FINANCIAL STATEMENT. (In Committee of Supply, 27th June, 1940.) BY THE HON. WALTER NASH, MINISTER OF FINANCE.

Appendix to the Journals of the House of Representatives, 1940 Session I, B-06

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INDEX.

PAGE Annual appropriations, estimates, 1940-41 .. . . .. .. .. 6 Budget surplus, 1939-40 .. . . .. .. .. .. .. ] Company-taxation .. .. .. .. .. .. .. .. 5 Comparison of income-taxation . . . . . . .. . . .. 5 Consolidated Fund Estimates, 1940-41 .. .. .. .. . . .. 6 Consolidated Fund: Reduced revenue .. .. .. .. .. .. 4 Credit, utilization of Reserve Bank . . .. .. .. .. .. 2 Death and gift duties, revised .. .. .. .. .. .. .. 6 Diversion of productive effort to war purposes .. .. .. .. .. 2 Economy in normal expenditure .. .. .. .. .. .. 4 Empire air training scheme .. .. .. .. .. .. .. 3 Estimates, 1940-41: Revenue and expenditure .. .. .. .. .. 6 Excess profits .. .. .. .. .. .. .. .. 5 Finance Emergency Regulations .. .. .. .. .. .. .'.lO Hardship, provision for .. .. .. .. .. .. .. 7 Highways and roads .. .. . . .. .. .. .. . . 9 Housing .. .. .. .. .. .. .. .. .. 9 Hydro-electric development . . .. .. .. .. .. .. 9 Imports, reduction of .. .. .. .. .. .. .. 3 Income-tax adjustments . . .. .. .. .. .. .. 4 Income-tax, liability of State trading activities for .. .. .. .. 5 Income-tax, 1940-41 : Yield .. .. .. .. .. .. .. 5 Income-taxation: Comparison .. .. .. .. .. .. 5 Interest-free loans .. .. .. .. .. .. .. .. 8 Land-development and afforestation .. .. .. .. .. .. 9 Loan contributions .. .. .. .. .. .. .. .. 8 Loan programme .. .. .. .. .. .. .. .. .. 8, 9 National savings loans .. .. .. .. .. .. .. 7 National security tax .. .. .. .. .. .. .. 7 Public buildings .. .. .. .. .. .. .. .. 9 Permanent appropriations, estimates, 1940-41 .. .. .. .. .. 6 Profits, excess .. .. .. .. .. .. .. .. 5 Public debt transactions, 1939-40 .. .. .. .. .. .. 9 Public works .. .. .. .. .. .. .. .. 8 Railway construction and improvement .. .. .. .. .. 8 Revenue: Estimate, 1940-41 . . . . . . .. . . . . 6 Roads and highways .. .. .. . . .. .. .. .. 9

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PAGE Sales-tax increased .. .. .. .. .. .. .. • • .. 7 Silver coin profits .. .. .. .. .. .. .. • • .. 6 State trading activities: Liability for income-tax .. .. .. .. 5 Surplus, 1939-40 .. .. .. .. .. .. .. .. .. 1 Surplus, 1940-41, estimated .. .. .. .. .. .. .. 6 Surtax on incomes .. .. .. .. .. .. .. .. 5 Taxation estimates, 1940-41 .. .. .. .. .. .. .. 6 Taxation of companies .. .. .. .. .. .. .. 5 Tax on debenture interest .. .. .. .. .. .. .. 5 Telegraph and telephone extension .. .. .. .. .. .. 9 War-costs met from current production .. .. .. .. .. 2 War-costs, overseas, financed by United Kingdom .. .. .. .. 3 War expenditure: Estimate .. .. .. .. .. .. .. 3 War Expenses Account .. .. .. .. .. .. .. 4

II

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1940. NEW ZEALAND.

FINANCIAL STATEMENT. (In Committee of Supply, 27th June, 1940.) BY THE HON. WALTER NASH, MINISTER OF FINANCE.

Mr. Chairman, — As Honourable members will recall the last Budget was presented by my late colleague, the Right Hon. M. J. Savage, whose recent death has removed one of the most outstanding personalities in the Dominion's history. His works will be his greatest monument to future generations. Since the presentation of the last Budget the British Empire has taken up arms to resist the oppression of a powerful and ruthless nation whose objective is the subjection of the democracies and, in particular, the destruction of the British Commonwealth of Nations: the Commonwealth of which we are proud and privileged to be a member. The menace from our enemies will bring out all that is great in our people initiative, fortitude, willingness to sacrifice, and suffer hardship as required—so that the menace may be removed from the world, and our enemy may not prevail. The glorious traditions of self government and free government associated with the British race will, I believe, be extended out of the present travail of suffering and distress from which will ultimately come a world of more stable order. On the outbreak of war the New Zealand Government, on behalf of the people, immediately offered full and unqualified support to the United Kingdom and her Ally, France, and every effort has been made to make that support as effective as possible. Apart from the all-important assistance in the actual theatre of war, since the outbreak of hostilities the whole of New Zealand's exports have been made available to the United Kingdom Government, while at the same time, under our import selection policy, purchases of goods have been diverted to the United Kingdom wherever supplies have been available from that source. In present circumstances, when all attention is focused on the war situation, 1 do not propose to review the governmental activities of the past year to the same extent as is customary, but will refer to them in relation to our war effort or for purposes of comparison. Otherwise I propose to deal as concisely as possible with proposals for the current year. Last year's public accounts have already been published, disclosing a Budget surplus of £319,000. Honourable members will obtain fuller details from the usual depai tmental lepoits, although these will be reduced in size to conserve the paper-supplies.

Offer to United Kingdom Government.

Budget Surplus 1939-40.

2—B. 6.

8.—6.

A state of war must necessarily subject the economic structure of a country to severe strains and stresses. Men and women must be withdrawn from particular activities and occupations for service overseas or for diversion to pursuits more in keeping with wartime requirements. Various types of raw materials and other goods which we have to import are in short supply and difficult to obtain, while shipping services are partially diverted and disorganized. Much material and the services of thousands of men are required for building and equipping camps and other training centres for the forces to go overseas and for home-defence purposes. Our factories to an increasing extent will be occupied in making boots, clothing, equipment, and munitions. We are compelled to extend the volume of labour and material required to feed and generally maintain the men in uniform and also the men and women engaged in a hundred different ways in providing for their requirements. In all, a substantial proportion of our productive effort is required for war purposes, but in the present grave situation all will agree that nothing must be allowed to stand in the way of building up our fighting power. Except to the extent that it can be offset by additional production through hard work and better organization, the diversion of effort to war purposes must be at the expense of civilian consumption of goods and services. In other words, all must share in varying degree in the sacrifices. There is no escape from that, and the problem is to adjust the burden as equitably as possible over the whole community. In doing so it is important that normal economic activity should be kept going as much as possible—firstly, to provide the sinews of war, and, secondly, to maintain the civilian population on as high a standard as is practicable; in fact, strengthening our economic structure to withstand the terrific strain of war, keeping up the morale of the people, and generally maintaining stability on the " home front " is a national duty, for it is a vital factor in any sustained effort on the fighting front. The real costs of war, apart from borrowing overseas, must come from current production, for the material and services are required now. For such a destructive purpose as war the obvious method of finance is taxation, and there is no doubt that we should pay as we go for the war to the limit that is practicable. The limit is fixed by the necessity already explained of keeping the economic system intact and functioning to capacity. One man's expenditure is another man's income, and experience has shown that when any appreciable number of people cannot meet their obligations the result is a chaotic state of affairs such as would not be conducive to a sustained war effort. Another factor to be considered is that certain classes of saving under long-term contracts would not only involve loss and hardship in the future if interrupted, but would inevitably retard our production and economic development. Thus to make use of our full resources there is a considerable amount accruing from current production that must be borrowed by the State or some one else. Tt is, of course, sound in principle to restrict borrowing as far as possible to productive purposes and thereby avoid a relatively increasing burden of debt charges for the future. As the war progresses and its costs continue to mount we may be forced to utilize Reserve Bank credit to some extent. Bank credit is a normal and sound method of financing additional production, but to issue additional money to purchase for war purposes a portion of an existing volume of production must mean leaving civilian consumers with the present volume of purchasing-power to buy the much smaller volume of goods that remain available for them. That involves progressive inflation, and experience in other countries has shown that the disastrous effects which follow, fall most severely upon the rank and file of the people. Except to the extent by which production is expanded we must inevitably consume or use less luxury products if we are to provide all that is required for a maximum war effort. It is infinitely better for everybody that the measure of the sacrifice required from each and every one to carry on the war should be made out of our current income either by way of taxation or by savings.

Diversion of productive effort to war purposes.

War costs met from current production.

Utilization of Reserve Bank credit.

2

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Money is worth only what can be purchased with it, and the problem of the war is organizing our man-power and economic resources to produce to the maximum the goods and services required for the war effort here and overseas and by our civilian population. Part of our requirements is met directly from our production and the balance by an exchange of goods with other countries, mostly with Great Britain. We must think in terms of goods and services and not in terms of money. In the light of these principles the Government's policy for financing the national effort on the war front and the "home front" may be concisely stated as tax to the economic limit for war purposes and borrow for essential productive works and for any balance of war requirements. Honourable members will readily appreciate that it is quite impossible to make firm estimates of war expenditure up to the close of the financial year, for we cannot foresee what our forces will be called upon to do during that period. Three months ago the best estimate that could be made was a total of £33,000,000. The figure is now £37,500,000 made up as follows:— Army— New Zealand Expeditionary Force— £ Overseas . . .. .. .. 18,000,000 In New Zealand .. .. .. 7,000,000 Home Defence .. .. .. .. 5,000,000 Navy .. .. .. 1,500,000 Air Force— Overseas .. .. .. .. .. 1,750,000 In New Zealand .. .. .. .. 4,250,000 £37,500,000 Honourable members are already aware that arrangements have been made lor the cost of New Zealand's forces overseas to be financed by the United Kingdom Government on a loan basis, New Zealand being charged the same tate ol interest on such loans as the United Kingdom herself is paying in respect of her war loans. To the extent that this.arrangement is utilized we will be piling up dead-weight overseas debt that will be a heavy burden on us for man) years after the war, when our ability to pay may be less than it is now. We have therefore every incentive to strain every nerve to meet from New Zealand the costs of maintaining our forces overseas as such costs accrue. In New Zealand these costs may be met by taxation or by borrowing. Even if it is necessary to finance by local borrowing it is a debt we owe to ourselves and not a dead-weight burden on the Dominion after the war. Any part of our overseas war costs which we do pay from our own resources means pioviding it out of the proceeds of our exports. In other words, we must reduce our imports to do it. The necessary sacrifice must be made by consuming less goods. By doing so we not only help ourselves, but directly assist the hard-pressed Mother-country. Every million pounds worth of goods needed by our troops overseas and not found through curtailing our consumption of goods here in New Zealand can be provided only by that much additional curtailment by the people of the United Kingdom. ' It must come out of our production or out of theirs, and I feel sure our people will want to avoid increasing the already enormous war burden being carried by the people of the United Kingdom. Including £1,750,000 on account of the Empire air training scheme, the total overseas costs of our forces have been tentatively estimated at £19,750,000, and expenditui e in New Zealand at £17,750,000. We must find the latter as and when required, and then organize a Dominion-wide sustained economy drive with a view to meeting, out of our overseas funds, as much as possible of the amount which otherwise would come as a loan from the United Kingdom.

War expenditure.

Overse us war costs financed by United Kingdom Government.

Reduction in imports.

Empire air training scheme.

3

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War Expenses Account.

