FINANCIAL STATEMENT. (In Committee of Supply, 28th September, 1937.) BY THE HON. WALTER NASH, MINISTER OF FINANCE.

Appendix to the Journals of the House of Representatives, 1937 Session I, B-06

B—6,

INDEX.

PAGE Accounts, Public .. .. .. ~ _ _ _ jq Adjustment Commissions, Mortgage .. .. .. .. ~ 5 Annual appropriations .. .. .. .. .. jg Assistance to country libraries . . .. .. .. .. .. 20 Broadcasting .. .. .. .. .. _ _ 27 Budgetary position for 1937-38 .. .. .. ~ _. 19 Buildings, public .. .. .. ~ .. , .. 14 Bureau of Industry .. .... .. .. ~ 12 Butter and cheese prices .. .. .. .. .. _ t 9 Capital works, expenditure .. .. .. .. .. . 15 Commercial broadcasting .. .. .. .. .. _ _ 17 Comparative expenditure .. .. .. .. ~ .. 22 Consolidated Fund expenditure .. .. .. .. . . .. 16 24 Consolidated Fund revenue .. .. .. .. 16 9 4 Conversions, New Zealand debt. . .. .. .. .. .. 19 Credit policy . . .. .. .. .. . _ _ .. 16, 25 Current year's guaranteed prices .. .. .. .. .. 9 Customs .. .. .. .. .. , _ 23 Dairy Industry Account .. .. .. .. ~ _ _ g Debt operations .. .. .. .. _ jg Debt redemption .. .. .. .. ~ jg Defence .. .. .. .. ~ , 1121 Domicile of public debt .. .. .. .. . . _ 49 Education . . .. .. .. .. .. _ _ 20 Elimination of level crossings .. .. .. .. ~ ] 4 Employment Promotion .. .. .. .. .. _ 2 Employment Promotion Fund .. .. ~ .. _ _ 2 Employment Promotion Fund expenditure .. . , . . ~ 3 Employment Promotion Fund revenue .. .. .. , . 3 Estimated expenditure .. .. .. .. .. 19 20 21 Estimated revenue .. .. .. .. .. ~ _ 24 Estimated revenue, main highways .. .. .. . . .. 23 Expenditure, Consolidated Fund .. .. .. .. _ 45 Expenditure, Employment Promotion Fund . . .. .. ~ 3 Expenditure on housing .. .. .. .. . _ 5 Financial policy .. .. .1. .. ~ _ | | Foreign affairs .. .. .. .. .. _ .11 Government buildings centre .. .. .. , . . . 14 Guaranteed price, origin of .. .. .. .. .. . . 8 Guaranteed price: Season's results .. .. . . .. .. 8 Guaranteed prices for current year .. .. . . .. .. 9 Health vote .. .. .. .. .. ~ . _ _ 21 Higher overseas costs .. .. .. .. .. .. . . 3 Higher overseas prices .. .. .. .. ~ ~ , _ ] Highways and roads .. .. .. ~ .. .. ~ 14 Housing .. .. .. .. .. ~ _ _ _ 4 Housing survey .. .. .. .. .. _ _ 4 Hydro-electric development . . .. .. .. ~ .. 15 Improvement in economic conditions .. .. .. .. 1 Income-tax revision . . .. .. .. . . ~ .. 23 Increase in public debt .. . . .. .. . . . . 18 Increased pensions • ■ . . .. . . . . .. .. 4 Industrial efficiency .. .. .. .. ~ .. _ 12 Interest receipts .. .. .. .. .. .. .. 23 Internal marketing .. .. .. .. .. , . , . ] 1 Lands improvement .. .. .. .. .. ~ .. 15 Land-tax .. .. .. .. .. ~ _ .. 23 League of Nations .. .. .. .. .. .. .. 21

8.—6

PAGE Lending rates, State Advances Corporation .. • • ■ • • • 6 Local marketing .. • ■ • • • ■ • ■ • ■ .. 11 London Conversion Loan, 1936 .. .. .. ■ • • • ...19 Marketing Department . .. .. • • • • • • • ■ ? Marketing, internal .. .. .. .. •• .11 Marketing primary products .. .. .. .. • • • ■ 7 Milk for school-children .. .. .. • • • • 21 Mortgage Adjustment Commissions .. .. . • • ■ • • 5 Mortgage adjustments to date .. .. .. .. • • • • 6 Mortgages finance .. .. .. • • • • • • • • 5 National Broadcasting Service .. .. .. • • • • .. 17 Negotiations overseas .. .. .. . • • • • • .. 10, 11 New industries .. .. .. • • • • • • .. 11 New markets .. .. .. .. ■ ■ • • ■ • • - ? Other receipts .. .. .. • • • ■ • • .. 24 Overlapping of industries .. ... .. • ■ • • ■ • 12 Overseas costs.. .. .. .. • • • • ■ ■ • • 3 Overseas negotiations .. .. .. . ■ • • • ■ .. 10, 11 Overseas prices .. .. .. • • • • • • • • 1 Pensions increased .. .. .. . • • • ■ ■ • • 4 Permanent Appropriations .. .. . ■ • • ■ • • • 16 Physical education .. .. .. • ■ • - ■ • ~21 Picot Brothers, Ltd., acquisition of . . .. • • ■ • .. 11 Police .. .. .. • • • • • • • • 22 Price fixation .. .. .. .. . ■ • • • • .. 13 Primary Products Marketing Department .. •. ■ • • ■ 7 Private broadcasting stations .. .. . . .. • • ■ • 17 Prosperous conditions .. .. .. ■ • • • • • • • 1 Public Accounts .. .. .. • • • • • • ..16 Public braidings .. .. .. • ■ • • •• • • • 14 Public debt . . .. .. .. • ■ • • • • .. 18 Public health .. .. .. .. . • • • • • ..17 Public Works .. .. .. .. •• •• •• . . 2, 13 Public Works programme .. .. .. .. • • • • 15 Quota allocations .. .. .. ■ • • • • • ..10 Radio beacons .. .. .. • • • • ■ • 22 Railways .. .. .. • • • • • • • • .. 13 Readjustment of mortgages .. .. .. • • • • • • 6 Reserve Bank of New Zealand .. .. .. • ■ • • . . 18 Revenue, 1937-38, estimated .. .. .. . ■ ■ • 23 Roads and highways .. .. ■ ■ • • • ■ ■ ■ .. 14 Salaries and wages .. .. .. • ■ • • ■ • ■ ■ 16 Sales tax .. .. .. • • • • • • • • 23 Scope of public works .. .. ■ ■ • • • • • • .. 13 Secondary industries .. .. •. • • ■ • ■ • • • 2 Small-farms scheme .. .. .. • • • • • • .. 15 Social services .. .. • • ■ • • • • • .. 17, 21 Sources of funds for public works .. • • • • • • • ■ 16 Southland Electric-power Board.. .. .. ■ • • ■ .. 18 Stamp and death duties .. • • • • ■ • • • .. 23 Standards Institute .. .. .. • • • • • • .. 13 State Advances Corporation .. .. .. • ■ • • 6,18 Summary of expenditure .. .. .. • • ■ • .. 16 Summary of revenue .. .. .. .. • • • • .. 16 Summary of year's transactions .. .. • • • ■ • • 16 Surplus, 1936-37 . . .. .. .. .. • • .. 16 Surplus, 1937-38, estimated .. .. .. .. • • 24 Uneconomic areas .. ... • • • • • • • • • • ® United Kingdom, offer to .. .. .. • • • • .. 10 Wage and salary restorations .. .. .. .. • • • • 3

ii

8.—6.

1937. NEW ZEALAND.

FINANCIAL STATEMENT. (In Committee of Supply, 28th September, 1937.) BY THE HON. WALTER NASH, MINISTER OF FINANCE.

Me. Chairman, —- The Financial Statement submitted last year set out the proposal which would be introduced to give effect to the policy. of the Government. It is now my privilege to present to this Committee the record of achievements for the first year of office. Reforms of a far-reaching character have been initiated, and the available evidence proves that the Dominion is enjoying a measure of prosperity gieater than has been experienced for many years. This- prosperity is to a major extent due to the legislation passed last year. The prices of our principal pastoral production —wool, meat, butter, and cheese —have all improved during the year, and the Government claim no credit for higher prices for meat and wool which made a contribution to the inci eased national income, but they do claim that the policy of readjusting and extending the incomes of the mass of the people brought a major improvement in our internal economy. A combination of higher pi'ices and increased quantities resulted in a record of £64,600,000 being obtained for the Dominion's exports for the year ended 30th June last. This represented an increase of nearly £11,000,000, or 20 per cent., compared with the previous year. Exports of meat were valued at £13,500,000, wool at £18,800,000, and butter and cheese at £21,700,000. It is of interest to note that the most recent statistics indicate that New Zealand now supplies 62 per cent, of the United Kingdom cheese imports, 56 per cent, of her pork imports, and nearly 30 per cent, of her butter imports. New Zealand is now, in fact, the chief overseas supplier of butter, cheese, and pork to the United Kingdom s markets. The evidence of prosperity and changed circumstances during the past year in the Dominion is so impressed on our individual experience that comparison with the immediate previous years is hardly necessary, but in order that the picture may be properly appreciated, a table (numbered 21) is appended to this Statement showing

Prosperous conditions.

Higher overseas prices.

Improvement in the Dominion,

I—B. 6.

8.—6

the improvement in various aspects of the national economy since the present Government took office. It may be compared with a similar table (also numbered 21) in the 1935 Financial Statement. Some outstanding items are : —- As shown in 1935 Table. Latest Results. £ £ Yalue of total production .. .. 98,800,000 114,200,000 Value of exports .. .. .. 43,000,000 64,600,000 Salaries and wages paid .. .. 65,700,000 85,000,000* Mortgages discharged .. .. 13,800,000 20,700,000 Bank debits (excluding Government) . . 676,200,000 916,200,000 * Provisional. It is impossible to present the whole scene by an array of statistics, as some of the more important aspects of human welfare cannot be measured by such means, but if we think back to three years ago and compare conditions then with those obtaining now, the improvement will be brought home to us in a striking manner. Incomplete as these particulars are, they constitute a record of which the Dominion may be justly proud. Our standard of living compares favourably with that of other countries, but there are many ways in which it could and should be improved. The standard of living depends on the maximum production of desirable commodities and the Government will not rest content so long as there are men and women unemployed and our resources are not fully used. EMPLOYMENT PKOMOTION. The methods adopted to promote employment have been first to endeavour to absorb men into normal productive employment. To this end the State Placement Service which the present Government established has proved particularly valuable, and during the past year alone 14,000 permanent, 9,000 temporary, and 9,000 casual positions were found throughout the Dominion. Employers are, to an increasing degree, taking advantage of the facilities which • the Service offers. The Government are by various means encouraging the establishment of new industries and the extension of existing ones. If this Dominion is to increase or even maintain her existing population in remunerative employment secondary industries must receive more attention than has been the case in the past. This does not mean the bolstering-up of uneconomic enterprises by subsidies or tariffs, but the intelligent control and development of industries which this Dominion should be able to carry on to meet the requirements of her own population and to provide for export those commodities in respect of which our Dominion possesses natural advantages. An important index as to secondary production is the return of factory workers of which the latest recorded figures show 111,041 employed, being 8,766 in excess of the previous year, and 6,593 greater than the number employed in 1929-30. The pushing-ahead of public works, to which I shall refer in greater detail later, has been another major factor in meeting the unemployment situation. Since 1870, public works have played an important part in New Zealand's economic development, and suddenly to reduce the expenditure on such works as was done in 1930-35 naturally had a most damaging effect on the national welfare. Public works are now recognized in most countries as a very useful and advantageous method of coping with unemployment. In regard to the special finance provided for dealing with the problem of employment it is satisfactory to note that in spite of the additional charges imposed on the Fund by reason of the improvement in rates of pay the year closed with a balance.

Employment promotion.

Secondary industries.

Public works.

Employment Promotion Fund.

2

8.—6.

The total amount available during the financial year was £4,667,256, consisting of— £ Balance brought forward .. .. .. 406,711 Revenue from taxation . . . . . . 4,224,965 Interest and other miscellaneous receipts .. .. 35,580 £4,667,256 Of the total taxation revenue, amounting to £4,224,965, the sum of £440,562 was received from the registration levy, £2,590,832 from wages tax, and £1,193,571 from the special charge on " other income." The total revenue from taxation was £304,939 in excess of that received during the previous financial year, although during that year the tax was imposed at the rate of lOd. in the pound for the first six months as against Bd. in the pound since then. The improvement in the revenue from wages tax indicates that salaries and wages were increased by some £12,000,000, while the receipts from the charge on " other income " reflect an increase of over £8,700,000 in the incomes of those persons liable for this tax. Disbursements from the Fund for last year totalled £4,414,011, made up as follows : — £ Wages and other payments under various schemes .. 2,601,739 Food, clothing, and other necessities .. . . 27,446 Sustenance payments .. .. .. .. 1,557,215 Sundry loans and grants .. .. .. 73,440 Christmas bonus and other miscellaneous payments 77,726 Administration expenses .. .. .. 76,445 £4,414,011 For the current financial year it is estimated that, on the present basis of taxation, the revenue will amount to £5,180,000, the increase of £919,000 over the receipts for last year reflecting the increase in the amount of salaries, wages, and other income. The additional resources anticipated will enable more to be done in the direction of providing full-time work at standard rates of pay, and the Acting Minister of Labour has recently visited various parts of the Dominion for this purpose. It will also provide some foundation for the new proposals in connection with the National Superannuation, Health, and Unemployment Scheme. WAGE AND SALARY RESTORATIONS. While consideration has necessarily been given to the promotion of employment, the Government have been by no means unmindful of the interests of the great majority who are in normal employment. In the past wage and salary earners have been the first to suffer from the effects of a depression and the last to benefit by an improvement. Objection to wage and salary restorations is often based on the effect on prices. It is assumed that the wage and salary restorations are the sole cause of increased prices. This view is erroneous. The relative statistics disclose that substantial increases have in fact taken place in the price of imported goods, which are now up to the 1930 level. There has also been some increase in prices of locally produced goods, but this has been the experience of other countries the world over. In any case, increased prices for our exports involve increased prices internally for the same classes of goods. The test, however, is real purchasing-power. Comparing June, 1937, with June, 1935, purchasing-power in New Zealand as expressed in wages has increased by 9 per cent., whereas in both Great Britain and Australia the purchasing-power of wages has shown a slight decline.

Increased salaries and wages.

Higher overseas costs.

3

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In effecting a more equitable distribution of the national income, tlie legitimate claims of those who have contributed to the Dominion'sfwealth in|the past have not been overlooked. I refer to the old-age and war pensioners, and in these cases, together with those of widows' and other forms of pension, the " cuts " were restored, and in some cases further increases were given and conditions of eligibility made more generous. The additional cost has been well worth while, and, as in the case of wages increases, has had an important influence in increasing the demand for primary and secondary products. At this point it cannot be too strongly emphasized that increased production of the commodities and services that will be in demand from the increased wages and salaries is essential to a permanent improvement in standards of living. HOUSING. A more just distribution of the national income is linked up with the provision of adequate housing facilities. The problem of slums does not arise to the same extent as in the older countries, nevertheless the problem of proper housing standards in New Zealand has assumed major importance. As honourable members are aware, a national housing survey is at present in progress, but the results will not be available for some months. Apart from this information, it is obvious that for some time past an acute shortage of suitable housing-accommodation has prevailed in the Dominion. Building operations have suffered a particularly severe setback during the past twenty years. The general improvement in economic conditions during the past year, together with an increase in the marriage-rate, has intensified the demand to such an extent that the Government felt fully justified in proceeding as quickly as possible with the erection of houses throughout the Dominion. The problem had assumed such pressing importance that the method of relying on private enterprise was considered inadequate to meet the situation, and it became necessary for the Government to act promptly. Accordingly, under the provisions of the Housing Act, 1919, and the State Advances Corporation Act, 1936, a Housing Construction Department was set up under the immediate direct control of the Parliamentary Under-Secretary to the Minister of Finance. With commendable promptitude the Department, in addition to utilizing land already owned by the Government, purchased suitable areas in different centres of population, and within a comparatively short time contracts for the erection of houses had been let. By purchasing areas of this description for subdivision and arranging contracts on a large scale the Government have been enabled to effect substantial savings in capital costs. In order to ensure that the houses should measure up to a high standard both practically and aesthetically, the following principles are being adhered to : —- (a) In the initial stages the majority of the houses are to be individual units. (b) No two houses in any particular area are to be of the same design. (c) As far as practicable materials are to be produced or manufactured in New Zealand. (id) The quality of construction is to be of a high standard, and the internal facilities are to be modern and complete. These houses are not intended for sale, as investigations have shown that the housing shortage is being experienced most acutely by those who for various reasons are unable or unwilling to finance the purchase of a property. Every encouragement is being given to local authorities to undertake similar housing-schemes, and for this purpose money has been made available at an interest-rate of 3 per cent, per annum. Up to the 15th September last the Housing Construction Department had let contracts in twenty-six different towns in the Dominion for 1,118 houses. In anticipation of the early completion of 385 houses in the Wellington District, a ballot was taken, and arrangements have been made for the tenants to enter into possession in the very near future. Houses will shortly be available in the Auckland, Wanganui, Palmerston North, Christchurch, Dunedin, and Invercargill Districts, to be followed by further houses in other centres as completed.

Increased pensions.

Housing survey.

Housing Department. Construction

Contracts for erection of houses.

4

8.--6.

In addition to providing a substantial measure of relief from the housing shortage, the Government operations are at present giving direct full-time employment to over 1,500 skilled tradesmen and labourers. The expansion of the activities of the Department is limited only by the shortage of skilled labour, which is already becoming a serious problem. In the near future the building of houses will be under way concurrently in over forty towns. Special measures are in hand to increase the number of tradesmen, and this will not only enable the programme to be accelerated, but will be the means of placing a large number of unemployed in full-time employment. Up to the present expenditure on housing amounts to approximately £250,000, but there are commitments for land purchased and work started amounting to about £1,250,000. By [the end of the financial year commitments will probably amount to £3,000,000 and expenditure to £1,500,000. As honourable members are aware, the money for the housing scheme is being provided by the Reserve Bank. The Government realize the necessity for improved housing and other accommodation on farms, and, where it is possible to obtain reasonable security for the sum to be expended, will arrange for special consideration to facilitate the granting of loans. MORTGAGE FINANCE. One of the major problems with which New Zealand was faced as a result of the depression was an equitable adjustment of the rights of mortgagees and mortgagors. Much of the legislation that was passed in this connection had the effect of postponing adjustment rather than of facilitating it, and the feelings of uncertainty which prevailed undoubtedly had an adverse effect on mortgage-finance operations generally. With a view to finalizing and clarifying the whole position, legislation (the Mortgagors and Lessees Rehabilitation Act) was passed last session, and Adjustment Commissions were set up throughout the Dominion to deal with applications and to make adjustments of the liabilities of mortgagors and lessees in accordance with the method laid down by the Act. The Act also provided for the constitution of a Court of Review to consider appeals against decisions of the Adjustment Commissions. The principle of the present Act differs considerably from the previous mortgagerelief legislation. The original relief Acts were designed to afford temporary relief for mortgagors (both rural and urban) by way chiefly of moratorium, reduction of interest-rates, and remission of arrears. The Act of 1935, known as the Rural Mortgagors Final Adjustment Act, originated the principle of writing down the principal sum under a mortgage to an amount commensurate with the depreciated value of the security. The final adjustment, however, was to be delayed, in general, for a period of five years (known as the budgetary period), during which period a trustee was appointed to control the mortgagor's financial affairs, and, to a certain extent, his farming operations. The value of the property for adjustment purposes was to be based upon the productive value as ascertained during the budgetary period. The budgetary system was found to be irksome, and it was considered that the final adjustment of the farmer's affairs would be unduly delayed. Accordingly the present Act, which extends also to home and other mortgagors as well as to farmer mortgagors, and also to leases, eliminates the five-year budgetary period, and provides for an immediate and final adjustment of the liabilities of mortgagors and lessees, the method of determining the value of the security, in the case of farmer mortgagors, being based upon the productive value of the land ascertained from the average prices for produce during the ten years prior to the passing of the Act. A total of approximately 34,000 applications for adjustment have been filed affecting mortgages aggregating many millions of pounds.

