FINANCIAL STATEMENT (In Committee of Supply, 18th August, 1949)

Appendix to the Journals of the House of Representatives, 1949 Session I, B-06

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INDEX

PAGE Amusements-tax .. .. 29 Assets : From Loan-moneys .. 22 Balance of Payments .. .. 12 Benefits : Social Security .. .. 30 Christmas Island Phosphates .. 25 Coal-mines, State .. .. 25 Commonwealth Finance Ministers' Conference .. .. 4, 5 Conclusion .. .. 32 Consolidated Fund .. .. 14 Debt, Public .. .. .. 20 Interest on .. ... .. 21 Defence .. .. 16 Dollar Difficulties .. 4, 7 Education : Increased Assistance .. 30 Estimates for 1949-50 — Consolidated Fund .. .. 14 National Development .. 23 Social Security Fund .. .. 18 War Expenses Account .. .. 19 Exchange Appreciation .. 13, 20 Expenditure .. 15, 18, 19, 23 Finance Ministers' Conference .. 4, 5 Housing .. .. .. 8, 23 Hydro-electricity .. .. 23, 24 Immigration .. .. .. 17 Income-tax Rebate .. .. 31 Insurance Against National .Disasters 29 Interest on Public Debt .. .. 21 International Trade .. .. 3 Land Settlement .. .. 24 Loan Moneys represented by Assets .. 22 Loan Repayments .. 20, 21 Loan Requirements .. 23

PAGE Ministerial Conference .. .. 4, 5 National Development Programme .. 23 National Disasters, Insurance- Against 29 National Income Statistics .. .. 26 Pensions, War .. .. .. 31 Phosphates, Christmas Island .. 25 Production and Trade .. .. 7 Prospectuses for Loans .. xxvi-xxxii Public Debt .. .. .. 20 Interest on .. .. 21 Rebate : Income-tax .. .. 31 Rehabilitation .. .. .. 19 Residential Accommodation, Assistance for .. .. 26 Revenue, Consolidated Fund .. 14 Savings .. .. .. 12 Social Security Benefits : Increases .. 30 Social Security Fund .. .. 18 Social Security Reciprocity .. 18 Stabilization .. .. .. 17 State Coal-mines .. .. 25 Statistics, National Income .. 26 Steel .. .. .. .. 24 Sterling Funds .. .. 10 Surplus, 1948-49 .. .. 1,14 Tables .. .. .. i-xxxii Taxation Revenue : How Spent .. 28 Tax Rebate : Income-tax .. .. 31 Tax Reductions Since the War .. 28 Telegraph Extension .. 23, 25 Trade .. .. .. 7 Wage Levels and Savings .. .. 12 War Expenses Account .. .. 19 War Pensions : Increases .. .. 31 Works Programme .. .. 23

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1949 NEW ZEALAND.

FINANCIAL STATEMENT (In Committee of Supply, 18th August, 1949)

By the Right Hon. Walter Nash, Minister of Finance Mr. Chairman, — The financial year that has just passed has been one of general buoyancy and success. There has been a comfortable surplus in the Public Account. Economic activity is at a level higher than ever before, as is manifested by the state of full employment, the record volume of total production which is steadily increasing—high levels of wages and national income—and capital development which is proceeding at a rate commensurate with other fields of economic progress. Our standard of living, which is reflected in our records of health, education, and culture is among the highest in the world. While our community cannot show many examples of superabundance of wealth in the hands of v single individuals, yet, on the other hand, there is no poverty or want. These satisfactory conditions have resulted mainly from our own efforts in the production of goods for our local needs and for export. It should be remembered, however, that New Zealand has been among the fortunate minority of nations whose production facilities and property were not seriously damaged by the direct effects of war.

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It is necessary to point out, however, that the war did adversely affect New Zealand in a variety of ways; and that those effects have not even yet been entirely overcome. The payment of interest on the public debt incurred during the 1939-45 war must continue. Shortages, mainly in the sphere of capital goods, still affect progress to some extent. Within our own economy, and in all overseas countries, the wastage of production in war inevitably -engendered inflationary pressures. It is clear that, while some difficulties remain, New Zealand has now progressed, especially in terms of goods available, beyond the levels of pre-war years. It can be said, too, that the inflationary pressures consequent on the war have receded to some extent, both at home and overseas. By its policy of stabilization of costs and by price and other essential controls, the Government has achieved the highest practicable degree of economic equilibrium. It has not been possible to avoid all effects of external conditions in view of the fact that approximately one half of our production and consumption is involved in overseas trade. However, on the evidence of the success of the stabilization policy, it is obvious that New Zealand is not inevitably bound to follow completely all economic fluctuations in the rest of the world. It should be stressed, however, that a contributory factor in the present conditions of prosperity has been our ability to sell overseas, at profitable prices, a large proportion of our production. A sense of security, and faith in the continuance of the present satisfactory conditions can be justified only by careful forethought, collective endeavour, and the will to work. Developments overseas, particularly during the past few months, indicate that the principal countries of the world are now moving from the post-war era of inflation into a period of re-adjustment. The needs of war and the deferred demands after the war had built up what seemed to be an insatiable market for production. Consequently, the seller remained in a- superior position until a few months ago. Prices had risen and employment remained at extraordinary levels. With the satisfaction of deferred demand and the return of millions of war-workers into civilian employment it was inevitable that the markets should change in favour of the buyer, that prices should recede and that employment should to some extent decline. There is every reason for believing that wise financial administration by the Governments concerned will ensure that the readjustment is beneficial, and that they will not allow the position to grow into a major recession.

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International Trade The war which concluded four years ago accentuated a change in the pattern of trade which had been developing from the beginning of this century. Western European countries, which had traditionally been the main importers of food and raw materials and the main exporters of manufactured goods had, even before the war, met with increasing competition, especially from the Western Hemisphere. The war hastened the trend, the completion of which may otherwise have taken many more years. Most of the participants in the war suffered violent disruption and destruction of productive resources. Many of them were obliged to draw on their reserves of gold and convertible currency, and to sell their overseas investments, the interest from which had previously assisted them to balance their overseas receipts and payments. On the other hand, a few countries relatively unscarred by the war developed their levels of production to unprecedented heights. With the close of the war, the devastated countries could look only to those few fortunate nations for vitally needed goods. At the same time, those who most needed imports could not produce sufficient exports to pay for them. The dollar shortage has arisen directly from those causes. In the meantime, a way had to be found by which the Western European countries could be saved from economic ruin and political disruption. Co-operation among the affected nations was necessary and promises to be highly beneficial, but without assistance from the Western Hemisphere, no efforts, however strenuous, could be successful. From the end of the war up to June, 1947, the United States had provided by loans and other means approximately £5,000,000,000 to assist the rest of the world. In 1947, the United States announced that it was prepared to give a further sum —up to £5,000 million—towards European recovery, over a period extending to 1952. The results of this most generous and unselfish act have already been notable. With the assistance of Marshall Aid, production in Western Europe, and particularly in the United Kingdom, has been •substantially expanded during the past year. The aid from the European Recovery Programme cannot, of itself, solve the economic problem of the Western European countries. By severe restriction of imports, especially from hard currency areas; by the expansion of production and exports; and by an increasing volume of intra-European trade and financial payments, the beneficiaries are striving to play their part in the achievement of full recovery. 2* B—6

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It is now evident that this recovery cannot be completely attained by the end of 1952, as was originally hoped. With the prevailing economic conditions, particularly in the United States, it has been increasingly difficult to expand or maintain present exports to the hard currency markets. The difficulties which the United Kingdom is now experiencing have significant effects on the whole sterling area, of which New Zealand is a member. Dollar receipts from exports by sterling area countries have decreased to such an extent that the gap between receipts and payments of dollars is now too great to be covered by E.R.P. payments. The deficit has fallen on the slender gold and dollar reserves of the sterling area, of which the United Kingdom is custodian. If the present rate of decline of these reserves continues, they will be exhausted within twelve months. It is vital that this should not occur, for such a development would severely impede the functioning of the sterling area system, and the achievement of multilateral trade for the world as a whole would be drastically retarded. The drain on the gold and convertible currency reserves of the sterling area must be arrested. To ensure the continuity of operation of the sterling area system, these reserves must be built up. Urgency therefore dictates that sterling area countries must achieve an immediate increase in earnings from exports to dollar countries; and that sterling area countries must carefully review their imports from hard currency sources. Ministerial Conference —Dollar Difficulties The whole problem was the subject of discussions in London on Bth, 9th, and 10th July between the United Kingdom Chancellor of the Exchequer (Sir Stafford Cripps), the President of the Board of Trade (Mr. Harold Wilson), the Secretary to the United States Treasury (Mr. John W. Snyder), and the Canadian Minister of Finance (Mr. Douglas Abbott). At the conclusion of this meeting, a communique was issued giving a general outline of the discussions, the main points of which may be summarised as follows: — (a) Particular stress was laid on the necessity of finding solutions which would maintain high levels of employment and enable' world trade and international payments to develop on a multilateral basis. (b) The aim must be the achievement of a pattern of world trade in which the dollar and non-dollar countries can operate within one single multilateral system.

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(c) The general approach to existing problems must be based upon full recognition of their profound and long-term character. (d) The difficulties were an aggravation of deep seated maladjustments; and remedies other than financial assistance from Canada and the United States must be explored. (e) It was proposed that fact-finding discussions should take place between the three Governments in preparation for a further meeting of Ministers at Washington in September next. (/) The necessity for action to meet immediate problems was recognized, but no suggestion was made that sterling should be devalued. It was against this general background and with a view to giving them a factual picture of the position and seeking their co-operation in finding a solution to the problem, which is of major concern to all, that Commonwealth Grovernments were invited to send their Finance Ministers to a Conference in London. At the Conference, Ministers were present from the United Kingdom, Canada, Australia,, South Africa, India, Pakistan, Ceylon, Southern Rhodesia, and New Zealand. The meetings of Ministers commenced on 13th July and concluded -on 18th July when the text of a press communique was agreed to. Meetings continued between officials for some days subsequently, and it was arranged that there should later be continuous consultation and ■exchange of information at the official level between Commonwealth representatives in London. It was agreed that the Commonwealth Liaison Committee, which has been functioning in London for some time in connection with the European Recovery Programme and related matters, would be an appropriate body to undertake such work. The crisis was precipitated by a sharp fall in United States imports, brought about mostly by a decline in business activity in that country. Owing to a fall in sales to the United States the reserves held in dollars and gold by the United Kingdom on behalf of the sterling area were decreasing so rapidly that immediate action to stop it was •essential. On the best information available it appeared that dollar earnings during 1949-50 would be sufficient for 75 per cent, only of the value of imports from the dollar area during 1948. Great Britain took immediate action to reduce imports accordingly and the New Zealand Government has agreed to reducing its demand upon dollar resources by reprogramming of imports and where appropriate by other means.