As taxation is involved, the finance of our war expenses cannot be isolated from the budgetary position of the Consolidated Fund. In fact the War Expenses Account is really an extension of the general Budget kept in a separate account for administrative purposes and to clarify the position. The far-reaching disturbances to trade and industry arising out of the war together with the inevitable smaller consumption of goods by the people adversely affect the normal Budget resources. The rationing of motor-spirit obviously results in a fall in the revenue from petrol-tax. Customs duties and sales tax decline as imports are reduced. The revenue from the former would normally have suffered as a result of the import selection policy, but that policy must now be carried much further under the stress of war. On the basis of present taxation it is estimated that there would have been a net decrease of £2,100,000 in the revenue of the Consolidated Fund, the principal variation compared with last year's receipts beingDecrease. £ £ Customs duties .. .. .. 2,400,000 Sales tax .. . . . . .. 500,000 Highways revenue .. .. .. 400,000 3,300,000 Increase. £ Income-tax . . .. .. .. 1,100,000 Stamp and death duties .. .. 100,000 1,200,000 Net decrease .. .. .. £2,100,000 On the other side of the account every effort has been made to economize in normal avenues of expenditure having regard to the advisability, previously referred to, of maintaining civil activities as far as is practicable. However, the war has increased departmental responsibilities involving additional expenditure. Various subsidies, particularly in respect of fertilizers and rural housing, are being paid to assist in keeping down farming-costs and to encourage production. On the other hand, the costs of the Navy, Army, and Air Force are now charged to War Expenses Account. Full details of the expenditure are shown in the Estimates, but the net result is a comparative decrease in the total Consolidated Fund expenditure of £900,000, this decrease being due to the fact that this year no provision is made for defence expenditure out of the Consolidated Fund. Thus, so far as the Consolidated Fund is concerned, we are faced with a shrinkage of £2,100,000 in revenue, offset to the extent of £900,000 by a decrease in expenditure to be provided from that fund. A provision of £250,000 has been made for supplementary estimates, but there is a margin for this in the fact that last year's figures, Avith which comparisons are made, produced a surplus of £300,000. Altogether additional revenue to the extent of £1,150,000 is required to balance the Consolidated Fund Budget. For war expenses, as previously indicated, we are faced this year with expenditure estimated at £37,500,000. Following the principles outlined in my opening observations, as much as possible of this should be found from taxation. The special items of war taxation imposed last year would this year, if left undisturbed, produce approximately £3,500,000. Having regard to the destructive nature of the expenditure it is imperative that much more than this should be provided from revenue. In fact, it seems clearly in the best interest of the Dominion that we should aim to provide from taxation the greater part, if we cannot manage the whole, of the £17,750,000 required for expenditure in New Zealand. For this purpose and to bridge the gap of £1,150,000 in the Consolidated Fund, consideration was first given to an upward revision of the rates of income-tax. In order to obviate certain anomalies which would have been

Reduced Consolidated Fund revenue.

Consolidated Fund revenue.

Economy in normal expenditure.

Consolidated Fund deficiency.

War Expenses Account requirements.

Income-tax adjustments.

4

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accentuated b\ increasing the rates under the graduated system used during the last few years, it has been decided in the case of individuals that the new lates will be on a " step " basis under which each pound of taxable income will be taxed at a rate determined by reference to the particular income-group Imnn , Ueh Jt falls " The startin S rate will be 2s. 6d. in the pound upon the first £100 oi taxable balance; 2s. 9d. in the pound will be payable on the second £100 of taxable balance; and 3s. in the pound upon the third £100 of taxable balance; and, so on, by increase of 3d. for each £100 of taxable balance up to maximum rate of 12s. in the pound, which will be payable upon all taxable income in excess ot £3,800. The advantage of this system lies in the fact that everv taxpayer, no matter what his income, pays the same rate of tax upon each succeeding pound of taxable income; it is the logical counterpart to the grant ot a personal exemption of £200 to every taxpayer, regardless of the size of that taxpayer s income. It is not proposed to alter the personal exemption of £200, the exemptions lor wife and children, or the provision relative to adding a percentage to the tax on unearned income. In the case of companies the graduation method to be applied will be similar to that used last year, but the new rate will be 2s. 6d. in the pound using by graduations of l/100th of a penny to Bs. in the pound at £6,600, and iismg thereafter by graduations of l/150th of a penny to a maximum rate of Bs. Ud. m the pound on all income over £7,950. A further change proposed is the increase to the maximum company rate oi the tax payable upon interest receivable in terms of debentures issued free 0 tax py companies. This change abolishes the advantage hitherto secured by companies m respect of this class of debenture interest. . ~4, s Y as th€ Case last year the rates of tax for both companies and individuals will be increased by 15 per cent., this addition being credited to the War Expense's Account. t an °f the effect on personal assessments of these new rates 1 would quote the following examples of the amount of tax payable last year and this year respectively upon representative taxable balances, by which is meant the taxpayer's income less the standard exemptions allowed.

Company taxation.

Tax on debenture interest.

Surtax.

Comparison of income taxation.

Phis means that a single man with an income of £300 will pay £14 7s. 6d. income-tax. A married man without children with an income of £350 would pay a like amount, and a married man with a wife and one child would pay a similar sum on an income of £400. It is_ also proposed to bring all State trading activities into line as regards income-tax. At present the Government's electric-supply undertaking, the Internal Marketing and State Coal-mines Departments, and the Commercial Broadcasting Service are exempt from such taxation. It is proposed to introduce legislation to make these activities liable for income-tax. , jT. a Inter stage there will be placed before the House proposals for the establishment of the procedure necessary to transfer to the State the whole of any excess profit made during the Avar period. With these additions to the field of taxation at the new rates, the incometax will, it is estimated, yield £15,450,000, an increase of £2,400,000 above what would have been received on last year's basis of tax. »

State trading activities liable for income-tax.

Excess profits.

Income-tax yield 1940-41.

5

„ ,, , Income-tax on Earned Income, laxable Balance. : Last Year. New Proposals. f s. d. £ s . d. 100 •• ■• 11 19 7 14 7 o 500 .. .. 69 9 7 86 5 0 LOOO • • • • 162 18 4 208 8 9 2>000 .. .. 42113 4 560 12 6 °' 000 • • • • 1,772 18 4 2,384 16 3

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Approximately £2,100,000 of this increase will go to the Consolidated Fund, and the balance of £300,000 to War Expenses Account. The benefit of practically the whole of this additional revenue from income-tax will indirectly go to wai expenses through the transfer to that account of £1,950,000 death duties hitherto paid to the Consolidated Fund. In addition there is available for the Consolidated Fund £1,000,000 profits from the issue of our own silver coin. Reference was made to this item in last year's Budget but as it was not required then, it is still available. The additional revenue thus available for the Consolidated Fund from income-tax and silver-coin profits amounts to £3,100,000, and as only £1,150,000 is required to balance the Budget it is proposed that all the revenue from death and gift duties including the £1,950,000 that would otherwise be credited to the Consolidated Fund under the heading of " Stamp and Death Duties should go into the War Expenses Account. If this is done the budgetary position of the Consolidated Fund will be as follows: — Revenue. Taxation- — £ Customs . ■ • • • • • ■ 7,500,000 Beer duty .. • • • • • • 1,380,000 Sales tax .. .. • • • • 3,000,000 Highways .. • • • • • • 2,600,000 Stamp duties .. • • • • • • 1,650,000 Land-tax . . . • • ■ • • 1,000,000 Income-tax .. .. • • • • 13,550,000 Miscellaneous .. .. • • • • 225,000 30,905,000 Interest .. .. • • • • • • 2,800,000 Other Receipts .. • • • • • • 3,375,000 6,175,000 37,080,000 Expenditure. Permanent Appropriations— £ Debt services . • • • 10,671,000 Exchange . . • • • • 1,500,000 Transfer of highways revenue 2,583,000 Other permanent appropriations 380,000 15,134,000 Annual votes — Social services • • • • 11,834,000 Other services .. • • 9,816,000 21,650,000 Supplementary estimates and contingencies .. 250,000 ' 37,034,000 Leaving an estimated surplus of .. £46,000 Reverting to the War Expenses Account, to augment the revenue it is proposed to introduce a new scale of death and gift duties designed to piovide a further £750,000 per annum, or approximately £400,000 for the balance ol this financial year. The new scales reduce the exemption from estate duty from £1,000 to £200 and from certain succession duties from £500 to £200. In Great Britain the exemption from estate duty is £100 and in some o1 the Austialian States £200. The new maximum rates will be 50 per cent, for combined estate and succession duties in the case of estates of £70,000 and over devolving upon the widow and children, 55 per cent, when left to father, mother, brothei s, sisters nephews, aunts, and uncles and other blood relations within the fourth degree', and 60 per cent, when the successors are relatives outside the fourth

Silver coin profits.

Consolidated Fund Estimates 1940-41.

Revised death and gift duties.

6

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degree or are strangers in blood, including charities. The ability to collect death duties is an important factor in fixing the maximum rates of duty. Further details in regard to these proposals will be laid before honourable members when the necessary amending legislation is brought down. Including the revenue diverted from the Consolidated Fund and the equivalent of the extra one-third payable to War Expenses Account under last year's legislation, the total amount payable into this account from death and gift duties for the current financial year is estimated at £3,000,000. In addition there will be £500,000 from postages, and £720,000 from various Customs duties under last year's special war taxation provisions. All these items with £1,900,000 from the 15-per-cent. super tax on income-tax will produce a total of £6,120,000, but this falls far short of the £17,750,000 required to coyer estimated defence expenditure in New Zealand, quite apart from what is required for maintenance of our forces abroad. Accordingly, the (roverament have reached the conclusion that this yield from taxation must ' ,e IHconsiderably increased. It is not possible to do this except by forms of taxation that will reach practically every one in the Dominion. In any case every one is vitally concerned in the outcome of this war, and, therefore, should make some appreciable contribution towards its cost. It is therefore proposed to impose a direct national security tax of Is. pound on all income, calculated on the same basis as for social security. Everything that we prize including our social-security system is dependent on winning this war and maintaining our national security. In the grave state of emergency that exists I feel sure that every one will gladly make his contribution to this tax. It will be paid by every one and every one will know that he or she is paying it. The man with £200 a year will pay £10 in national security tax while the man with £20,000 a year will pay £1,000, this, of course, being additional to what he is required to pay in income-tax and surtax. In fact, any individual with such an income will, if it is all income from investments, have to pay in direct taxation—i.e., income-tax, social security charge, and national security tax—no less than £16,427 18s. 4d. The proposed national security tax for the balance of this financial year should yield about £6,000,000. 1 heoretically it would be more equitable if the proposed national security tax could be adjusted according to income and family responsibilities—i.e. an income-tax graduated down to reach the lowest incomes. However, on the lower incomes the only practicable method is a flat tax collected at the source. J his is recognized in the social security tax. +• National Security Tax of 4s. to ss. per week may impose some degree V m P Up ° n fa milies with several children on incomes of £4 to £5 per week lo counteract the possibility of hardship the Government proposes to amend the Social Security Act by extending the family benefit to cover the second and each subsequent child, instead of the third and each subsequent child as at present. 1 At the other end of the income scale provision is made so that the aggregate effect of income-tax at - unearned " rates, social security charge, and national security tax.will mno case exceed 17s. 6d. in respect of any one pound of income. in addition to the foregoing it is proposed to double the present rate of Snonmn ?7 1? , 10 per , (3e " t " * nd t0 credit the extra revenue (estimated at ' £2,000 000 for the balance of this financial year) to War Expenses Account. If by all these means £14,120,000 is obtained from taxation for war expenses, £IQ7™LT eSSary t ?.' ,orrow £3 > 630 ' 000 expenditure in New Zealand and wefn i exp Z e overseas - For the latter, as previously explained, TmnlS TJi P ° n arran gement made with the British Government, but should not do so more than we can possibly help. Thus every one can play an important part in the Dominion's war effort by curtailing his consumption of goods, avoiding waste, and saving every pennv j and investing it as it were, m national security. Tn addition to loans in a form suitable tor ordinary investors, provision will be made to enable the rank and file oi the people to do their part by subscribing small amounts at regular or ii regular intervals as best suits them. This will be done through the introduction

National security tax.

Provision for hardship.

Increased sales tax.

National savings loans.