Expenditure on housing.

Mortgage Adjustment Commissions.

5

8.—6.

Thirty-three Adjustment Commissions have been set up to exercise jurisdiction throughout the various districts. The Commissions have been functioning for several months past, and steady progress is being made. Up to the end of August 1937, some 6,000 applications have been disposed of either by way of voluntary adjustments, withdrawals, or hearing before Commissions. Of approximately 4,300 orders made by the Commissions, some 1,900 had at the above date been actually sealed, involving the writing-off of a total amount of approximately £446,000, this amount representing mortgage-moneys in excess of the values of the securities as ascertained by the Commissions in accordance with the Act. Some 1,650 mortgages the terms of which had expired have been extended. An amount of approximately £147,000 arrears of interest on mortgages has been remitted. As regards leases, a sum of £14,000-odd arrears of rent has been remitted, and in many cases the rate of rent payable has been reduced. The Government have not overlooked the problems of men who are endeavouring to farm uneconomic areas under land for settlement leases and other titles associated with the Crown, and are considering methods of dealing with the matter. Apart from stabilizing the position in so far as existing mortgages are concerned, the Government have provided adequate finance on reasonable terms for new borrowers. In this connection it is appropriate that I should refer to the operations of the State Advances Corporation as a major factor in the provision of adequate mortgage finance on reasonable terms and based on the " table " principle. The extent to which the facilities of the Corporation have been availed of is shown by the loans authorized from Ist April, 1936, to 31st July last. Number. Amount. Urban— £ Erection of dwellings .. .. .. 1,411 1,012,820 Refinancing .. .. .. .. 1,735 995,609 Other purposes . . . . . . 548 370,470 3,694 2,378,899 Rural— Refinancing .. .. .. .. 1,188 2,607,690 Other purposes . . . . . . 287 450,430 1,475 3,058,120 Total authorizations .. .. 5,169 £5,437,019 The process of transferring to the Corporation the whole of the discharged-soldier-settlement mortgages, totalling £11,525,000, is now complete, and Corporation stock amounting to £8,760,000, bearing interest at 3§ per cent, per annum, has been issued to the Crown in settlement, the balance of £2,765,000 constituting a contingent liability of the Corporation. The Corporation has now on its books mortgages totalling over £51,000,000. The Government policy is to provide ample funds for sound securities at low interest-rates, which is the most important factor both in lightening the burden of fixed charges and in encouraging the development of trade and industry. The lending-rate of the State Advances Corporation has been held at 4| per cent., and the rate for local authorities' loans at 3| per cent. During the past year some local authorities have experienced difficulty in raising loans at 3j per cent., and the Government have been urged to allow a higher rate. Low interest-rates, however, have proved an important element in promoting prosperity and it is an integral part of the economic policy of most countries to maintain rates at a low level.

Adjustments effected to date.

Uneconomic areas.

Mew Joanmoneys.

State Advances Corporation.

Lendfng-rates.

Local authorities.

6

8.--6.

In New Zealand it is the Government's policy to maintain interest-rates at the lowest possible level. Accordingly the Government cannot agree to increase the borrowing rate for local authorities, and in order to support the existing rate it is intended to increase the amount which the State Advances Corporation has available for investing in the securities of local authorities. MARKETING: PRIMARY PRODUCTS. In accordance with the legislation enacted last session, all butter and cheese manufactured for export on and after Ist August, 1936, is acquired by the State when the produce is placed on board an overseas vessel. A full report regarding the operations of the Department concerned will be laid before Parliament later in this session. The report will deal with the results of the first year's activities under the guaranteed-price plan for the dairy industry, [and |will review the marketing of dairy-produce by the Department. The Government at this stage desire to pay tribute to the officials in London and in New Zealand who have carried out a change of procedure which is of profound importance to the Dominion. There is general agreement amongst those qualified to judge that the marketing operations during the past year have been entirely successful. The administration has proceeded smoothly, and dairy-factory companies, through the system of payment of guaranteed prices for butter and cheese, have been enabled to pay uniform butterfat prices to their suppliers at a higher level than would have been possible under the old system of marketing. This stabilizing feature has been appreciated by dairy-farmers, who have been able to budget for the season's farming operations with certainty in so far as price is concerned. A marked improvement in shipping arrangements has also been made possible, and the programme of arrivals of produce at the various United Kingdom ports has been designed to give a more regular and uniform delivery to meet the actual market needs at the various destinations. The marketing of butter and cheese on consignment on a commission basis by the appointed agents of the Government has given very satisfactory results, and representatives of merchant firms with wide experience have declared that the present system is much more satisfactory than that which was previously in operation. The gradual extension of outlets for New Zealand butter and cheese has continued, and there is evidence of trade appreciation of the better service which it has been possible to give under the collective-marketing system. The Department is proposing to extend its publicity and sales promotion, and, if normal circumstances continue, increased sales may be looked for in the United Kingdom. Efforts have been made to increase sales of butter and cheese in markets other than the United Kingdom, and the requirements of firms trading in those markets have been regularly supplied. The excellent quality of butter and cheese exported has been maintained during the season, and there is much evidence of appreciation of the uniformly high standard which has been reached. Considerable and satisfactory progress has been made in the rationalization of the dairy industry by consolidation of manufacture of butter and cheese and by elimination of overlapping in cream-collection services. Evidence is already forthcoming of the advantages in savings in costs and improvement in quality which have resulted from the action taken. A system of presentation of the accounts of dairy-factory companies in standard form has been introduced, and is providing reliable comparisons of the results of the manufacturing operations of companies. This feature is of distinct advantage to the Government and to directors, suppliers, and officials of dairy companies.

Primary Products Marketing Department.

Success of policy.

Shipping arrangements.

New markets,

7

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The financial operations of the Dairy Industry Account for the export season have not yet been completed, but on present indications the deficit should not exceed £650,000. The guaranteed-price procedure, with the new system of marketing, is of such profound importance to the future of the Dominion that a recital of its origin may be of interest. In 1934 the Commission set up by a previous Government to investigate the dairy industry reported that at least one-half of the dairy-farmers engaged in the industry were in varying degree unable, at that time, to meet in full their financial commitments. Investigation revealed that within a period of six years overseas butter prices had declined from 184s. to 665. 6d. per hundredweight. With this information the Prime Minister and other members of the present Government pledged themselves that, if elected, they would institute a procedure that would give the farmer a guaranteed share of the national income, and would take the responsibility for marketing the produce overseas. The purpose and promise were clear. It was to endeavour to find a measure that would give to the working-farmer an income measured in price for his product equal, as far as is humanly ascertainable, to the payment for like work in other fields of production. No more —no less' —than equal treatment for all workers in town or country. That promise has been kept to its limit. Endeavours to give special privileges to any section, whether to farmer, other worker, to finance or to commerce, in a democracy, inevitably bring their own Nemesis. With this philosophy guiding their actions the Government on entering office decided to buy all butter and cheese placed on board a ship for export at prices slightly in excess of the average realization during the ten years ended 31st July, 1935. The average for the ten years was 12-73 d. per pound of butterfat for butter. The Government decided to purchase the butter and cheese at prices that would enable efficient dairy-factory companies to pay 13-04 d. per pound for butterfat for butter, and to provide for a premium of Ud. per pound for suppliers of butterfat for cheese-manufacture. An overestimate of the costs of butter-manufacture resulted in a lesser differential than the l|d. promised. The Government have noted this disparity, and, when full information of the year's working is available from all the dairy companies, will take the necessary steps to carry out their undertaking. The year's working, whilst showing an estimated deficiency of £650,000 between pay-out and realizations, has given to the dairy-farmer an element of confidence and security that could not have been obtained under any system previously in operation. The foregoing covers the first year, during which the prices were based on previous averages. For the production-year just commenced, the procedure to determine the price is set out in section 20 of the Primary Products Marketing Act. Subsection (5) of the same section sets out the objective of the Government. _ It is to give to efficient dairy-farmers a price for their product that will provide a net income sufficient to maintain themselves and their families in a reasonable state of comfort. To achieve this objective the Act provides that the Government must take into account prices realized in previous years ; the necessity to maintain _ the stability and efficiency of the industry ; the costs involved in efficient production ; the costs of marketing ; and, in particular, that the general standard of living of farmers and dairy-factory workers should be based on and be equal to the general standard of living in the Dominion.

Dairy Industry Account.

Origin of guaranteed price.

Season's results.

8

8.—6.

The Government, taking all these factors into account, announced that they would buy all butter and cheese which is exported after 31st July, 1937, and which is manufactured on or before 31st July, 1938, at the following prices per pound f.o.b. ocean steamer : — Creamery Butter. Price per Ponnd. £ inest grade — d. 94 points and over . . . . . . ..13-375 93 to 93| points (basic guaranteed price) .. .. 13-25 First grade — 92 to 92-| points .. .. .. .. .. 13*1875 90 to 91| points . . . . . . . . 13-00 Second grade .. . . . . . . . . 12-50 Whey Butter. First grade .. .. .. .. .. ..12-25 Second grade .. .. .. .. .. 11-75 Cheese. Finest grade— 94 points and over .. .. .. . . 7 • 69625 93 to 93| points .. .. .. .. .. 7•665 First grade — 92 to 92| points (basic guaranteed price) . . .. 7-54 91 to 91-| points .. .. .. .. .. 7-4775 Second grade . . .. .. .. .. .. 7-29 Allowing 2jd. per pound butterfat for costs between delivery at factory and on board ship, the return to the farmer from an efficient dairy factory should be 13-88 d. per pound of butterfat for butter. Price per Pound. This price is made up as follows : — d. Working and maintenance costs . . .. . . 5-07 Allowance for interest on capital .. .. .. 3-06 Labour on farm .. .. .. .. .. 7-29 15-42 Less return from pigs .. .. .. .. 1.54 13-88 In order to cover the difference in costs of production and in returns from byproducts in the case of butterfat for cheese, the purchase-price of cheese is so fixed that the average efficient cheese-factory will pay out to its suppliers 2d. per pound butterfat over the pay-out for butter, or 15-88 d. per pound. The Government are satisfied that the prices guaranteed represent a fair and just payment to dairy-farmers for their produce, and that these prices, fixed entirely in accord with the Government policy, will give an efficient dairy-farmer a security of living-standard better than he has known for many years. Pay-out on shipment at a known price sufficient to cover his costs gives the farmer the position that is due to him as a contributor towards the national income and development. The Government desire in concluding this section of the Financial Statement to stress the imperative need of maintaining and even improving the quality of our products. The name of New Zealand stands very high in overseas markets for quality, and every dairy-farmer and factory-worker should accept a personal responsibility for maintaining that quality.

Current year's guaranteed prices.

High quality essential.

2—B. 6.

9

8.—6

OVERSEAS NEGOTIATIONS. The importance of adequate and expanding markets for New Zealand produce has already been referred to. On the average, consumption in the Dominion accounts for approximately half of our total production, and consequently any influence likely to improve or conversely to prejudice our overseas markets is one to which the Government must necessarily give the closest attention. Rapid advances have been made in the last few years in both the quality and quantity of our primary production, and there is no doubt that by a greater application of scientific methods our output per acre could be further substantially increased. It is therefore essential to our welfare that an expanding market should be available for our produce. The Government are aware, of course, that increased supplies beyond a certain point result in reduced prices, but investigations have shown that in none of our principal overseas markets is the consumption per head of the class of commodities which New Zealand supplies adequate to the maintenance of a reasonable standard of living. Conditions are improving in this respect as a result of increased purchasingpower, but there is still scope for a substantial increase in consumption. Following a decision of the Government, I was privileged at the end of last year to visit the United Kingdom to discuss with the Government there the export policy of the Dominion. The actual offer which was submitted to the United Kingdom Government was as follows :— (1) The United Kingdom, with minor qualifications, would be offered a full market in New Zealand for its manufactures and raw material equal in value to the balance of credits from sale of New Zealand products in the United Kingdom after providing for (a) shipping-charges, (b) " invisible " items, (c) debt services, and (d) a proportionate sum for the reduction of New Zealand overseas debt. (2) If agreement could be reached, the United Kingdom in certain cases would be given the complete market in New Zealand for special manufactures of a type that were not produced in New Zealand. In certain cases New Zealand would give preference to United Kingdom manufacturers or producers desiring to install and operate plants in New Zealand for the production of commodities at present imported. (3) New Zealand's secondary industries to be extended, but not by reducing the total volume of United Kingdom export trade to New Zealand. Negotiations in connection with this offer are not yet complete, the United Kingdom Government showing a reluctance to admit an expanding quantity of the Dominion's primary produce, as conflicting to some extent with the policy of encouraging maximum local production of foodstuffs, the objective being that in time of war less reliance need be placed on overseas supplies. Negotiations are still being pursued, however, while the personal contacts which were made in London have given the negotiators a full understanding and sympathy with each other's viewpoints. It was possible, however, during my stay in London to reach agreement in regard to beef, mutton, lamb, pork, and bacon, which together constitute not less than 33J per cent, of the total value of the Dominion's exports. Previous discussion concerning beef centred around an allocation based on the 1935 figures, which would have meant an allocation of 45,800 tons. The negotiations which took place resulted in an increase of the allocation to 56,200 tons, and there is every possibility that further increases will be given in subsequent years. Similar discussions took place in connection with mutton and lamb, the preliminary allocation being actually less than for 1936. The point was stressed with the United Kingdom authorities that, by limiting exports to such an extent, not only would considerable hardship be imposed on the Dominion, but the ability to purchase United Kingdom goods would be seriously prejudiced. As a result, it is satisfactory to be able to record that the allocation for 1937 was increased to 4,010,000 cwt., which is the highest allocation accorded to New Zealand since the

Offer to United Kingdom Government.

Quota allocations.

10

B. —6,

quota system was introduced. In addition, and arising out of previous negotiations, the threatened levy on New Zealand mutton and lamb imported into the United Kingdom will not now be proceeded with. While in England I took the opportunity of visiting the principal wholesale markets handling New Zealand produce, and later of discussing the question of quality and supplies with the more important retailers. lam satisfied, as a result of those investigations, that the principal lines of New Zealand produce compare favourably with any at present on the English market —the most discriminating in the world. An interesting feature associated with the new marketing policy for butter is that whilst Danish prices have always commanded a margin over New Zealand, the last season, according to the report of the Imperial Economic Committee, shows that whilst New Zealand butter with a record output was 10 per cent, higher in price than in 1935, Danish prices showed an appreciation of only 6 per cent. Preliminary negotiations were carried out with representatives of the Governments of France, Germany, the U.S.S.R., the Netherlands, Denmark, the Irish Free State, Palestine, Yugoslavia, Southern Rhodesia, Canada, the United States of America, and Panama. There are reasonable hopes that as a result of these negotiations further markets will be developed for New Zealand produce. In company with the Right Hon. the Prime Minister, opportunity was taken to discuss with the Imperial Government outstanding questions regarding defence, air communications, foreign affairs, and shipping, and an agreement was reached on various matters of policy. These subjects will come up for your consideration later. Careful investigation was also made into housing problems, and the latest advances made in the United Kingdom were inspected. The New Zealand Government's overseas publicity work was reviewed in order that improvements may be introduced with a view to making a more effective appeal both to potentialfconsumers of our produce and to prospective tourists. Detailed inquiries were made as to processes, costs, output, &c., in the sugar-beet, iron and steel, tire, coal carbonization, and other industries. The information obtained will be invaluable when decisions are required relative to the extension of secondary industries within the Dominion. Opportunity was taken while in London to discuss the Government's policy with the highest financial authorities, who are well informed on matters affecting New Zealand. The development of the present Government's policy is being watched with keen and sympathetic interest. Although the Government do not contemplate borrowing again in London, other than for necessary redemption purposes, it is satisfactory to note that our credit stands very high in the eyes of the investor. The only loans raised in London by the present Government have been for conversion purposes, the last loan incidentally being on as favourable terms as have been accorded to the Dominion during the present century. INTERNAL MARKETING. While paying particular attention to maintaining and extending the Dominion's overseas markets as an influence affecting our general prosperity, the Government have not overlooked the important matter of internal marketing. It is true that approximately 70 per cent, of our agricultural and pastoral production is exported, but it is obvious that the marketing of the remaining 30 per cent, is a vital factor in the national economy. Internal marketing has accordingly been the subject of very careful investigation by the Government, and, as a means of implementing the Government's policy, an Internal Marketing Branch of the Primary Products Marketing Department was established in February last, and at the same time the business carried on by Picot Brothers, Ltd., was acquired by the Government. At the time of purchase this company represented the largest wholesale dealers in primary produce for the local market in New Zealand. The business, which included premises, plant, and stock-in-trade, was acquired on a valuation basis, while the services of the managing director were retained as Director of the new Branch.

Further negotiations.

Defence, foreign affairs, &c.

New industries.

Financial policy.

Local markets,

Acquisition of Picot Brothers' business.