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It is obvious that cutting down imports might retard the achievement of the longer range objective Of a balance based on full employment and a high level of multilateral trade. It was, therefore, strongly urged on behalf of New Zealand that everything possible should be done to meet the immediate problem by increasing dollar earnings and where appropriate by borrowing dollars. It will be generally agreed, that without interfering with essential food supplies to Great Britain, New Zealand could make a contribution to the dollar pool. I am confident that an appreciable proportion of our contribution can take the form of increased dollar earnings. Special measures will therefore be taken to increase exports to United States and Canada and to ensure that we obtain the benefit in dollars from such exports. At present we are losing dollars through operations in New Zealand goods in free sterling markets by dealers in other countries. To the extent that we need to import essential requirements,, particularly for capital purposes, from Canada and United States, consideration will be given to borrowing dollars provided loans can be obtained on reasonable terms and conditions. It was recognized at the Conference that a permanent solution could be found only in a world-wide pattern of full and productive employment such as would make possible a self-balancing system of international payments. This involves the development of the agricultural and industrial resources of the sterling area and in fact of the whole of the non-dollar world to provide more primary products and manufactured goods for supply at competitive prices to dollar markets and to other markets at present abnormally dependent upon supplies from dollar countries. Developments in many countries and particularly in undeveloped countries are held up by lack of capital. Dollar countries could hasten a permanent solution of present difficulties by encouraging international investment in productive enterprises by their citizens and through national and international institutions. In the past such an investment policy consistently pursued over many years by Great Britain was a powerful factor in the development of the British Commonwealth and also of the United States and other countries. Countries in the dollar area can also assist by maintaining a high level of employment, income and demand in their territories and by facilitating and encouraging the purchase of goods and services from other countries. For their part the Commonwealth representatives at the Conference agreed that what was necessary was the speediest possible increase in efficient and economic production and co-operation to

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secure the most effective use of the resources available to the sterling area. This should be combined with an expansion of sales in dollar markets with special attention to prices, selling methods, and market requirements and more intensive efforts to increase dollar earnings from services of all kinds including tourist services. With its natural attractions New Zealand should be able to earn more from the tourist trade and this matter is being fully explored. Organization and co-operation and the assistance of capital can be powerful aids but in the long run every country must earn its own standard of living by greater and more efficient production. All our efforts should be bent in this direction. To summarize the dollar difficulties The Government is satisfied that recessions in trade cannot be avoided by purchasing less from any given country. The objective should be to sell more. Price adjustment can best be achieved by increasing efficiency rather than by curtailing costs by wage reductions. The permanent solution of the present problem can be achieved only by expanding demand and increasing multilateral international trade. Raising of loans in the surplus countries for productive purposes is the best method of overcoming the immediate difficulty. Loans should be made available on reasonable terms to the buying countries by the surplus countries. The Government has instituted inquiries as to the availability on reasonable terms and conditions of loans from Canada and the United States. The immediate and long term solution is the expansion of production and of exports to Canada, to the United States, and to other dollar countries, and the raising of loans to meet the present deficit between exports to and imports from those countries. Production and Trade I now come to the position of New Zealand in the important sphere of production and trade. The latest figures of the volume of production in New Zealand show a continued rising tendency. The level of total production has never been higher. The total volume of production for the year ended 30th June, 1948, is 20 per cent, above 1938-39 and 29 per cent, above

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the level of 1935-36. The volume of factory production shows an increase of 50 per cent, over 1938-39 and is nearly double that of 1935-36. The volume of farm production is 13 per cent, in excess of 1938-39. The quantity of butter produced in 1947-48 was 151,000 tons. The weight of wool in the 1948 production year was nearly 19 per cent, higher than in 1936. The volume of meat products though slightly lower than in 1947, was considerably higher than that of pre-war yearsLater figures, provisionally estimated, promise even bet'ter results for the production year 1948-49. Butter production was approximately 166,000 tons; cheese, approximately 98,000 tons, and canned milk products, 35,000 tons. It will be seen from Table No. 14 published with this Statement that electric-power production has more than doubled since the year ended 31st March, 1936. This has been a substantial element in raising factory production by 50 per cent, since 1938-39. Statistics of internal transport reflect the increases shown by other statistical series. The net ton-miles run on the railways reached a record total of 971 million ton-miles in the financial year just closed — an increase of 69 per cent, above the 1938-39 total and 119 per cent, above the 1935-36 figure. Motor-vehicles licensed at 30th June, 1949, reached a record total of 392,386. A particularly pleasing aspect of recent statistics has been the continued increase in timber production, which reached a new record total of 480 million board feet in the March year, 1949, an increase of 11 per cent, above the 1948 total, 52 per cent, above the 1939 figure, and more than three times the footage in 1932. This has permitted gratifying developments in the sphere of housing. The total number of private buildings for which permits were granted (in urban areas), for the year ended 31st March, 1949, was 11,102, compared with 8,093 in 1938-39, or 4,140 in the year ended 31st March, 1936. Of the total of -11,102 —which would approximate 16,000 if rural buildings were added—the number of dwellings of which construction was commenced by the Government in the year ended March, 1949, was 4,530. These records indicate the fruitful results that can be achieved by the harmonious co-operation of State and private interests.

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Of all the nations of the world, New Zealand is among the highest in terms of trade per head. The total value of production for the year ended June, 1948, was £265 million. Of this £132,400,000 (roughly half) was exported. The total value of all goods available for use in New Zealand in the same year was £275,900,000. Of this, £143,300,000 (about 52 per cent.) was imported. The figures throughout history show that New Zealand is largely dependent on farm products for its overseas income. Eighty-five per cent, of the value of exports was major farm products—33 per cent, dairy, 22 per cent, meat, and 30 per cent. wool. Our overseas trade continues to expand, the volume of exports in the calendar year 1948 being 27 per cent, above the 1938 figure and 28 per cent, above the total in 1935. The volume of imports in 1948 was 8| per cent, above the 1938 total. The G-overnment, in conjunction with farming representatives, has given an undertaking to the British Ministry of Food, to facilitate, by 1955, a substantial increase in supplies of meat and dairy exports. Steps have already been taken to obtain supplies of fencing-wire, while a policy of increased importation of fertilizer and the establishment of additional fertilizer-works is being actively pursued. Recently, as farmers are aware, the Government, after consultation with farming representatives, approved a basis of subsidy on imported phosphatic fertilizers (slag, finely ground North African phosphates, and guanos). The subsidy with a maximum of £3 per ton will be found —one-half by the Government and the other half from the farm industry stabilization .accounts. The Government is also fully aware of farmers' needs for farming machinery and equipment, part of which is obtainable only from dollar sources, and it is intended, within the limited amount of dollars available, to make a reasonable provision for these requirements. New Zealand is potentially able to increase locally grown tobaccosupplies, and Government assistance has recently been given for flood-control measures in Nelson which should open up additional land capable of producing by 1952-53 an additional million pounds weight of tobacco, which will constitute a direct saving of threequarters of a million dollars. The Government is also pressing on with the establishment of a pulp and paper mill, which will supply all New Zealand's needs and provide a surplus for export. Turning now to goods available for consumption in New Zealand. 'This figure is obtained by ascertaining the value and volume of goods produced—deducting exports and adding imports.

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The volume of goods imported in the year ended 30th June, 1948,. was 25 per cent, more than 1938-39. Taking into account the rise in local production to 20 per cent, above pre-war, we find that the volume of all goods available for use in New Zealand has risen by 25 per cent, over 1938-39. The community has thus progressed beyond the point of re-gaining its pre-war level of consumption. On a " per head ,r basis goods available are 11 per cent, higher in volume than in 1938-39, and nearly 30 per cent, above 1936. In other words, on an average, each individual has available one-third more goods—imported and locally-produced—than he had in 1936. This summarises the most important aspect of our economy—the physical goods available to individuals. On the financial side the years of spectacular increases in the volume of money are past. For the year ended March, 1949, the increase in the volume of money was £3-5 million —compared with £22*6 million for the year ended March, 1948, £6-9 million for 1947, and £32-5 million for 1946. On the evidence of the considerably diminished increase in the volume of money for the year ended 31st March, 1949, it seems clear that, by such measures as general stabilization, price control and the restriction of trading-bank advances, the financial policy of the Government has been successful in preventing buoyant conditions from developing into inflation. Sterling holdings on 25th May, 1949, totalled £74,830,000. There had been a declining tendency since July, 1947, but this was inevitable, in view of war arrears of consumer and capital imports. The peak figure of sterling held by New Zealand was that of February, 1947, when approximately £9l million sterling was held. New Zealand has had ample experience in the past to learn that precipitous falls in the overseas prices of primary products can, in the absence of adequate safeguards, reduce the exporter and the whole community to economic distress. The importance of stabilization to farmers entails the following action by the Government: (1) The maintenance of a guaranteed price; (2) the securing of long-term markets for the farmer's goods; and (3) the efficient use of overseas exchange—and the assurance of economic reserves. There is good reason for satisfaction concerning the farm industry stabilization accounts, in which £44 million are held in reserve. Used in conjunction with the guaranteed price, which could take into account falling costs following any possible falling prices, the stabilization funds and the wool reserves would afford a very substantial cushion against any shocks originating overseas.

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The long-term bulk contracts with the United Kingdom, with a guarantee of stable prices with a maximum rise or fall in any one year of 7\ per cent., is one of the major factors safeguarding the future of our trade. By import control, the Government is in a position to hold reasonable balances of sterling—a further safeguard against any adverse developments overseas. As has been shown, the accumulation of reserves has been accomplished without making heavy inroads into available imports; in fact, the volume of imports for the year ended June, 1948, had never been higher. Generally, there is cause for satisfaction in the trade position, The value figures are records, as are some of the volume figures. All volumes are at high levels. Only by continuing import control can New Zealand assist the United Kingdom and also maintain necessary sterling reserves. The £lO rebate from income-tax assessments last year was of great benefit to many individuals; 125,000 persons who formerly paid incometax were totally exempt; and about half the number of taxpayers had their tax reduced by 50 per cent, or more. There is no way of reducing taxation very substantially, unless by cutting social services and reducing the number of civil servants. The Government will do neither. Social Security benefits, health services, education, development of resources, debt services—all must be paid for, mainly by taxation. The smaller taxpayer ultimately receives (in cash and kind), in the majority of cases, more than he has contributed to the State. The Government is keeping a close supervision over prices, and will continue to ensure that no excessive margins will be charged. The people of New Zealand have cause for confidence and optimism in the state of the community. We are enjoying conditions of prosperity. Employment levels are very high; wages and other incomes afford a comfortable living for those who work; social security benefits provide for the aged,, the widows and the disabled; and the volume of goods available in New Zealand has never been greater. We should never lose sight of the fact that our standard of living depends ultimately on the goods and services available. Wise planning can ensure that these are distributed fairly within the community; but total production must continue to increase if the standard of living is to advance.

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Wage levels and savings As we enter a period when prices overseas, especially of raw materials, are becoming stable, and in some eases receding, the importance of successful stabilization of costs and efficiency of production in New Zealand becomes greater than ever. The general level of wages has a double effect on internal stability.. In the first place it affects costs of production directly, because wages become costs. Secondly, it largely determines the level of incomes,, and thus, to the extent that a wage increase is spent instead of being saved, directly affects the demands for goods and services. Increasing wages unless balanced by increased production are incompatible with stable costs of production and prices. One important subject in relation to increased production is that of savings. More production requires extended and new equipment and installations. Such equipment and installations cannot be obtained except by saving or by loans from overseas. The national output in any year can only be used once —either consumed currently or invested in capital equipment for future production of consumers' goods and services. The whole of our national income should not be expended on current consumption—a portion equal to the new capital expenditure must be saved if we are to avoid undue pressure on the prices of consumer goods. Sufficient savings to finance capital development for our long-term needs are essential. Every effort should therefore be made by all New Zealanders to increase their savings, in banks, in the Post Office, in National Savings, in Government securities, or through, insurance, and companies should allocate the greatest possible proportion of their annual profits to reserve. Zealand's balance of payments For the calendar year 1948 New Zealand's payments to the rest of the world exceeded receipts by a little over seven million pounds sterling. Receipts totalled £150,000,000 and payments £157,000,000, but this excess of payments takes into account capital transactions in relation to Government and local-body debt amounting to £10,400,000. The volume of our exports in 1948 continued to increase, and the value reached a record total of £124,600,000. Imports in the same year totalled £108,000,000.