7

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of a National Savings Scheme operated in conjunction with the Post Office Savings-bank. Each individual's contribution will be accumulated in a separate National Investment Account in his or her name and, if desired, will be convertible into National Savings Bonds. Provision for loan contribution by large investors will be made by the issue of loans with a currency of ten years or more in respect of which Government stock will be issued in the usual manner. In the circumstances the Government consider that these loans should be regarded as contributions to the war effort from the material assets of those with property and should accordingly be free of interest for a period of three years or until twelve months after the conclusion of the war, and thereafter for ten years at a rate of interest not exceeding 2i per cent. In this way the Government proposes to raise within New Zealand not only the money required to be expended in this country, but also some portion of the amount necessary to meet expenditure abroad, thus relieving, so far as is possible, the drain upon the resources of the British Government. .. f ... A start towards the provision of interest-free loans has already been made by generous voluntary effort on the part of many citizens, and to date nearly sufficient has been subscribed to balance the War Expenses Account to the end of last financial year. But that is not sufficient. It is not right that others equally capable of affording assistance should not make their due contribution. In this connection it is the intention of the Government to formulate for the consideration of the House a procedure under which all who have means will be required to assist by subscribing to loans for these purposes. Those who already have or who may in the future voluntarily lend money free of interest, may have the amount already subscribed taken into account in determining their total liability under this heading. In addition to meeting all war requirements, some provision has to be made for carrying on national works such as development of more hydro-electric power required for our industries, both primary and secondary, and landdevelopment and irrigation-works which have a direct bearing on increasing production; while the curtailment of road transport to conserve petrol makes it all the more important that sufficient rolling-stock is provided for the railways to handle the traffic. In fact useful development work is a necessary preparation for rehabilitation which must start before hostilities cease. Even so, it is fully recognized by the Government that with so much required for war purposes, borrowing for public works must be reduced to the minimum required for essential works. Honourable members will appreciate that it takes time under the proposals for marshalling the man-power of the Dominion to get large numbers of men transferred from public works to other works of greater national importance. Furthermore, the large volume of works in hand has either to be completed or rounded off at a point where it can stand over without losing the money already invested. A substantial beginning has been made in reducing the expenditure on the whole works programme, and the amount of borrowed capital required this year is approximately £15,000,000 compared with £19,000,000 lor last financial year. As men are required for more urgent purposes associated with the war the volume of national works will be progressively reduced. Concerning the actual works which it is proposed to carry out during the year, an allocation of £3,450,000 has been made to railways construction and improvement. Of this total, £700,000 will be devoted to the completion of construction works already in hand, including the Napier to Gisborne and the South Island Main Trunk lines. The new line from Paeroa to Pokeno, which had just been commenced at the outbreak of war, has been discontinued for the time being. The balance of £2,750,000 under this class is for additions and improvements necessary for meeting existing commitments and for building essential locomotives, cars and wagons, new goods-sheds, &c. From a military point of view alone, an efficient and complete railway organization is most important in the national interests.

Loan contributions.

Public works.

Railway construction and improvement.

8

8.—6.

The expansion of industry, both primary and secondary, has necessitated a substantial increase in hydro-electric capacity for which an allocation of £2,750,000 has been made. This includes new works on the Waikato River and near Lake Waikaremoana and in the South Island, all urgently required to provide for the demands of consumers. The Cobb River scheme in the Nelson district has been acquired from the company Avhich commenced its construction, the price being paid in long-term securities. The supply of electricity continues to be a successful State enterprise, and the gross revenue for this year is expected to exceed £2,000,000, which will pay all working-expenses, including depreciation, and provide a residue towards extension of works. Under the heading of " Land-development and afforestation," for which provision of £3,234,000 has been made, the policy is to concentrate more especially on those phases of development which will result in immediate and material increases in production. Under this heading is included irrigation (£425,000), land clearing and improvement (£350,000), small-farms development (£550,000), and Native-land settlement (£1,000,000). These facilities, too, will be of advantage in connection with a comprehensive scheme for the rehabilitation of the men in our forces which the Government have now under consideration, as it is necessary to provide for such requirements well in advance. A very large extension of linen-flax growing in the Dominion, on an economic basis, is being planned, the immediate object being to meet war requirements; but this extension opens an additional avenue of primary production. The public demand for adequate housing facilities still continues, and provision for the expenditure of £4,000,000 has been made during this financial year. The Government regard this as one of the most important and successful of their activities, as, apart from providing a better environment in which such a large proportion of our citizens are born and live their daily lives, the building industry is a key industry in the maintenance of a balanced national economy. Another important factor is that houses are in short supply now and any curtailment of construction during the war would result in serious difficulties when the men return home from overseas. The roads and highways allocation for this year has been reduced to £4,350,000. Expenditure under this heading is being restricted to the completion of works in hand and to metalling work in the more remote areas where such works can be shown to be necessary. Petrol-tax and the other forms of highways revenue, provide, of course, for the maintenance of our main highways, any residue being utilized for construction and improvement works. The balance of the year's allocation for public works is in respect of public buildings, including schools, telegraph and telephone extension and other miscellaneous services, for all of which works a total of £2,805,000 is provided. All these activities have been curtailed and are now confined to finishing work in hand or undertaking jobs that are essential. These allocations make up a grand total of £20,589,000, but, as revenue from hydro-electricity, highways, &c., is estimated to provide a total of £5,506,000, the loan requirements for the year are reduced to a net total of £15,083,000. Approximately half of the total allocation concerns the activities of the Public Works Department, the balance being under the control of the Railways, Lands, Housing Construction, and other Departments. This loan programme of £15,083,000 is, of course, additional to the amount that will have to be borrowed for the War Expenses Account, but national works cannot be dissociated from the war effort. Much of the expenditure is necessary to support that effort or to pave the way for the rehabilitation phase that must follow the war. Concerning debt transactions for last financial year, the total borrowings amounted to £21,615,965, while redemptions and debt repayments out of revenue totalled £2,678,701, resulting in a net increase in the nominal amount of the public debt of £18,937,264. Of this increase, £1,000,000 represents a short-dated sterling loan by the New Zealand trading banks, while Treasury

I Hydro-electric ? development.

Landdevelopment and afforestation.

Housing.

Roads and highways.

Public buildings, telegraph and telephone extension.

Public debt transactions 1939 40.

3—B. 6.

9

8.—6,

notes amounting to £1,080,000 were issued to the United Kingdom Government, representing advances under the exports credits scheme. The balance of the net increase—namely, £16,857,264 —was raised in New Zealand. The magnitude of the financial programme with which the Dominion is now faced must necessarily involve the co-ordination of the various national activities and generally the mobilization of all our resources. To this end the Finance Emergency Regulations empower the Government to control the flow of capital and to direct financial resources generally from uneconomic purposes to investment in activities where expansion is urgently required. Authority is also taken for the Government, through the Reserve Bank, to acquire at current market prices, overseas securities held by New Zealand residents, in order that the whole of the Dominion's financial resources may be made available in the national interests. The Government look for the fullest co-operation and assistance from all concerned. The scene is changing so rapidly that only by the utmost goodwill on the part of each and every one will the machinery be enabled to function satisfactorily. We are passing through perilous times, when the very existence of our Empire is being threatened as never before. It has been said that the darkest hour is before the dawn, but we have confidence that the cause of truth and justice will ultimately prevail and that the democratic institutions of the world will survive the purging fire of the forces of oppression. This Financial Statement omits special references to exports and imports, exchange control, and import selection, and other relative subjects which affect the economy and finance of the Dominion. Information on these matters will be found in the various tables of this Statement and in the reports presented to the House and to the country. Should further information be required it will be supplied if it is available. The Statement has dealt almost exclusively with war finance and its effects on our economy. It conveys the financial side of the picture only—an important side —but not the most important which is work and production; work for all —hard work, sustained work —to make or produce the commodities essential for our kindred overseas and for our people in the Dominion. In proportion to our population we can, I believe, make the greatest contribution to winning this war, but it can be made only by work. The spirit of work on the farms, in the factories, on the waterfront, and in public and other services is developing as understanding of the issue grows. We are creating more goods and providing more efficient services than at any period in our history. There is still much to do. We must keep our people employed on productive work and organize and utilize all possible resources of the Dominion; utilize them to help the Motherland by sending her every ounce of products she requires. Maximum exports and minimum imports are the best contributions we can make during the Avar years to assist the United Kingdom and carry our share of the common load. Every policy must be subordinated to the war requirements, but peace will come — our soldiers will return — and. we must prepare for them. In the meantime work and service are the test, and till the present struggle ends will remain the test. We must give all. Saint Ignatius Loyola, who lived more than four centuries ago, sums up the spirit that should—nay, must —animate all our men and women to-day if we are to come through this conflict victorious. The spirit is— To give and not to count the cost, To fight and not to heed the wounds, To toil and not to seek for rest, To labour and not ask for any reward. My statement ends on that note. If we and our people can catch the spirit of Loyola, our actions will not only help us to save ourselves but enable us to contribute our share to the saving of the British Commonwealth, the other English-speaking countries, and the great democracies of Europe which are now crushed under the heel of the invading oppressor.

Finance Emergency Regulations.

10

8.—6

TABLES TO ACCOMPANY THE FOREGOING STATEMENT.

Table No. 1. —Abstract of Receipts and Expenditure of the Financial Year ended 31st March 1940. See Parliamentary Paper 8.-l [Part I]. Table No. 2. —Tite Public Debt on 31st March, 1940. See Parliamentary Paper 8.-l [Part lII]. Table No. 3.—Revenue for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939 .. .. .. .. .. Table No. 4.—Comparative Statement op the Estimated and Actual Revenue op the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1940 • • • • • • • • • • •. .. .. .. iii Table No. s.—Estimated Revenue for 1940-41, compared with the Actual Revenue for 1939-40 .. iv Table No. 6.—Stamp and Death Duty Revenue for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939 .. .. .. .. .. .. iv Table No. 7. —Statement of the Customs Duties collected for 1939-40, compared with 1938-39 .. v Table No. 8. —Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Yeah ended 31st March, 1940, compared with the Year ended 31st March, 1939 .. .. .. .. v Table No. 9. —Comparative Statement of the Appropriated and Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year exded 31st March, 1940 .. .. .. .. ~ _ _ .. vii Table No. 10. —Estimated Net Expenditure for 1940-41, compared with the Actual Net Expenditure for 1939-40 .. .. .. .. .. .. ix Table No. 11. —Public Works Fund—Statement showing Net Expenditure under Appropriations for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939 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, 1940 .. xi Table No. 13.—Statement showing the Amount charged to " Unauthorized " in each Financial Year from Ist April, 1930, to 31st March, 1940 .. .. .. .. .. xii Table No. 14.—Statement showing the available Financial Resources of the various Accounts on the 31st March, 1940, as compared with the 31st March, 1939 .. .. .. xiii Table No. 15.—Statement of Amounts paid on account of Pensions and Social Security Benefits for the Financial Years ended 31st March, from 1936 to 1940.. .. .. xiii Table No. 16.—Education Expenditure—Total Expenditure on Education out of Public Funds since 1913-14 .. .. .. .. .. _ .. xiv Table No. 17.—Statement of Half-yearly Instalments of Principal and Interest for Repayment of Debt funded with Imperial Government .. .. .. .. .. xv Table No. 18.—Statement showing Maturity Dates and Domicile of Debt outstanding as at 31ST March, 1940 .. .. .. .. .. xvi Table No. 19.—Statement showino Values of Imports and Exports of the Dominion in each Financiai Year ended 31st March, from 1931 to 1940 .. .. .. * xvii Table No. 20. —Table showing Improvement in Economic Conditions .. .. _ xvii Copy of Prospectus of 1939 London Conversion Loan .. .. xviii

i—B. 6.

B—6,

Table No. 3. Revenue for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939.