11

8.—6,

The fact that the principal trading of Picot Brothers' business was in lines such as butter, eggs, honey, bacon, and cheese meant that the Government were immediately possessed of an organization giving a complete range of service in the handling and distribution of primary foodstuffs in the capital city of the Dominion. At the time of the change-over Picot jßrothers had two branches operating outside Wellington, one in Hastings and the other in Palmerston North. In view of the fact that the co-operative dairy interests in Hawke's Bay desired to undertake their own local marketing, the Government in their endeavour to assist co-operative servicing units of distribution transferred its branch in Hastings to them. The branch was taken over from the Internal Marketing Branch on the same basis and terms as the Government had acquired it from Picot Brothers, Ltd., so that neither profit nor loss resulted to the Government. Subject to the Government's approval of prices and conditions, the new Hawke's Bay company becomes the sole distributor of butter in that area. The foundation is therefore laid for the Government to superintend and set a standard of efficiency and economy in transferring the produce of the land to the consuming public as economically as possible, and, with this direct influence on the various units handling our produce, it will be the policy of the Internal Marketing Branch to investigate and determine methods that will narrow the margin of costs between producer and consumer. The new organization has already done much useful work both as a controlling factor in the distribution of primary foodstuffs and in organizing various sections of the Dominion's primary industries for more orderly and scientific methods of distribution. It is expected that the first year's trading activities of the Branch will show a surplus. In fixing prices under the Internal Marketing Regulations the Government are charged with ensuring that the prices received on the local market for butter and cheese are such as will ensure that the efficient dairy-farmer shall receive an pay-out equal to that made for butter and cheese for export. Inquiries are under way to ensure that the maximum advantage of national marketing shall also be made available to the producers of honey and eggs, and to provide for the supply of these commodities to the Dominion consumers at reasonable prices. INDUSTRIAL EFFICIENCY. To give effect to the Government's industrial policy the Industrial Efficiency Act was passed in the first session of the present Parliament. By it the Government were empowered to institute measures that were essential before anything in the nature of economic planning could be attempted. The keynote of its provisions is co-ordination of existing units and the encouragement of new industries with the object of eliminating economic waste and of giving a conscious direction to the productive energies of the country. It was clear from the most cursory view of our secondary industries, in both the productive and distributive fields, that there was a great deal of overlapping in particular industries, giving rise to wasteful competition that fell with full effect upon the ultimate consumer. It was found that price-cutting was just as disastrous in its social effects as the monopoly organization of industry, and a system of licensing of industrial units was introduced so as to ensure equity and a fair return to those legitimately engaged in trade and industry. The Bureau of Industry was set up as the working instrument through which plans of reorganization could be formulated and developed and new [industries fostered. The Bureau has been functioning for eight months and a great deal of preliminary work has been done. Fifteen industries have been gazetted by the

Butter and cheese.

Honey and eggs.

Overlapping of industries.

Bureau of Industry.

12

8.—6.

Minister of Industries and Commerce as subject to license, while a complete plan for the rehabilitation of the flax industry has been brought to finality with the concurrence of those engaged in the industry. The Minister is the appeal authority with regard to licensing decisions of the Bureau, and under powers conferred upon him by the Act he has appointed Sir Francis Frazer to inquire into and report to him upon the subject-matter of all appeals. At the moment the Bureau is examining proposals for the establishment of several new industries in the Dominion, and licenses have already been granted for the manufacture of] asbestos-cement products, an important new industry, which will provide increased employment. Particular attention has been given by the Government to the promotion of commodity standards, and the Standards Institute set up under the Department of Scientific and Industrial Research is now functioning with the voluntary co-operation of representatives of the various industries. Research associations, representing Government and industry, have also been set up in the Dominion. A policy of price-fixation has been successfully followed in several cases, and under the Board of Trade Act the Minister of Industries and Commerce initiated a scheme for the control and development of the wheat, flour, and bread industries. As a result of this activity an important industry has been saved from the effects of ruthless competition from overseas, a higher measure of efficiency has been attained, and consumer interests have been protected to the fullest extent. The ultimate saving to the Dominion as a result of the scheme runs into many hundreds of thousands of pounds. The Government's policy is the maintenance of existing industries at the highest pitch of efficiency, the encouragement of new industries that can be established with reasonable social advantage, and the best use of our undoubted resources of raw materials that are yet in the primary stages of development. PUBLIC WORKS. A reference has already been made to the Government's policy regarding public works as a means of providing full-time useful employment. The definition of public works is a very wide one, and includes the construction and improvement of and additions to railways ; the erection and alteration of post and telegraph buildings, courthouses, and public buildings of various other kinds ; construction and improvement of roads and highways ; land drainage, irrigation, protection, and land-settlement of various types ; extension of telegraph and telephone systems; afforestation; the development of electric supply; development of tourist resorts ; and other works of less importance. In addition to public works executed by the Government, a considerable number are carried out by local authorities with or without Government financial assistance, but it is noteworthy that during the past seven or eight years the portion, both absolute and relative, of the cost of public works borne directly by the local ratepayer has diminished very considerably. An analysis of the incidence of the burden of the estimated annual road bill, for example, shows that in 1928-29 the amount provided from local rates was £1,616,000, or 29 per cent, of the total on all except urban roads, while in 1935-36 it was £1,366,000, or 22 per cent, of the total. The Government are of opinion that a substantial measure of planning is a necessary implication of an economic public works policy. Planning has therefore been undertaken first to select the most desirable works having regard to the localities where labour is available, and second to initiate a longrange programme designed to carry out necessary works and to utilize the available supply of skilled and unskilled labour to the greatest advantage. On railway-construction last year the expenditure was £587,000, principally on the Gisborne-Napier extension, the South Island Main Trunk connection, and the Westport to Inangahua length. It will be seen from the Public Works Estimates

Standards Institute.

Price-fixation,

Scope of public works.

Planning necessary,

Railwayconstruction.

13

8.—6.

that a total of £1,108,000 has been allocated for expenditure in this category during the current financial year. The urgent need of more rolling-stock and the putting in hand of deviation]]and duplication works on the more heavily trafficked lengths is covered by the programme for the current year amounting to £3,235,000. The erection of public buildings is a means whereby a substantial amount of expenditure can be made usefully and economically. The relative inactivity of recent years in the construction of public buildings has resulted in an acute shortage of necessary accommodation which will require a lengthy period to overtake. The expenditure on public buildings last year was £655,000, which was almost exactly twice the previous year's outlay. The allocation for the current year is £1,689,000. This includes £550,000 for school buildings, £459,000 for post and telegraph buildings, and a substantial provision for air-defence bases and for general buildings, such as courthouses, mental hospitals, departmental offices, and a special building for the Broadcasting Service. Construction work on these buildings and on housing will be limited only by the number of skilled tradesmen available. Special measures are being adopted to increase the number of tradesmen, and building activities will be co-ordinated in order to keep the available tradesmen in constant employment. On examination of the existing accommodation for Government administrative work it was found that the staffs and Departments were spread over a large area in Wellington City. This has resulted in costly means of intercommunication, and, following the procedure in other countries, the Government have had a comprehensive plan prepared for grouping Government Offices axound Parliament Buildings on modern town-planning principles and suitable in every way for the accommodation of the nation's legislative and administrative services. A Bill dealing with the acquisition of the land necessary for this purpose will be introduced to Parliament during the present session. The development and improvement of roading is an activity upon which it is admittedly possible to employ large numbers of men and at the same time it is difficult to analyse the results in terms of monetary loss or gain. Deviations or improvements of existing roads result in a saving in annual maintenance costs, the greater proportion of the expenditure goes in wages, and the improved roads meet a real need of a large and increasing section of the community. The removal of the barriers of distance between city and country must in general result in a lowering of costs, and thus facilitate the attainment of "a higher living standard. It seems that the improvements in speed and reliability of transport are bringing home to more and more people the fact that there may be economic as well as aesthetic advantages in having one's home in the country, although one is employed in the city. Encouragement of this movement may result in much improvement in health and in other advantages to the community. A programme of roading for backblock areas has been prepared, and, with the assistance of the county councils, it is proposed to commence extensive work immediately up to the limit of available competent labour. From the roads vote last year £914,000 was expended, and £1,030,000 has been allotted for the current year. From the Main Highways Account the expenditure last year under annual and permanent appropriations was £3,325,000, of which a substantial part was devoted to ordinary maintenance and to payment of interest and subsidies. The comparable total for highways expenditure for the current year is £4,678,000, which includes a full year's expenditure on maintenance and construction work on some 4,000 miles of State highway, towards which local authorities previously contributed, and also some £600,000 for the current year's heavy programme of level-crossing elimination. The cost of this latter programme is being apportioned between the Main Highways Account, the Employment Promotion Fund, and the vote for railway improvements.

Public buildings.

Government Buildings centre.

Roads and highways.

Elimination of level crossings.

14

8.—6,

The Government's programme for the development, improvement, and settlement of the land comprises various divisions such as swamp-drainage, irrigation, flood-protection works, works in aid of the flax and kauri-gum industries, the settlement of unemployed workers under the small-farms scheme, the establishment of the Maori as reasonably efficient farmers on their own land, and the opening-up and settlement of Crown lands generally. The principal activity during the year in connection with the small-farms scheme was the development of the blocks already in hand, only a comparatively small area being added during the year. The results have been somewhat impressive from the point of view of increase in production. Many of the blocks have reached the stage where they have been subdivided into sections, and the occupiers provided with herds of cows to milk on the basis of a share in the cream cheques. The individual farms already settled are proving very satisfactory. Generally speaking, the majority of the settlers are making good incomes, which will increase from year to year until their farms reach their maximum capacities. The settlers on the whole are contented with their prospects, and are appreciative of the opportunity which has been afforded them of permanently establishing themselves on the land. The total area under development is now 59,560 acres, the average number of men employed during the year being 1,067. It is anticipated that a further 26,000 acres will be developed during the current year, which will provide employment for an additional 400 men. Another major activity controlled by the State is that of hydro-electricity. The Dominion is particularly well endowed with facilities for the generating of electricity by water-power, and every advantage should be taken of these facilities to improve the amenities of life. It is unfortunate that in the earlier years a large portion of the funds were raised at high rates of interest, which has resulted in the Government accounts showing an accumulation of losses and substantial arrears of sinking fund. These deficiencies are now being rapidly wiped out. With the taking-over of the Southland Power Board's supply area during last year, there was naturally an increase in the total revenue and in the expenses of the Electric Supply Account. The estimated revenue for this financial year is shown as £1,355,000. The constructional expenditure for the current year for extensions in both Islands is expected to amount to a total of £1,087,000, which with £358,000 for working-expenses necessitates a total provision of £1,445,000. After charging depreciation, the actual profit which accrued to the State as a result of last year's operations was £136,000, which will be utilized in reduction of the accumulated losses already referred to. In total, the works and development programme, including maintenance of highways and certain other items of a revenue nature, requires provision for an estimated sum this financial year of £] 7,367,000, as follows : — £ Railway construction and i mprovements . . . . 4,295,000 Highways and roads .. .. .. .. 5 ; 708,000 Public buildings .. .. .. .. 1,689,000 Hydro-electric development . . . . . . I. 445 } 000 Small-farms settlement . . . . . . 450,000 Telegraph extensions . . . . . . . . 750,000 Native-lands settlement . . . . . . 677,000 State-forests development . . . . . . 475,000 Lands development and improvements . . . . 825,000 Other works (aerodromes, plant and material, &c.) 1,053,000 £17,367,000

Lands improvement.

Small-farms scheme.

Hydroelectricity development.

Total public works programme.

15

8.—6.

After allowing for the revenues accruing to the Main Highways, Electric Supply, and other Accounts, it is estimated that balances carried forward on Ist April last, together with amounts received for investment from the Post-office Savings-bank and other departmental sources, will be sufficient to provide all that is required for this programme, but so long as there are men or machines able to carry out the work, and the necessary materials are available, the Government will not allow any necessary job to be held up for want of money. The Government's policy is to obtain the maximum utilization of the available production resources of the Dominion, and if the existing volume of credit is insufficient or not utilized to this end, further credit as required will be made available. PUBLIC ACCOUNTS. The generally prosperous condition of the Dominion throughout the year resulted in the revenue exceeding the estimates, while expenditure, it is satisfactory to note, shows a substantial saving compared with the relative appropriations. The actual surplus for the year, as has already been publicly announced, was £472,000, compared with £281,800 for the previous year. The public accounts having already been published, it is unnecessary for me again to review them in detail, while] [particulars of both revenue and expenditure, as compared with the Budget estimates and with the results of the previous financial year, are attached to this Statement. The year's transactions may, however, be summarized as follows : — Summary of the Year's Operations. Revenue. £ £ Taxation . . . . . . . . 26,941,000 Interest .. .. .. .. 2,387,000 Other receipts .. .. .. .. 1,819,000 31,147,000 Expenditure. Permanent appropriations — £ Debt services .. .. 9,380,000 Exchange .. . . 1,581,000 Highways .. .. .. 2,509,000 Other services . . . . 618,000 14,088,000 Annual appropriations — Social services .. .. 9,913,000 Other services .. .. 6,674,000 16,587,000 — 30,675,000 Surplus .. .. .. .. .. .. £472,000 It will be observed in comparing these results with those of former years that both revenue and expenditure are now on a higher level than previously. This is accounted for principally by the implementing of the Government's policy of extending the scope of State activities, the increased cost of social services, and the restorations of the " cuts " in salaries and wages of Government employees. The practice of drastically reducing salaries and wages at the outset of a depression has been tried with results of which most of us have been made painfully aware. It is realized now that, apart from other considerations, a policy of deflation involves such widespread reduction in purchasing-power that

Source of funds.

Surplus for year.

Summary of year's transactions.

Salaries and wages.

16

8.—6.

any savings in expenditure are more than offset by the loss of revenue through the lessened demand for commodities and services. The action of the Government in restoring salaries and wages to their former level has been amply justified by results. The revenue from wages tax during the past year indicates "that in salaries and wages alone an increase of £12,000,000 has taken place. It is impossible to estimate the ultimate effect of this addition on the national income, but it is obvious that a very large measure of the general improvement in conditions within the Dominion is attributable to this section of the Government's policy. Increased cost of social services arises mainly in respect of increased pensions and the extension of hospital and dental clinic facilities. The previous rates of pensions were insufficient to enable a reasonable standard of living to be maintained. In addition to improving the actual pension rates, the qualifying conditions were made less restrictive. Few would deny this measure of assistance and comfort to our old-age pensioners, widows, invalids, and those suffering from war disabilities, who are now unable adequately to provide for themselves. Administrative procedure has revealed one or two anomalies in the legislation dealing with invalidity pensions and steps will be taken during the present session to remove them. They are associated with the country in which the invalidity originated and the period of absence allowable overseas. The expenditure shows an increase for dental hygiene. This arises from the fact that substantial additions to the number of trainees were necessary to enable the arrears of work to be overtaken. This form of State service has proved so popular and so beneficial to the rising generation that increased staff became an absolute necessity if the service were to cover adequately the children in our schools. It is by attacking the problem of defective teeth in the early stages that the best results are obtainable, and already the benefits of this service have become apparent in the improved teeth of the school-children. It is opportune at this stage to refer briefly to the implementing during the year of the Government's policy in regard to broadcasting. As honourable members are aware, the Broadcasting Board has been abolished and the service brought under the direct control of the Minister of Broadcasting. On suitable occasions the proceedings of Parliament are broadcast, arousing widespread interest amongst listeners. The object of this service is to awaken in the public mind a sense of responsibility in the government of the country by enabling them to become more familiar with the conduct of Parliament. The experiment has been most successful. A new high-powered national station has now been established at Titahi Bay, and is adequately fulfilling a long-felt want. In order to secure improved coverage for the difficult districts of Southland and Hawke's Bay a new station is being provided for each of these areas. In addition, consideration is being given to improving the service for listeners in outlying districts. Arrangements have also been made for the erection of a new broadcasting building in Wellington. In addition to providing studios for all the Wellington stations, the new building will include a conservatorium of music and the spoken arts. The National Broadcasting Service will shortly publish a monthly journal containing programmes and other information of interest to listeners. An important step taken during the year was the establishment of a commercial broadcasting service. The first commercial station was acquired by purchase in Auckland last October, and in view of its immediate popularity a similar station was established in Wellington in April last. The experiment having proved so successful, the opening of stations in Christchurch and Dunedin is now being proceeded with. When the present Government first took office there were twenty-two private or " B " class broadcasting-stations in the Dominion, many of them finding it extremely difficult to maintain an adequate service owing to lack of finance. The improvement effected by the Government to the National Broadcasting Service, together with the decision to establish at least four commercial stations in the main centres, and other non-commercial stations in districts which are at present

Social services.

National Broadcasting Service.

Commercial Broadcasting,

Private stations

3—B. 6.

17

8.—6.

not being well served, reduces the necessity for private broadcasting which should ultimately cease. In view, however, of the service which the private stations had rendered to listeners in the past, it was considered that the Government would not be justified in terminating the licenses of private stations without some measure of compensation for the amount which had been expended on equipment. It was decided therefore to purchase the equipment of any of the private-station licensees who desired to sell to the Government, and valuers were appointed to report on each station. Based on such reports offers were made to the various private-station licensees to sell for amounts which were considered fair and equitable to both the station-owners and the public. To date seventeen stations have been purchased as a result of such negotiations, and some are being temporarily operated as Government stations. PUBLIC DEBT. During the year ended 31st March last the provision of funds to meet expenditure for various capital purposes, less repayment of debt effected, resulted in a net increase in the public debt of £5,109,102. The fresh borrowing was incurred for the following purposes : — £ Public works . . . . . . . . . . 4,440,053 Purchase of Southland Electric-power Board undertaking .. .. .. .. .. 1,670,569 Acquisition of shareholders' interests in Reserve Bank and Mortgage Corporation . . . . 1,655,728 Costs, charges, and expenses arising in connection with the conversion of the 6-per-eent. £5,869,988 1936-51 London loan (including exchange on remittances from New Zealand) .. .. 628 ,147 Premiums on conversions in New Zealand. . .. 5,862 Housing .. .. .. .. .. 100,000 Raised for redemptions but not used .. .. 2,061 £8,502,420 Against this gross increase in debt must be offset redemptions totalling £3,393,318, leaving the net increase at £5,109,102. Funds for debt redemption were obtained from the following sources : —• £ Public Debt Repayment Account .. .. 1,691,188 Reparations and war credits . . . . . . 43,706 Sinking funds .. .. .. .. .. 13,489 Repayment of capital by other accounts . . . . 1,644,935 £3,393,318 In terms of the Southland Electric-power Supply Act, 1936, the Government assumed liability for the loans raised by that Board and exercised the Board's option to repay in London on the 15th September, 1936, the sum of £1,500,000 sterling. Funds for this purpose, plus exchange costs, were obtained to the extent of £407,000 from sinking funds, and the balance was borrowed in New Zealand. The balance of the Board's indebtedness (£133,000) was domiciled in New Zealand, and this portion of the debt was converted to a 4-per-cent. rate involving a premium issue of £3,678. The net effect of these operations was to increase the Public Debt by £1,670,569. The elimination of private shareholders in the Reserve Bank and the State Advances Corporation in terms of legislation passed last year involved the issue of public securities to the extent of the nominal capital of the institutions, £1,500,000 plus £155,728 allowed to private shareholders as premiums.

Increase in debt.

Redemptions.

Southland Electric-power Board.

Reserve Bank of New Zealand and State Advances Corporation.