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An estimate of New Zealand's overseas transactions for the calendar year 1949 is as follows: — Receipts Exports— £ (N.Z.) Millions. Butter .. .. .. .. ■ .. .. 34-50 Cheese .. .. .. .. -.. .. 12-25 Meat .. .. .. .. .. .. 27-00 Wool .. .. .. .. .. .. 40-00 Other exports ... .. .. .. .. 20-00 Other receipts .. .. .. .. .. 22-00 Estimated receipts .. .. .. £155-75 Payments Debt services .. .. .. .. .. 3-20 Government imports for Government use .. .. 13-50 Government imports for public use .. .. .. 6-70 Other Government requirements .. .. .. 5-15 Licensed imports .. .. .. .. .. 110-00 Other payments .. .. .. .. .. 25-00 Estimated payments .. .. .. £163-55 On the basis of licences issued, it is estimated that licensed imports coming into New Zealand this year will reach as high as £llO million, Exchange appreciation Costs of production and of living in New Zealand have been forced upwards considerably during and since the war by the increase in the prices of imports, and this difficulty became more pronounced early in 1948. To reduce the rising tendency in prices, it was announced in the financial statement last year that the Government had decided to increase the value of the New Zealand pound to parity with sterling. Although it is twelve months since the change was made, it is still too early to assess fully all the effects on our economy. The effect on prices of all imported goods was, of course, apparent at once. Prices of some important items were reduced a few days after the exchange-rate was altered. The price of one type of agricultural tractor was reduced from £512 to £424, while the prices of fencing and barbed wire were also reduced within a few weeks. Important items of food and clothing were included in the pricereductions. During the ten months ended 30th June last some £84,500,000 of overseas exchange was expended on licensed imports.

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The appreciation in currency meant a saving to the whole community of £21,000,000 on these imports. It will also be appreciated that the alteration in the exchange-rate has had an important effect in reducing the prices payable for imported industrial plant and machinery. This should assist our industries, as well as keeping down the cost of production in New Zealand. The Government and local authorities have also benefited through the lower charges for interest. The Government's policies of stabilization and price-control have played, and will continue to play, a vital role in ensuring that the benefits of the exchange reduction are passed on to consumers and producers, and in regulating costs and prices generally. CONSOLIDATED FUND Having reviewed the setting in which our public finances operate, I now deal with these for the past year and give an outline of the prospects for the current year. The sound position of the public accounts for 1948-49, which have already been tabled in the House, is shown by the surplus of £2,631,000, which will be retained in the Consolidated Fund as part of the working balance. While the revenue from income-tax was in excess of the original estimate, the revenue from Customs and sales-tax did not reach the amount anticipated. Other sources of taxation showed minor variations from the estimates. The work of the Land and Income Tax Department in the Wellington and Hamilton districts, which had been in arrears, was during the year brought substantially up to date. This, together with improvement in the staff position, which enabled more attention to be given to the collection of overdue tax, resulted in the collection of increased amounts in the districts mentioned, and also in the sum collected for tax arrears. On the expenditure side, excluding special transfers of £4,000,000 to the Loans Eedemptions Account (representing the non-re'curring tax receipts) and £2,000,000 to the War Expenses Account, the final figures generally were close to the estimates. Estimates for 1949-50 The estimated revenue of the Consolidated Fund for the current year is £121,397,000, and the estimated expenditure is £120,720,000. The balance of £677,000 will be required for the supplementary estimates and for contingencies.

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The detailed estimates of revenue show that taxation receipts should follow fairly closely the actual receipts for last year. The following sets out the estimated revenue for 1949-50: 1949-50 Estimate. Taxation— £(000) Customs .. .. .. .. .. 19,250 Beer duty .. .. .. .. .. 4,525 Sales-tax .. .. .. .. .. 13,750 Film-hire tax .. .. .. .. .. 190 Highways .. .. .. .. .. 3,880 Stamp duty .. .. .. .. .. 9,616 Land-tax .. .. .. .. .. 900 Income-tax .. .. .. .. 49,000 101,111 Interest .. .. .. .. .. .. 5,712 Profits of trading undertakings .. .. .. 2,175 Departmental receipts .. .. .. .. 12,399 £121,397 The total of permanent appropriations on the expenditure side should approximate that of last year. Annual appropriations, however, show an increase of £7,919,000 over last year's expenditure. While full details will be found in the estimates the following table shows the position for 1949-50 in summarised form: — Estimate, 1949-50 £(000) £(000) Debt services .. .. .. .. 22,365 Other permanent appropriations .. .. 3,305 25,670 Votes— Social security .. .. .. .. 12,000 Other social services .. .. .. 25 ,411 Armed services .. .. .. .. 10,697 Stabilization .. .. .. .. 13,947 Other votes .. .. .. .. 32,995 95,050 Total expenditure .. .. .. £120,720

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Defence The result of the referendum for military training will enable the Government to give full effect to its policy that the Armed Forces of New Zealand should be properly balanced, organized, and trained in peace to discharge, if ever the need should arise, our responsibilities in war. For many years the Government has emphasized that we must take increasing responsibility for our own defence. The plans for our Forces will enable us to do that and, at the same time, help to ease the burden which for so many years has been, and is still, borne by the United Kingdom. Our naval Forces will be trained to defend trade and communications in New Zealand and the South Pacific. They will be capable of operating with the Forces of Australia, the United Kingdom, and any other of our allies in support of our common objectives. The task of the Air Force in the South Pacific complements that of the Navy. The defence of trade and communications in this area is their joint responsibility. Fiji to the north of New Zealand occupies an important position in relation to the defence of trade and communications in the South Pacific, and special arrangements with respect to the defence of the Colony have already been made. Now that the electors have decided in favour of the military training scheme the Regular Army can begin to discharge its primary role of training the Territorial Force. With a military training scheme New Zealand can ensure the maximum facilities for the defence of its own shores and also make its contribution towards the defence of the British Commonwealth of Nations. Whilst the training scheme will enable us to meet the military situation it will also be of real personal benefit to our young men and to society. The estimated cost of the full defence scheme in an average year is £(m.) 17-25, but it will take upwards of three to four years to reach this figure, which covers both recurrent and capital costs, including full provision for purchase of the modern equipment that will be required for all arms of the Forces. In terms of cost per head of population the full scheme will represent an expenditure of approximately £9 per head. The present expenditure from the Consolidated Fund is, of course, less, and for this financial year represents £5 14s. 2d. per head. Though these costs are still below the present average for the United Kingdom—viz., £l5 2s. —they are much greater than the average of £1 13s. 6d. per head of population in 1939. We can be justly proud both of what has been done and what is planned in defence. When these plans are developed we shall be able to meet our obligations for the defence of New Zealand and the South

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Pacific area, for the maximum' contribution possible to the defence of the British Commonwealth, and the provision of Forces in certain circumstances for the purposes of the United Nations. In the meantime, we are proceeding with the realization of our plans which call, in particular, for close consultation with the United Kingdom and Australia and other like-minded States which- share with us a common concern for the security of the Pacific and the world. The estimate of expenditure for the three services on defence for the current year is £10,696,376 compared with £8,986,611 for 1948-49. Stabilization The payment of subsidies to hold the prices of essential goods and services has been continued as part of the stabilization programme. Expenditure for the 1948-49 financial year was £11,663,710. The estimated expenditure this year is £13,934,000. The major increases in subsidy expenditure have been incurred in respect of butter and milk for local consumption consequent on recent increases in the guaranteed prices paid to producers. Provision has also been made in the estimates to meet half of the cost of the subsidy on certain imported fertilizers: the other half will be recoverable from the farm industry stabilization accounts in terms of a special agreement with the industries concerned. The balances in those stabilization accounts continue to accumulate as a reserve held on behalf of the industries. The most recent available details of the position of these accounts are as follows: — Dairv Industry Stabilization Account balance as at 31st July, 1949, £15,400,000, of which £12,200,000 was invested. Meat Pool and Meat Industry Stabilization Account estimated balance as at 30th September, 1949, £29,000,000, of which £27,000,000 is invested. The position of these funds will be improved by the recent per cent, increase in prices for the 1949-50 season under the long-term contracts negotiated with the United Kingdom. Immigration The Government will continue the existing policy of assisting suitable persons to migrate to New Zealand, and for this purpose the s.s. " Atlantis " will be operated on behalf of the Government. It is anticipated that the ship will make three voyages during 1949, and will bring approximately 2,400 assisted immigrants to New Zealand. Accommodation for assisted immigrants on other vessels will probably be very limited. Under the Child Migration Scheme 140 children are expected to arrive this year, while, by arrangement with the International Refugee Organization, 932 displaced persons recentlyarrived in Wellington.

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Associated with tlie immigration policy, and to assist in providing accommodation for workers, the Government has established numerous hostels in various districts. This policy has contributed materially in providing labour for essential industries. The Labour and Employment Department operates or is interested in twenty-seven camps and hqstels, and a further ten camps or hostels are projected. SOCIAL SECURITY FUND The total expenditure from the Social Security Fund last year amounted to £42,997,000. Revenue of the Fund, apart from the transfers from Consolidated Fund, amounted to £29,437,000. The credit balance of the Fund at 31st March, 1949, was £8,682,000. For the current year it is estimated that social security taxation will realize £31,600,000, and it is proposed to provide £12,000,000 from the Consolidated Fund. Including provision for increased benefits amounting to £1,800,000, the estimated expenditure from the Fund will amount to £46,224,000. The following gives a summary of the anticipated receipts and payments of the Fund for the current year:— Estimated Expenditure • £ Monetary benefits other than family benefits .. .. 22,260,000 Family benefits .. .. .. .. .. 14,800,000 Medical and hospital benefits .. .. .. 8,059,000 Administration expenses .. .. .. .. 793,000 Emergency benefits .. .. .. .. 312,000 £46,224,000 Estimated Receipts £ Social security charge .. .. .. .. 31,600,000 Miscellaneous receipts .. .. .. .. 36,000 Transfer from Consolidated Fund .. .. .. 12,000,000 £43,636,000 Expenditure in excess of receipts will be met from the cash balance carried forward in the Fund last year. Reciprocity of Social Security Reciprocal arrangements with Australia for payments of social security benefits to persons who move from one country to the other were recently brought into operation. Proposals for a reciprocal agreement with United Kingdom are under discussion, and it is hoped that negotiations can be completed in time for authorizing legislation to be passed this session. This agreement is to apply to age, universal superannuation, widows', and orphans' benefits.

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War Expenses Account The expenditure from War Expenses Account during 1948-49 was met out of revenue, thus maintaining the policy which has been adopted over the past two years that no further loans for war purposes would be raised. The principal receipts were transfers from the Consolidated Fund, £3,786,000; sale of surplus assets, including German reparations, £1,661,000; and rehabilitation repayments, £1,541,000. The more substantial payments were for Army, £1,661,000, and Air, £168,000 — mainly J Force expenditure; rehabilitation, £4,591,000, and war gratuities, £1,330,000. For the present financial year the principal sources of receipts will be sale of surplus assets, £600,000, and of German Reparation Assets, £lOO,OOO. The final accounts for J Force expenditure have still to be submitted but it appears that the expenditure in respect of the Armed Services from War Expenses Account will be about £450,000. Rehabilitation, estimated at £2,323,000, is the main item of expenditure while the balance of gratuities will probably require £175,000. It is anticipated that the present balance of War Expenses Account, together with the estimated receipts, will meet the demands for the current year. Rehabilitation As at 31st March, 1949, the total number of demobilized servicemen and women was 209,161, an increase of 6,896 on the previous year. Loan authorizations for the year totalled £12,125,000, making an aggregate for the seven years to date of £61,486,000. Of the last mentioned total, £29,813,000 is in respect of housing, £23,610,000 for farm settlement, £4,584,000 for establishment in business, and £3,479,000 for the purchase of v furniture, tools of trade, and miscellaneous loans. Trade training and education schemes continue to meet a steady demand from ex-servicemen desirous of improving their qualifications and employment prospects. To date, trade training has been provided in over 14,000 cases, and over 18,000 ex-servicemen and women have •been assisted in educational courses. As at 31st March, 1949, 6,253 ex-servicemen had been settled on the land with rehabilitation finance. Despite the fact that 939 new applications were received during the year for farm training and settlement, the number of men awaiting settlement was substantially reduced. Housing loans granted to ex-servicemen to date total 25,259 and 10,256 State rental houses have been allocated to ex-servicemen, making a grand total of 35,515 who have been assisted to obtain their own homes.