II

I Year ended | Year ended | 31st March, i 31st Mareh, I Increase. Decrease. 1940. i 1939. Taxation — £ £ £ £ Customs .. .. •• •• 9,946,858 10,650,428 .. 703,570 Beer duty .. •• •• •• 1,378,999 1,076,796 302,203 Sales tax 3,510,130 3,555,696 .. '45,566 Film-hire tax .. .. .• •• 93,117 85,882 7,235 Gold-export duty •• •• •• 116,889 100,012 16,877 Highways " .. •• •• 2,997,441 3,059,989 .. 62,548 Stamp and death duties .. .. .. 3,469,013 3,409,440 59,573 Land-tax 1,019,084 1,058,499 .. 39,415 Income-tax 10,271,352 9,303,495 967,857 Miscellaneous .. .. •• •• 7,716 5,535 2,181 Total—Taxation 32,810,599 32,305,772 1,355,926 851,099 Interest — On capital liability — Working railways .. .. •• 1,189,031 701,064 487,967 Postal and telegraph .. .. ... 639,000 588,000 51,000 'On Public Debt Redemption Fund .. .. 445,557 392,486 53,071 On other public moneys .. .. ... 635,158 445,896 189,262 Total—Interest 2,908,746 2,127,446 781,300 Other receipts— Registration and other,fees .. .. 308,283 290,104 18,179 National-endowment revenue .. .. .. 147,394 .. 147,394 Territorial revenue .. .. .. 395,489 319,244 76,245 'External affairs .. .. .. .. 159,203 196,503 .. 37,300 Justice 172,765 164,117 8,648 Marine 159,456 167,850 .. 8,394 Native 5,658 5,748 .. 00 Printing and Stationery .. .. .. 300,827 344,402 .. 43,575 Profits of Trading Institutions .. .. 420,143 202,294 217,849 Stamp duties .. .. .. .• 63,188 66,798 .. 3,610 Tourist and Health Resorts .. .. 114,963 126,229 .. 11,266 Miscellaneous .. .. .. •• 129,972 113,094 16,878 Recoveries on account of expenditure of 18,564 4,844 13,720 previous years Recoveries on account of unauthorized expendi- 6,303 206 6,097 ture of previous years Total—Other receipts .. .. 2,254,814 2,148,827 357,616 251,629 2,494,842 1,102,728 1,102,728 Totals .. .. .. .. ————■— 37,974,159 36,582,045 1,392,114

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, 1940.

III

Difference. Estimate for Actual for 1939-40. 1939-40. More . Lesfl Taxation— £ £ £ £ Customs .. .. .. .. 10,000,000 9,946,858 .. 53,142 Beer duty .. .. .. .. 1,300,000 1,378,999 78,999 Sales tax .. .. .. .. 3,500,000 3,510,130 10,130 Film-hire tax .. .. .. .. 85,000 93,117 8,117 Gold-export duty .. .. .. 100,000 116,889 16,889 Highways .. .. .. .. 3,250,000 2,997,441 .. 252,559 Stamp and death duties .. .. .. 3,480,000 3,469,013 .. 10,987 Land-tax .. .. .. .. 1,000,000 1,019; 084 19,084 Income-tax .. .. .. .. 9,600,000 10,271,352 671,352 Miscellaneous .. .. .. .. 5,000 7,716 2,716 Total—Taxation .. .. .. 32,320,000 32,810,599 807,287 316,688 Interest— On capital liability— Working railways .. .. .. 1,200,000 1,189,031 .. 10,909 Postal and telegraph .. .. .. 645,000 639,000 .. 6,000 On Public Debt Redemption Fund .. 480,000 445,557 .. 34,443 On other public moneys .. .. .. 455,000 635,158 180,158 Total—Interest .. .. .. 2,780,000 2,908,746 180,158 51,412 Other receipts — Registration and other fees .. .. 300,000 308,283 8,283 National-endowment revenue .. .. 140,000 .. .. 140,000 Territorial revenue .. .. .. 295,000 395,489 100,489 External Affairs .. .. .. .. 180,000 159,203 .. 20,797 Justice .. .. .. .. .. 172,000 172,765 765 Marine .. .. .. .. .. 165,000 159,456 .. 5,544 Native .. .. .. .. .. 6,000 5,658 .. 342 Printing and Stationery .. .. .. 320,000 300,827 .. 19,173 Profits of Trading Institutions .. .. 261,000 420,143 159,143 Stamp duties .. .. .. .. 66,000 63,188 .. 2,812 Tourist and Health Resorts .. .. 128,000 114,963 .. 13,037 Miscellaneous .. .. .. .. 1,117,000 129,972 .. 987,028 Recoveries on account of expenditure of f 18,564 previous years 10,000 j,- 14,867 Recoveries on account of unauthorized expendi- [_ 6,303 J ture of previous years Total—Other receipts .. .. 3,160,000 2,254,814 283,547 1,188,733 1,270,992 1,556,833 1,270,992 i ' ' Total revenue .. .. .. 38,260,000 37,974,159 .. 285,841

8.—6,

Table No. 5. Estimated Revenue of the Consolidated Fund (Ordinary Revenue Account) for the Year ending 31st March, 1941, compared with the Actual Revenue received for the Year ended 31st March, 1940.

Table No. 6. Stamp and Death Duty Revenue for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939.

IV

I Estimate Actual Differences. for for — — 1940-41. 1939-40. Increase. Decrease. ! I Taxation - £ £ £ £ Customs .. .. .. .. .. .. 7,500,000 9,946,858 .. 2,446,858 Beerduty .. .. .. .. .. 1,380,000 1,378,999 1,001 Sales tax .. .. .. .. .. .. 3,000,000 3,510,130 .. 510,130 Filin-hire tax .. .. .. .. 90,000 93,117 .. 3,117 Gold-export duty .. .. .. .. .. 125,000 116,889 8,111 Highways .. .. .. .. .. 2,600,000 2,997,441 .. 397,441 Stamp and death duties .. .. .. . . 1,650,000* 3,469,013 .. 1,819,013 Land-tax .. .. .. .. .. 1,000,000 1,019,084 .. 19,084 Income-tax .. .. .. .. .. 13,550,000 10,271,352 3,278,648 Miscellaneous .. .. .. .. .. 10,000 7,716 2,284 Total—Taxation .. .. 30,905,000 32,810,599 3,290,044 5,195,643 Interest— On capital liabilityWorking Railways .. .. .. .. 1,200,000 1,189,031 10,969 Postal and Telegraph .. .. .. .. 650,000 639,000 11,000 On the Public Debt Redemption Fund .. .. 450,000 445,557 4,443 On other publio moneys .. .. .. .. 500,000 635,158 .. 135,158 Total—Interest .. .. 2,800,000 2,908,746 26,412 135,158 Other receipts— Registration and other fees.. .. .. .. 300,000 308,283 .. 8,283 Territorial revenue .. .. .. .. 400,000 395,489 4,511 External Affairs .. .. .. .. .. 160,000 159,203 797 Justice .. .. .. .. .. .. 184,000 172,765 11,235 Marine .. .. .. .. .. .. 160,000 159,456 544 Native .. .. .. .. .. .. 6,000 5,658 342 Printing and Stationery .. .. .. .. 350,000 300,827 49,173 Profits of Trading Institutions .. .. .. 495,000 420,143 74,857 Stamp duties .. .. .. .. .. 66,000 63,188 2,812 Tourist and Health Resorts.. .. .. .. 115,000 114,963 37 Miscellaneous .. .. .. .. 1,125,000 129,972 995,028 Recoveries on acoount of expenditure of previous years.. 14,000 18,564 .. 4,564 Recoveries on account of unauthorized expenditure .. .. 6,303 .. 6,303 Total—Other receipts .. 3,375,000 2,254,814 1,139,336 19,150 4,455,792 5,349,951 4,455,792 Totals .. .. .. .. 37,080,000 37,974,159 .. 894,159 * Death duties now paid to War Expenses Account.

Year Ended 31 at March, Item. Increase. Decrease. 1940. 1939. !_ £ £ £ £ Adhesive stamps .. .. 216,771 62,992 153,779 Duty on instruments.. .. 367,890 393,619 .. 25,729 Estate and succession duty .. 1,443,705 1,702,681 .. 258,976 Gift duty .. .. .. 182,161 115,031 67,130 Impressed stamps, and duty on 229,739 233,430 .. 3,691 cheques Company licenses .. .. 90,729 90,451 278 Sharebrokers' licenses .. 1,770 1,862 .. 92 Totalizator revenue .. .. 787,418 661,443 125,975 Amusements-tax .. .. 95,644 92,993 2,651 Lottery duty .. .. 24,083 20,389 3,694 Overseas-passenger duty .. 25,709 30,598 .. 4,889 Rates, fines, and miscellaneous 3,394 3,951 .. 557 353,507 293,934 293,934 Totals .. .. 3,469,013 3,409,440 59,573

8.—6

Table No. 7. Statement showing Customs Duties collected for Year ended 31st March, 1940, compared with the Year ended 31st March, 1939.

Table No. 8. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1940, compared with the Financial Year ended 31st March, 1939.

V

1939-40. | 1938-39. Increase. Decrease. I : | | | £ £ £ £ Tobacco, cigars, and cigarettes 2,265,222 2,138,254 126,968 Spirits, wine, and beer .. .. 1,008,348 865,406 142,942 Motor-vehicles and parts* .. .. .. 315,405 734,964 .. 419,559 Motor-spirit* .. .. •• 2,684,954 1,660,380 1,024,574 Tea 145,887 136,113 9,774 Sugar .. •• •• •• ■. 690,803 667,176 23,627 Other goods .. .. .. •• 2,032,126 3,436,379 .. 1,404,253 Primage duty .. •• •• •• 300,140 293,833 6,307 Surtax 503,973 717,923 .. 213,950 1,334,192 2,037,762 1,334,192 Totals 9,946,858 10,650,428 703,570 I * Excluding tire-tax and petrol-tax earmarked to Main Highways.

Year ended Year ended 31st March, 31st March, j Increase. Decrease 1940. 1939. Permanent Appropriations: — £ £ £ £ Under special Acts of Legislature— Civil List 27,033 30,127 .. 3,094 Debt Services— Interest .. .. .. .. .. 7,982,505 7,500,515 481,990 Amortization of debt— Sinking fund .. .. .. .. 10,859 10,859 Repayment of Public Debt Act, 1925 .. 1,892,378 1,754,123 138,255 Transfers to Loans Redemption Account .. 252,331 .. 252,331 Payments on guaranteed loans .. Or. 2,513 Or. 4,864 2,351 Administration and management .. .. 330,068 50,311 279,757 Total—Debt Services .. .. .. 10,465,628 9,310,944 1,154,684 Other ServicesOther grants and subsidies .. .. .. 253,031 401,074 .. 148,043 Salaries and honoraria .. .. .. 71,594 75,005 .. 3,411 Highways — Transfers to Main Highways Account .. 2,790,098 2,852,164 .. 62,066 Paid to boroughs .. .. .. .. 182,170 176,910 5,260 Expenses of collecting, &c... .. .. 27,541 26,021 1,520 Advances 3,145 Or. 6,750 9,895 Other special Aots — Exchange on remittances of public moneys to 1,704,716 1,422,085 282,631 or from countries overseas Miscellaneous .. .. .. .. 29,821 44,993 15,172 Transfer to War Expenses Account .. .. 2,287,826 .. 2,287,826 Total—Other Services .. .. 7,349,942 4,991,502 2,587,132 228,692 Total —Permanent Appropriations .. 17,842,603 14,332,573 3,741,816 231,786

B.—6a

Table No. 8 —continued. Statement of the Actual Net Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year ended 31st March, 1940, compared with the Financial Year ended 31st March, 1939 —continued.