18

B_—6,

Detailed particulars of the conversion operations in connection witli the 6-per-cent. 1936-51 loan which was dealt with in London on Ist August, 1936, were included in the Budget of last year, while the incidental expenses appear in this year's accounts. The conversion issue was made at a discount of 1% per cent., and a total of £4,000,000 was converted in London. Of the balance, £1,690,688 was repaid from the resources of the Public Debt Repayment Account and £179,300 from the proceeds of issues in New Zealand. Charges and expenses of these operations, including exchange on remittances to London, involved further borrowing in New Zealand to the extent of £628,147. In addition to the London conversion operations, opportunity was taken to exercise the right to repay £12,426,875 4-per-cent. 1937-40 stock and debentures domiciled in New Zealand. Cash and conversion applications totalled £11,440,249, and the balance required for redemptions was found by the issue of Treasury bills for £925,000, and £61,626 from debt repayment resources. The two conversion schemes to which reference has already been made have resulted in substantial savings in interest. The London conversion loan is responsible for an annual saving in interest of approximately £208,000, with a consequent saving in exchange charges, while the New Zealand conversion operations have effected a reduction in interest charges to the extent of £105,000 per annum. In both cases the greater portion of the savings is due to a reduction in interest-rates, the balance being accounted for by reductions in the amount of the debt. Other maturing loans of £706,280 and £2,500 were also dealt with on 15th. February, 1937, and Ist March, 1937, respectively, £424,800 being repaid and £283,980 being renewed. Purchases of securities in Australia at prices above par resulted in conversions involving premiums totalling £5,862. No increase in debt charges was involved. The net increase of £5,109,102 raised the debt as at 31st March, 1937, to £287,670,200, domiciled as follows : — £ London .. .. .. .. .. 156,737,017 Australia .. .. .. .. .. 891,900 New Zealand .. .. .. ..130,041,283 Total .. .. .. .. £287,670,200 As a result of the year's operations the London debt decreased by £1,974,913, Australian debt by £700,750, while the debt domiciled in New Zealand increased by £7,784,765. Of the latter amount, £5,613,979 represented departmental investments and the balance issues to the public in connection with the purchase of the Southland Power undertaking and cancellation of shares in the Reserve Bank and State Advances Corporation. No public issue was made to meet public works expenditure, which was financed from internal resources. BUDGETARY POSITION FOR 1937-38. Expenditure. The detailed estimates which are being presented to you this evening indicate that the expenditure chargeable against the Ordinary Revenue Account of the Consolidated Fund for the year is estimated at a total of £34,728,000, after allowing for a sum of £300,000 to cover supplementary estimates and contingencies. Included in this total is an amount of £3,058,000, which is transferable to the Main Highways Account and to local authorities, and is offset by an equivalent amount of revenue. Eliminating this "self-balancing" item, the total expenditure is reduced to £31,670,000, which, on a comparative basis, is £3,504,000 in excess of the actual expenditure for last financial year.

London conversions.

New Zealand conversion operations.

Domicile of public debt.

Summary of expenditure,

19

8,— 6,

This increase is accounted for to the extent of £3,086,000 by additional charges under annual votes, the balance arising in respect of provision for supplementary estimates and sundry items. It will be noted with satisfaction that debt charges are estimated to involve a net increase, compared with last year, of only £15,000, which is the smallest increase for many years past. As I have already indicated elsewhere, the present Government, as a matter of policy, have reduced each year the amount of overseas indebtedness, and this, together with savings arising out of the successful conversion operations, has reduced very considerably the annual charges on account of the external debt. The whole of the Government's capital requirements have been raised locally at low rates of interest. In regard to the annual votes, where the major portion of the total increase is accounted for, social services are estimated to cost this financial year a total of £12,168,000, compared with £9,913,000 expended last year. To the extent of £1,697,000 the increase is due to pensions. Honourable members will recall that in last year's Budget it was announced that " cuts " in pensions were to be restored and in some cases further increases given. The subsequent legislation gave effect to that promise. The increases, however, operated during only portion of last financial year, while this year the full effect of the increased appears in the estimates. These increases, together with the normal expansion of the Department, account for the additional provision referred to. The sum of £3,745,000 is provided this year in respect of vote " Education," representing an increase of £349,000 on last year's expenditure and £950,000 over the amount spent in 1935-36. Full details of the increases appear in the estimates. Facilities for the conveyance of children by road and rail to primary and post-primary schools are being extended, and the boarding-allowance granted (where necessary) to enable country children to attend such schools is being increased from the present rate of ss. per week to 7s. 6d. A larger sum than in any previous year is being allocated to school and class libraries. A sum is provided to allow of the restoration of grants for public libraries in rural communities. Boys' and girls' agricultural clubs are to receive increased encouragement. In Native schools additional scholarships are to be awarded to Maori students and additional material allowed for manual instruction. A sum is being allowed for the preparation and printing of suitable text-books for use in Native postprimary schools, in connection with which a Committee is being set up. The expenditure on University National Bursaries and War Bursaries is increased. The moneys repaid by teachers in respect of the training-college boarding-allowance loans granted in 1933 and 1935 are to be refunded, and all such remaining obligations cancelled. Provision is made for the appointment of three women advisers of Infant Departments in public schools and of kindergarten schools. Increased grants are to be made in aid of free kindergartens and towards the cost of their buildings. Provision is made also for the appointment of one Woman Inspector and one Woman Supervisor of domestic and home science subjects, the employment of vocational-guidance officers, and payment of half the salaries of officers to be attached to training colleges for museum work in schools. A Council of Adult Education is being set up to co-ordinate the various efforts made in the direction of adult education, for the general purposes of which (including such education in public works camps and the activities of the Workers' Educational Association) an increased sum is being provided. A scheme is being inaugurated for assisting small libraries in the country districts. This will take the form of a regular loan supply of books from a central source, and will constitute the beginning of a comprehensive national library system. This service will be ready for operation early next year. A sum of £3,000 is to be provided as an initial grant. Provision is also made for increases in staff made necessary by the introduction of a 42-hour week in Child Welfare Institutions and Schools, and in the case of the Correspondence School, as a result of an increase in the number of pupils.

Debt charges.

Annual votes.

Education.

Assistance for oountry libraries.

20

8.—6.

The Minister of Internal Affairs has taken preliminary steps, by means of consultations and conferences with representatives of sports bodies, to establish a National Sports Council with the object of extending throughout the Dominion facilities available in the way of sports-grounds, swimming-baths, and. gymnasia. A conference on physical education was called by the Education Department, the Health Department also participating, and as a result projects for physical education and the furtherance of the physical welfare of our people have been formulated. An increase of £145,000 is provided under vote "Health." One-half of this is occasioned by the Milk in Schools Scheme, the benefits of which already reach over a third of the school population, and are being expeditiously extended as satisfactory arrangements for supply and distribution are completed in the various localities. In furtherance of the Government's aim to meet as soon as possible all demands for the services of School dental nurses, training facilities have been expanded permitting a substantially increased number to be accepted for the twoyears course of training. Additional School Medical Officers, District Nurses, and Inspectors of Health are also provided for. New items include provision for the recent inquiry into the problem of abortion, for the present inquiry into the maternity services of the Dominion, and for the inspection, by selected members of the Royal Australasian College of Surgeons, of the surgical work in public hospitals. A Council is being set up to advise on and co-ordinate medical-research work, and additional financial assistance is being provided for that purpose. The social service policy of the Government thus accounts for the greater portion of the increase in annual expenditure. A progressive social service policy such as we now have in New Zealand needs no apology. Apart from all other considerations, it pays a nation to develop a healthy, well-educated people, and this is what the present Government have set out to accomplish. The problem of social and economic security has received very inadequate treatment in the past, and yet it is the most important influence towards a full and useful life. The increase in pensions rates and a widening of the scope of those entitled to benefits is a step towards strengthening the social security of the people. The Government are at present engaged in a comprehensive investigation of a major scheme—in respect of health and social insurance—which, when functioning, will relieve many of the anxieties at present hanging over the average household. The necessary legislation in this connection will be introduced this session. The estimates of expenditure include two related items, one to cover New Zealand's contribution of £15,000 to the League of Nations, the other a much larger item of £1,600,000 to provide for the defence of the Dominion. These items are inextricably linked together. The Government is of opinion that there can be no permanent peace between the nations other than through a body to which all the nations are pledged and bound to act in accord with principles of agreement, law, and order. The Government believes that the League of Nations is such a body and by effective application of its principles alone can peace be permanently achieved. The difficulties are real, but as a small unit in the world of nations and as one of the units indissolubly bound in the British Commonwealth of Nations the Government are willing to pledge the Dominion to live up to the principles of the League. If the Governments of other nations would live up to the same principles the world could go forward to an era of life far surpassing anything in recorded history. Until the League becomes effective the Government must take the steps necessary inside its powers to defend the Dominion. To this end, and with valuable assistance from Great Britain, an Air Defence Scheme has been organized; the proposals with regard to co-operation in Naval Defence have been finalized; and steps have been taken to reorganize the Land Defences and to co-ordinate the three branches of Defence Services to eliminate waste and to ensure the most effective use of our resources if and when need may arise. If the expenditure on the League of Nations leads to an effective organization the need will never arise.

Physical education.

Vote " Health."

Social service policy.

League of Nations.

Defence.

21

8.—6.

Concerning the Police Department, provision is being made for the erection of new police-stations at Palmerston North, Mount Cook (Wellington), Whangarei, Wanganui, Nelson, Greymouth, and Tima.ru, where the existing stations are very old buildings, beyond repair, and quite inadequate for present-day requirements. It is also proposed to carry out additions and alterations to the Central Policestations at Auckland, Wellington, Christchurch, and Dunedin, to provide for badly-needed additional office and barrack accommodation. The numerical strength of the Police Force has been increased by 175 men, of whom 125 are required to enable the weekly working-hours to be reduced from fifty-six to forty-eight. A reduction to forty hours per week was not found practicable, and as some compensation for this an increase of 10s. per week in pay has been granted to all members of the Force. Provision is also being made for procuring additional technical equipment for the Police Department. An allocation of £20,000 has been made for continuation of the programme of installing radio beacons at suitable lighthouses on. the coast. At the same time lights at the stations are being changed over from incandescent gas to electric light, and current will also be provided for the residences of keepers. A small sum has been provided in continuation of a programme of replacement of lighthouse buildings which are showing deterioration due to age. May I, towards the conclusion of this Statement, make some comments on the estimated expenditure on particular items for the year under review, and submit a comparison with the last year of the previous Government, 1935-36. The total estimated expenditure this year is £34,427,721 as against £25,890,567 for 1935-36, an increase of £8,537,154. Where is it proposed to expend the extra sums ? Of the major items, highways shows an increase of £951,000, but it will all be expended on roads and bridges to the particular benefit of the motorist and the general benefit of our people in town and country. The cost of departments grouped in the estimate under general administration and law and order is up by £701,000 due to restoration of salaries and wages and extension of other facilities, including Commissions for mortgage adjustments. Defence shows an increase of £585,000. Apart from the amount required for Air Services, this increase arises from a policy to which the Government were partially committed on coining into office. The cost of development of primary and secondary industries is £672,000 greater, but any expenditure that will lead to increased utilization of our raw materials and national resources is good economy. If we turn to social services we find that health expenditure, including Mental Hospitals, is up by £444,000. Extension of education facilities is costing £950,000 more, but if well spent it is the essence of progressive economy. War pensions show an increase of £250,553, whilst the veterans receive £163,456 more. The sum required to assist our old people is more than double the amount of two years ago. Widows with young children will receive £188,000 more, and the reproach of the invalids who were not previously provided for has been removed at a cost of £627,000. There are other minor increases, but a decrease is recorded under family allowances. One of the most interesting indexes to the progress of the Dominion is the recorded statistics of applications for and payments of family allowances. Honourable members will recollect that in 1.934-35 a family of husband, wife, and more than two children could not claim the family allowance if the family income exceeded £3 ss. increased by 2s. for each child in excess of two. In that year 12,321 allowances were paid, and this meant that .12,321 mothers with more than two children had incomes of less than the limit mentioned. In the year 1936-37, after slightly more than a year of the present Government,

Police.

Marine department radio beacons.

Comparative expenditure.

22

8.—6.

the number of allowances paid had declined to 9,515, whilst the income limit had been increased to £4 per week with 2s. for each child in excess of two. Thus in 1936-37 the number of families with more than two children receiving £4 per week or less had declined by nearly three thousand as compared with the number receiving £3 ss. two years ago. Now let us examine the position in general. The Government have restored wages and salaries, increased pensions, provided better facilities for the promotion of health and extension of education. The extra cost is £8,500,000 and this comes out of an aggregate of private incomes which last year's statistics show to have increased by at least £20,000,000. So that whilst £8,500,000 has been used to extend production and promote some increase in our living standards the people who have paid the extra money are left with £11,500,000 more than before the readjustments were made. REVENUE. The estimates of revenue for the current financial year reflect an improvement in economic and social conditions. Customs duties, the principal individual beading of revenue, are estimated to return a total of £10,500,000. This represents a little over £1,000,000 increase compared with the actual receipts for last year. Admittedly this is a particularly difficult item to estimate, depending as it does to a large extent upon the vagaries of fashion and the actual date on which dutiable goods are cleared through Customs. On this occasion, being so far advanced into the financial year, we have the advantage of particulars of imports and of revenue to the 31st August as a guide, and, based, on this information, £10,500,000 is a reasonable estimate. Income-tax, the second largest revenue heading, is estimated at £7,500,000, compared with actual receipts of £6,619,000 for the previous year. This tax is assessed on the taxable income earned during last year, and the estimate has been computed largely on the basis of the returns now to hand. Taxable income was undoubtedly higher last year than in the previous year, and £881,000 represents the estimated amount of the additional revenue from this source. Since the beginning of the year an expert departmental Committee has been reviewing the incidence, principles, and administration of land and income taxation with a view to recommending means of correcting existing anomalies and of closing loopholes whereby payment of tax is being avoided. Legislation will be introduced later in the session to give effect to the land and income taxation policy of the Government. Sales tax is estimated at a total of £3,650,000, an increase of £605,000, or 20 per cent., compared with last year's receipts. This item has shown a steady annual increase since its inception in 1932-33, and is now one of the major items of revenue. Highways revenue, to' which reference has already been made, is offset by an equivalent amount of expenditure. The generally prosperous conditions, together with the increase in the number of motor registrations which has taken place, will, it is anticipated, result in a substantial increase in petrol-consumption. Under the circumstances, the estimate for the current year has been shown as £3,058,000, compared with receipts totalling £2,503,000 for last year. Stamp and death duties consist principally of death duties, which by their very nature are difficult to estimate with any degree of accuracy. Based, however, on the actual receipts for last year, and allowing for the improvement in values which has taken place recently, an increase of £287,000 has been provided for, thus bringing the estimate to a total of £3,450,000 for the current year. Land-tax will be assessed on thefsame basis as last year, but provision will be made for relief of proved hardship. The power of the Commissioner of Taxes in this connection is to be extended, and the necessary amending legislation will be introduced. The revenue for the current year has been estimated at £1,000,000, compared with actual receipts of £1,048,000 during last year. The remaining items of taxation call for no special comment, except that in total they represent an increase compared with the receipts for last financial year. Interest receipts consist in the recoupment of interest from various State accounts, principally the Railways and the Post and Telegraph Department. The reduction of £102,000 compared with last year is due to a fall in the estimated net receipts from the railways. This in turn is due to increased expenditure consequent

Summary of revenue.

Income-tax revision.

Sales tax.

Highways revenue.

Stamp and death duties.

Land-tax.

interest receipts.

23

8.—6.

upon the restoration of the " cuts " in salaries and wages, together with the shorter working-week. Arising out of the improved, general conditions, an increase in revenue has also been provided for, but in the meantime this is not estimated fully to offset the increased expenditure. The final item in the main headings of revenue is " Other Receipts," which covers the profits of the various State lending Departments, registration fees, national-endowment revenue, and the various miscellaneous items which are too small individually to justify separate headings. In total these are estimated to augment this year's revenue to the extent of £2,155,000, compared with actual receipts of £1,819,000 for last year. In total, then, the revenue for the current year is estimated at £34,778,000, which, as will readily be ascertained, exceeds estimated expenditure by £50,000. A summary of the position is as follows : — Revenue. Taxation— £ Customs .. . .. 10,500,000 Beer duty.. .. . 950,000 Sales tax .. .. .. 3,650,000 Film-hire tax . . . . . . 80,000 Gold-export duty .. .. . 105,000 Highways .. .. .. .. 3,058,000 Stamp and death duties . . . . 3,450,000 Land-tax .. .. .. 1,000,000 Income-tax .. .. .. 7,500,000 Miscellaneous . . . . 45,000 Total taxation .. .. .. 30,338,000 Interest receipts . . . , . . 2,285.000 Other receipts .. .. . .. 2,'155,'000 £ Total estimated revenue .. .. .. .. 34,778.000 Expenditure. £ Debt services .. .. .. 9,396,000 Exchange .. .. .. 1,700,000 Transfer of highways revenue .. 3,058,000 Other permanent appropriations . . 601,000 14,755,000 Annual votes — Social services .. .. 12,168,000 Other votes .. .. 7,505,000 19,673,000 Total main estimates .. .. .. 34,428,000 Supplementary estimates and contingencies 300,000 Total estimated expenditure . . . . . . . . 34,728,000 Estimated surplus . . . . . . .. £50.000 Honourable members will have realized ere this that no alteration in the rates of taxation is contemplated this financial year. The Government have gone some distance along the road of improving the general welfare of the community, and, while much has undoubtedly been done, there is still much to do. The general buoyancy in revenue has enabled substantial improvement to be effected in the Jot of the less fortunate section of the community —the pensioners, the unemployed, and those in receipt of small incomes—and until the Government's objective in connection with a more equitable distribution of the national income has been attained the whole of the additional revenue will be required for this purpose.

24

B.— 6

This statement covers one of the most interesting periods in the history of the Dominion. The purpose of the Government is to bring security to all our people. To achieve this purpose the Government accept the responsibility for those who through physical or other disability are unable to care for themselves. For those able and willing to work the Government are laying foundations so that their skill and energy can be beneficially used not exclusively for themselves, but for the Dominion as a whole. These foundations are difficult to lay because acquisitive instincts affect the actions of all of us to such an extent in present circumstances. The Government believe, however, that when there is security for all who are willing to work the fear of poverty and depressions will disappear, and with it the dominant acquisitive instinct will gradually be eliminated. The removal of the fear of poverty is a first essential to progress. Our living standards can be raised to higher levels only by the production of more and better food, healthier and warmer clothing, with comfortable houses to make into homes. This means improved methods of farming, more efficient makers of clothes and builders of houses. Given the co-operation of producers, the Government will guarantee a collective security for our family life, for the mothers and the children of the nation, in which all who share in producing shall share in utilization. Furthermore, social security is a prime essential to the enjoyment of a fuller life—involving cultural as well as material things—that should be the heritage of our people. To suggest the inevitability of slumps and booms, associated as they are with affluence for a limited number during a period, and followed by unemployment, destitution, hardship, and privation for the masses, is to deny all conscious progressive purpose. The Government know that they cannot isolate the Dominion completely from all the effects of prices overseas, but they are determined to use to the fullest extent all the labour and materials in the Dominion for the provision to the maximum of our requirements, whilst taking every step to exchange our surplus commodities through trade with nations overseas. The only real limitation to production is our own labour and material resources. There is much unreasoned criticism with regard to the use of credit. Money and credit are means to an end. It cannot be too strongly emphasized that more production and better services are the essentials of security and of higher living standards and that money or credit is useful only when it serves this end. This means that the Government, to succeed, must have the full co-operation of workers in all fields —on the farm, in the factories, on our roads, and in commerce. Ours is one of the most richly-endowed countries in the world. The Government will do their best to use that endowment for the benefit of all our people.

