or stall, and all such other matters as in the opinion of the Board are necessary for the efficient conduct of the business of the Corporation, the surplus for each financial year shall be applied 111 terms of paragraphs (a) and (b) of section 42 of the Mortgage Corporation of Now Zealand Act, 1934-35, which provides that so long as there exists any contingent liability of the Corporation to the Crown, arising out of the transfer of _ State Advances or other Crown mortgages to the Corporation, the surplus shall be paid into the Public Account , otherwise the surplus for any year shall be credited by the Corporation to its General Reserve Fund. Security of Capital. It is provided by statute that the Mortgage Corporation may lend on first mortgage of land up to the recognized trustee margin—namely, two-thirds of the value of the security as determined by the Board. It may be stated that in the case of rural lands valuations for the purposes of the Board will be on a basis primarily influenced by the earning capacity. , . , , , The business of the Corporation is mainly lending on long-term-instalment mortgages, under which system the margin of security is a steadily increasing factor. In addition the Corporation may lend on the security of a mortgage of stock or other chattels, but only where, in the opinion of the Board of Management, the interests of the Corporation in any mortgage of land then held will thereby be more adequately safeguarded. Provision is also made in the Act for advances in excess of the two-thirds margin and up to four-fifths margin in the ease of advances made to repay any mortgage debt existing at the commencement, of the Act, but the Minister of Finance is required to guarantee the Corporation against any loss that may be incurred by in respect of so much of the loss as is attributable to the excess of an advance over two-thirds of the value of a security. Thus the Corporation will be responsible for advances up to the two-thirds margin only. Rates of interest to be charged on loans granted by the Corporation will be determined by the Board of Management from time to time, provided that the net rate of interestpayable under any mortgage of land shall not exceed by more than 1 per centum the rate of interest payable by the Corporation on its last issue of bonds or other securities. Furthermore, an initial Reserve Fund of not less than £2,750,000 is being provided by the State in the form of debentures or other securities at present vested in the State Advances Superintendent in respect of advances to local authorities and transferable to the Corporation pursuant to section 36 of the Act. Mortgagors will also be required to pay to the credit of the General Reserve Fund an amount equal to 2 per cent, of their loans, and these contributions will accumulate at compound interest. The borrowing of the Corporation being limited to fifteen times the sum of the subscribed capital and the amount at credit of the General Reserve Fund ensures the building up of substantial reserves in order that the business of the Corporation may expand accordingly. Security to investors is further enhanced by the fact that funds are distributed over a wide range of securities located in different parts of the Dominion. The share capital of the Corporation is therefore adequately safeguarded, and an investment therein should rank as a first-class security. General Meetings and Voting Bights of Shareholders. Ordinary general meetings of shareholders shall be convened by the Board once in every year and shall be held not later than the 31st day of July in each year, though the first general meeting need not be held before 31st July, 1936. Every shareholder of the Corporation, other than the Minister of Finance, will at any meeting be entitled to one vote for every share of which he is the registered proprietor, but no shareholder may at any meeting exercise more than five thousand votes, whether in his own right 01 as proxy. Shares and Transfers. The shares of the Corporation will be registered and may be transferred. The Corporation may decline to accept— (1) Any transfer of shares except to a British subject who is ordinarily resident in New Zealand, or who having been so resident is at the time of transfer temporarily out of New Zealand for the purpose of his business or for other sufficient reason; or to a company or other corporation incorporated in New Zealand, or to any company incorporated outside New Zealand but having a, place of business in New Zealand. (2) Any transfer of shares that, would increase the holding of the transferee beyond 5,000 shares. Except with the special consent of the Minister of Finance no transfer of shares allotted to any person will be recognized pending incorporation.

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General.

, Corporation will have its Head Office at Wellington and may establish such branches and agencies m New Zealand as it thinks fit. The Corporation shall not be at any time dissolved except by an Act of Parliament. A copy o± the balance-sheet and auditor's report will be sent to shareholders not less than seven days before the date of the Annual General Meeting. Iwo auditors qualified for appointment under the Companies Act, 1933, shall be appointed as auditors of the accounts of the Corporation at ,nv P m S Pros P ect us with the form of application for shares may be obtained of tbe SI rT I ' f Reserve Bank of New Zealand, at any Branch S Kft f throughout the Dominion, or from members of any stock exchange WWi ? ealand - Applications together with the amount payable on application, may be SetorLrOffice ° f Dominion any Postal In its capacity as mortgagee under any State Advances or other Crown mortgage transferred to it under Part V of the Act the Corporation shall enjoy the same exemptions shall bri?able n for n t^ e T Ct origmal mort ê'agee, otherwise the Corporation mder to CompLS lc° *1933 » COmp ™ J ' "«-'Por.trf Failure to pay any sum due in respect of any shares on or before the day appointed for payment may render such sum liable to interest at the rate of 6 per cent., and may also involve the forfeiture of any sum previously paid and the cancellation of any allotment. A commission of -J of 1 per cent, will be paid to Registered Sharebrokers and Banks on allotments made m respect of applications bearing their stamp, with a minimum of Is m respect to each allotment. The list of applications will be closed on the 24th day of May, 1935, but the Minister reserves the right, to close the list on such earlier date as he may prescribe by notification m the JS ew Zealand Gazette or otherwise. Adam Hamilton, for Minister of Finance. The Treasury, Wellington, C. 1, New Zealand, 9th May, 1935.

By Authority : G. H. Lone*, Government Printer, Wellington.— L 935.

XXIV