VI

Year ended Year ended 31st March, 31st March, Increase. Decrease. 1940. 1939. Annual Appropriations:— £ £ £ £ Vote, — Legislative.. .. •• •• •• 105,481 98,791 6,690 Prime Minister's Department .. .. 26,245 24,644 1,601 Finance — Treasury i .. •• 49,211 47,271 1,940 Customs .. .. .. .. •• 158,390 137,753 20,637 Land and Income Tax .. .. • • 155,259 135,106 20,153 Stamp Duties .. .. •• •• 97,531 105,537 .. 8,006 Audit .. .. •• •• •• 33,812 39,452 .. 5,640 Total—Finance .. •• •• 494,203 465,119 42,730 13,646 General Administration — Public Service Commissioners'Office .. .. 13,454 13,590 136 Internal Affairs .. •• •• •• 518,400 499,861 18,539 External Affairs .. .. •• •• 208,213 207,797 416 Printing and Stationery .. .. •• 250,818 302,016 .. 51,198 Marine . •• •• •• 179,426 179,406 20 Labour •• •• •• 2,881,908 134,758 2,747,150 Native .. .. •• •• •• 535,745 122,932 412,813 >. Valuation .. .. •• •• •• 48,503 49,069 .. 566 Electoral 10,452 114,641 .. 104,189 Census and Statistics .. .. •• 33,850 33,938 Total—General Administration .. 4,680,769 1,658,008 3,178,938 156,177 Law and Order — Justice and Prisons .. .. •• 279,463 337,071 .. o7,608 Crown Law Office .. .. •• •• 8,401 8,279 122 Police .. •• •• •• 627,502 607,390 20,112 Total —Law and Order .. .. 915,366 952,740 20,234 57,608 D Nfovv ~ •• •• 169,139 835,331 .. 666-, 192" Annv " • •• •• 541,969 706,753 .. 164,784 Air .. .. .. •• •• 215,504 557,205 .. 341,701 Total—Defence 926,612 2,099,289 .. 1,172,677 Maintenance of Public Works and Services 1,090,598 724,287 366,311 Development of Primary and Secondary IndustriesLands and Survey .. .. . • •• 306,181 300,241 5,940 Agriculture 970,338 1,078,426 108,088 Industries and Commerce, Tourist and Publicity 350,883 444,216 .. 93,333 Scientific and Industrial Research .. .. 157,049 158,785 . . 1,736 Mines •• •• 74,485 33,716 40,769 Transport !. _ 83,063 81,699 1.364 •• Total — Development of Primary and 1,941,999 2,097,083 48,073 203,157 Secondary Industries - " Social Services —• , Health .. .. •• 1,519,139 1,362,757 156,382 Mental Hospitals .. .. .. •• 303,753 417,483 • ■ 113,730 Education •• •• •• 4,471,809 4,097,546 374,263 Pensions .. .. 2,016,811 6,933,819 .. 4,917,008 Social Security .. .. •• 1,000,000 .. 1,000,000 National Provident and Friendly Societies .. 119,618 133,959 .. 14,341 Total —Social Services.. .. 9,431,130 12,945,564 1,530,645 5,045,079 Unauthorized Expenditure— Services not provided for .. •• 199,814 374,580 .. 1/4,766 Total—Annual Appropriations .. .. 19,812,217 21,440,105 5,195,222 6,823,110 8,937,038 7,054,896 7,054,896 Total Expenditure 37,654,820 35,772,678 1,882,142

e

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, 1940.

VII

Net Actual Net Difference. j Appropriations, Expenditure, 1 1939-40. 1939-40. , r ( j More. Less. Permanent Appropriations :— £ £ £ £ Under Special Acts of the Legislature,— Civil List .. .. .. .. .. 30,200 27,033 .. 3,167 Debt services— Interest .. .. .. .. .. 8,036,380 7,982,505 .. 53 875 Amortization of DebtSinking Fund .. .. .. .. 10,859 10,859 Repayment of Public Debt Act, 1925 .. 1,907,144 1,892,378 14 766 Securities redeemed .. .. .. 2,000 ' 2'000 Payments on Guaranteed Loans .. .. Cr. 1,500 (Jr. 2,513 1013 Transfers to Loans Redemption Account .. .. 252 331 252 331 Administration and Management ,. .. 67,100 330,068 262 968 Total—Debt services .. .. 10,021,983 10,465,628 515,299 71,654 Other services—■ Other Grants and Subsidies .. .. .. 252,500 253,031 531 Salaries and Honoraria .. .. .. 72,235 71,594 641 Highways.. .. .. .. .. 3,233'000 !! 233 191 Exchange.. .. .. .. .. 1,500,000 1,704,716 204,716 Transfer to War Expenses .. .. .. .. 2,287,826 2,287 826 Other Special Acts .. .. .. .. 21,256 ' 32*966 II,*710 Total—Other services .. .. 5,078,991 7,349,942 2,504,783 233,832 Total—Permanent Appropriations.. 15,131,174 17,842,603 3,020,082 308,053 Annual Appropriations :— Vote, — Legislative .. .. .. .. .. 109,995 105,481 .. 4,514 Prime Minister's Department .. .. .. 26,000 26,245 245 Finance— Treasury .. .. .. .. .. 48,200 49,211 1,011 Customs .. .. .. .. .. 174,958 158,390 .. 16,568 Land and Income Tax .. .. .. 167,600 155,259 .. 12 341 Stamp Duties .. .. .. .. 103,778 97,531 .. 6'247 Audit •• •• •• •• •• 42,979 33,812 .. 9,'l67 Total—Finance .. .. .. 537,515 494,203 1,011 44,323 General Administration— Publio Service Commissioner's Office .. .. 14,860 13,454: .. 1 406 Internal Affairs .. .. .. .. 607,342 518,'400 . . 88'942 External Affairs .. .. .. .. 219,260 208,213 .. 11,'047 Printing and Stationery .. .. .. 299,200 250,818 .. 48^382 Marine .. .. .. .. .. 204,112 179,426 .. 24,686 Labour .. .. .. .. .. 2,723,443 2,881,908 158,465 Native .. .. .. .. .. 539,210 535,745 .. 3,465 Valuation .. .. .. .. .. 53,000 48,503 .. 4,497 Electoral .. .. .. .. .. 14,000 10,452 .. 3,548 Census and Statistics .. .. 36,600 33,850 .. 2,750 Total—General Administration .. 4,711,027 4,680,769 158,465 188,723 Law and Order— Justice and Prisons .. .. .. 308,000 279,463 .. 28,537 Crown Law Office .. .. .. .. 8,449 8,401 .. 48 Police .. .. .. .. .. 629,259 627,502 !! 1,757 Total—Law and Order .. .. 945,708 915,366 .. 30,342 Defence— Navy .. .. .. .. .. 919,970 169,139 .. 750,831 Arm y •• •• •• 1,594,468 541,969 .. 1,052,499 Air •• •• •• .. .. 700,000 215,504 .. 484,496 Total—Defence .. .. .. 3,214,438 926,612 .. 2,287,826 Maintenance of Public Works and Services .. 771,400 1,090,598 319,198

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, 1940—ctd.

VIII

Difference. Net Actual Net | Appropriations, Expenditure, I 1939-40. 1939-40. More . Less. Annual Appropriations—continued. £ £ £ £ Vote—continued. Development of Primary and Secondary Industries — Lands and Survey .. •• •• •• 339,656 306,181 •• co'fin Agriculture .. •• •• 1,032,954 970,338 .. on'c/iR Industries and Commerce, Tourist and Publicity 371,729 350,883 . • 20,846 Scientific and Industrial Research .. .. 174,470 157,049 .. 17,421 Mines .. •• •• 90,000 74,485 .. 15,515 Transport ! 85,433 83.063 „ 2,370 Total —Development of Primary and 2,094,242 1,941,999 .. 152,243 Secondary Industries — Social Services — „ Health .. .. •• 1,546,978 1,519,139 .. 27,839 Mental Hospitals .. .. •• 364,000 303,753 .. Education 4,510,482 4,471,809 .. 38,673 Pensions . •• 2,080,000 2,016,811 .. 63,189 Social Security .. .. .. •• 2,000,000 1,000,000 .. 1 ' 00^^!! National Provident and Friendly Societies .. 124,467 119,618 j .. 4,84. Total —Social Services .. •• j 10,625,927 9,431,130 . .. 1,194,797 Unauthorized Expenditure, — Services not provided for .. .. ■■ •• 199,814 199,814 .. Total —Annual Appropriations .. 23,036,252 19,812,217 878,733 3,902,768 3,698,815 4,211,421 3,698,815 Total Expenditure .. .. 38,167,426 37,654,820 512,606

8.—6,

Table No. 10. Estimated Net Expenditure of the Ordinary Revenue Account for the Year ending 31st March, 1941, compared with Actual Net Expenditure for the Year ended 31st March, 1940.

ii—B. 6.

IX

Estimate \ Actual Difference. for for 1940-41. 1939-40. „ Increase. Decrease. Permanent Appropriations,— £ £ £ £ Civil List .. .. .. .. .. 30,200 27,033 3,107 Debt services— Interest .. .. .. .. .. 8,519,607 7,982,505 537,102 Sinking Fund .. .. .. .. .. 10,859 10,859 Repayment of Public Debt .. .. .. 2,077,225 1,892,378 184,847 Administration and Management .. .. .. 59,850 330,068 .. 270,218 Payments of Guaranteed Loans, Redemptions, and 3,066 249,818 .. 246,752 Trftii sfcrs —■—— — — — Total—Debt services .. .. .. 10,670,607 10,465,628 721,949 516,970 Under Special Acts of the Legislature—Highways .. .. .. .. .. 2,583,000 2,999,809 .. 416,809 Exchange .. .. .. .. .. 1,500,000 1,704,716 .. 204,716 Other Special Acts .. .. .. .. 349,965 2,645,417 .. 2,295,452 4,432,965 7,349,942 .. 2,916,977 Total—Permanent appropriations .. 15,133,772 17,842,603 725,116 3,433,947 Annual Appropriations, — Legislative .. .. .. .. .. 109,000 105,481 3,519 Prime Minister's Department .. .. .. 24,000 26,245 .. 2,245 Finance — Treasury .. .. .. .. .. 60,000 49,211 10,789 Customs .. .. .. .. .. 169,197 158,390 10,807 Land and Income Tax .. .. .. .. 170,000 155,259 14,741 Stamp Duties .. .. .. .. .. 102,000 97,531 4,469 Audit .. .. .. .. .. .. 40,000 33,812 6,188 541,197 494,203 46,994 General Administration — Public Service Commissioners'Office .. .. 1-6,000 13,454 2,546 Internal Affairs .. .. .. .. .. 508,500 518,400 .. 9,900 External Affairs .. .. .. 215,943 208,213 7,730 Printing and Stationery .. .. .. .. 300,000 250,818 49,182 Marine.. .. .. .. .. •• 172,000 179,426 .. 7,426 Labour .. .. .. .. .. 2,717,722 2,881,908 .. 164,186 Native.. .. .. .. .. .. 470,000 535,745 .. 65,745 Valuation .. .. .. .. .. 50,000 48,503 1,497 Electoral .. .. .. .. .. 7,100 10,452 .. 3,352 Census and Statistics .. .. .. .. 36,000 33,850 2,150 4,493,265 4,680,769 63,105 250,609 Law and Order— Justice and Prisons .. .. .. .. 286,440 279,463 6,977 Crown Law .. .. .. .. .. 8,500 8,401 99 Police .. .. .. .. .. .. 645,000 627,502 17,498 939,940 915,366 24,574 Defence — Navy .. .. .. .. .. .. •• 169,139 .. 169,139 Army .. .. .. .. .. .. .. 541,969 .. 541,969 j Air .. .. .. .. .. .. .. 215,504 .. 215,504 J 926,612 .. 926,612 Maintenance of Public Works and Services .. .. 650,000 1,090,598 .. 440,598 Development of Primary and Secondary Industries— Lands and Survey .. .. .. .. 400,000 306,181 93,819 Agriculture .. .. .. .. .. 1,649,000 970,338 678,662 Industries and Commerce, Tourist and Publicity .. 521,615 350,883 170,732 Scientific and Industrial Research .. .. .. 165,000 157,049 7,951 Mines .. .. .. .. .. .. 250,000 74,485 175,515 Transport .. .. .. .. .. 73,000 83,063 .. 10,063 3,058,615 1,941,999 1,126,679 10,063 Sooial Services — — — Health.. .. .. .. .. .. 1,503,410 1,519,139 .. 15,729 Mental Hospitals .. .. .. .. 442,000 303,753 138,247 Education .. .. .. .. .. 4,630,000 4,471,809 158,191 War and Sundry Pensions .. .. .. 1,950,000 2,016,811 .. 66,811 Social Security .. .. .. .. .. 3,200,000 1,000,000 2,200,000 National Provident and Friendly Societies .. .. 109,000 119,618 .. 10,618 11,834,410 9,431,130 2,496,438 93,158 Services not provided for .. .. .. .. .. 199,814 .. 199,814 Total—Annual appropriations .. .. 21,650,427 19,812,217 3,761,309 1,923,099 4,486,425 5,357,046 4,486,425 Totals .. .. .. I 36,784,199 37,654,820 „ 870,621 |

8.—6

Table No. 11. PUBLIC WORKS FUND. Statement showing the Net Expenditure under Appropriations for the Year ended 31st March, 1940, compared with the Year ended 31st March, 1939.