4—B. 6.

25

8.—6

TABLES TO ACCOMPANY TEE FOREGOING STATEMENT.

Page Table No. 1. —Abstract of Receipts and Expenditure of the Financial Year ended 31st March, 1937. See Parliamentary Paper 8.-l [Part I]. Table No. 2.—The Public Debt on 31st March, 1937. See Parliamentary Paper 8.-l [Part lII]. Table No. 3. —Revenue for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936 .. .. .. .. .. .. .. .. ii 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, 1937 .. .. .. .. .. .. .. .. .. .. iii Table No. s.—Estimated Revenue for 1937-38, compared with the Actual Revenue for 1936-37 .. iv Table No. 6.—Stamp and Death Duty Revenue for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936 .. .. .. .. .. iv Table No. 7.—Statement of the Customs Duties collected for 1936-37, compared with 1935-36 .. v Table No. 8. —Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1937, compared with the Year ended 31st March, 1936 .. .. .. .. .. v Table No. 9. —Comparative Statement of the Appropriated and Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1937 .. .. .. .. .. .. .. .. vii Table No. 10. —Estimated Net Expenditure for 1937-38, compared with the Actual Net ISxpenditure for 1936-37 .. .. .. .. .. .. .. .. ix Table No. 11.—Public Works Fund—Statement showing Net Expenditure under Appropriations for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936 x Table No. 12.—Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to 31st March, 1937 .. xi Table No. 13.—Statement showing the Amount charged to " Unauthorized " in each Financial Year from Ist April, 1926, to 31st March, 1937 .. .. .. .. xii Table No. 14.—Statement showing the available Financial Resources of the various Accounts on the 31st March, 1937, as compared with the 31st March, 1936 .. .. .. xiii Table No. 15. —Statement of Amounts paid on account of Pensions for the Financial Years ended 31st March, from 1933 to 1937 .. .. .. .. .. .. .. xiii Table No. 16. —Education Expenditure—Total Expenditure on Education out of Public Funds since 1913-14 .. .. .. .. .. .. .. .. .. xiv Table No. 17. —State Balance-sheet as at 31st March, 1936 .. .. .. .. xv Table No. 18.—Statement of Hale-yearly Instalments of Principal and Interest for Repayment of Debt funded with Imperial Government .. .. .. .. .. xvi Table No. 19. —Statement showing Maturity Dates and Domicile of Debt outstanding as at 31st March, 1937 .. .. .. .. .. .. .. .. xvii Table No. 20.—Statement showing Values of Imports and Exports of the Dominion in each Financial Year ended 31st March, from 1931 to 1937 .. .. .. .. .. xvii Table No. 21. —Table showing Improvement in Economic Conditions .. .. .. .. xviii Prospectus of State Advances Corporation' Local Loan .. .. .. .. .. xix

i—B. 6.

8.—6.

Table No. 3. Revenue for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936.

u

Year ended Year ended 31st March, i 31st March, Increase. Decrease. 1937. ! 1936. Taxation — £ £ £ £ Customs .. .. .. .. 9,499,254 8,161,161 1,338,093 Beer duty .. .. .. .. 841,585 715,042 126,543 Sales tax .. .. .. .. 3,044,613 2,462,601 582,012 Film-tire tax .. .. .. .. 72,209 60,657 11,552 Gold-export duty .. .. .. 108,793 106,976 1,817 Highways .. .. .. .. 2,503,111 2,124,130 378,981 Stamp and death duties .. .. .. 3,162,502 2,841,766 320,736 Land-tax .. .. .. .. 1,047,877 458,873 589,004 Income-tax .. .. .. .. 6,618,716 4,581,328 2,037,388 Miscellaneous .. .. .. 42,185 43,881 .. 1,696 Total—Taxation .. .. .. 26,940,845 21,556,415 5,386,126 1,696 Interest — On capital liabilityWorking railways .. .. .. 903,858 1,051,477 .. 147,619 Postal and telegraph .. .. .. 566,000 541,000 25,000 On Public Debt Redemption Fund .. .. 385,855 615,020 .. 229,165 On other public moneys .. .. .. 531,405 513,949 17,456 Total—Interest .. .. .. 2,387,118 2,721,446 42,456 376,784 Other receipts — Registration and other fees .. .. 251,390 235,761 15,629 National-endowment revenue .. .. 152,632 146,126 6,506 Territorial revenue .. .. .. 298,812 289,478 9,334 External affairs .. .. .. .. 154,127 128,562 25,565 Justice .. .. .. .. .. 141,729 149,366 .. 7,637 Marine .. .. .. .. .. 147,480 138,189 9,291 Native .. .. .. .. .. 6,237 5,372 865 Printing and Stationery .. .. .. 231,331 189,581 41,750 Stamp duties .. .. .. .. 64,253 54,886 9,367 Tourist and Health Resorts .. .. 101,809 85,652 16,157 Miscellaneous .. .. .. .. 259,170 463,072 .. 203,902 Recoveries on account of expenditure of 10,001 8,461 1,540 previous years Recoveries on account of unauthorized expendi- 254 .. 254 ture of previous years Total —Other receipts .. .. 1,819,225 1,894,506 136,258 211,539 5,564,840 590,019 590,019 Totals .. .. .. .. 31,147,188 26,172,367 4,974,821

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, 1937.

iii

Difference. Estimate for Actual for 1936-37. 1936-37. More. Less. Taxation — £ £ £ £ Customs 9,100,000 9,499,254 399,254 Beer duty .. •• •• 770,000 841,585 71,585 Sales tax 2,900,000 3,044,613 144,613 Film-hire tax .. .. •• •• 70,000 72,209 2,209 Gold-export duty .. .. •• 110,000 108,793 .. 1,207 Highways 2,512,000 2,503,111 .. 8,889 Stamp and death, duties .. .. •• 3,210,000 3,162,502 .. 47,498 Land-tax 1,300,000 1,047,877 .. 252,123 Income-tax .. .. •• •• 6,000,000 6,618,716 618,716 Miscellaneous .. .. •• •• 45,000 42,185 .. 2,815 Total-Taxation 26,017,000 26,940,845 1,236,377 312,532 Interest — On capital liability — Working railways .. .. •• 900,000 903,858 3,858 Postal and telegraph .. .. .. 560,000 566,000 6,000 On Public Debt Redemption Fund .. 580,000 385,855 .. 194,145 On other public moneys .. .. 480,000 531,405 51,405 Total —Interest 2,520,000 2,387,118 61,263 194,145 Other receipts — Registration and other fees .. •• 235,000 251,390 16,390 National-endowment revenue .. .. 145,000 152,632 7,632 Territorial revenue .. . • • • 290,000 298,812 8,812 External Affairs .. .. •• •• 154,000 154,127 127 Justice 148,000 141,729 .. 6,271 Marine 138,000 147,480 9,480 Native 5,000 6,237 1,237 Printing and Stationery .. .. .. 195,000 231,331 36,331 Stamp duties .. . ■ ■ • • • 55,000 64,253 9,253 Tourist and Health Resorts < .. .. 90,000 101,809 11,809 Miscellaneous 1,070,000 259,170 .. 810,830 Recoveries on account of expenditure of 5,000 10,001 5,001 previous years Recoveries on account of unauthorized expendi- .. 254 254 ture of previous years Total —Other receipts .. .. 2,530,000 1,819,225 106,326 817,101 1,403,966 1,323,778 1,323,778 Total revenue .. •• 31,067,000 31,147,188 80,188 I I

JB.—6

Table No. 5. Estimated Revenue of the Consolidated Fund (Ordinary Revenue Account) for the Year ending 31st March, 1938, compared with the Actual Revenue received for the Year ended 31st March, 1937.

Table No. 6. Stamp and Death Duty Revenue for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936.

IV

Estimate Actual Differences. • for lor — 1937-38. 1936-37. , _ Increase. Decrease. Taxation— £ £ £ £ Customs .. .. .. .. .. .. 10,500,000 9,499,254 1,000,746 Beer duty .. .. .. .. .. 950,000 841,585 108,415 Sales tax .. .. .. .. .. .. 3,650,000 3,044,613 605,387 Film-hire tax .. .. .. .. .. 80,000 72,209 7,791 Gold-export duty .. .. .. .. .. 105,000 108,793 .. 3,793 Highways .. .. .. .. .. 3,058,000 2,503,111 554,889 Stamp and death duties .. .. .. .. 3,450,000 3,162,502 287,498 Land-tax .. .. .. .. .. 1,000,000 1,047,877 .. 47,877 Income-tax .. .. .. .. .. 7,500,000 6,618,716 881,284 Miscellaneous .. .. .. .. .. 45,000 42,185 2,815 Total—Taxation .. .. 30,338,000 26,940,845 3,448,825 51,670 Interest— On capital liability— Working Railways .. .. .. .. 700,000 903,858 .. 203,858 Postal and Telegraph .. .. .. 590,000 566,000 24,000 On the Public Debt Redemption Fund .. .. 500,000 385,855 114,145 On other public moneys .. .. .. .. 495,000 531,405 ..' 36,405 Total—Interest .. .. 2,285,000 2,387,118 138,145 240,263 Other receiptsRegistration and other fees.. .. .. .. 255,000 251,390 3,610 National-endowment revenue .. .. .. 155,000 152,632 2,368 Territorial revenue .. .. .. .. 305,000 298,812 6,188 External Affairs .. .. .. .. .. 220,000 154,127 65,873 Justice .. .. .. .. .. .. 170,000 141,729 28,271 Marine .. .. .. .. .. .. 150,000 147,480 2,520 Native .. .. .. .. .. .. 10,000 6,237 3,763 Printing and Stationery .. .. .. .. 245,000 231,331 13,669 Stamp duties .. .. .. .. .. 65,000 64,253 747 Tourist and Health Resorts.. .. .. .. 110,000 101,809 8,191 Profits of Trading Institutions .. .. .. 360,000 149,020 210,980 Miscellaneous .. .. .. .. .. 100,000 110,150 .. 10,150 Recoveries on account of expenditure of previous years.. 10,000 10,001 .. I Recoveries on account of unauthorized expenditure . . .. 254 .. 254 Total—Other receipts .. 2,155,000 1,819,225 346,180 10,405 3,933,150 302,338 302,338 Totals .. .. .. .. 34,778,000 31,147,188 3,630,812

Year Ended 31st March, « Item. Increase. Decrease. 1937. 1936. £ £ £ , £ Adhesive stamps .. .. 154,527 149,575 4,952 Duty on instruments.. .t 347,738 277,441 70,297 Estate and succession duty .. 1,616,247 1,510,873 105,374 Gift duty .. .. .. 108,887 104,606 4,281 Impressed stamps, and duty on 211,150 197,637 13,513 cheques Stamp duty on interest .. Dr. 98 53 .. 151 Company licenses .. .. 87,771 87,781 .. 10 Sharebrokers'licenses .. 2,068 1,980 88 Bank-note duty .. .. 14,288 34,389 .. 20,101 Totalizator revenue .. .. 503,655 378,851 124,804 Amusements-tax .. .. 70,564 56,507 14,057 Lottery duty .. .. 20,153 17,762 2,391 Overseas-passenger duty .. 22,148 20,685 1,463 Rates, fines, and miscellaneous 3,404 3,626 .. 222 341,220 20,484 20,484 Totals .. .. 3,162,502 2,841,766 320,736

8.—6.

Table No. 7. Statement showing Customs Duties collected for Year ended 31st March, 1937, compared with the Year ended 31st March, 1936.

Table No. 8. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1937, compared with the Financial Year ended 31st March, 1936.

V

1936-37. 1935-36. Increase. ' Decrease. £ £ £ £ Tobacco, cigars, and cigarettes 1,899,798 1,709,252 190,546 Spirits, wine, and beer .. . .. 846,907 733,791 113,116 Motor-vehicles and parts* .. .. .. 979,490 677,634 301,856 Motor-spirit* .. .. .. .. 1,355,075 1,176,260 178,815 Tea .. .. .. .. .. 134,811 133,505 1,306 Sugar .. .. .. .. .. 678,165 673,206 4,959 Other goods .. .. .. .. 2,686,786 2,222,989 463,797 Primage duty .. .. .. .. 319,614 324,717 .. 5,103 Surtax .. .. .. .. .. 598,608 509,807 88,801 1,343,196 5,103 5,103 Totals.. .. .. .. 9,499,254 8,161,161 1,338,093 * Excluding tire-tax and petrol-tax earmarked to Main Highways.

Year ended Year ended 31st March, 31st March, Increase. Decrease, 1937. 1936. Permanent Appropriations:— £ £ £ £ Under special Acts of Legislature,—■ Cml List .. .. .. .. .. 28,472 26,516 1,956 Debt Services — Interest .. .. .. .. .. 7,604,469 7,730,194 .. 125,725 Amortization of debt— Sinking fund .. .. .. .. 10,859 10,859 Repayment of Public Debt Act, 1925 .. 1,624,508 1,543,086 81,422 Transfers to Loans Redemption Account .. 66,115 13,987 52,128 Administration and management .. .. 81,543 29,285 52,258 Payments on guaranteed loans .. Cr. 7,190 18,543 .. 25,733 Securities redeemed .. .. .. 5 .. 5 Total—Debt Services .. .. .. 9,380,309 9,345,954 185,813 151,458 Other Services— Education.. .. .. .. .. 95,526 95,967 .. 441 Contribution towards Singapore Naval Base .. .. 100,000 .. 100,000 Other grants and subsidies .. .. .. 253,319 251,447 1,872 Salaries and honoraria .. .. .. 71,135 65,350 5,785 Pensions .. .. .. .. .. 43,692 44,351 .. 659 Highways— Transfers to Main Highways Account .. 2,333,753 1,975,945 357,808 Paid to boroughs .. .. .. .. 154,265 109,427 44,838 Expenses of collecting, &c... .. .. 21,425 22,034 .. 609 Advances .. .. .. .. .. 11,817 3,342 8,475 Other special Acts— Exchange on remittances of public moneys to 1,581,351 1,593,536 .. 12,185 or from countries overseas Miscellaneous .. .. .. .. 113,435 114,579 .. 1,144 Total—Other Services .. .. 4,679,718 4,375,978 418,778 115,038 Total—Permanent Appropriations .. 14,088,499 13,748,448 \ 606,547 266,496

i}. —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, 1937, compared with the Financial Year ended 31st March, 1936—continued.

vi

Year ended Year ended 3l8t -March, 31st March, Increase. Decrease. 1937. 1936. Annual Appropriations:— £ £ £ £ Vote, — Legislative.. .. .. .. .. 106,840 79,238 27,602 Prime Minister's Department .. .. 27,502 23,521 3,981, Finance — Treasury .. .. .. .. .. 40,854 41,834 .. 980 Customs .. .. .. .. .. 112,098 96,034 16,064 Land and Income Tax .. .. .. 140,180 74,829 65,351 Stamp Duties .. .. .. .. 91,354 87,515 3,839 Audit .. .. .. .. .. 36,121 29,468 6,653 Total—Finance .. .. .. 420,607 329,680 91,907 980 General Administration— Publio Service Commissioners'Office .. .. 6,982 4,334 2,648 Internal Affairs .. .. .. .. 368,003 363,658 4'345 External Affairs .. .. .. .. 158,255 136,667 21,588 Printing and Stationery .. .. .. 227,422 176,098 51,324 Marine .. .. .. .. .. 123,423 112,710 10,713 Labour .. .. .. .. .. 206,358 44,971 161,387 Native .. .. .. .. .. 286,956 48,918 238,038 Valuation .. .. .. .. .. 58,509 48,178 10,331 Electoral .. .. .. .. .. 11,806; 85,833 .. 74,027 Census and Statistics .. .. .. 63,809 .. 63,809 Total—General Administration .. 1,511,523 1,021,367 564,183 74,027 Law and Order— Justice and Prisons .. .. .. 273,486: 251,111 22,375 Crown Law Office .. .. .. .. 7,419 j 6,273 1,146 Police .. .. .. .. .. 496,978 453,890 43,088 Total—Law and Order .. .. 777,883 711,274 66,609 Defence— Naval Defence .. .. .. .. 632,062 462,245 169,817 Defence .. .. .. .. .. 560,017 552,125 7,892 Total—Defence .. .. .. 1,192,079 1,014,370 177,709 Maintenance of Public Works and Services .. 1,174,991 145,492 1,029,499 Development of Primary and Secondary Industries— Lands and Survey ... .. .. 401,900 189,652 212,248 Agriculture .. .. .. .. 692,267 591,802 100,465 Industries and Commerce, Tourist, and Publicity 176,808 161,872 14,936 Scientific and Industrial Kesearch .. .. 97,517 59,848 37,669 Mines .. .. .. .. .. 28,923 19,240 " Transport.. .. .. .. .. 28,038 25,205 2,833 Total — Development of Primary and 1,425,453 1,047,619 377,834 Secondary Industries U Social Services— Health .. .. .. .. .. 996,840 808,966 187,874 Mental Hospitals .. .. .. .. ' 334,636 279,670 54,966 Education .. .. .. .. 3,396,234 2,795,098 601,136 Pensions .. .. .. .. .. 5,072,735 3,769,612 1,303,123 National Provident and Friendly Societies .. 112,545 102,866 9,679 Total—Social Services.. .. .. 9,912,990 7,756,212 2,156,778 Unauthorized Expenditure,— Services not provided for .. .. .. 36,791 13,346 23,445 Total—Annual Appropriations .. .. 16,586,659 12,142,119 4,519,547 75,007 5,126,094 341,503 341,503 Total Expenditure .. .. .. 30,675,158 25,890,567 4,784,591

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, 1937.