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During the year rehabilitation expenditure and loan authorizations amounted to £19,327,000, making the total to date £84,643,000. It is estimated that requirements in the current financial year will be in the vicinity of £18,000,000. PUBLIC DEBT Full details of transactions affecting the public debt during 1948-49 will'be found on page 72 of the Public Accounts (parliamentary paper B-l [Pt. I]) , already tabled. The major transaction was the adjustment necessitated by the bringing of New Zealand currency to parity with sterling as determined 'in August of last year. Since 1943 the London debt has been recorded in the accounts at 25 per cent, more than sterling value. It will now be recorded as at parity with sterling. The alteration in the rate of exchange has reduced the London debt in New Zealand currency by £20,797,000. The annual payments of interest in London will now cost correspondingly less in New Zealand currency. The moneys available in the Consolidated Fund were insufficient to pay to the Reserve Bank of New Zealand the liability arising out of the provisions of section 4 of the Finance Act, 1934, consequent upon the exchange alteration. Authority was obtained in section 2 of the Finance Act, 1948, to raise the funds necessary to meet the liability, and stock to the value of £20,000,000 was issued to the Reserve Bank for this purpose. The year's transactions included a 3 per cent. £16,000,000 conversion issue in London to take advantage of an optional maturity of a 4£ per cent. loan. Of that amount £225,465 was repaid, and the balance of £3,000,000 was transferred to New Zealand domicile. Details of the issue were included in last year's Financial Statement. Two internal loans of £3,761,485 and £3,492,230 which matured during the year were repaid on due dates. The domicile of the public debt as at 31st March, 1949, was as follows: — Amount. Per Cent. £ London .. .. .. .. 79,962,101 13-0 Australia .. .. .. .. 628,226 0• 1 New Zealand .. .. ..534,395,305 86-9 £614,985,632 100-0 The figures exclude the amount of the funded debt relating to the 1914-18 war. The floating debt in the form of Treasury bills included in the above figures remained at £55,000,000.

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It will be noted that 13*1 per cent, only of the debt is now held overseas. A conversion offer of £7,000,000 made on Ist June last in respect of a £7,322,579 3£ per cent. London loan was very successful, and cash applicants received small allotments only. The balance of £322,579 was repaid in cash. In New Zealand arrangements were made to redeem, on 15th June last, two 2| per cent, war loans totalling £16,806,940 and a 4 per cent. 1933 conversion loan for £12,432,440, totalling' in all £29,239,380. Securities, issued to those who wished to convert their holdings to new investments were per cent. 1954-55 stock, and 3 per cent, stock maturing 1961-64. Investors in loans totalling £15,111,380 elected to convert to the new stocks, while holders of the old loans amounting to £14,128,000 were repaid in cash. The only other overseas loan requiring action in this financial year is a London loan of £7,500,000 which matures on 15th December next. Interest on Public Debt Payments on account of interest, at home and abroad, shown first in millions of New Zealand pounds and then as a percentage of national income, are as follows:

Since 1936 the average rate of interest on public debt has fallen from £3 19s. Id. per cent, to £2 14s. 4d. per cent. Over the period for which estimates of national income are available —that is, since 1938-39 —the burden of debt, defined as total interest charges, has declined from 5• 9 per cent, to 4• 0 per cent, of the net national income; and this over a period of expenditure upon war unprecedented in New Zealand's history. The Government's policy regarding overseas debt has resulted in a reduction since 31st March, 1936, of £52,558,000. The annual interest on this debt has been reduced during the same period from £5,725,000 sterling, to £3,273,000, a net reduction of £2,452,000 sterling annually. This reduction is in addition to repayment of all moneys made available by the United Kingdom Government in respect of the 1939-45 War amounting to £48,667,000 sterling.

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Annual Interest Charge £(N.Z.) (Millions). Percentage of National Income. Year Ended 31st March, Overseas. New Zealand. Overseas. 1 New Zealand. 1939 6-8 4-7 • .3-5 2-4 1944 6-6 9-0 2-0 2-8 1946 7-1 11-5 2-0 3-3 1947 4-7 12-9 1-3 3-5 1948 4-7, 13-1 1-1 3-2 1949 3-3 13-3 0-8 3-2

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Although the sums mentioned have been repaid we are producing more than ever before and are able to import more goods, because of the reduced charges on our export receipts. To-day our standard of living is higher than in any previous period, and instead of mortgaging the future we have freed a considerable portion of our future earnings from unproductive charges. Whilst this debt redemption policy has been followed successfully it is not proposed to extend it in a way that will restrict the major capital development works, which are essential to the expansion of production. Loan moneys represented by Assets From 31st March, 1936, up to 31st March of the present year, the public debt has increased from approximately £256 million to £615 million, a net increase of £359 million. During the same period New Zealand has borne its share of the cost of the world's greatest war, in respect of which almost £204 million of debt has been incurred, in addition to huge sums expended from current taxation. Deducting £204 million from the increase of £359 million over the period, we have a remainder of £155 million of debt represented by productive or useful assets. These are as follows: — £(MiUion) Housing .. . . . . .. 49 Hydro-electric schemes .. .. .. 26 Railways . . . . . . . . 21 Eoads and highways .. .. .. 18 Bank of New Zealand . . . . . . .. 7 Airways, phosphates, and other undertakings . . . . 5 Land settlement, coal-mines, Post Office facilities, irrigation, and State forests . . . . 22 Public Buildings, including schools and hospitals . . 16 £164 ' This excess of £9 million in value of assets over relative loan debt arises largely from repayment of debt in the interim, and the excess might be increased by bringing into account capital expenditure from reserves and from revenue. The point I desire to emphasize, however, is that when war debt is omitted we can show against a net increase of £155 million in debt a total of tangible assets, some of them highly productive, at least £9 million greater than that increase in debt, even when those assets are very conservatively valued. There is obviously every reason for confidence in New Zealand Government securities as permanent investments.

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NATIONAL DEVELOPMENT PROGRAMME The 1948 Appropriation Act authorized the raising of £32,000,000 to finance the National Development Programme for .1948-49. Less work than anticipated was carried out, so that the borrowing for the works portion was £26,724,000. Additional amounts, totalling £1,560,000, were raised and invested in the New Zealand National Airways Corporation (£685,000), the British Petroleum Company of New Zealand, Ltd. (£765,000), and the Linen Flax Corporation (£110,000), making the total borrowed for the year £28,284,000. It is estimated that for ordinary purposes £35,268,000 will be required during the present year, and this compares with the actual expenditure last year from loan-moneys as follows: — Expenditure, Estimates, 1948-49. 1949-50. £ £ Housing .. .. .. 7,738,000 9,250,000 Education buildings .. .. 1,629,000 2,250,000 Electric supply .. .. .. 5,000,000 6,350,000 Highway-construction .. .. 1,970,000 2,500,000 Land-settlement.. .. .. 2,450,000 4,250,000 Railways: improvements and additions .. .. .. 1,746,000 2,990,000 State coal-mines .. .. .. 1,500,000 2,000,000 State forests .. .. .. 813,000 1,250,000 Telegraph extension .. .. .. 2,500,000 Christmas Island phosphates .. 1,375,000 125,000 Other works .. .. .. 2,503,000 1,803,000 £26,724,000 £35,268,000 An additional sum of £BBl,OOO will be required from which to advance capital moneys to trading corporations. The foregoing programme will be financed from proceeds of the current loan securities on sale to the public, together with departmental and other investment funds. Hydro-electricity To the extent that labour and materials are available, work is being accelerated on new power-stations on the Waikato, Clutha, and Cobb Rivers and at Lake Tekapo. Every endeavour is being made to have these new power-stations in operation as early as possible, and it is anticipated that the Tekapo and Maraetai schemes will be completed about the end of 1950 and 1951 respectively. Water-storage works are in progress at Lakes Pukaki and Waikaremoana. Power-transmission lines are being erected as required. The total capital invested by the State in electricity undertakings is over £46,000,000, and new projects under construction will double this figure. The year's estimate for capital expenditure is £6,350,000.

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Last year's generation of 2,753 million units exceeded that of the previous year by 241 million units, and compares with 1,319 million units ten years ago. Steel As a result of the Prime Minister's representations in the United Kingdom earlier this year, the Government has been successful in obtaining vital heavy steel plate requirements for the Maraetai and Cobb hydro-electric schemes, which will be available in time to ensure that no hold-up occurs in the construction of these high priority works. Steel supplies for the Auckland and Wellington water-supply schemes are being obtained to enable work to proceed. With a current trend for overseas steel supplies to improve, particularly from the United Kingdom, it is expected that the major requirements will be available from this source. Land Settlement The development of land for settlement for ex-servicemen and •civilians is proceeding on a greater scale as additional labour and materials becomes available, this being evidenced by the number of units allotted during the financial year 1948-49 as compared with the previous year. Provision for the acquisition and development of land will in future be made on new votes out of the reconstituted Land Settlement Account in terms of section 27 of the Land Act passed last session. Owners of land who sell properties to the Crown often incur loss of income while seeking other suitable investments for the purchaseprice, which is now paid in cash as soon as the transfer is completed. Consequently, many landowners are reluctant to sell to the State. To overcome the difficulty it is proposed to give vendors an option if they so desire to have payment of the purchase-price spread over a period or payable at the end of an agreed period up to say, ten years, and in the interim to receive interest on the unpaid purchase-money. Empowering legislation will be included in a suitable Bill to be brought clown this session. The heavy, expenditure on land-development is being reflected in increased production. It is the Government's policy to maintain this progress until the whole of the land capable of development is in production. For this reason the allocation of funds for this year, £4,250,000, is considerably higher than the £2,450,000 provided last year.

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Progress has been maintained in development of Maori lands, and a programme for bringing into use a minimum of approximately 20,000 acres annually for ten years is under way. A further increase in house-building for Maoris is anticipated, and preparations have been made for handling more work in this respect. State Coal-mines During the year the Government purchased the undertaking of Taupiri Goal-mines, Ltd., a company operating the Roto war o and Alison Mines and owning extensive coal-bearing lands in the vicinity of Huntly. Six other smaller properties were also purchased mainly for development purposes. The Coal Valuation Commission has been established in accordance with the provisions of the Coal Act, 1948, and will soon commence its discussions to determine the global sum which is to be apportioned amongst the claimants in respect of the coal vested in the Crown on the Ist April, 1949. Christmas Island Phosphates In the Finance Act (No. 2), 1948, authority was given in section 2 for the Government of New Zealand to join with the Government of the Commonwealth of Australia'in an agreement with the Christmas Island Phosphate Co., Ltd., for purchase of the company's mining rights and assets on Christmas Island in the Indian Ocean. The purchase was completed on the 31st December last, the total cost being £3,000,000, which was shared equally between the two Governments. Negotiations are proceeding for the future management of the undertaking. In the meantime the British Phosphate Commissioners are managing the workings. Telegraph Extension Financial provision has been made for the expansion of the Post Office telecommunication network, including the overtaking of arrears of work which accumulated during the war and immediate post-war years. This provision covers estimated expenditure on new telephone switching equipment, both automatic and manual, outside telephone plant, machine printing telegraph apparatus, and radio plant. Most of *this equipment has been on order for a considerable time and some has already been landed, while reasonably early delivery is promised for the remainder. But many new buildings and extensions to existing premises are necessary, and a great deal of work in installing switching equipment and in new reticulation work has to be done before the Post Office will be able to give service to every one who wants a telephone or to provide a " no-delay " toll service. Progress is also dependent on the availability of labour, poles, &c.