X

I I II Vnt.p Year ended j Year ended r . e ' 31st March, 1940. j 31st March, 1939. Increase. Decrease. I __J _J j £ £ £ £ Public Works, Departmental .. .. 147,461 216,010 .. 68,555 Railway-construction .. .. 1,178,776 1,234,646 .. 55,870 Railways Improvement and Additions to 2,986,640 2,563,436 423,204 Open Lines Public Buildings— General .. .. .. .. 269,228 807,469 .. 538,241 Courthouses .. .. .. 11,436 34,868 .. 23,432 Education Buildings .. .. 844,126 660,666 183,460 Prison Buildings and Works .. 4,348 7,656 .. 3,308 Police-stations .. .. .. 60,664 77,745 .. 17' 081 Postal and Telegraph .. .. 362,730 280,951 81,779 Mental Hospital Buildings .. .. 175,552 128,839 46,713 Health and Hospital Institutions .. 67,136 88,099 .. 20 963 Lighthouses and Harbour-works .. 22,519 33,850 .. 1)^331 Development of Tourist Resorts .. 24,892 24,552 340 Roads, &e. .. .. .. .. 1,124,590 1,290,838 .. 166^248 Telegraph Extension .. .. .. 416,779 575,944 .. 159,165 Lands, Miscellaneous .. .. 172,525 134,977 37,548 Irrigation, Water-supply, and Drainage.. 416,437 164,481. 251^956 Swamp Land Drainage" .. .. 2,696 5,325 .. 2^629 Settlement of Unemployed Workers .. 446,698 344,684 102,014 Native Land Settlement .. .. 357,819 493,695 .! 135,876 Totals, annual appropriations 9,093,052 9,168,737 1,127,014 1,202,699 Unauthorized— Services not provided for .. .. 4,976 75 4,901 Totals .. .. .. 9,098,028 9,168,812 1,131,915 1,202,699 1,131,915 70,784 I

8.—6

Table No. 12. Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to the 31st March, 1940.

XI

WAYS AND MEANS. Loans :— £ s. d. £ s d Immigration arid Public Works Loan, 1870 .. .. .. 4,000,000 0 0 Immigration and Public Works Loan, 1873 .. .. .. 2,'oooiooo 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 .. .. .. .. 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 .. .. 1,000j 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 .. .. 7 11 New Zealand Loan Act, 1888 .. .. .. .. ] 000' 000 0 0 Native Land Purohase Act, 1892 .. .. .. .. 'l49'700 0 0 Lands Improvement and Native Lands Acquisition Aot, 1894 .. 500'000 0 0 Aid to Public Works and Land Settlement Act, 1896 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Amendment Act, 1897.. 250'000 0 0 Aid to Public Works and Land Settlement Amendment Act, 1898.. 500,000 0 0 Aid to Public Works and Land Settlement Act, 1899 .. .. 1,000,000 0 0 Aid to Public Works and Land Settlement Act, 1900 .. .. 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 ... 0 0 Aid to Public Works and Land Settlement Act, 1904 .. .. 0 0 Aid to Public Works and Land Settlement Act, 1905 .. .. 1, 0 0 Aid to Public Works and Land Settlement Act, 1906 .. .. 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 .. .. 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 .. .. 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 Aot, 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 Aot, 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, Seotiou 5 .. .. .. . 750,000 0 0 Finance Act, 1920, Section 15 .. .. .. 2,500000 0 0 Finance Act, 1021, Section 10 .. 2 673 ] 111 10 11 Finance Act, 1923, Section 2 .. .. .. .. 4 \ .'i06' 608 17 6 Finance Act, 1924, Section 2 .. .. .. 2'l26'oi3 12 6 Finance Act, 1925, Section 2 .. .. .. .. .. 4,' 10 2 Finance Act, 1926, Section 2 .. .. 10 7 Finance Act, 1927 (No. 2), Section 2 .. .. .. .. 10 3 Finance Act, 1928, Section 2 .. .. .. .. .. 3,185*132 14 8 Finance Act, 1929, Section 2 .. .. .. .. 4 6 Finance Act, 1930 (No. 2), Section 2 .. .. .. .. 5,000,000 0 0 Finance Act, 1931 (No. 4), Section 2 .. .. .. .. 3, 0 0 Finance Aot (No. 3), 1934, Section 2 .. .. .. .. 4,000,000 0 0 Finance Act (No. 2), 1936, Section 2 .. .. .. 6,000,000 0 0 Finance Act, 1937, Section 11 .. .. .. .. 6' 000' 000 0 0 Finance Act, 1938, Section 2 .. .. .. .. 8,000'000 0 0 Finance Act, 1939, Section 2 .. .. .. .. 2,407'745 0 0 Stock issued for Expenses of Conversion, 1930-31 .. .. 18 0 Post and Telegraph Aot, 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 Aot, 1905 .. .. .. .. 50 \ 000 0 0 Appropriation Act, 1912 .. .. .. .. .. 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 Acoount 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 Carried forward .. .. .. .. 137,602,832 6 3

Consolidated Fund.— Ordinary Kevenue Account, j Financial I Other Public Works t Year. Accounts. Fund. ■ Ser TM e ed n f 0 or. P1 '°"j Excess of Votes, j Total. £ a. d. £ s. d. £ a. d. £ s. d. £ s. d. £ s. d. 1930-1931.. 4,585 0 0 129,903 7 1 134,438 7 1 3,450 8 7 1,586 13 11 139,525 9 7 1931-1932.. 18,698 6 0 19,182 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 8,28f! 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 | 1937-1938.. 88,651 10 2 138,382 16 1 227,034 6 3 6,100 2 8 14,120 10 9 247,254 19 8 I 1938-1939.. 374,579 19 8 415,576 1 5 790,156 1 1 143,575 7 1 165,951 12 8 1,099,683 0 10 1939-1940.. 199,814 2 7 478,918 11 0 678,732 13 7 ; 51,816 17 1 31,413 13 10 761,963 4 6

8.—6,

Table No. 12—continued. Statement showing the Total Ways and Means of the Public Works Fund, General Purposes Account, and the Total Net Expenditure to the 31st March, 1940—continued.

Table No. 13. Statement showing the Amount charged to "Unauthorized" in each Financial Year from 1st April, 1930, to 31st March, 1940.

XII

I WAYS AND MEANS—continued. £ s. d. £ s. d. Brought forward .. .. .. .. 137,602,832 6 3 Receipts in Aid : — Amount transferred from Consolidated Fund .. .. .. 14,555,000 0 0 Contributions of Canterbury Province for Railways .. .. 56,000 0 0 Proceeds of Railway Material handed over to Cook County Council 4,963 7 4 Stamp Duties to 31st December, 1876 .. .. .. 264,657 16 4 Transfer from Confiscated Lands Liabilities Account .. .. 19,963 1 3 Receipts under Section 16 of the Reserves and other Lands Disposal 21,890 4 5 and Public Bodies Empowering Act, 1912 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 70,838 6 11 1893 Special Receipts under the Railways Authorization and Manage- 2,257 1 9 ment Act, 1891 Special Receipts under the North Island Main Trunk Rail tray 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 .. .. .. 65,121 5 0 Settlement of Unemployed Workers .. .. .. .. 302,477 8 7 Receipts under Section 12 of Native Land Amendment Act, 1932.. 40,092 12 2 Agriculture (Emergency Powers) Act, 1934, Section 26 .. .. 4,379 0 2 Finance Act, 1932 (No. 2), Section 6— Transfer from Land for Settlements Account.. .. .. 3,917 12 0 Finance Act, 1932 (No. 2), Section 16— Transfer from Land for Settlements Account.. .. .. 43 6 8 Transfer from State Forests Account . . .. .. 14 17 1 Receipts under the Native Housing Act, 1935 .. .. 8,210 6 11 Finance Act, 1932, Section 55 .. .. .. .. 365,625 0 0 1 1(5,467,438 8 4 £154,070,270 14 7 NET EXPENDITURE. it—_ Expenditure on— Immigration .. .. .. .. .. ., 3,312,573 0 3 Public Works, Departmental .. .. .. .. .. 3,748,865 19 9 Railways, including Surveys of New Lines and Payment to Midland 67,976,253 18 0 Railway Bondholders Roads .. .. .. .. .. .. .. 27,441,349 12 3 Land-purchases .. .. .. .. .. .. 2,148,248 8 2 Settlement of Unemployed Workers .. .. .. .. 1,858,608 19 0 Development of Mining .. .. .. .. 879,714 10 11 Telegraph Extension .. .. .. .. .. .. 13,293,412 10 I Public Buildings .. .. .. .. .. .. 17,795,337 3 1 Lighthouses, Harbour-works, and Harbour-defences .. .. 1,390,990 14 3 Contingent Defence .. .. .. .. .. .. 1,389,448 17 9 Rates on Native Lands .. .. .. .. 68,671 16 10 Thermal Springs .. .. .. .. .. .. 14,599 13 2 Development of Tourist Resorts .. .. .. .. 806,528 0 7 Lands Improvement .. .. .. .. .. .. 1,408,886 18 7 Swamp Land Drainage .. .. .. .. .. 105,565 3 2 Plant, Material, and Services .. .. .. .. .. 134,825 11 3 Charges and Expenses of raising Loans .. .. .. .. 3,965,916 6 4 Coal-mines .. .. .. .. .. .. .. 10,835 8 0 Interest and Sinking Fund .. .. .. .. .. 218,500 0 0 Irrigation and Water-supply .. .. .. .. .. 1,966,765 18 5 Motor Transport Servioe .. .. .. .. .. 33,635 5 3 Transfer to Main Highways Account, Construction Fund .. .. 1,226,000 0 0 Native Land Settlement .. .. .. .. .. 1,539,621 3 2 Dairy Industry Loans .. .. .. .. .. .. 46,124 13 0 152,781,279 11 3 Balance on 31st March, 1939 — Cash in the Public Account .. .. .. .. .. 1,034,729 10 0 Investments.. .. ■ .. .. .. .. 254,261 13 4 1,288,991 3 4 £154,070,270 14 7

8.—6

Table No. 14. Statement showing the available Financial Resources of the various Accounts on the 31st March, 1940, as compared with the 31st March, 1939.

Table No. 15. PENSIONS AND BENEFITS. Statement of Amounts paid on Account of Pensions and Social Security Benefits for the Financial Years ended 31st March from 1936 to 1940.