vii

Net Actual Net Difference. Appropriations, Expenditure, 1936-37. 1936-37. More Lesa _ Pt&MANENT Appropriations :— £ £ £ £ tinder Special Acts of the Legislature,— Civil List .. .. .. .. •• ' 30,050 28,472 .. 1,578 Debt services— Interest .. .. .. .. .. 7,541,367 7,604,469 63,102 Amortization of Debt—Sinking Fund .. .. .. .. 10,859 10,859 Repayment of Public Debt Act, 1925 .. 1,624,700 1,624,508 .. 192 Transfers to Loans Redemption Account .. 15,000 66,115 51,115 Securities redeemed .. .. .. 1,000 5 .. 995 Administration and Management .. .. 59,500 81,543 22,043 Payments on Guaranteed Loans .. 6,300 Gr. 7,190 .. 13,490 Total —Debt services .. .. 9,258,726 9,380,309 136,260 14,677 Other services— Education .. .. .. .. 95,526 95,526 Other Grants and Subsidies .. .. .. 255,000 253,319 .. 1,681 Salaries and Honoraria .. .. .. 84,979 71,135 .. 13,844 Pensions .. .. .. .. •• 44,523 43,692 .. 831 Highways .. .. .. .. . ■ 2,512,000 2,509,443 .. 2,557 Exchange.. .. .. .. .. 1,455,000 1,581,351 126,351 Other Special Acts .. .. .. .. 109,206 125,252 16,046 Total—Other services .. .. 4,556,234 4,679,718 142,397 18,913 Total—Permanent Appropriations.. 13,845,010 14,088,499 278,657 35,168 Annual Appropriations :— Vote, — Legislative .. .. .. .. .. 112,301 106,840 .. 5,461 Prime Minister's Department .. .. .. 27,256 27,502 246 Finance— Treasury .. .. .. .. .. 42,696 40,854 .. 1,842 Customs .. .. .. .. .. 114,711 112,098 .. 2,613 Land and Income Tax .. .. .. 146,952 140,180 .. 6,772 Stamp Duties .. .. .. .. 92,719 91,354 .. 1,365 Audit .. .. .. .. .. 38,469 36,121 .. 2,348 Total—Finance .. .. .. 435,547 420,607 .. 14,940 General Administration — Public Service Commissioner's Office .. .. 5,200 6,982 1,782 Internal Affairs .. .. .. .. 364,517 368,003 3,486 External Affairs .. .. .. .. 145,080 158,255 13,175 Printing and Stationery .. .. .. 204,209 227,422 23,213 Marine .. .. .. .. .. 131,676 123,423 .. 8,253 Labour .. .. .. .. .. 218,076 206,358 .. 11,718 Native .. .. .. .. .. 284,028 286,956 2,928 Valuation .. .. .. .. .. 58,990 58,509 .. 481 Electoral .. .. .. .. 12,770 ' 11,806 .. 964 Census and Statistics .. . . .. 67,542 63,809 .. 3,733 Total —General Administration .. 1,492,088 1,511,523 44,584 25,149 Law and Order— Justice and Prisons .. .. .. 271,129 273,486 2,357 Crown Law Office .. .. .. .. 7,797 7,419 .. 378 Police .. .. .. .. .. 499,896 496,978 .. 2,918 Total —Law and Order .. .. 778,822 777,883 2,357 3,296 13 efence Naval Defence .. .. .. .. 651,630 632,062 .. 19,568 Defence .. .. .. 631,336 560,017 .. 71,319 Total—Defence .. 1,282,966 1,192,079 .. 90,887 Maintenance of Public Works and Services .. 1,179,680 1,174,991 .. 4,689

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, 1937 —ctd.

viii

Net Actual Net Difference. Appropriations, Expenditure, , 1936-37. 1936-37. ! More _ Less _ | ; I . Annual Appropriations—continued. £ £ £ £ Vote—continued. Development of Primary and Secondary Industries— Lands and Survey .. .. .. ... 407,278 401,900 .. 5,378 Agriculture .. .. .. .. 663,377 692,267 28,890 Industries and Commerce, Tourist, and Publicity 177,530 176,808 .. 722 Scientific and Industrial Research .. .. 99,168 97,517 .. 1,651 Mines .. .. .. .. .. 46,114 28,923 .. 17,191 Transport.. .. .. .. .. 30,834 28,038 .. 2,796 Total —Development of Primary and 1,424,301 1,425,453 28,890 27,738 Secondary Industries — Social Services— Health .. .. .. .. .. 959,445 996,840 37,395 Mental Hospitals .. .. .. .. 342,935 334,636 .. 8,299 Education .. .. .. .. 3,457,837 3,396,234 .. 61,603 Pensions .. .. .. .. .. 5,611,475 5,072,735 .. 538,740 National Provident and Friendly Societies .. 112,604 112,545 .. 59 Total—Social Services .. .. 10,484,296 9,912,990 37,395 608,701 Unauthorized Expenditure, — Services not provided for .. .. .. .. 36,791 36,791 Total—Annual Appropriations .. 17,217,257 16,586,659 150,263 780,861 428,920 816,029 428,920 Total Expenditure .. .. 31,062,267 30,675,158 .. 387,109

8.—6.

Table No. 10. Estimated Net Expenditure of the Ordinary Revenue Account for the Year ending 31st March, 1938, compared with Actual Net Expenditure for the Year ended 31st March, 1937.

11 —B. 6.

ix

Estimate I Actual Difference. for I for " 1937-38. | 1936-37. Decrease . Permanent Appropriations,— £ £ £ £ Civil List .. .. .. .. .. 30,600 28,472 2,128 Debt services— Interest .. .. .. .. .. 7,629,525 7,604,469 25,056 Sinking Fund .. .. .. .. .. 10,859 10,859 Repayment of Public Debt .. .. .. 1,704,700 1,624,508 80,192 Administration and Management .. .. .. 50,970 81,543 .. 30,573 Payments of Guaranteed Loans, Redemptions, and Cr. 285 58,930 .. 59,215 Tr£tnsfcrs ■ —— Total—Debt services .. .. .. 9,395,769 9,380,309 105,248 89,788 Under Special Acts of the Legislature — Education .. .. .. .. .. 95,540 95,526 14 Salaries and Honoraria .. .. .. .. 72,035 71,136 899 Pensions .. .. .. .. .. 45,160 43,693 1,467 Highways .. .. .. .. ... 3,058,500 2,509,443 549,057 Exchange .. .. .. .. .. 1,700,000 1,581,351 118,649 Other Special Acts .. .. .. .. 357,106 378,569 .. 21,463 5,328,341 4,679,718 670,086 21,463 Total —Permanent appropriations .. 14,754,710 14,088,499 777,462 111,251 Annual Appropriations,— Legislative .. .. .. .. .. 110,000 106,840 3,160 Prime Minister's Department .. .. .. 25,505 27,502 .. 1,997 Finance — Treasury .. .. .. .. .. 40,647 40,854 .. 207 Customs .. .. .. .. .. 125,342 112,098 13,244 Land and Income Tax .. .. .. .. 161,870 140,180 21,690 Stamp Duties .. .. .. .. .. 94,741 91,354 3,387 Audit .. .. .. .. .. .. 42,876 36,121 6,755 465,476 420,607 45,076 207 General Administration— ■ Public Service Commissioners'Office .. .. 9,400 6,982 2,418 Internal Affairs .. .. .. .. .. 456,415 368,003 88,412 External Affairs .. .. .. .. 246,321 158,255 88,066 Printing and Stationery .. .. .. .. 238,000 227,422 10,578 Marine.. .. .. .. .. .. 158,987 123,423 35,564 Labour .. .. .. .. .. 120,964 206,358 .. 85,394 Native.. .. .. .. .. .. 152,420 286,956 .. 134,536 Valuation .. .. .. .. .. 62,000 58,509 3,491 Electoral .. .. .. .. .. 9,842 11,806 .. 1,964 Census and Statistics .. .. .. .. 33,999 63,809 .. 29,810 1,488,348 1,511,523 228,529 251,704 Law and Order— —. Justice and Prisons .. .. .. .. 327,590 273,486 54,104 Crown Law .. .. .. .. .. 7,869 7,419 450 Police .. .. .. .. .. .. 610,000 496,978 113,022 945,459 777,883 167,576 Defence— — Navy .. .. .. .. .. .. 734,797 632,062 102,735 Army .. .. .. .. .. .. 550,000 427,635 122,365 Air .. .. .. .. .. .. 315,000 132,382* 182,618 1,599,797 1,192,079 407,718 Maintenance of Public Works and Services .. .. 1,150,000 1,174,991 .. 24,991 Development of Primary and Secondary Industries — Lands and Survey .. .. .. .. 386,000 401,900 .. 15,900 Agriculture .. .. .. .. .. 754,485 692,267 62,218 Industries and Commerce, Tourist, and Publicity .. 355,500 176,808 178,692 Scientific and Industrial Research .. .. .. 133,538 97,517 36,021 Mines .. .. .. .. .. .. 44,000 28,923 15,077 Transport .. .. .. .. .. 46,500 28,038 18,462 1,720,023 1,425,453 310,470 15,900 Social Services— . Health.. .. .. .. .. .. 1,141,650 996,840 144,810 Mental Hospitals .. .. .. .. 390,500 334,636 55,864 Education .. .. .. .. .. 3,745,325 3,396,234 349,091 Pensions .. .. .. .. .. 6,769,423 5,072,735 1,696,688 National Provident and Friendly Societies .. .. 121,505 112,545 8,960 12,168,403 9,912,990 2,255,413 Services not provided for .. .. .. .. .. 36,791 .. 36,791 Total—Annual appropriations .. .. 19,673,011 16,586,659 3,417,942 331,590 4,195,404 442,841 442,841 Totals .. .. .. .. 34,427,721 30,675,158 3,752,563 * Appropriated and expended under \'ote " Detence," 1936-37.

8.—6

Table No. 11. PUBLIC WORKS FUND. Statement showing the Net Expenditure under Appropriations for the Year ended 31st March, 1937, compared with the Year ended 31st March, 1936.

X

I I Vnto Year ended Year ended T r» 31st March, 1937. 31st March, 1936. Increase. Decrease. £ £ £ £ Public Works, Departmental .. .. 137,748 99,385 38,363 Railway-construction .. .. 586,982 Cr. 34,898 621,880 Railways Improvement and Additions to 432,112 292,909 139,203 Open Lines Public Buildings— General .. .. .. .. 58,565 39,532 19,033 Courthouses .. .. .. 2,655 8,701 .. 6,046 Education Buildings .. .. 268,884 122,357 146,527 Prison Buildings and Works .. 4,621 2,123. 2,498 Police-stations .. .. .. 7,149 6,710 439 Postal and Telegraph .. .. 158,005 97,800 60,205 Mental Hospital Buildings .. .. 142,109 67,465 74,644 Health and Hospital Institutions .. 12,921 2,191 10,730 Lighthouses .. .. .. 630 3,320 .. 2,690 Harbour-works .. .. .. 669 Or. 399 1,068 Development of Tourist Resorts .. 16,789 13,683 3,106 Roads, &c. .. .. .. .. 913,720 444,377 469,343 Telegraph Extension .. .. .. 232,512 195,380 37,132 Lands, Miscellaneous .. .. 62,673 37,909 24,764 Irrigation, Water-supply, and Drainage.. 11,062 85,414 .. 74,352 Swamp Land Drainage .. .. 24,965 12,922 12,043 Plant, Material, and Services .. .. .. 22,438 .. 22,438 Settlement of Unemployed Workers .. 92,016 146,480 .. 54,464 Native Land Settlement .. .. 112,319 71,887 40,432 Dairy Industry Loans .. .. 30,510 10,750 19,760 Totals, annual appropriations 3,309,616 1,748,436 1,721,170 159,990 Unauthorized—Services not provided for .... 21 14 7 Totals .. .. .. 3,309,637 1,748,450 1,721,177 159,990 159,990 1,561,187

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, 1937.

xi

8.—6.

WAYS AND MEANS. Loans :— £ s. d. £ 8. d. Immigration and Public Works Loan, 1870 • - .. ■ ■ 4,000,000 0 0 Immigration and Public Works Loan, 1873 .. • • ■ ■ 2,000,000 0 0 Immigration and Public Works Loan, 1874 .. .. • • 4,000,000 0 0 General Purposes Loan Act, 1873 .. .. • • •• 750,000 0 0 New Zealand Loan Act, 1876 .. .. •• •• 750,000 0 0 New Zealand Loan Act, 1877 .. .. .. .. 2,200,000 0 0 New Zealand Loan Act, 1879 .. .. .. •• 5,000,000 0 0 New Zealand Loan Act, 1882 .. .. .. • • 3,000,000 0 0 New Zealand Colonial Inscribed Stock Loan Act, 1882 .. .. 250,000 0 0 North Island Main Trunk Railway Loan Act, 1882 .. .. 1,000,000 0 0 New Zealand Loan Act, 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 11 New Zealand Loan Act, 1888 .. .. .. 1,000,000 0 0 Native Land Purchase Act, 1892 .. .. .. •• 149,700 0 0 Lands Improvement and Native Lands Acquisition Act, 1894 .. 500,000 0 0 Aid to Public Work3 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 .. ■■ 5,061,533 0 3 Aid to Public Works and Land Settlement Act, 1922 .. .. 4,408,860 12 3 Finance Act, 1909 .. .. .. •• 1,250,000 0 0 Finance Act, 1915, and New Zealand Loans Act, 1915 .. .. 2,000,000 0 0 Finance Act, 1916 .. .. .. •• 1,000,000 0 0 Finance Act, 1917 .. .. .. •• •• • ■ 850,000 0 0 Finance Act, 1918 (No. 2) .. .. .. .. •• 2,500,000 0 0 Finance Act, 1919, Section 5 .. •• .. •• 750,000 0 0 Finance Act, 1920, Section 15 . .. .. •• 2,500,000 0 0 Finance Act, 1921, Section 10 .. .. .. .. 2,673,111 10 11 Finance Act, 1923, Section 2 .. .. .. .. 4,306,608 17 6 Finance Act, 1924, Section 2 .. .. .. .. 2,126,013 12 6 Finance Act, 1925, Section 2 .. .. .. .. 4,151,450 10 2 Finance Act, 1926, Section 2 .. .. .. .. 5,220,134 10 7 Finance Act, 1927 (No. 2), Section 2 .. .. .. .. 4,319,594 10 3 Finance Act, 1928, Section 2 .. .. .. .. 3,185,132 14 8 Finance Act, 1929, Section 2.. .. .. .. .. 4,097,119 4 6 Finance Act, 1930 (No. 2), Section 2 .. .. .. .. 5,000,000 0 0 Finance Act, 1931 (No. 4), Section 2 .. .. .. .. 3,000,000 0 0 Finance Act (No. 3), 1934, Section 2 .. .. .. .. 3,444,918 10 10 Stock issued for Expenses of Conversion, 1930-31 .. .. 360,835 18 0 Post and Telegraph Act, 1908 .. .. .. •. 200,000 0 0 Midland Railway Petitions Settlement Acts, 1902 and 1903 .. 150,000 0 0 Paeroa-Waihi Railways Act, 1903 .. .. .. •• 75,000 0 0 Waikaka Branch Railway Act, 1905 .. .. .. .. 50,000 0 0 Appropriation Act, 1912 .. .. .. .. •• 15,000 0 0 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 5 442,614 16 9 Receipts in Aid: — 114,640,005 17 1 Amount transferred from Consolidated Fund .. .. .. 14,555,000 0 0 Contributions of Canterbury Province for Railways .. .. 56,000 0 0 Proceeds of Railway Material handed over to Cook County Council 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 Publio Bodies Empowering Act, 1912 Carried forward 14,922,474 9 4 j 114,640,005 17 1

B.—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, 1937—continued.

Table No. 13. Statement showing the Amount charged to "Unauthorized" in each Financial Year from 1st April, 1926, to 31st March, 1937.

xii

WAYS AND MEANS—continued. £ s. d. £ s. d. Brought forward .. .. .. 14,922,474 9 4 114,640,005 17 1 Receipts in Aid—continued. 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 71,073 0 3 1893 Special Receipts under the Railways Authorization and Manage- 2,257 1 9 ment Act, 1891 Special Receipts under the North Island Main Trunk Railway Loan 114,550 19 6 Application Act, 1886 Sinking Funds released .. .. .. .. .. 506,819 19 3 Finance Act, 1932, Section 7 (4) — Sale of land under Hauraki Plains Act, 1926 .. .. .. 17,216 14 4 Settlement of Unemployed Workers .. .. .. .. 111,448 4 11 Receipts under Section 12 of Native Land Amendment Act, 1932.. 40,092 12 2 Agriculture (Emergency Powers) Act, 1934, Section 26 .. .. ! 769 13 6 Finance Act, 1932, No. 2, Section 16—• Transfer from Land for Settlements Account.. .. .. 43 6 8 Transfer from State Forests Account .. .. .. 14 17 1 15,847,377 1 9 £130,487,382 18 10 NET EXPENDITURE. Expenditure on— Immigration .. .. .. .. .. .. 3,312,913 1 6 Public Works, Departmental .. .. .. .. .. 3,211,990 2 9 Railways, including Surveys of New Lines and Payment to Midland 57,600,965 12 9 Railway Bondholders Roads .. .. .. .. .. .. .. 23,899,855 0 4 Land-purchases .. .. .. .. .. .. 2,054,023 13 8 Settlement of Unemployed Workers .. .. .. .. 756,501 15 2 Development of Mining .. .. .. .. .. 880,855 3 6 Telegraph Extension .. .. .. .. .. .. 11,988,429 16 8 Public Buildings .. .. .. .. .. .. 12,781,988 6 4 Lighthouses, Harbour-works, and Harbour-defences .. .. 1,323,344 11 3 Contingent Defence .. .. .. .. .. .. 1,401,079 18 11 Rates on Native Lands .. .. .. .. .. 68,671 16 10 Thermal Springs .. .. .. .. .. .. 14,599 13 2 Development of Tourist Resorts .. .. .. .. 733,925 12 1 Lands Improvement .. .. .. .. .. .. 980,342 16 3 Swamp Land Drainage .. .. .. .. .. 80,881 9 3 Plant, Material, and Services .. .. .. .. .. 139,344 4 11 Charges and Expenses of raising Loans .. .. .. .. 3,828,307 3 7 Coal-mines .. .. .. .. .. .. .. 10,835 8 0 Interest and Sinking Fund .. .. .. .. .. 218,500 0 0 Irrigation and Water-supply .. .. .. .. .. 1,314,240 12 2 Motor Transport Service .. .. .. .. .. 33,635 5 3 Transfer to Main Highways Account, Construction Fund .. .. 1,226,000 0 0 Native Land Settlement .. .. .. .. .. 466,866 3 9 Dairy Industry Loans .. .. .. .. .. .. 41,259 12 5 128,369,357 0 6 Balance on 31st March, 1937, — Cash in the Public Account .. .. .. .. .. 2,042,680 18 4 Investments.. .. .. .. .. .. .. 75,345 0 0 2,118,025 18 4 £130,487,382 18 10

Consolidated Fund.—Revenue Account. F INA N OIAL Ye A b. I Ac °coun™. PūB TuNr EKS 8er vMedTor Pr °" Excess of VoteB ' TotaI ' 1926-1927 .. 27,913 18 1 12 4 73,332 10 5* 1,581 10 7 2,801 18 9 77/715 19 9' 1927-1928 .. 15,942 13 4 51,560 10 5 67,503 5 9 10,740 8 2 49,604 6 11 127,848 0 10 1928-1929 .. 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 1«, 182 17 10 37,881 3 10 21,577 6 4 1,376 10 3 60,835 0 5 1932-1933 .. 45,724 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 1935-1936 .. 13,346 5 0 126,457 14 3 139,803 19 3 108,641 5 3 13 18 5 248,459 2 11 1936-1937 .. 36,790 15 3 113,473 1 4 150,263 16 7 81,170 9 10 2,002 19 6 233,437 5 11

8.—6

Table No. 14. Statement showing the available Financial Resources of the various Accounts on the 31st March, 1937, as compared with the 31st March, 1936.