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Assistance for residential accommodation The Government has paid particular regard to the needs of people, both old and young, who live in hostels or other institutions provided by religious bodies. The action which has been taken by various churches and societies to provide suitable accommodation is greatly appreciated, and since 1947 Government subsidies have been arranged, amounting to £lll,OOO. These subsidies for approved proposals are normally provided on the basis of one-third of the capital cost of land and buildings. Where necessary, further Government assistance by way of loan is arranged. Homes are also being built by the Government for older people and pensioners who will rent these dwellings on much the same basis as that on which other State houses are made available. Suitable blocks of flats for this purpose are being erected throughout New Zealand. Special arrangements have also been made to accommodate old people at Howardville, near Christchurch. Hostel accommodation for Public Service typists, cadets, and other employees has been extended over the past year, and further hostels will be operating shortly. National income Statistics No approach to a complete review of a country's public finances can ignore consideration of the trend and state of the national income. Upon the national income depends largely our standard of living, and from it is drawn the taxation with which governmental services are financed and by which any necessary redistribution of resources is effected. The following table shows the trend of national income as disclosed by the latest statistics. It should be remembered that for all years except part only of the latest year the figures are based on currency at its former exchange value of £125 N.Z. equals £lOO sterling. National Income. £(Mfflion) 1938-39 .. .. .. .. 194 1943-44 .. .. .. .. 327 1946-47 .. ... .. ..365 1947-48 .. .. .. .. '4ll 1948-49 (provisional) .. .. .. 419 The New Zealand national income has increased by 2 per cent, over the past year, and the purchasing-power of the currency in which that income is expressed has increased also. The national income statistics are being published separately, and as a result of further research it is possible to indicate the disposal of the national product by way of current consumption, by capital formation in New Zealand, and by the effect on the net balance of

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international payments. There is also shown the disposal of private income by personal consumption, by payment of direct taxation, and by private savings. The tables which are being published show clearly the effects of the diversion of our economy to war purposes and of the return to more normal conditions. In 1938-39 personal consumption of goods and services accounted for 66 per cent, of the gross national product. In 1943-44, when our war effort was at its peak, the proportion fell to 48 per cent., while the provisional estimates for 1948-49 with increasing availability of goods and services for civilian consumption show a return to 65 per cent, or approximately the pre-war proportion. A corresponding movement has also taken place in expenditure on capital formation, which as a percentage of gross national product fell in 1943-44 from a pre-war level of 23 per cent, to 10 per cent, and has now returned to 21 per cent., or approximately the pre-war level. This information is of special importance as it represents the provision that is being made out of current production to cover maintenance and expansion of national capital assets. The following table prepared from the national income studies shows in an interesting way the relation of current Government expenditure to the value of national production.

27

1938-39. 1948-49. — Percentage of Percentage of £(Million). Gross National £(Million). Gross National Product. Product. Current Expenditure on Goods and Services — Interest on overseas debt .. 6-8 3-0 3-3 0-7 Social services (excluding 8-3 3-6 20-3 4-2 transfers to private income) Defence and war 2-1 0-9 10-4 2-2 Maintenance of works and 2-5 1-1 5-1 1-1 services Development of industry .. •0-7 0-3 4-0 0-8 Administration and other 3-0 1-3 9-2 1-9 expenditure Tnfg] PYPlnnnirf fTdTiQiofQ onn i UUd/Ij tJAl/lU.U.lilg uldJLlolcIo dJLLU. - subsidies 23-4 10-2 52-3 10-9. Transfers to private income— Social security monetary 7-7 3-4 39-5 8-2 benefits and pensions Interest on public debt in 4-7 2-0 13-3 2-8 New Zealand Transfers to local authorities 5-1 2-2 6-6 1-4 Subsidies 0-6 0-3 12-0 2-5 Grand total 41-5 18-1 123-7 25-8

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It will be noted that the proportion of the national product -absorbed by current Government expenditure on goods and services remained virtually constant at £lO 4s. per cent, in 1938-39 and £lO 18s. per cent, in 1948-49, while the proportion collected in taxation and redistributed to private persons rose from 5-4 per cent, in 1938-39 to 11 per cent, in 1949. A large proportion of this increase has resulted from the improvement in social security monetary benefits. How the taxation revenue was spent It is interesting to analyse the expenditure of a pound of taxation revenue. The analysis of the 1948-49 revenue shows the following result: — s. d. Debt services ~. .. .. .. .. 3 2 War and defence .. .. .. .. 2 0 Social services and Stabilization— s. d. Health, and mental hospitals .. .. ..12 Education .. .. .. .. ..16 Pensions and benefits (war and social security) .. 7 4 Stabilization .. .. .. ..17 ll 7 General administration and other .. .. .. 3 3 20 0 Tax reductions since the war The attainment of post-war recovery has been assisted by the substantial tax- reductions made by the Government since hostilities ceased. The remission of national security tax, when calculated at 1948-49 income levels, approximates £2O million per annum. Income-tax reductions, together with the abolition of the social security registration fee, amounted to a further £l4 million. This -shows that, despite expenditure on war pensions and social security benefits amounting to £2o*6 million more in 1948-49 than in 1945-46, the Government has materially reduced taxes to the benefit of the whole community. Thus consumers have been able to retain a greater proportion of their gross earnings. Since the volume of goods available for consumption has risen (according to the latest statistics to 25 per cent, above 1938-39 volume and to more than 30 per cent, above 1945-46 volume), people have been able to buy more goods, and so improve their standard of living.

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What these tax reductions mean to the individual taxpayer is illustrated by the following comparisons of residue left after direct taxes have been paid and family benefit has been added: —

In addition to the relief from direct taxes there is the considerable benefit to consumers from lower tariffs, duties, and sales tax consequent upon reductions made by the Government, and by the operation of the •General Agreement on Tariffs and Trade. The value of remissions of indirect taxes since the war amounted to £l2 million, giving a total over-all reduction in taxes of approximately £46 million per annum. Honourable members will appreciate that these reductions in taxation represent a considerable concession to taxpayers without interfering with our high social standards and needs for defence. Remission of certain amusements-tax Amusements-tax is payable in respect of certain amateur sports and amateur musical and operatic functions. From the information available the Government is satisfied that activities of this kind merit exemption from taxation. Legislation to this end will therefore be introduced during this session. Insurance against national disasters In accordance with the Government's promise last year, it is proposed to extend the cover under section 14 of the Earthquake and War Damage Act, 1944, to insured property damaged as the direct result of storm or flood which is of an abnormal and unforeseen nature.

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Residue for Year Ended 31st March, Amount of Gross Earned Income. Increase in Residue. 1946. 1949. Taxpayer With Dependent Wife and One Child £ £ £ £ 400 .. 334 396 62 500 .. 403 476 73 600 .. 470 552 82 800 .. 600 700 100 Taxpayer With Dependent Wife and Two Children 400 .. 342 422 80 500 .. 413 511 98 ' 600 .. 480 587 107 800 .. 612 736 124 Taxpayer With Dependent Wife and Three Children 400 .. 376 448 72 500 .. 421 540 119 600 .. 490 621 131 800 .. 624 771 147

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No increase in the present premium charge is intended for this additional cover, but 10 per cent, of the premium income will be credited to a special Disaster Fund to be used to meet approved claims. It is also intended to give authority to grant insurance on a voluntary basis under section 15 of the Act for damage occurring as the direct result of storm and flood to property of any kind, including property which is not normally insured against loss or damage b-y fire. Apart from these provisions, if farmers promote mutual insurance schemes to protect their crops and stock not normally covered by insurance, the Government will consider favourably paying a proportion of the cost of approved claims. * « Increased Assistance in Education To assist parents who are required to board their children away from home in order to attend school it is proposed to increase the boarding-allowances paid on account of children attending both primary and post-primary schools. These increased allowances will be payable from the beginning of the next school year, Ist February, 1950. Similarly, it is intended to give increased financial assistance to students attending University by increasing the values of University scholarships and bursaries. Regulations to implement these proposals will be issued in due course. Social security benefits It is proposed to increase the scale of social security monetary benefits from £2 ss. to £2 10s. a week, with effect from Ist June, 1949. The increase will apply to age, widows', invalids', miners', sickness, and unemployment benefits, and where the benefit includes a portion payable on account of a wife who is not qualified to receive a benefit in her own right her portion will also be raised by ss. a week, from £2 ss. to £2 10s. a week. Beneficiaries under twenty years of age and orphans will benefit from the increase of ss. weekly in the basic rate. Mothers r allowances payable to widows will also be increased by ss. weekly. -It is not proposed to vary the present rates of universal superannuation or family benefits. The estimated additional cost of the above increases for the current financial year is £1,800,000. Proposals for the present year include the introduction of an " ambulance benefit," and also improvements to the existing procedure in dealing with the " general medical services."

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War Pensions War-pension rates will also be increased. As the majority of exservicemen suffering minor disabilities for winch they are receiving war pensions are following normal employment, they will benefit from the increase in the general wage-level, but to ensure that all pensioners will participate in the improvements in benefits it is proposed to raise the basic pension. For a pensioner who suffers 50 per cent, disablement the pension will be raised from £llos. a week to £llss. a week. Where a pensioner is totally disabled the pension will be raised from £3 a week to £3 10s. a week. Other pensions for various degrees of disablement will be proportionately increased. At the same time the pension for a wife will be increased from £1 to £1 ss. a week. Where there are dependent children, the mother's allowance of £llos. will rise to £1155., but the children's allowance will remain at 10s. a week for each child as at present. Thus a disabled man on full economic pension with a wife and two children, according to percentage of disability can receive:— Totally 50 Per Cent. Disabled. Disabled. £ s. d. £ s. d. Disablement pension .. 3 10 0 1 15 0 Economic pension .. .. ..250 2 ' 5 0 Mother's allowance . . .. 1 15 0 1 15 0 Children's allowance (2) .. ..100 100 £B,lO 0 £6 15 0 Previous rate .. . . . . £7 15 0 £6 5 0 The basic rate of pension for war widows will be increased by ss. per week, while war pensions payable to other classes of dependants will be increased pro rata. The basic rate of war veterans' allowance, both for the war veteran and, if married, for his wife, will be increased from £2 ss. to £2 10s. a week, giving a maximum of £5 weekly for a married couple. All increases in war pensions and war veterans' allowance will operate from Ist June, 1949. The estimated cost of thes'e increases for the balance of the current financial year is £500,000. Inepme-tax rebate Last year a rebate of up to £lO was made on all income-tax assessments of individuals. This was designed to give relief, particularly to those in the lower-income groups. The result was that no income-tax was payable by individuals whose assessments were not more than £lO, and a flat reduction of £lO was made on all other individual assessments.