XIII

1940. 1939. Account. Balance I Liabilities Balance Liabilities I on I on Authority for on on i Authority (or 31st March, 31st March, j ™ is n i ? t g f°i\? 31st March, 31st March, ?fSP 1940. 1940. 1 on 1939. 1939. on Consolidated Fund — £ £ £ £ £ £ Ordinary Revenue .. .. 2,052,526 1,072,608 .. 2,539,854 664,306 Public Works Fund— General Purposes.. .. .. 1,288,991 634,572 12,592,255 638,874 719,016 6,958,076 Electric Supply .. .. .. 50,887 151,701 1,323,351 15,927 131,174 1,127,590 Electric Supply Sinking Fund .. 12,648 .. .. 10,321 Bank of New Zealand Shares .. 1,859,375 .. .. 1,859,375 Employment Fund Promotion .. .. .. .. 207,544 178,516 Iron and Steel Industry Account .. .. 424 5,000,000 .. 2,348 5,000,000 Land for Settlements .. .. 973,163 2,906 6,278,000 905,782 1,901 6,278,000 Loans Redemption .. .. .. 339,313 .. .. 24,399 Main Highways Account .. .. 80,173 402,346 1,792,111 164,788 395,886 1,200,000 Public Debt Repayment .. .. 17,423 .. .. 3,263 Reserve Fund .. .. .. 1,305,117 .. .. 1,272,494 Samoan Loan Suspense .. .. .. .. 4,800 .. .. 4,800 Social Security Fund .. .. 523,901 293,941 State Coal-mines .. .. .. 18,919 22,261 35,000 7,625 27,891 60,000 State Coal-mines Sinking Fund .. .. .. .. 11,767 State Forests .. .. .. 42,920 23,141 585,225 52,724 19,137 985,225 War Expenses Account .. .. 953,380 507,552 6,713,946 Working Railways .. .. .. 994,555 431,447 .. 270,096 427,834 Housing Account .. .. .. .. 5,654 2,950,000 .. .. 4,550,000 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 .. .. .. 10,513,291 3,548,553 37,395,688 7,984,833 2,568,009 26,284,691

Year ended 31st March, 1936. j 1937. 1938. I 1989. I 1940. t i I 1 1 | Pensions— £ £ £ £ £ Blind .. .. .. 22,991 6,181 Civil Service Act, 1908 .. 4,676 4,106 3,632 3,256 3,130 Defence Act, 1909.. .. 2,127 2,067 1,991 1,905 1,993 Epidemic .. .. 907 253 14 Judicature Act, 1908 .. 3,222 2,753 2,111 1,852 2,291 Police .. .. .. 1,575 1,849 1,820 1,783 1,720 War .. .. .. 1,349,447 1,483,345 1,597,524 1,616,248 1,673,730 War Veterans'Allowances .. 16,544 110,667 161,267 158,584 203,439 Miscellaneous 1938/39 Pension .. .. .. .. 38,947 Instalments Sundry .. .. .. 8,256 9,290 8,623 8,755 8,095 — Emergency .. .. .. .. .. .. 86,711 Family Allowance.. 149,043 130,730 106,402 84,436 252,562 Invalidity .. .. .. 278,579 632,829 750,748 942,196 Maori War .. .. 2,577 1,972 1,806 1„338 1,103 Miners' .. .. .. 67,834 83,253 88,167 87,094 92,653 Old-age .. .. .. 1,718,601 2,413,103 3,235,057 3,577,129 6,517,899 Orphans' .. .. .. .. .. .. 14,880 Sickness .. .. .. .. .. .. .. 208,790 Unemployment .. .. .. .. .. .. 434 ; 497 Widows'.. .. .. 311,864 412,280 471,287 487,216 785^952 Totals .. .. 3,659,664 4,940,428 6,312,530 6,780,344 11,270,588 * Paid from Social Security Fund aa from 1st April, 1939.

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 1939-40.

T . Additional amounts are available from revenue from reserves vested m postprimary schools and University college? as follows : — £ Post-primary schools .. .. .. 28,379 University colleges .. .. .. .. 16,258 £44,637 The following amounts were paid out of the Got eminent Fire Insurance Fund for rebuilding school buildings destroyed by fire : — Year ended Amount. Year ended Amount. 31st March, £ 31st March, £ 1916-17 .. 2,127 1929-30 .. 6,357 1917-18 .. 2,658 1930-31 .. 6,671 1919-20 .. 15,682 1931-32 .. 7,768 1920-21 .. 16,162 1932-33 .. 6,424 1921-22 .. 27,103 1933-34 .. 3,846 1922-23 .. 8,542 1934-35 .. 8,541 1923-24 .. 12,490 1935-36 .. 5,149 1924-25 .. 32,829 1936-37 .. 6,831 1925-26 .. 4,938 1937-38 .. 7,952 1926-27 .. 10,337 1938-39 .. 13,266 1927-28 .. 12,474 1939-40 .. 10,931 1928-29 .. 12,197

XIV

; Loan-money: Erection Consolidated Fund. of School Buildings and Residences. p er n ea( j Vote, | Subsidies of V " ar ■ National Education Revenue , Public Education PopulaSpecial Endow- (excluding frQm aeachers Wojks Loans P Acts. ment Superannua- Reservea . Super- jj und Account. Revenue. tion annual}] on Subsidies). Fund. £ £ £ £ £ £ £ £ £ 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 2,4-69 563,411 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 3,259,2912 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 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 4+ 1.936-37 95,526 3,348,449f 88,713 169,362 268,884 .. 3,970,934 2 10 3 1937-38 •• 99,540 3,629,9061159,955 177,178 546,434 .. 4,613,013 2 17 1 1938-39 101,721 4,052,582§ 107,559 167,064 660,480 .. 5,089,406 3 6 9 1939-40 .. •• •• 4,424,148f 133,554 155,842 843,064 .. 5,556,608 3 8 0 * Net revenue after deducting expenses and cost of collection. f Includes charges to "Unauthorized." f On census results. §£3,149 Miscellaneous Revenue not taken into account.

8.—6

Table No. 17. PUBLIC DEBT. Statement of Half-yearly Instalments of Principal and Interest for Repayment of £27,532,164 advanced by the Imperial Government and funded in Terms of the Agreement dated 6th September, 1922.

XV

Date Instalments paid. j 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 25,348,502 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 i 24,100,199 1st December, 1931f .. .. .. j .. .. j 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 1939-40.

8.—6

Table No. 18. PUBLIC DEBT. Maturity and Domicile of Debt outstanding, 31st March, 1940.

XVI

Date of Maturity. Due in — j Total Debt New Zealand. (Nominal Qi *™ V, London. Australia. ' ; Amount). 1st April, 31st March, Public. j Departmental. £ £ £ £ £ Overdue .. .. •• •• 4,415 .. 4,415 Treasury bills .. •• 22,895,000 2,510,000 25,405,000 Treasury notes .. 1,080,000 .. .. .. 1,080,000 19251 •• 1946 .. 2,090,909* .. .. .. 2,090,909 19381 1942 .. .. .. 2,805,515 195,700 3,001,215 19391 •• 1942 .. .. .. 4,613,505 .. 4,613,505 19391 .. 1943 .. .. .. 13,678,870 .. 13,678,870 1940 .. 1941 .. 1,098,445 .. 500,005 .. 1,598,450 1940 . 1945 .. 16,000,000 .. .. .. 16,000,000 1941 .. 1942 .. .. 17,300 37,000 .. 54,300 19421 1946 .. .. .. 9,209,700 631,155 9,840,855 1942f 1963 .. 10,505,989 .. 378,639 .. 10,884,628 1943 .. 1944 .. 7,339,656 .. .. .. 7,339,656 1944 .. 1945 .. 7,780,408 .. 142,500 .. 7,922,908 1945 .. 1946 .. 22,543,590 .. 2,500 .. 22,546,090 1946 1947 .. .. .. 435,829 1,227,743 1,663,572 19461 1950 .. .. .. 8,320,320 642,885 8,963,205 1947 .. 1948 .. 11,341,609 83,300 2,476,650 1,501,600 15,403,159 1947+ .. 1958 .. 19,225,465 .. .. .. 19,225,465 1948 .. 1949 .. .. .. 4,463,190 44,000 4,507,190 1948+ .. 1954 .. 5,000,000 .. .. .. 5,000,000 1949 .. 1950 .. 7,500,'000 .. .. .. 7,500,000 19491 .. 1953 .. .. .. 12,484,105 .. 12,484,105 1950 1951 .. 1,250,000 779,000 250,000 .. 2,279,000 1952 .. 1956 .. 12,000,000f .. 7,974,510} 1,524,265} 21,498,775 19521 1957 .. .. .. 6,808,795 2,315,765 9,124,560 1954 1959 .. .. .. 5,199,110 339,000 5,538,110 1955 .. 1956 .. .. .. 750 461,700 462,450 19551 .. 1961 .. 3,989,100 .. .. .. 3,989,100 1956 1957 .. 12,900 .. 2,710 2,212,095 2,227,705 1956+ •• 1972 .. 5,000,000 .. .. .. 5,000,000 1957 1958 .. •• 10,550 21,029,318 21,039,868 1958 " 1959 .. .. 3,500 16,145,668 16,149,168 1959 !! 1960 .. .. .. •• 9,309,250 9,309,250 Interest-free§ .. 5,000 .. 1,376,854 .. 1,381,854 II 1946 .. 577,446|| .. .. 577,44-6 1958 .. 23,522,753|| .. .. • • 23,522,753 Totals .. .. 157,863,270 879,600 104,074,522 60,090,144 322,907,536 * Advances by Imperial Government for State Advances purposes. t Government has option to redeem at par on or after the earlier date on giving notice in the London Gazette. X Government has option to redeem on or after the earlier date on giving three months' notice in the New Zealand Gazette. § Interestfree loans are for various periods, the bulk being for the duration of the war and six months thereafter. II Imperial Government advances funded in terms of section 8, Finance Act, 1922. Payments at present suspended.

B— 6,

No. 19. 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 1940 (excluding Specie).

Table No. 20. IMPROVEMENT IN ECONOMIC CONDITIONS. Table of Miscellaneous Statistical Information (on a March Year Basis) showing the Most Recent Figures compared with 1934—35, 1935—36, and the Lowest Point in the Depression.

iii—B. 6.

XVII

Exports. Imports. Excess of Exports. Year ended 31st March, , T „ . . _ „ New Zealand Sterling New Zealand, Full On New 0n s ter l in£r Currency, j Equivalent. Currency Sterling Zealand Cur-1 T3 as ; s Equivalent. Equivalent, rency Basis, j - Dasls - £ (000) £ (000) £ (000) £ (000) £ (000) £ (000) 193 1 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 } 934 •• •• •• 46,043 36,834 26,136 20,908 19,907 15,926 193 » 44,918 35,985 32,568 26,082 12,350 9,903 * 93b •• •• •• 49,676 39,900 37,440 30,072 12,236 9,828 J 937 •• •• 60,234 48,381 47,621 38,250 12,613 10,131 J 938 •• •• •• 65,008 52,215 58,065 46,638 6,943 5,577 ; 939 •• •• •• 57,867 46,415 54,408 43,657 3,459 2,758 1940 •• •• •• 59,643 47,715 45,572 36,457 14,071 11,258 * Excess o£ imports.

lowest Figure. j 1934-35. 1985-38. Latest Mgure. Unit. " j js'lTCt*!; Amount. Amount. ||J« Amount. g-"™ Amount . Value of total production .. .. £(m.) 1932* 83-6 1935* 97-0 1936* 114-2 1939* 135-3 Value of farm production 1932* 49-2 1935* 59-2 1936* 72-5 1939* 80-4 Value of factory productionf .. „ 1933* 17-7 1935* 20-7 1936* 23-2 1939* 30-5 Aggregate private income .. .. „ 1933 91-2 1935 104-4 1936 121-3 1938 167-0 Salaries and wages payments .. „ 1933 58-9 1935 65-7 .1936 72-5 1939 109-5 Gross farming income .. .. „ 1933* 37-9 1935* 46-1 1936* 57-8 1939* 67-1 Exports (excluding specie) .. .. „ 1932 33.9 1935 44.9 jggg 4g . 7 1940 59 . 6 Imports (excluding specie) 1932 24-8 1935 32-6 1936 37-4 1940 45-6 Bank deposits (excluding Government) „ 1932 51-0 1935 62-3 1936 62-1 1940 69-0 Bank debits (excluding Government) I ,, 1933 539-7 1935 660-3 1936 732-8 1940 957-0 Net bank-note circulation .. .. | „ 1932 5-8 1935 0-3 1936 6-6 1940 12-6 -Building permits issued in larger centres— Total value .. .. .. 1933 2-1 1935 3-1 1936 5-0 1940 9-6 Dwellings .. .. Number 1933 997 1935 2,173 1936 3,181 1940 6,555 Mortgages registered .. .. £( m .) 1934 7 . 8 1935 u , 8 1936 | 6 . 2 1940 i 7 . 6 Mortgages discharged 1933 8-1 1935 13-7 1936 17-6 1940 14-1 Land transfers .. .. „ 1934 9-6 1935 12-2 1936 15-6 1940 22-1 Totalisator investments .. .. „ 1933 3.3 1935 3 . 9 1936 4 . g 1940 g . 7 - m - ■■ i9s5t »•» >«* »•» ■«»> •»-» New deposits . .. £( m .) 1933 16-9 1935 24-2 1936 25-6 1940 25-2 Amount to credit of depositors .. „ 1933 42-0 1935 49-4 1936 52-9 1940 58-0 Sales-tax collected .. „ 1934 j.g 19 3 5 2 . 2 1936 2 -5 1940 3-5 Electrcc-power units supplied .. Million .. 1935 729-3 1936 792-9 1939 1 239-4 Railways: Net ton-miles run .. „ 1933 363-4 1935 419-7 1936 443-6 1940 j 580-8 Shippmg: Manifest tonnage .. „ 1934 5-7 1935 6-3 1936 6-7 1940 8-0 Motor-vehicles licensed ... .. Number 1933J 195,019 1935J 209,462 1936t 228,247 19401 317 526 Consumption of motor-spirit (gallons) Million 1932§ 55-4 1934S 62-1 19355 69-3 1939S 100-0 MeLnumbers m of- 6eS " " ( °° 0) 1934 88 '° 1935 93 ' 6 1936 102-3 1940 129-5 Export prices (1909-13 = 1000) .. Number 1932$ 892 19345 1109 19358 1102 1930S 1391 Retires- 68 (1926 - 30 = 100 °) » 1932 § 8 ™ ]934§ 909 msf 937 S l<m Food groups (1926-30 = 1000) .. „ 1933§ 732 1934§ 774 1935S 835 19393 1052 rates— 1000) .. „ 1933§ 795 1934§ 808 1935§ 837 1939§ • 990 FffMrHvi Vnnm " " 1933§ 833 1934§ 839 1935 § 858 1939 § 1100 • Jioofi Tnnm ' •' " § 1031 1934§ 1038 1935§ 1025 1939§ 1111 Share prices (1926 — 1000) .. „ 1932!) 703 | J 934§ 960 1935§ 1026 1939g 869 « Year ended 30th June. t Does not include factory preceding of primary products. J As at end of March. 3 Calendar year.