Table No. 15. PENSIONS. Statement of Amounts paid on Account of Pensions for the Financial Years ended 31st March from 1933 to 1937.

xiii

1937. 1936. Account. Balance Liabilities JXritTta Balance Liabilities fXrftyTor 3 nir h ' «■&* »*&*• rags Consolidated Fund — £ £ £ £ £ £ Ordinary Revenue .. .. 958,665 437,859 500,000 479,636 287,813 500,000 Public Works Fund— General Purposes .. .. .. 2,118,026 812,778 6,555,081 1,902,651 385,582 4,005,634 Electric Supply .. .. .. 143,634 95,131 1,517,590 217,604 72,456 1,347,590 Electric Supply Sinking Fund .. 13,430 .. .. 17,555 Bank of New Zealand Shares .. 1,859,375 .. .. 1,859,375 .. • Discharged Soldiers Settlement .. 334,007 1,457 .. 151,751 8,383 Employment Fund Promotion .. 253,245 189,621 .. I 406,711 285,717 Land for Settlements .. .. 484,603 2,601 6,278,000 328,746 12,656 6,278,000 Loans Redemption .. .. .. 74,519 .. .. 584,583 .. Main Highway —- Go e n~tln1und- " !! } 74 ' 327 275 ' 378 2 > 052 ' 400 { "IS «$8 90^900 Public Debt Repayment .. .. 39,795 .. .. 106,387 Reserve Fund .. .. .. 363,524 .. . „ 352,497 Samoan Loan Suspense .. .. .. .. 4,800 .. .. 4,800 Silver and Bronze Coinage Account .. 696,635 .. .. 634,753 State Coal-mines 70,403 23,070 55,000 75,872 15,401 55,000 State Coal-mines Sinking Fund .. 9,182 .. .. 8,821 State Forests .. .. .. 45,352 8,842 410,225 14,565 8,952 546,225 Working Railways .. .. .. 1,301,739 390,122 .. 1,796,656 298,137 State Advances Loan .. .. •• .. 8,714,250 .. .. 8,714,250 Housing Account .. .. .. •• •• 6,150,000 .. .. 1,250,000 Additional Unexhausted Authorities for raising Loans. Government Accident Insurance Act, 1908 .. .. 23,000 .. .. 23,000 State Fire Insurance Act, 1908 .. .. .. 98,000 .. .. 98,000 Totals .. .. .. 8,840,461 2,236,859 32,358,346 9,027,554 1,570,306 23,728,399

Year ended 31st March, 1933. 1934. I 1935. 1936. I 1937. I | . I £ £ £ £ £ War .. .. .. 1,217,586 1,246,441 1,264,110 1,349,447 1,483,345 Old-age .. .. 1,271,157 1,350,982 1,519,889 1,718,601 2,413,103 Widows' .. .. •• 311,317 302,020 296,565 311,864 412,280 Miners' .. .. .. 62,563 56,810 58,740 67,834 83,253 Maori War .. .. •• 5,831 4,522 3,607 2,577 1,972 Epidemic 4,197 3,290 1,983 907 253 Civil Service Act, 1908 .. 6,453 5,917 5,211 4,676 4,106 Defence Act, 1909 .. .. 2,176 2,163 2,084 2,127 2,067 Judicature Act, 1908 .. 1,833 2,272 2,682 3,222 2,753 Police 1,166 1,384 1,449 1,575 1,849 Blind .. .. .. 18,065 19,306 21,227 22,991 6,181 Family Allowance .. .. 122,810 146,766 152,818 149,043 130,730 War Veterans'Allowances .. .. .. .. 16,544 110,667 Sundry .. .. •• 6,627 8,022 7,989 8,256 9,290 Invalidity .. .. .. •• ■■ •• 278,579 Totals .. .. 3,031,781 3,149,895 3,338,354 3.659,664 4,940,428

8.—6

Table No. 16. EDUCATION EXPENDITURE. Total Expenditure on Education out of Public Funds, including Primary, Secondary, Higher Education, Technical and Special Schools, and Child Welfare, 1913-14 to 1936-37

Additional amounts are available from revenue from reserves vested in postprimary schools and University colleges as follows: — £ Post-primary schools .. .. .. 35,683 University colleges .. . . . . .. 20,858 £56,541 The following amounts were paid out of the Government Fire Insurance Fund for rebuilding school buildings destroyed by fire :— £ 1916-17 .. .. .. .. .. 2,127 1917-18 .. .. .. .. .. 2,658 1919-20 .. .. .. .. ..15,682 1920-21 .. .. .. .. ..16,162 1921-22 .. .. .. .. .. 27,103 1922-23 .. .. .. .. .. 8,542 1923-24 .. .. .. .. .. 12,490 1924-25 .. .. .. .. .. 32,829 1925-26 .. .. .. .. ..4,938 1926-27 .. .. .. .. .. 10,337 1927-28 .. .. .. .. .. 12,474 1928-29 . . . . .. .. ... 12,197 1929-30 .. .. .. .. 6,357 1930-31 .. .. .. .. .. 6,671 1931-32 .. . .. .. .. 7,768 1932-33 .. .. .. .. ..6,424 1933-34 .. .. .. .. .. 3,846 1934-35 .. .. .. .. 8,541 1935-36 .. .. .. .. .. 5,149 1936-37 .. .. .. .. .. 6,831

xiv

Loan-money: Erection Consolidated Fund. of School Buildings ; and Residences. Per Head Vote, Subsidies °f Year. National Education pt° o„v.r .. Total. Mean Special , Endow- (excluding t Teachers' TO , lc noa ion Populaf . 1 j. o trom Works Loans H<-m Acts. ment Superannua- Reserves . Super- Jund Aecoant tion. Revenue. tion annuation Subsidies). Lund. £ £ £ £ £ £ £ £ £ s. d. 1913-14 .. 27,742 50,681 1,131,756 71,808 17,000 121,954 .. 1.420,941 1 5 3 1914-15 .. 26,128 55,139 1,207,983 70,802 17,000 122,940 .. 1,499,992 1 6 2 1915-16 . 46,874 64,858 1,329,166 84,390 17,000 97,972 .. 1,640,260 1 8 6 1916-17 .. 58,408 60,180 1,406,264 90,535 17,000 70,367 .. 1,702,754 1 9 8 1917-18 .. 59,362 70.345 1,511,256 90,518 17,000 63,082 .. 1,811,563 1 11 5 1918-19 .. 57,716 76,177 1,602,995 92,095 43,000 115,656 .. 1,987,639 1 14 1 1919-20 .. 79,747 78,988 2,031,825 99,352 43,000 195,500 .. 2,528,412 2 1 10 1920-21 .. 101,972 70,313 2,460,116 100,758 43,000 244,722 214,571 3,235,452 2 11 8 1921-22 .. 96,217 71,737 2,580,562 105,448 43,000 2.469 563,411 3,462,844 2 13 10 1922-23 .. 90,393 66,610 2,514,991 112,378* 68,000 .. 361,976 3,214,348 2 9 0 1923-24 .. 96,506 77,788 2,604,508 116,808*68,000 .. 295,681 3,259,291 2 8 11 1924-25 .. 128,844 86,746 2,752,271 118,973* 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 3,230,200 106,405*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 57,294 51,435 .. 2,749,134 1 15 8 1934-35 .. .. 87,207 2,550,100 128,738 165,306 51,289 .. 2,982,640 1 18 5 1935-36 .. .. 95,968 2,747,582 118,883 170,026 121.424 .. 3,253,883 2 1 4J 1936-37 ..1 .. 95,526 3,348,449| 88,713 169,362 268,884 .. 3,970,984 2 10 3 i * Net revenue after deducting expenses and cost of collection. f Includes £80 charged to " Unauthorized." { On census results.

8.—6,

Table No. 17. State Balance-sheet as at 31st March, 1936. Liabilities. Assets. Capital— £ s. d. Land and buildings, including Crown, settlement, and £ s. d. Public debt* .. .. .. 285,461,097 19 9 endowment land, departmental land and buildings 40,660,489 8 8 Rural Advances bonds .. .. 4,213,050 0 0 State forests, nurseries, and plantations .. .. 38,976,424 0 6 Employment Promotion Fund .. 455,100 5 4 Railways, including permanent-way and works, Public Debt Redemption Fund .. 17,225,644 10 6 rolling-stock, and unopened lines .. .. 59,483,494 11 5 Creditors— Telegraphs, telephones, and wireless systems .. 11,198,102 9 7 Sundry .. .. .. .. 2,730,392 18 1 Electrical schemes .. .. .. .. 13,249,117 9 2 Interest on debentures and stock due Drainage and irrigation schemes .. .. 4,389,963 0 3 and unpaid* .. .. .. 19,910 10 0 Collieries, sawmills, quarries, &c. .. .. 408,864 6 5 Interest on public debt accrued but Armament and military stores, aviation equipment 2,771,459 9 6 not due* .. .. .. 2,280,729 3 7 Oyster-beds, fish-hatcheries, equipment, &c. .. 122,708 19 2 Wages and other payments accrued 55,478 7 5 Wharves, bridges, harbour-works, lighthouses, &c... 718,824 19 0 Payments in advance, &e. .. .. 443,165 0 1 Plant, material, and furniture .. .. .. 2,964,902 11 2 Reserves — Libraries, books, museum exhibits, stationery, General .. .. .. 4,102,075 12 11 stamps, &c. .. .. .. .. 222,445 16 11 Sinking fund and reserves for loan- Live and dead stock, farm crops, &c. .. .. 406,449 7 1 redemption .. .. .. 3,291,129 1 6 Government steamers, launches, motor-cars, &c. .. 462,156 0 9 Depreciation .. .. .. 6,723,957 10 4 Advances on loan or mortgage .. .. .. 15,649,595 5 0 Fire, accident, and marine insurance, Debtors — bad debts, &c. .. .. 1,014,496 9 5 Sundry .. .. .. .. .. 2,472,602 6 8 Amount held on deposit .. .. 594,208 911 Unpaid purchase-price of land and buildings, and Suspense .. .. .. .. 209,234 16 6 interest thereon .. .. .. .. 2,080,200 7 3 Post Office investment and war-loan Postponed rents, &c. .. .. .. 316,974 9 9 certificates .. .. .. 897,590 8 0 Interest and rent, due and unpaid, and due and Miscellaneous liabilities .. .. 74,742 16 6 accrued .. .. .. .. .. 1,424,126 5 4 Excess of assets over liabilities .. 60,958,217 10 3 Special investments — Nauru phosphate rights .. .. .. 565,040 0 0 Bank of New Zealand shares .. .. .. 2,109,375 0 0 Reserve Bank of New Zealand .. .. 1,000,000 0 0 Public Trust Office (Public Debt Redemption Fund, &c.) .. .. .. .. 7,966,688 11 2 Crown interest in State Advances Corporation .. 41,617,964 17 1 Special assets of various accounts — Native land schemes, &c. .. .. .. 1,020,105 7 7 Unallocated loan charges .. •• •• 655,788 5 3 Payments in advance .. .. .. .. 297,196 12 3 Properties acquired by Crown and properties in course of realization .. .. .. .. 1,045,612 22 Investments — Reserve Fund .. .. .. .. 324,653 14 0 Sinking funds .. .. .. •• 1,121,197 9 8 Miscellaneous, including investment of Treasury' accounts .. .. .. •• 6,521,473 12 5 National Development Account — Expenditure on— £ s. d. Main highways, roads, &c. 30,861,589 4 1 Development of mining .. 867,467 15 11 Education, &c. .. .. 8,467,610 18 3 Immigration .. .. 3,318,944 0 9 Harbour-works .. .. 1,045,668 15 1 Land-development .. 840,061 0 3 Cost of raising loans .. 295,978 11 7 45,697,320 5 11 Other loan expenditure— War expenditure .. .. 67,863,693 3 6 Naval defence .. . . 1,389,656 I 5 Local bodies .. .. 3,037,229 19 2 Maori-land settlement . . 247,145 0 0 Miscellaneous .. .. 4,599,386 0 3 77,137,110 4 4 Cash — Public Account .. .. 3,812,109 7 2 Receiver-General .. .. 133,442 18 3 State Advances Office Account 736,009 11 0 Post Office or Post Office Savings-bank .. .. 682,467 11 5 Deposit accounts .. .. 66,757 18 3 In hand and in transit .. 34,608 13 0 Deposit with Bank of International Settlements .. 36,023 0 0 Public Trust Office .. 185,819 12 3 5,687,238 11 4 Miscellaneous assets .. .. .. 4,555 13 4 £390,750,221 10 1 £390,750,221 10 1 * See Note (2) below. Notes. —(1) To account for the whole public debt, loan expenditure on war and other purposes not represented by tangible assets has been included under the heading " Other Loan Expenditure." Interest is received in respect of portion of the local bodies' loan expenditure. (2) Of the amount shown as public debt, £1,801,417 10s. Id. 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 .. .. . . .. . . 1,565,284 0 0 Public Service Superannuation Fund .. .. .. .. 2,678,167 0 0 4,243,451 0 0 Excess of subsidies recommended by Actuary over subsidies paid : Railway Superannuation Fund .. .. .. .. 1,580,800 0 0 5,824,251 0 0 Local authorities, loans guaranteed by the Govern- £ s. d. ment .. .. .. .. .. .. 2,704,575 0 0 Less accumulated sinking funds .. .. .. 898,700 5 7 1,805,874 14 5 £7,630,125 14 5

XV

8.—6,

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. Interest. Principal. £ £ £ 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. ■f Following on the " Hoover " moratorium, the Imperial Government agreed to postpone the instalments of principal and 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 1936-37.

B.—o.

Table No. 19. PUBLIC DEBT. Maturity and Domicile of Debt outstanding, 31st March, 1937.

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 1931 to 1937 (excluding Specie).

iīi —B. 6.

xvii

Date of Maturity. Due in I New Zealand. :^ otal F r ° m 01 .T? , London. j Australia. : 1st April, 31st March, , , , _ , , , 1 j j Public. Departmental. £ £ £ £ £ Overdue .. .. •• •• 39,465 .. 39,465 Treasury bills .. • • • • 2,325,000 .. 2,325,000 1925+ 1946 .. 2,090,909* .. •• •• 2,090,909 1937 1938 .. .. 92,600 751,300 .. 843,900 1938 .. 1939 .. 4,000 3,000 265,030 .. 272,030 19381 1942 .. .. .. 2,813,380 808,190 3,621,570 1939 1940 .. 17,173,191 .. 6,241 8,900 17,188,332 1939+ 1942 .. .. .. 4,114,505 . .. 4,114,505 1939+ 1943 .. 13,678,215 .. 13,678,215 1940 " 1941 !! .. .. 500,015 .. 500,015 1941 " 1942 . .. 17,300 37,100 .. 54,400 1942+ !! 1946 .. .. •• 9,211,470 631,155 9,842,625 1942+ 1963 .. 10,505,989 .. 378,639 .. 10,884,628 1943 " 1944 .. 7,339,656 .. .. •• 7,339,656 1944 1945 .. 7,780,408 .. .. •• 7,780,408 1945 1946 .. 22,543,590 .. 2,500 .. 22,546,090 1946 " 1947 .. .. 540,047 1,117,743 1,657,790 1946+ " 1950 .. .. .. 8,324,310 642,885 8,967,195 1947 " 1948 .. 11,221,609 .. .. 11,221,609 1947+ .. 1958 .. 19,225,465 .. .. • • 19,225,465 1948 1949 .. •• •• 10,500 10,500 1948+ " 1954 .. 5,000,000 .. .. •• 5,000,000 1949 " 1950 .. 7,500,000 .. .. •• 7,500,000 1949+ " 1953 .. •• •• 12,491,090 .. 12,491,090 1950 '' 1951 .. 1,250,000 779,000 250,950 .. 2,279,950 1959 1953 .. .. .. 260,000 260,000 1959 " 1956 12,000,000+ .. 7,978,310J 2,124,265$ 22,102,575 1Q59+ " 1957 . 6,708,155 1,158,160 7,866,315 1955 " 1956 .. .. 3,956 462,200 466,156 1955+ 1961 .. '3,989,100 .. .. ■■ 3,989,100 19 56 1 " 1957 .. 12,900 .. 4,460 4,009,480 4,026,840 1956+ 1972 .. '5,000,000 .. .. 5,000,000 1057' " 1958 .. 7,800 19,461,050 19,468,850 1958 " 1959 •• 18,261,933 18,261,933 1959 " 1960 " .. .. •• 10,652,885 10,652,885 s " 1946 577,446§ .. .. .. 577,446 § 1958 .. 23,522,753§ .. .. 23,522,753 Tota l s .. .. 156,737,016 891,900 70,431,938 59,609, 287,670,200 * Advances by Imperial Government for State Advances purposes. + Government has option to redeem at par on or after the earlier date on giving notice in the London Gazette. % Government has option to redeem on or after the earlier date on giving three months' notice in the New Zealand Gazette. § Imperial Government advances funded in terms of section 8, Finance Act, 1922. Payments at present suspended. «'[The basis of classification between "Public" and "Departmental" debt domiciled m New Zealand has, been altered this year. For purposes of comparison the Departmental debt on this new basis as at 31st March, lydo, was £53,995,367.

Exports. Imports. | Excess of Exports. Year ended 31st March, „ , . New Zealand Full On New ,, q wl - New Zealand Sterling Currency Sterling Zealand CurCurrency. , Equivalent. Equivalent. Equivalent. 1 rency Basis. £ (000) £ (000) £ (000) £ (000) £ (000) £ (000) !931 39,527 37,198 39,833 37,656 —306* —458* 1932 .. 33,943 30,857 24,761 22,510 9,182 8,347 1933 .. .. 37,510 32,677 25,059 22,049 12,451 10,628 1934 v . 46,043 36,834 26,136 20,908 19,907 15,926 1935 " .. 44,918 35,985 32,568 26,082 12,350 9,903 3.936 49,676 39,900 I 37,440 30,072 12,236 9,828 !937 " .. .. 60,234 48,381 j 47,621 38,250 12,613 10,131 i _ ; * Excess of imports.

8.—6,

Table No. 21. IMPROVEMENT IN ECONOMIC CONDITIONS. Table of Miscellaneous Statistical Information showing the Most Recent Figures compared with Table No. 21 in B.-6, 1935.

xviii

As shown in T i a m1935 Table. Latest 3?1 g ure ' Unit. | IS?" 4 —■ . . Value of total production .. .. .. £(m.) 98-8 1936 114-2 Value of farm production .. .. .. ,, 63-3 1936 72-5 Salaries and wages payments.. .. .. „ J 65-7 1937* 85-0 Gross farming income .. .. .. „ ■ 50-8 1936 60-5 Exports (excluding specie) .. .. .. „ 43-0 1937 64-6 Imports (excluding specie) .. .. .. „ 34-3 1937 50-1 Bank deposits (excluding Government) .. „ 62-3 1937 65-0 Bank debits (excluding Government) .. .. „ I 676-2 1937 916-2 Net bank-note circulation .. .. .. ,, , 6-3 1937 8-3 Building permits issued in larger towns .. „ j 3-6 1937 5-8 Mortgages registered .. .. .. ,, | 12-0 1937 20-3 Mortgages discharged .. .. .. „ I 13-8 1937 20-7 Land transfers .. .. .. .. ,, | 12-2 1937 20-4 Totalizator investments .. .. .. „ ! 4-0 1937 6-1 Railways —Net ton-miles run .. .. Million : 420-0 1937 521-1 Skipping—Manifest tonnage . . .. .. ,, 6-2 1937 7-8 Motor-vehicles licensed .. .. .. Number 208,200 1.937f 211,164 Unemployed males .. .. .. .. „ 48,205 19371 35,839 Index numbers of — Export prices (1909-13 = 1000) .. .. „ 1,046 1937 1,397 Share prices (1926 = 1000) .. .. .. „ j 957 1937f 999 ♦Year ended 31st March. fAs at end of June.