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It is proposed to continue this rebate for the current financial year, and a reduction of some £3 • 3 million has been allowed for in the estimates of revenue which I have already mentioned. Conclusion From the facts and figures which I have supplied to the House this evening it will be seen that the public finances, as well as the whole economy of New Zealand, are in very good condition. We have been able to conclude the past year with a surplus of £2,600,000. At a time when other countries are experiencing or expecting difficulty in disposing of all their products which normally enter into international trade we have a full and insistent demand for all our products. Controls have been necessary and efficacious in the past and may be essential in the future. The Government will, nevertheless, take every opportunity to relax and abandon controls wherever the circumstances warrant. Rationing of meat and sugar has been removed during the past year, while the restrictions on building control have been diminished. At the same time it is to be borne in mind that the needs of the United Kingdom, with which New Zealand's fortunes are so closely and so irrevocably bound, may require some redirection of exports and of imports. Supplies of goods and services are becoming in increasing degree more readily available in New Zealand. In other words, our standard of living is rising. In the announcement which I have just made regarding increased benefits and pensions for those who for one good reason or another are unable to increase their earning-power, some recognition is made of the fact that every one should share in an increase in the national income and in an enhanced standard of living. Too much emphasis cannot be placed on the fact that continuance of the present good conditions depends upon good conditions in other countries as well as upon every one pulling his weight in our own country. Strikes, disputes, profiteering, idleness, and friction of all kinds, whether local or international, merely drag us back, and in the long run are of no gain to any one. A steady increase in efficiency and in productivity is imperative. We are fortunate in that New Zealand is a country with great resources. We have a great heritage in our country and in our association with the other members of the British Commonwealth. To live up to the responsibilities of that heritage means continuous and energetic efforts. Those efforts can only be successful with orderly Government and orderly public finance. These during the past fourteen years have been and will be for the future the objectives of the Government.

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Table No. 1 Revenue of the Consolidated Fund, Social Security Fund, and War Expenses Account for the Year ended 31st March, 1948, and for the Year ended 31st March, 1949

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33

1948. 1949. Consolidated Fund. Social Security Fund. War Expenses Account. Total. Consolidated Fund. Social Security Fund. War Expenses Account. Total. Taxation — Income-tax Land-tax National security tax Social security charge Customs duties Beer duty Sales tax Highways tax Stamp duties Other.. £ 36,632,581 854,456 772,029 24,390,881 4,404,051 15,945,813 3,543,954 9,382,555 172,833 £ 26,176,635 £ £ 36,632,581 854,456 772,029 26,176,635 24,390,881 4,404,051 15,945,813 3,543,954 9,382,555 172,833 £ 49,007,672 916,120 19,111,486 4,555,374 14,105,224 3,613,743 9,624,256 127,864 £ 29,378,385 £ £ 49,007,672 916,120 29,378,385 19,111,486 4,555,374 14,105,224 3,613,743 9,624,256 127,864 Interest receipts Disposal of surplus assets Other receipts 96,099,153 5,002,728 16,oii,234 26,176,635 97,432 5,425,622 4,930,852 122,275,788 5,002,728 5,425,622 21,042,518 101,061,739 5,215,789 15,246,387J 29,378,385 58,651 1,535,835 2,453,937 130,440,124 5,215,789 1,535,835 17,758,975 Transfers from Consolidated Fund .. 117,116,115 -22,666,018 26,274,067 16,000,000 10,356,474 6,666,018* 153,746,656 121,523,915 -18,785,712 29,437,036 15,000,000 3,989,772 3,785,712f 154,950,723 94,450,097 42,274,067 17,022,492 153,746,656 102,738,203 44,437,036 7,775,484 154,950,723 * Includes Budget surplus, 1946-47, £4,611,018. t Includes Budget Surplus, 1947-48, £1,785,713. % Excludes £20,000,000 receipts for stock issued to Reserve Bank due to alteration of the exchange-rate.

Table No. 2 Statement of the Actual Expenditure of the Consolidated Fund (Ordinary Revenue Account) for the Financial Year Ended 31st March, 1949, Compared With That of the Financial Year Ended 31st March, 1948.

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— Year ended Year ended 31st March, 31st March, Increase. 1949. 1 Decrease. Permanent Appropriations— Under Special Acts of Legislature— Civil List Debt Services — Interest .. .. Transfer to Loans Redemption Account— New Zealand Loans Amendment Act, 1947— Section 14 (Annual Contribution) Section 11 (c) Administration and management Total —Debt Services Other Services— Highways Other special Acts Total—Other Services Total —Permanent Appropriations Annual Appropriations— Vote, — Legislative Prime Minister's Department External Affairs Finance — Treasury .. .. Stabilization Customs Land and Income Tax Stamp Duties Audit Total —Finance General Administration — Public Service Commission.. Internal Affairs Island Territories Printing and Stationery JVIarine Labour and Employment Maori Affairs Valuation Electoral ■Census and Statistics Total—General Administration £ 98,922 £ 101,724 £ £ 2,802 16,619,960 4,513,156 4,670,000 225,961 17,825,052 4,377,223 4,200,000 210,064 135,933 470,000 15,897 1,205,092 26,029,077 26,612,339 621,830 1,205,092 205,325 25,428,617 219,281 2,387,907 23,040,710 13,956 *25,633,942 2,607,188 23,040,710 13,956 51,761,941 29,321,251 23,662,540 1,221,850 177,521 152,506 25,015 221,449 156,966 64,483 621,151 673,909 52,758 354,096 11,687,137 329,713 731,772 191,867 108,419 309,711 14,621,917 272,086 560,749 169,458 104,311 44,385 57,627 171,023 22,409 4,108 2,934,780 13,403,004 16,038,232 299,552 2,934,780 81,413 1,417,935 663,234 676,010 480,570 1,479,145 521,219 220,557 20,094 76,729 349,304 63,872 3,184,825 652,875 669,451 434,283 935,873 463,807 171,276 35,257 75,556 373,330 17,541 10,359 6,559 46,287 543,272 57,412 49,281 1,173 1,766,890 i5,163 24,026 5,986,210 7,060,405 731,884 1,806,079 * Includes £20,576,207 paid to Reserve Bank for liability due to alteration in exchange rate.

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Table No. 2 —continued Statement of the Actual Expenditure of the Consolidated Fund, etc. —ctd.

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— Year ended 31st March, 1949. Year ended 31st March, 1948. Increase. Decrease. Annual Appropriations—continued Vote —continued Law and Order— Justice and Prisons Crown Law Office Police £ 605,949 13,679 1,073,999 £ 554,872 12,971 968,836 £ 51,077 708 105,163 £ Total—Law and Order 1,693,627 1,536,679 156,948 Defence— Navy Army Air 2,300,533 2,229,876 5,857,932 1,736,627 3,470,245 4,175,219 564,906 1,682,713 1,241,369 Total —Defence 10,388,341 9,382,091 2,247,619 1,241,369 Maintenance— Maintenance of Public Works and Services Highways Maintenance 6,759,475 3,920,772 6,405,234 3,404,081 354,241 516,691 Total —Maintenance 10,680,247 9,809,315 870,932 Development of Primary and Secondary Industries — Lands and Survey Forest Administration Agriculture Scientific and Industrial Research .. Mines Transport Industries and Commerce Tourist and Health Resorts 1,238,624 810,659 1,844,631 774,433 132,438 317,738 520,271 596,541 1,184,258 1,609,709 745,004 107,166 220,849 1,276,855 452,739 54,366 810,659 234,922 29,429 25,272 96,889 143,802 756,584 Total —Development of Primary and Secondary Industries Social Services— ♦Health .. Mental Hospitals Education War and other pensions Social Security 6,235,335 5,596,580 1,395,339 756,584 8,081,457 9,588,988 4,926,081 15,000,000 4,718,733 1,243,332 8,883,246 4,688,312 16,000,000 j=2,119,392 705,742 237,769 1,000,000 Total —Social Services 37,596,526 35,533,623 3,062,903 1,000,000 Unauthorized Expenditure— Services not provided for 127,801 68,845 58,956 Total—Annual Appropriation 87,131,212 86,009,151 8,913,631 7,791,570 32,576,171 9,013,420 Total Expenditure 138,893,153 115,330,402 23,562,751 * Mental Hospitals expenditure incorporated in vote : Health from 1st April, 1948.

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Table No. 3 SOCIAL SECURITY FUND

iv

Year Ended Year Ended Year Ended Year Ended Estimate for Slst March, 31st March, 31sfc March, 31st March, Year Ended 1946. 1947. 1948. 1949. 31st March, 1950. Receipts £ £ £ £ £ Registration fees .. 585,713 15,287 Social security charge 14,557,460 22,383,884 26,176 j 635 29,378^385 31,600,000 Miscellaneous receipts 143,020 120,993 97,432 58,651 36,000 Balance from previous year 2,389,701 1,716,303 5,410,977 7,241,918 8,681,917 Transfer from Consolidated Fund .. 7,000,000 18,000,000 16,000,000 15,000,000 12,000,000 24,675,894 42,236,467 47,685,044 51,678,954 52,317,917 Expenditure Administration expenses 721,587 704,194 707,883 729,259 792,920 Emergency benefits 121,959 134,287 227,857 251,409 312,000 Hospital benefits, &c. — Maternity benefits 600,209 672,989 800,030 916,120 915,000 Hospital benefits 2,173,460 1,986,288 1,949,489 1,997,375 2,020,000 Medical benefits 1,427,309 1,760,574 2,167,826 2,306,881 2,305,000 Pharmaceutical benefits 1,133,366 1,439,686 1,558,350 1,793,159 1,819,000 Supplementary benefits 229,971 352,043 545,793 861,913 1,000,000 Unauthorized expenditure— Services not provided for 95 Monetary benefits— Age 9,817,615 11,881,119 12,976,286 13,790,971 15,350,000 Widows 1,043,593 1,529,010 1,709,626 1,847,030 2,125,000 Orphans 24,178 22,905 24,187 27,623 27,500 Family 2,611,759 12,680,778 13,798,648 14,242,203 14,796,000 Invalids 1,183,537 1,328,485 1,367,300 1,348,616 1,426,500 Miners 88,359 105,416 110,106 113,659 123,500 Maori War 101 104 111 10 Unemployment 31,661 24,332 8,357 8,948 16,750 Sickness 565,420 853,328 897,093 911,107 1,000,000 Universal superannuation 1,185,508 1,349,689 1,593,757 1,850,079 2,195,500 Social Security Amendment Act, 263 427 580 1943, section 13 (8) (c) : Maintenance moneys Balance .. 1,716,302 5,410,977 7,241,918 8,681,917 6,099,247 24,675,894 42,236,467 47,685,044 51,678,954 52,317,917