8.—6

Copy of Prospectus of 1939 London Conversion Loan.

NEW ZEALAND GOVERNMENT £3£ PER CENT. CONVERSION STOCK, 1939-45. Interest payable Half-yearly at tie Bank of England on the Ist January and the Ist July. Issue of £16,000,000 Stock. Authorized to be raised under the New Zealand Loans Act, 1932. A first payment of £1 15s. per £100 Stock, being a full six months' interest, will be made on the Ist January, 1940. The Government of New Zealand have observed the conditions prescribed under the Colonial Stock Act, 1900, as notified in the London Gazette of the 14th December, 1900, and Trustees may invest in this Stock under the powers of the Trustee Act, 1925, subject to the provisions of section 7 of that Act and unless expressly forbidden in the instrument creating the Trust. The Governor and Company op the Bank of England give notice that, on behalf of the Agents appointed for raising and managing loans under the New Zealand Loans Act, 1932, they are authorized to receive applications for the above stock. Holders of New Zealand Government £3f per cent. Stock, 1940, which is due to be repaid on the Ist January, 1940, may surrender their holdings in sums of £100 and receive in exchange for each £100 Stock surrendered, £1.00 New Zealand Government £3| per cent. Conversion Stock, 1939-45, together with a cash Payment at the rate of £1 per cent. Applications for conversion must be made on the special printed forms. Forms have already been sent by post to all holders of Inscribed Stock (in case of joint accounts, to the first holder). Applications for the conversion of Stock Certificates to Bearer must be accompanied by the relative Stock Certificates with Coupons maturing on the Ist January, 1940, attached. Stock Certificates to Bearer will be converted into Stock which will be exchangeable in due course for Stock Certificates to Bearer of the denominations of £100, £500, and £1,000. Cash applications will be accepted in accordance with the terms set out herein to an amount sufficient to make up with the Stock issued in conversion the above total of £16,000,000 New Zealand Government £3| per cent. Conversion Stock, 1939-45. The proceeds of Cash applications will be applied towards the redemption at par on the Ist January, 1940, of New Zealand Government £3f per cent. Stock, 1940, which has not been converted. Interest on the Stock will be payable in sterling at the Bank of England on the Ist January and Ist July. Interest Warrants will be transmitted by post. The Register of the Stock will be kept at the Bank of England. Stock will be transferable in sums of £100 or multiples thereof. Transfers will be free of Stamp Duty and will be made on the ordinary common form of transfer. The Stock will be convertible in due course into Stock Certificates to Bearer of the denominations of £100, £500, and £1,000, with Coupons attached, without payment of any fee. The Stock will be redeemed by purchases at or under par exclusive of accrued interest or by half-yearly drawings at par, in sums of £100, commencing Ist July, 1940. For the purpose of facilitating drawings, each £100 of Stock will be given a distinctive number and such numbers will be stated on the back of the relative Registered Stock Certificate or Stock Certificate to Bearer. In any half-year in which drawings are necessary such drawings will be effected in the months of May and November. Holders of Registered Stock drawn for redemption will be advised by notices posted to their respective registered addresses not later than the sth June or sth December in each such half-year ; in the case of Stock Certificates to Bearer the distinctive number of each £100 Stock drawn for redemption will be published in The Times. Stock so drawn will be due for redemption at the Bank of England on the next succeeding Ist July or Ist January, on which dates the Stock will cease to bear interest. The New Zealand Government, pursuant to an order of the Governor-General in Council dated the 21st July, 1939, have undertaken to provide for the redemption of the Stock by making available in London out of funds accruing from exports from the Dominion or otherwise sufficient sterling to repay by instalments as set out below the whole of this issue by Ist January, 1945 : — In the year ending 31st December, 1940 .. .. .. .. 2,000,000 In the year ending 31st December, 1941 .. .. .. .. 3,500,000 In the year ending 31st December, 1942 .. .. .. 3 500,000 In the year ending 31st December, 1943 .. .. .. .. 3 500,000 In the year ending 31st December, 1944 .. .. .. .. 3,500,000 These instalments will be made available by two equal payments in each year on or before the 30th June and the 31st December respectively, commencing 30th June, 1940. (Half-yearly payments will be reduced by the nominal amount of drawn Stock converted under the option set out below in the half-year to which such payments respectively relate.) Half-yearly payments will also be proportionately reduced as conversions of undrawn Stock or partial redemptions of Stock are made under the options set out below, but so that such proportionate reductions will not affect the proportion of outstanding Stock to be redeemed in any half-year, nor the repayment of the whole of the Stock by the Ist January, 1945.

XVIII

8.—6,

During the periods sth to 20th June and sth to 20th December in each year commencing in 1940, holders of Stock, including holders of Stock drawn in accordance with the above provisions, will have the option of converting such Stock in sums of £100 as to one-half into New Zealand Government £3§ per cent. Stock, 1949-54, and as to one-half into New Zealand Government £3J per cent. Stock, 1955-60, at rates to be published from time to time. Applications for conversion under the above option must be made on the special forms to be obtained from the Bank of England. The New Zealand Government reserve the right on, or at any time after, the Ist July, 1941, on giving not less than three months' notice by public advertisement in The Times, to redeem at par, together with accrued interest, the whole of the Stock or any part thereof not being less than the nominal amount of £1,000,000 sterling at any one time. On any such partial redemption the Stock to be redeemed will be selected by drawings. Under the provisions of the New Zealand Loans Act, 1932, the principal of and interest on the Stock of this Issue are charged upon Public Revenues in New Zealand. Under the provisions of the New Zealand Land and Income Tax Act, 1923 (No. 21), income derived by a person not resident in New Zealand from New Zealand Government Stock the interest on which is payable in London is not liable to taxation in the Dominion. By Act 40 and 41 Vict., Ch. 59, the revenues of the Dominion of New Zealand alone are liable in respect of the Stock and the interest thereon and the Consolidated Fund of the United Kingdom and the Commissioners of His Majesty's Treasury are neither directly nor indirectly liable or responsible for the payment of the Stock or of the interest thereon, or for any matter relating thereto. The transactions of the New Zealand Ordinary Revenue Account for the year ended 31st March, 1939, resulted in a surplus of £(N.Z.)809,000. This followed surpluses of £(N.Z.)281,800, £(N.Z.)472,030, and £(N.Z.)810,822 in the years to 31st March, 1936, 1937, and 1938 respectively. The exports from New Zealand during the six months to the 30th June, 1939, amounted to £(N.Z.)36,782,000 and the imports to £(N.Z.)28,187,000, resulting in a favourable visible balance of trade during this period of £(N.Z.)8,595,000. The value of exports to the United Kingdom in the years 1935 to 1938 was as follows : — 1935. 1936. 1937. 1938. £(N.Z.)38,921,000 £(N.Z.)45,493,000 £(N.Z.)50,706,000 £(N.Z.)48,899,000 The total value of exports in the years 1935 to 1938 was as follows :— 1935. 1936. 1937. 1938. £(N.Z.)46,538,000 £(N.Z.)56,752,000 £(N.Z.)66,713,000 £(N.Z.)58,376,000 The New Zealand Public Debt in London has been reduced by £4,051,089 from £160,908,105 at the 31st March, 1.934, to £156,857,016 at 31st March, 1938.

Cash Applications. Price of Issue, £99 per Cent. Payable as follows : — On application .. .. .. .. .. .. £ 5 per cent. On Tuesday, 15th August, 1939 .. .. .. .. £44 ~ On Friday, 15th September, 1939 .. .. .. £50 ~ £99 per cent. Applications, which must be accompanied by a deposit of £5 per cent., will be received at the Loans Office, Bank of England, London, E.C. 2. In case of partial allotment the balance of the amount paid as deposit will be applied towards payment of the first instalment; any surplus remaining after making that payment will be refunded by cheque. Default in the payment of an instalment by its due date will render the deposit and any instalment previously paid liable to forfeiture and the allotment to cancellation. Applications must be for amounts of £100 or multiples thereof. Scrip Certificates to Bearer with Coupon attached for the six months' interest payable Ist January, 1940, will be issued in exchange for Allotment Letters. These Certificates, when fully paid, may be registered in the books of the Bank of England, or they may be retained to be exchanged not later than the Ist May, 1940, for Stock Certificates to Bearer as soon as the latter can be prepared. A commission of ss. per £100 Stock will be paid to Bankers or Stockbrokers on Allotments made in respect of Cash and Conversion applications bearing their stamp. Prospectuses and Application Forms may be obtained at the Bank of England, London, E.C. 2, or at any of the Branches of the Bank of England; of Messrs. Mullens and Co., 13 George Street, London, E.C. 4 ; at the Bank of Now Zealand (the Bankers to the Government of New Zealand in London), 1 Queen Victoria Street, E.C. 4; of Messrs. J. and A. Scrimgeour, 3 Lothbury, London, E.C. 2 ; at any Stock Exchange in the United Kingdom ; or at the Office of the High Commissioner for New Zealand, 415 Strand, London, W.C. 2. The Lists of Conversion and Cash Applications will be opened forthwith, and will be closed on Saturday, sth August, 1939. Bank of England, London, 26th July, 1939.

By Authority: E. V. Paul, Government Printer, Wellington.—l94o.

XIX

Explanatory Note on Omission of 8.—7 and B.—7A (Appropriations chargeable on Consolidated and Public Works Fund and other Accounts). The appropriations chargeable on the Consolidated Fund and on the Public Works Fund and other accounts have prior to the year 1939-40 been published in the Appendices under the description 8.-7 and 8.-7 a respectively. The appropriations are compiled from the estimates of expenditure chargeable on the respective funds or accounts which have been submitted to and passed by the House. The estimates consist of the main estimates and the supplementary estimates. For reasons of economy the appropriations have not been printed separately. If it is desired to ascertain the amount appropriated for any particular item of the estimates, there must be added to the amount shown on the main estimates the amount, if any, for the same item shown on the supplementary estimates. The total amount appropriated for each vote on the estimates as opposed to the separate items of the vote (e.g., Vote " Legislative") is shown in the summary published in the supplementary estimates. For the separate items, however, both main and supplementary estimates must be consulted. The estimates for the Consolidated Fund and for the Public Works Fund are shown separately. The same relative order is maintained in the supplementary estimates as in the main estimates.