8.—6.

Copy of Prospectus of State Advances Local Loan. Dominion of New Zealand. STATE ADVANCES CORPORATION OF NEW ZEALAND. (Established under the State Advances Corporation Act, 1934-35.) Issue of 3J peb gent. Stock or Debentures (Series " B "). Repayable Ist June, 1944. Guaranteed as to Principal and Interest by the Government of New Zealand. Authorized to be raised under the State Advances Corporation Act, 1934-35 (hereinafter referred to as " the statute "J. Price of Issue : £100 per cent. Interest payable half-yearly at the Reserve Bank of New Zealand on the Ist June and Ist December. The first payment of interest will be made on the Ist day of June, 1937, subject to the conditions hereinafter provided. Trustees are authorized in terms of section 23 of the statute to invest funds in this issue unless expressly forbidden by the instrument (if any) creating the trust. The Reserve Bank of New Zealand is authorized, on behalf of the State Advances Corporation of New Zealand, to receive applications for the above-mentioned Stock or Debentures. If not previously surrendered in accordance with the provisions set forth below, the Stock and Debentures of this issue will be repaid at par at the Reserve Bank of New Zealand, Wellington, or at any branch of the Bank of JSJew Zealand in the Dominion, on the Ist day of June, 1944. In accordance with section 25 of the State Advances Corporation Act, 1936, all securities issued by the Corporation are guaranteed by the State ; and if any default is made by the Corporation in the payment of any principal or interest payable in respect of any such securities, such principal or interest, as the case may be, shall forthwith be paid by the iWinister of Finance out of the Consolidated Fund. The securities issued by the Corporation, in addition to being guaranteed as above by the New Zealand Government, give to the holders a floating charge over the whole of the mortgages and other securities of the Corporation (vide section 21 of the statute). Stock or Debentures of this issue will on the tender thereof by the holder be accepted at their nominal value in payment of principal or interest due under any mortgage of land held by the Corporation the date of which is subsequent to the commencing-date of this issue but prior to the commencing-date of any subsequent issue by the Corporation of securities to the public: Provided that in the case of any State mortgages transferred to the Corporation pursuant to Part V of the statute such payment shall be accepted only in securities of Series A. Stock and Debentures of this series will, for security purposes, rank pari passu with those of Series A of £500,000, and the Corporation may from time to time issue further securities in accordance with the authority of the statute. Applications. Applications, which must be accompanied by payment in full, will be received at the Reserve Bank of New Zealand, Wellington, at any branch of the Bank of New Zealand in the Dominion, or at any postal money-order office in New Zealand. Applications for Stock must be for sums of not less than £40, and any amount applied for in excess of £40 must be a multiple of £20. Debentures, payable to bearer, may be applied for in denominations of £20, £40, £100, £500, and £1,000, or in such higher denominations as may be agreed upon at the time of issue. The Reserve Bank of New Zealand reserves the right to make or decline allotments without being required to furnish any reason therefor. Where no allotment, or partial allotment only, is made the full or surplus amount paid on application, as the case may be, will be returned to the applicant. Provisional receipts will be issued for all payments made in respect of application-moneys, and allotment letters will in due course be issued by the Reserve Bank of New Zealand. In the case of Debenture allotments such letters will be exchangeable for the relative Debentures, payable to bearer, as soon as the latter can be prepared. In the case of Stock allotments certificates of registration will be posted to allottees when the Stock has been recorded in the Register. General Provisions. Exchange on Remittances. —Cheques in payment of application-money will be accepted free of inland exchange. Interest.—lnterest on Stock will be paid free of inland exchange by means of interest warrants, which will be transmitted by post at the risk of the stockholder. In the case of Stock registered in the names of two or more holders, interest warrants will be forwarded to the stockholder whose name appears first in the Register, unless directions for payment to an agent are given. The Reserve Bank will accept directions from stockholders for payment of interest to any agent in the Dominion ; existing instructions for the payment of interest in the Dominion on Series A Stock will be effective for the Stock of this issue also.

xix

8.—6.

Interest 011 Debentures will be paid free of inland exchange on presentation of the appropriate interest coupons annexed thereto at the Reserve Bank of New Zealand, Wellington, at any branch of the Bank of New Zealand in the Dominion, or at any postal money-order office in New Zealand. Interest on Stock and Debentures of this series will commence to accrue from the date of lodgment of the application-money in respect of allotments made. The initial payment Will be made on the lst day of June, 1937, in respect of applications lodged and accepted up to that date. Interest on any applications lodged and accepted on or after the lst day of June, 1937, will be computed from the date of lodgment to the next following half-yearly interest date. The initial payment of interest in respect of Debentures will be made by cheque. Transfers. —The Register of Stock will be kept at the Reserve Bank of New Zealand, Wellington, where all transfers will be registered. Stock will be transferable in amounts of £20 or multiples thereof. Stamp Duty.—Stock and Debentures of this issue will be exempt from Stamp Duty on the transfer thereof otherwise than by way of gift. The Stock of this series is issued subject to the conditions contained in the Schedule hereto. Commission at the rate of ss. per £100 Stock or Debentures will be allowed to bankers and registered sharebrokers on allotments made in respect of applications bearing their stamp. Copies of this Prospectus and forms of application may be obtained at the Reserve Bank of New Zealand, Wellington, at any of the offices of the Corporation, at any branch of any Bank in the Dominion, at any postal money-order office in New Zealand, or from any member of any Stock Exchange affiliated to the Stock Exchange Association of New Zealand. The list for applications will be opened on the 16th day of February, 1937. Reserve Bank of New Zealand, Wellington. Date : 16th February, 1937.

Series B. Schedule to Prospectus dated 16th February, 1937, relating to the Issue op 3J per cent. Stock or Debentures, 1944, Series B, op the State Advances Corporation of New Zealand. Registration of Stock. No transfer relating to stock of this series will be Any person or corporation lending money to the Cor- registered during the fourteen days immediately preceding poration under the terms of this Prospectus on the th ® , lst Jun <l and lst , December m each year. security of stock of this series will have his, her, or its , he executors or administrators of a deceased registered name registered in the Register of Stock of the State Ad- holder of stock (not being one of several joint holders) vances Corporation of New Zealand, which will be kept ® haU be th ®. ° P e f° ns recognized by the Bank as at the Reserve Bank of New Zealand, Wellington, tavmg any title to such stock. hereinafter referred to as " the Bank." Lh ® Bank shall be at . llbert y to retain interest Registration receipts will be issued to investors when P a y able u P on an y stock in respect of which any person the stock is registered. or corporation under the last preceding condition is Every person or corporation whose name is for the time entitled to transfer until such person or corporation shall being registered in the Register as the holder of stock or duly transfer same shall be deemed to be the holder of such stock for. the No P erson who 18 not , of * uU a B e shall be eligible under amount for the time being standing to his, her, or its any circumstances to become registered as the holder credit in the Register with the right to receive interest ot stook ot tlle rPoratl°nthereon half-yearly on the dates named in this Prospectus. No notice of any trust in respect of any stock or in Certificate of Title. respect of any certificate of title to stock shall be entered On application in writing made 011 the prescribed m the Register or be receivable by the Bank, and no form obtainable from the Bank or at any office of the liability shall attach to the Bank or to any officer thereof Corporation by the registered holder of any stock issued by reason of any express, implied, or constructive notice under the provisions of this Prospectus, the Bank will of any trust affecting such stock or certificate of title. issue a certificate of title certifying that the applicant The Bank will recognize the registered holder of any i s the registered holder of the stock referred to therein stock as the absolute owner thereof and shall not be bound (being the whole or any portion [not less than £20 or a to take notice or see to the execution of any trust, whether multiple thereof] of the amount of stock of which the expressed, implied, or constructive, to which any such applicant is the registered holder). A fee of Is. will be stock or certificate of title may be subject; and the charged for the issue of each certificate of title. receipt of such holder for the interest from time to time Any such certificate of title shall be conclusive evidence accruing due in respect thereof, and for any moneys 0 f the ownership of the stock to which it relates by the payable in respect thereof, or upon the redemption of person or corporation named therein as the holder and the same, shall be a good discharge to the Bank, not- will be signed on behalf of the Bank by an officer thereof withstanding any notice it may have, whether express duly authorized in that behalf. or otherwise, of the right, title, interest, or claim of any The transfer whether by delivery or otherwise of any other person or corporation to or in such stock or moneys. such certificate of title shall not operate as a transfer When the right to any stook is acquired by any person of the legal or equitable interest of the holder in the stock or corporation on the death or bankruptcy or liquidation to which it relates. No dealings with any stock to which of the registered holder or under a writ of execution or any such certificate of title relates will be recorded by in any manner other than by way of transfer as herein- the Bank unless and until such certificate of title has after provided, the Bank on application by or on behalf been produced to the Bank and cancelled by it. of the person or corporation entitled and on being Provided that where any such certificate of title has satisfied that he, she, or it is legally entitled to be registered been lost or destroyed the Bank, on evidence to its as the holder of the stook shall enter his, her, or its name satisfaction by statutory declaration of the loss or in the Register as the holder of such stock. destruction of such certificate of title, may on such terms In the case of the death of any one of the joint holders and subject to such conditions as it thinks fit (including of any stock of the Corporation, the survivor or survivors an indemnity) issue a substituted certificate with the will alone be recognized by the Bank as having any title word " substituted " stamped or written thereon. Every to or interest in such stock, and the Bank shall be at such substituted certificate shall be deemed to have the liberty to call for such evidence by way of proof as it same effect to all intents and purposes as the original shall think fit. certificate of title for which it is substituted.

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Transfer of Stock. Provided that nothing in the foregoing shall preclude m , , , ~ c . , t „ the Bank from accepting instructions for payment of the registered holder of any stock of this series may, on gtock £ made tQ a Banker> Savings . bank> by mstrament of transfer on the prescribed form obtainable Qr & New Zealand> and the endorsement from the Bank, transfer to any other person or corporation Qr guch the whole of- such stock or any portion thereof be ng bg a y gatiaf^ ction of the intereat and ot her moneys as aforesaid .„,1 a g„d d.d,.,,, ,1, by or 011 behalf of the transferor and the transferee the Bank shall cause the name of the transferee to be entered Exchange of Stock for Debentures. in the Register as the registered holder of the stock to gtock of thig aerieg may be exc h an ged for debentures which the instrument of transfer relates. of this serieg 0 f an equivalent amount on such terms as Every such entry shall operate as a transfer of the stock tQ ent of costa ag the Corporation may prescribe, to which it relates so as to vest that stock in the transferee. 1 ■ .No transfer comprising any stock for which a certificate of title has been issued will be accepted for registration Exchange of Debentures for Stock. unless such certificate of title is contemporaneously Debentures of this series may be exchanged for surrendered for cancellation. equivalent stock of this series on surrender of the relative No stamp duty under the Stamp Duties Act, 1923, will debentures with all current and future coupons to the be payable in respect of an instrument of transfer of any B an k; together with a request in writing for the issue of stock of this issue, but the registration fee for every s tock j n exchange, provided that the minimum inscription transfer of stock shall be 6d. for every £20 included in of atoo k hereunder shall be £20. A fee of 6d. for each such transfer with a maximum of 55., and such fee must £2 0 with a maximum of ss. will be charged for every if required by the Bank be paid before the registration exc h a nge of debentures for stock. of the transfer. The interest on stock and all other moneys payable > r c T i in respect thereof may be paid by cheque or interest Payment in Stock of Principal or Interest of Land warrant sent through the post to the registered address Mortgages. of the holder or in the case of joint holders to the registered Stock will, on the tender thereof by the holder, be address of that one of the joint holders who is first named accepted by the Corporation to the extent of the nominal in the Register in respect of such stock. Every such value thereof, in payment pursuant to the statute of cheque or interest warrant shall be made payable to the principal or interest under any table mortgage or other order of the person to whom it is sent, and payment of mortgage of land held by the Corporation, provided that the cheque or interest warrant, if duly endorsed, shall the stock so tendered is part of the last issue made to the be a satisfaction of the interest and other moneys as public before the date of execution of the mortgage. 11l aforesaid and a good discharge therefor. such case the stock must be surrendered to the Corporation, If several persons or corporations are entered on the aud interest beyond the date of surrender will not be Register as joint holders of any stock, then, without payable : Provided that, in the case of mortgages transprejudice to the last preceding clause, the receipt of any fer'red to the Corporation pursuant to the statute, such such holder for the interest or other moneys from time payment shall be accepted only in securities of Series " A." to time payable in respect of such stock shall be as effective a discharge to the Bank as if the person or corporation signing or. executing the same receipt were the sole Redemption of Stock. registered holder of such stock. Stock of this series will be redeemable at par on the If any cheque or interest warrant issued in payment of Ist day of June, 1944. interest or otherwise in respect of stock of the Corporation be lost or destroyed, then, upon proof thereof to the r . satisfaction of the Bank or in default of proof on such indemnity as the Bank deems adequate being given, a Income received by way of interest on stock of the new cheque or interest warrant in lieu of that lost or Corporation will be liable for New Zealand income-tax destroyed may be given or sent to the person or corporation to the same extent as income from any other assessable entitled thereto. source.

Statement by the State Advances Corporation of New Zealand. The within Prospectus is issued by the Reserve Bank of New Zealand, by arrangement with the Board of Management of the State Advances Corporation, inviting applications for the purchase of Stock and Debentures bearing interest at the rate of 3| per cent, per annum, maturing on the Ist June, 1944. The issue is State-guaranteed, both as to principal and interest. Investments in this issue may be made in amounts to suit all classes. For further details please refer to the prospectus. The investing public throughout New Zealand is given the opportunity to place funds by way of investment in an institution which has established a system of mortgage finance in the Dominion whereby long-term mortgages for borrowers are linked to securities marketable on the Stock Exchange ior lenders. The securities issued by the Corporation, in addition to being guaranteed by the New Zealand Government, give the holders a floating charge over a large number of mortgages and other securities, for details of which reference should be made to the balance-sheet annexed. In addition there is appended— (a) Profit and Loss Account for period ended 31st March, 1936 : (b) Explanation as to amount of profits and disposal thereof : (c) Details of General Reserve Fund : (d) Table showing business transacted. Profit and Loss Account for Period ended 31st March, 1936. £ s. d. Management expenses .. .. •• 72,921 14 7 Gross income brought forward from Interest Account 491,878 11 2 Contribution to Staff Superannuation Fund .. 15,000 0 0 Discount on redemption of stock .. .. ?9 10 4 Reserve for losses .. .. .. • • 5,000 0 0 Contingent liability Account: Amount transferred under section 3, State Advances Corporation Amendment Act, 1935 .. .. •• 57,000 0 0 Xet income carried forward to Appropriation Account .. .. .. •• 341,996 611 £491,918 1 6 £491,918 1 6

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Balance-sheet as at 31st March, 1936. Liabilities. A QQof<} ♦Share capital— £ s. d. £ s. d. £ B d " 1 '750'000 0 0 Mortgages and accrued interest .. .. 39,062,498 '5 10 ea .. .. 750,000 0 0 Advances on Current Account and accrued ct&dinlLance " 'H?'S22 1» « Government and ' local-body securities and 13,748 ® " balls paid in advance .. 171,644 12 6 _ accrued interest .. .. ..3 038 227 5 4 Stock and debentures and ac- 4M ' 644 12 6 1688 provMoll for depre - "tfohuih, «' " 30,600,004 13 g Office furniture and motor-vehicles .. 30,35117 8 Contingent liability to the Current assets— £ s d Rpse?vßs—' " " " 8,927,521 11 8 Sundry debtors .. .. 5,182 18 4 General Reserve 9 ~, , s K Fixed deposits with trading El™rvesfo? lolsês on invest t , bani ? a - nd accnled interest 954,187 17 0 man/. invest; Lodgments m transit and cash Investment Fluctuation J < ooooo in bank and on hand .. 75,102 4 Reserve .. .. 10,000 0 0 _ Realization Suspense Account—Losses chargeable ' Staff Superannuation Eund .. .. '25 392 18 11 t0 Contingcnt Llabilit y Account when defined 59,697 13 8 Sundry creditors .. .. .. 122'136 6 4 Liability to the Crown— Balance of net income .. 217,996 611 Less interim payment .. 75,000 0 0 142,996 6 11 Balance of interest on contribution to General Reserve 6,821 2 0 149,817 8 11 £43,217,990 8 2 £43,217,990 8 2 * la terms of State Advances Corporation Act, 1936, the whole of share capital was Required by the New Zealand Government, and is now fully paid up. General Reserve Fund.. At the commencement of the Corporation's lending-operations in September, 1935, this Fund stood at £2,750,010, increased to £2,956,472 as above. At the 27th November, 1936, the Fund had increased to £3,196,594. The whole of this sum is invested in sound local-body securities in the Dominion, Business transacted. Uptojlst December, 1936, the aggregate amount of applications received by the Corporation was £13,258,333, made up of— Mnmhpr -P Residential 6;238 ' 4,709,550 iarms •• •• •• •• •• 4,272 8,548,783 10,510 13,258,333 Arising from these applications loans have been granted as p • j lnr ! e 'i Number. £ Residential 3,333 2,225,668 * arms •• •• •• •• .. 1,628 3,870,270 4,961 6,095,938 Applications still under action total 1,503, amounting to £1,564,642, and the number declined or postponed for future consideration is 4,046, representing a total sum of £5,597,753. Profits. Section 41 of the State Advances Corporation Act, 1936, provides as follows : " After such provision as the Minister of Finance thinks proper has been made for the depreciation of securities or other assets and for such other matters as in his opinion are necessary for the efficient conduct of the business of the Corporation, the surplus for each financial year shall be paid into the Public Account, unless the Minister, m his discretion, authorizes the Board to credit it, in whole or in part, to the General Reserve Fund of the Corporation." Reference to the Profit and Loss Account figures furnished earlier in this report shows that, after meeting the interest charges on Stock and Debentures and paying working-expenses, the net profit available at the close of the last financial year was approximately £342,000. After providing reserves tor income-tax and investment fluctuation the balance is payable to the Crown on account of the contingent liability of £8,927,000, which ranks second to the claims of the holders of Stock and Debentures issued by the Corporation. Wellington,

By Authority: K. V. Paul, Government Printer, Wellington.—1937.

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