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Table No. 4 WAR EXPENSES ACCOUNT Statement Showing the Net Expenditure for the Year Ended 31st March, 1949, Compared with the Year Ended 31st March, 1948

v

■ Year Ended 1 Year Ended 31st March, 31st March, Increase. Decrease. 1948. 1949. Navy— £ £ £ £ Pay and allowances 62,465 110 62,355 Accommodation, victualling, and clothing 4,104 25 4,079 War and other stores 61,561 440 61,121 Medical services .. 1,101 2 1,099 Land, buildings, and ships 2,002,569 881 2,001,688 Docking, repairs, maintenance, and rent 76,716 13,936 62,780 "Transport 42,224 1,465 40,759 Miscellaneous effective services 8,603 2,025 6,578 Non-effective services .. .. 11,855 11,855 2,271,198 18,884 2,252,314 Army— 1 Pay and allowances 1,489,397 737,169 752,228 Accommodation, victualling, and clothing 2,869 6,787 '3,918 War and other stores 3,589,408 242,123 « 3,347,285 Medical services 118,724 356,789 238,065 Educational and vocational services 824 72 752 Land, buildings, and fortifications 3,608 '3,608 Transport 363,807 309,269 54,538 Miscellaneous effective services 9,024 3,849 5,175 Non-effective services 10,144 1,403 8,741 5,584,197 1,661,069 245,591 4,168,719 Air — Pay and allowances 257,541 50,338 207,203 Accommodation, victualling, and clothing 51,901 2,786 49,115 War and other stores 123,158 67,231 55.927 Medical services 228 8 220 Educational and vocational services 5 5 Land, aerodromes, and other buildings 4,004 33 '3,971 Repairs, maintenance, and rent 154,547 36,556 117,991 Transport 29,360 9,965 19,395 Miscellaneous effective services 64,163 1,606 62,557 Non-effective services 960 12 948 685,862 168,540 5 517,327 Ancillary— \ Primary producers' subsidies 668,063 Or. 11,869 679,932 Promotion and expansion of industry 150,022 Cr. 3,708 153,730 E.P.S. and other security measures 4,280 6,932 2,652 Services for Armed Forces (recoverable) Cr. 844,826 Cr. 70,309 774,517 Reserve stocks, indents, and manufactured goods Cr. 710,132 Cr. 229,962 480,170 (recoverable) Soldiers' financial assistance, patriotic, and similar (TTQ T1 ta 54,647 31 54,616 uili to Bulk purchase and sales by Pood Controller Cr. 536,844 Cr. 324,125 212,719 UNRRA 414,091 93,530 320,561 WARB administration and operating expenses 102,431 102,431 WARB transit housing 10,336 10,336 Miscellaneous (recoverable in part and whole) 353,654 Cr. 129,301 482,955 Miscellaneous (non-recoverable) 38,016 32,976 5,040 Cr. 409,029 Cr. 523,038 1,582,825 1,696,834 Rehabiitation advances, &c. 5,148,443 4,590,669 557,774 Gratuities 1,049,796 1,329,447 279,651 Refund to Chief Paymaster, B.C.O.F., military cur94,817 94,817 rency issued to Occupation Troops, Japan Loss on devaluation Occupation Currencies 63,359 63,359 Transfer to Loans Redemption Account 3,300,000 3,300,000 9,561,598 6,014,933 374,468 3,921,133 10,973,502 620,064 Total 17,693,826 7,340,388 10,353,438

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Table No. 5 NATIONAL INCOME

vi

(£(million)) 1938-39. 1939-40. 1940-41. 1941-42. 1942-43. 1943-44. 1944-45. 1945-46. 1946-47. 1947-48. 1948-49 (Provisional). Salary and wage payments Pay and allowances of Armed Forces .. Social security benefits and pensions Rental value of owner-occupied houses.. Other personal income (excluding company dividends) Company income (before distribution) .. 111-1 0-9 7-7 6-2 54-3 19-9 110-6 3-1 11-5 6-7 60-1 25-0 117-9 16-7 12-5 7-2 59-0 24-0 121-2 26-5 12-9 7-7 63-0 28-0 127-6 47-1 14-4 7-9 67-7 33-2 141-5 57-9 15-8 8-3 72-9 36-7 147-8 48-3 17-6 8-8 80-3 38-2 162-4 40-0 20-9 9-1 90-0 42-0 187-0 8-2 34-8 9-3 107-7 48-3 210-6 6-4 37-6 9-5 127-9 53-7 226-0 4-0 39-5 10-0 132-5 50-0 Private income 200-1 217-0 237-3 259-3 297-9 333-1 341-0 364-4 395-3 445-7 462-0 Plus — Government and local authority trading income Lump - sum payments from United Kingdom Government Less transfer incomes — Social security benefits and pensions .. Public debt interest (paid in New Zealand) 8-7 -7-7 -7-0 10-4 3-0 -11-5 -7-5 11-9 3-0 -12-5 -7-8 13-4 3-0 -12-9 -8-4 16-6 3-0 -14-4 -9-4 17-9 3-0 -15-8 -11-3 14-5 5-0 -17-6 -12-9 15-3 5-0 -20-9 -13-8 14-5 5-0 -34 -8 -15-1 13-4 5-0 -37-6 -15-3 12-0 -39-5 -15-5 Net national income at factor cost (national income ) 194-1 211-4 231-9 254-4 293-7 326-9 330-0 350-0 364-9 411-2 419-0 Indirect taxes Subsidies 20-6 -0-6 21-0 -0-5 22-3 -1-6 23-2 -2-7 27-9 -3-3 31-8 -3-1 34-0 -4-6 37-3 -6-6 43-0 -11-8 53-0 -13-6 46-0 -12-0 Net national income at market prices . . 214-1 231-9 252-6 274-9 318-3 355-6 359-4 380-7 396-1 450-6 453-0 Plus depreciation allowances 15-0 16-0 16-0 16-0 17-0 17-0 19-0 20-0 22-0 25-0 27-0 Gross National Product 229-1 247-9 268-6 290-9 335-3 372-6 378-4 400-7 418.1 475-6 480-0

Table No. 6

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Table No. 7 NATIONAL INCOME Components of Private Income as Percentages of Private Income (Index Numbers)

viii

— 1938-39. 1939-40. .1940-41. 1941-42. 1942-43. 1943-44. 1944-45. 1945-46. 1946-47. 1947-48. 1948-49 (Provisional). Salary and wage payments 55-5 51-0 49-7 46-7 42-8 42-5 43-3 44-6 47-3 47-3 48-9 (100) (100) (106) (109) (115) (127) (133) (146) (168) (190) (203) Pay and allowances of Armed Forces 0-5 1-4 7-0 10-2 15-8 17-4 14-2 11-0 2-1 1-4 0-9 Total 56-0 52-4 56-7 56-9 58-6 59-9 57-5 55-6 49-4 48-7 49-8 (100) (102) (120) (132) (156) (178) (175) (181) (174) (194) 8-4 (205) Social security benefits and pensions 3-9 5-3 5-3 5-0 4-8 4-7 5-2 5-7 8-8 8-5 (100) (149) (162) (168) (187) (205) (229) (271) (452) (488) (513) Rental value of owner-occupied houses 3-1 3-1 3-0 3-0 2-7 2-5 2-6 2-5 2-4 2-1 2-2 (100) (108) (116) (124) (127) (134) (142) (147) (150) (153) (161) Other personal income (excluding com-27-1 27-7 24-9 24-3 22-7 21-9 23-5 24-7 27-2 28-7 28-7 pany dividends) (100) (111) (109) (116) (125) (134) (148) (166) (198) (236) (244) Company income (before distribution) 9-9 11-5 10-1 10-8 11-2 11-0 11-2 11-5 12-2 12-1 10-8 (100) (126) (121) (141) (167) (184) (192) (211) (243) (270) (251) Private income 100-0 100-0 100-0 100-0 • 100-0 100-0 100-0 100-0 100-0 -100-0 100-0 (100) (108) (119) (130) (149) (166) (170) (182) (198) (223) (231) Government and local authority trading in PATTl P (100) (120) (137) (154) (191) (206) (167) (176) (167) (154) (138) m^uiuo Net National income — At factor cost (100) (109) (119) (131) (151) (168) (170) (180) (188) (212) (216) At market prices (100) (108) (118) (128) (149) (166) (168) (178) (185) (210) (212) Gross National Product (100) (108) (117) (127) (146) (163) (165) (175) (182) (208) (210)

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Table No. 8 DISTRIBUTION OF OTHER PERSONAL INCOME (1)— SHOWING INDIVIDUAL ITEMS AS PERCENTAGE OF TOTAL PRIVATE INCOME AND AS INDEX NUMBERS (BASE 1938-39 =100)

ix

1948-49 1938-39. 1939-40. 1940-41. 1941-42. 1942-43. 1943-44. 1944-45. 1945-46. 1946-47. 1947-48. (Provisonal.) Professional occupations (on own account) — Value (£m.) 5-0 5-5 4-5 7-5 9-0 11-0 11-7 Per cent. 2-5 2-5 1-9 2-1 2-3 2-5 2-5 Index No. 100 110 90 150 180 220 234 Commerce, trade, or business — Value (£m.) .. • .. 9-0 9-9 8-9 16-7 21-0 24-0 25-8 Per cent. 4-5 4-6 3-8 4-6 5-3 5-4 5-6 Index No. 100 110 99 186 233 267 287 Farming — Value (£m.) 24-7 25-4 27-0 41-5 47-0 59-5 64-0 Per cent. 12-3 11 >7 11-4 11-4 11-9 13-4 13-9 Index No. 100 103 109 168 190 241 259 Interest, rents, &c. — Value (£m.) 15-5 16-4 15-2 15-4 15-6 16-1 16-0 Per cent. 7-7 7-6 6-4 4-2 3-9 3-6 3-5 Index No. 100 106 98 99 101 104 103 Other — Value (£m.) 1-7 1-8 1-5 30 5-0 5-5 6-0 Per cent. .. .. ... 0-9 0-8 0-6 0-8 1-3 1-2 1-3 Index No. 100 106 88 176 294 324 353 Primary produce stabilization accounts (change in balances) — Value (£m.) —1-6 1-0 1-8 2-9 3-2 5-8 7-9 5-9 10-1 11-8 9-0 Per cent. —0-8 0-5 0-8 1-1 1-1 1-7 2-3 1-6 2-5 2-6 1-9 Total other personal income —( *) Value (£m.) 54-3 60-1 59-0 63-0 67-7 72-9 80-3 90-0 107-7 127-9 132-5 Per cent. 27-1 27-7 24-9 . 24-3 22-7 21-9 23-5 24-7 27-2 28-7 28-7 Index No. 100 111 109 116 125 134 148 166 198 236 244 ( l ) Excluding distributed company income, and rental value of owner occupied houses.

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Table No. 9 PRIVATE INCOME AND INCIDENCE OF DIRECT TAXATION

x

£(million) — 1938-39. 1939-40. 1940-41. 1941-42. 1942-43. 1943-44. 1944-45. 1945-46. 1946-47. 1947-48. 1948-49 (Provisional). Salary and wage payments Less direct taxes .. 111-1 4-9 110-6 8-0 117-9 12-5 121-2 15-6 127-6 19-4 141-5 23-4 147-8 24-5 162-4 26-8 187-0 23-7 210-6 24-5 226-0 27-1 106-2 102-6 105-4 105-6 108-2 118-1 123-3 135-6 163-3 186-1 198-9 Pay and allowances of Armed Forces Less direct taxes 0-9 3-1 16-7 0-8 26-5 1-1 47-1 3-2 57-9 3-5 48-3 3-8 40-0 3-3 8-2 1-2 6-4 0-3 4-0 0-5 0-9 3-1 15-9 25-4 43-9 54-4 44-5 36-7 7-0 6-1 3-5 Social security benefits and pensions 7-7 11.-5 12-5 12-9 14-4 15-8 17-6 20-9 34-8 37-6 39-5 Other personal income (including rental value of owner-occupied houses) Less direct taxes 60-5 11-8 66-8 13-3 66-2 18-8 70-7 20-7 75-6 24-2 81-2 25-9 89-1 26-3 99-1 29-4 117-0 29-3 137-4 30-1 142-5 35-1 48-7 53-5 47-4 50-0 51-4 55-3 62-8 69-7 87-7 107-3 107-4 Company income Less direct taxes 19-9 7-1 25-0 9-2 24-0 13-5 28-0 14-0 33-2 19-6 36-7 22-7 38-2 26-6 42-0 25-5 48-3 24-0 53-7 22-5 50-0 30-4 12-8 15-8 10-5 14-0 13-6 14-0 11-6 16-5 24-3 31-2 19-6 Private income Less direct taxes( *) .. 200-1 23-8 217-0 30-5 237-3 45-6 259-3 51-4 297-9 66-4 333-1 75-5 341-0 81-2 364-4 85-0 395-3 78-2 445-7 77-4 462-0 93-1 Private disposable income 176-3 186-5 191-7 207-9 231-5 257-6 259-8 279-4 317-1 368-3 368-9 ( 1 ) Excludes direct taxes on Government trading profits.

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Table No. 10 PRIVATE DISPOSABLE INCOME

xi

— 1938-39. 1939-40. 1940-41. 1941-42. 1942-43. 1943-44. 1944-45. 1945-46. 1946-47. 1947-48. 1948-49 (Provisional). Salary and wage payments — £(m.) Per cent. 106-2 102-6 105-4 105-6 108-2 118-1 123-3 135-6 163-3 186-1 198-9 (60-2) (55-0) (55-0) (50-8) (46-7) (45-9) (47-4) (48-5) (51-5) (50-5) (53-9) Index No. .. .. 100 97 99 99 102 111 116 128 154 175 187 Pay and allowances of Armed Forces — 36-7 7-0 6-1 3-5 £(m.) Per cent. 0-9 3-1 15-9 25-4 43-9 54-4 44-5 (0-5) (1-6) (8-3) (12-2) (19-0) (21-1) (17-1) (13-1) (2-2) (1-7) (1-0) Social security benefits and pensions — £(m.) Per cent. 7-7 11-5 12-5 12-9 14-4 15-8 17-6 20-9 34-8 37-6 39-5 (4-4) (6-2) (6-5) (6-2) (6-2) (6-1) (6-8) (7-5) (11-0) (10-2) (10-7) Index' No. 100 149 162 168 187 205 229 271 452 488 513 Other personal income (including rental value of owner-occupied houses) — 87-7 107-3 107-4 £(m.) Per cent. 48-7 53-5 47-4 50-0 51-4 55-3 62-8 69-7 (27-6) (28-7) (24-7) (24-1) (22-2) (21-5) (24-2) (25-0) (27-6) .(29-1) (29-1) Index Nt>. 100 110 97 103 106 114 129 143 180 220 221 Company income (before distribution) — £(m.) Per cent. 12-8 15-8 10-5 14-0 13-6 14-0 11-6 16-5 24-3 31-2 19-6 (7-3) (8-5) (5-5) (6-7) (5-9) (5-4) (4-5) (5-9) (7-7) (8-5) (5-3) Index No. Private disposable income — 100 123 82 109 106 109 91 129 190 244 153 279-4 317-1 368-3 368-9 £(m.) ' Per cent. 176-3 186-5 191-7 207-9 231-5 257-6 259-8 (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) Index No. 100 106 109 118 131 146 147 158 180 209 209

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Table No. 11

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Table No. 12 PRIVATE INCOME BEFORE AND AFTER TAXATION (Including changes in balances of Primary Produce Stabilization Accounts) Division Into Distributive Shares

xiii

Income Year. Value £(m.). Percentage of Private Income. Income Received by Salary and Wage Earners( x ). Income Received by Persons Not Gainfully Employed( x ). Income Received by Other Persons( 1 ). Company Income (Before Distribution). Private Income. Income Received by Salary and Wage Earners( J ). Income Received by Persons Not Gainfully Employ ed( x ). Income Received by Other Persons( 'J. Company Income (Before Distribution). Private Income. 1938-39 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 1947-48 1948-49 (provisional) 1938-39 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 1947-48 .. (provisional) 118-0 120-7 142-1 155-5 183-1 208-6 206-3 214-1 214-5 237-6 251-0 112-1 112-2 128-6 138-9 161-3 183-1 179-8 185-7 191-7 215-6 226-7 12-2 15-5 17-1 17-2 17-8 18-4 19-1 20-7 23-9 25-5 27-1 (bu 11-4 14-7 15-9 16-2 16-7 17-3 18-3 20-1 23-3 25-1 26-6 50-0 55-8 54-1 58-6 63-8 69-4 77-4 87-6 108-6 128-9 133-9 t including 40-0 44-7 38-3 41-1 43-4 47-7 55-1 62-7 84-0 103-4 103-9 Before 19-9 25-0 24-0 28-0 33-2 36-7 38-2 42-0 48-3 53-7 50-0 After : non-monei 12-8 15-8 10-5 14-0 13-6 14-0 11-6 16-5 24-3 31-2 19-6 Taxation 200-1 217-0 237-3 259-3 297-9 333-1 341-0 364-4 395-3 445-7 462-0 Taxation bary social 176-3 187-4 193-3 210-2 235-0 262-1 264-8 285-0 323-3 375-3 376-8 59-0 55-6 59-9 60-0 61-5 62-6 60-5 58-8 54-3 53-3 54-3 security b< 63-6 59-9 66-5 66-1 68-6 69-9 67-9 65-2 59-3 57-4 60-2 6-1 7-2 7-2 6-6 6-0 5-5 5-6 5-7 6-0 5-7 5-9 mefits) 6-5 7-8 8-2 7-7 7-1 6-6 6-9 7-0 7-2 6-7 7-0 25-0 25-7 22-8 22-6 21-4 20-9 22-7 24-0 27-5 28-9 29-0 22-7 23-9 19-8 19-5 18-5 18-2 20-8 22-0 26-0 27-6 27-6 9-9 11-5 10-1 10-8 11-1 11-0 11-2 11-5 12-2 12-1 10-8 7-2 8-4 5-5 6-7 5-8 5-3 4-4 5-8 7-5 8-3 5-2 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 (*) Excluding distributed company income.

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Table No. 13 PRIVATE INCOME BEFORE AND AFTER TAXATION (Excluding changes in balances of Primary Produce Stabilization Accounts) Division Into Distributive Shares

xiv

Income Year. Value £(m.). Percentage of Private Income. Income Received by Salary and Wage Earners( 1 ). Income Received by Persons Not Gainfully Employ ed( 1 ). Income Received by Other Persons(')( 2 ). Company Income (Before Distribution). Private Income( 2 ). Income Received by Salary and Wage Earners( *). Income Received by Persons Not Gainfully Employed( J ). Income Received by Other Persons( J )( 2 ). Company Income (Before "Distribution). Private Income( 2 ). 1938-39 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 1947-48 1948-49 (provisional) 1938-39 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 1947-48 1948-49 (provisional) 118-0 120-7 142-1 155-5 183-1 208-6 206-3 214-1 214-5 237-6 251-0 112-1 112-2 128-6 138-9 161-3 183-1 179-8 185-7 191-7 215-6 226-7 - 12-2 15-5 17-1 17-2 17-8 18-4 19-1 20-7 23-9 25-5 27-1 ( 11-4 14-7 15-9 16-2 16-7 17-3 18-3 20-1 23-3 25-1 26-6 51-6 54-8 52-3 55-7 60-6 63-6 69-5 81-7 98-5 . 117-1 124-9 but includi 41-6 43-7 36-5 38-2 40-2 41-9 47-2 56-8 73-9 91-6 94-9 Before 19-9 25-0 24-0 28-0 33-2 36-7 38-2 42-0 48-3 53-7 50-0 After . ng non-mo 12-8 15-8 10-5 14-0 13-6 14-0 11 - 6 16-5 24-3 31-2 19-6 Taxation 201-7 216-0 235-5 256-4 294-7 327-3 333-1 358-5 385-2 433-9 453-0 Taxation netary soci 177-9 186-4 191-5 207-3 231-8 256-3 256-9 279-1 313-2 363-5 367-8 1 58-5 55-9 60-3 60-7 62-1 63-7 61-9 59-7 55-7 54-7 55-4 al security 63-0 60-2 67-1 67-0 69-6 71-4 70-0 66-5 61-2 59-3 61-7 6-0 7-2 7-3 6-7 6-0 5-6 5-7 5-8 • 6-2 5-9 6-0 benefits) 6-4 7-9 8-3 7-8 7-2 6-8 7-1 7-2 7-4 6-9 7-2 25-6 25-3 22-2 21-7 20-6 19-5 20-9 22-8 25-6 27-0 27-6 23-4 23-4 19-1 18-4 17-3 16-3 18-4 20-4 23-6 25-2 25-8 9-9 11-6 10-2 10-9 11-3 11-2 11-5 11-7 12-5 12-4 11-0 7-2 8-5 5-5 6-8 5-9 5-5 4-5 5-9 7-8 8-6 5-3 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 100-0 (!) Excluding distributed company income. ( 2 ) Excluding changes in balances of primary produce stabilization accounts.

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Table No. 14 IMPROVEMENT IN NEW ZEALAND ECONOMIC CONDITIONS Most Recent Information Compared With Earlier Periods

xv

1 Depression Low. 1935-36. 1938-39. Recent Figures. " Unit. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Production — Value of total production Volume of total production (1938-39 = 100) £(m.) .. Index No. 1932 1 83-3 1936 1 1936 1 113-8 93 19391 19391 136-1 100 19471 19471 230-9 116 19481 19481 265 -0 5 120 5 Value of farm production Volume of farm production (1938-39 = 100) £(m.) .. Index No. 19321 49-1 19361 1936 1 71-8 101 19391 19391 81-9 100 19471 19471 131-4 110 19481 19481 155 -0 5 113 5 Value of gross farming income £(m.) .. 1932 1 37-9 1936 1 59-0 19391 68-9 19471 113-4 19481 136-5 5 Wool production (lbs. —greasy basis) Million.. 19361 304-3 19391 327-7 19471 367-0 19481 362-0 Butter production (tons) (000) .. 19361 168 19391 148 19471 146 19481 151 Cheese production (tons) (000) . . 19361 89 19391 85 19471 92 19481 89 Meat production (tons) (000) .. 1939 9 470 19471 557-5 19481 540-0 5 Value of factory production 2 Volume of factory production 2 (1938-39 = 100) £(m.) .. Index No. 1933 1 17-7 19361 19361 23-2 76 19391 19391 30-5 100 19471 19471 61-7 147 19481 19481 70-0 5 150 5 Total factory employees (000) .. 1934 3 86-0 1936 3 102-3 1939 3 123-7 1948 3 162-8 1949 3 164-7 Electric -power production (units) Million.. 1936 1,031-7 1939 1,413-5 1947 2,520-6 1948 2,589-6 Gas production (coal-gas sold) (cubic feet).. Million.. 1936 3,324-4 1939 3,591-4 1947 4,637-4 1948 4,750-0 5 Coal production (tons) (000) .. 1933 4 1,821 1935 4 2,115 1938* 2,222 1947 4 2,752 1948 4 2,782 5 Timber production (superficial feet) Million.. 1932 154-2 1936 293-1 1939 316-7 1948 433-0 1949 480-0 5 For footnotes, see end of table.

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Table No. 14— continued IMPROVEMENT IN NEW ZEALAND ECONOMIC CONDITIONS— continued Most Recent Information Compared With Earlier Periods— continued

xvi

Depression Low. 1935-36. 1938-39. Recent Figures. Unit. Year Ended. 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount, Year Ended 31st March, Amount. Year Ended 31st March, Amount. Production —continued — Building permits issued in urban districts — Total value all buildings Private dwellings Government housing construction : Dwellings commenced (included above) Value of goods available for consumption Volume of goods available for consumption (1938-39=100) £(m.) .. Number Number £(m.) .. Index No. 1933 1933 19321 19321 2-5 1,496 73-2 61 1936 1936 19361 19361 5-9 4,140 100-9 84 1939 1939 1939 19391 19391 12-1 8,093 3,432 137-0 100 1948 1948 1948 19471 19471 21-4 9,854 2,651 207-5 108 1949 1949 1949 19481 19481 26 -4 5 11,102 6 3,627 5 275-9 B 125 5 Membership of workers' unions (000) .. 1933 4 71-9 1935 4 80-9 1938 4 249-2 1947 4 260-4 1948 4 271-1 Trade. — Value of exports (excluding specie) Volume of total exports (excluding specie), (1936-38 = 100) £(m.) .. Index No. 1931 4 35-0 1935 4 1935 4 46-5 96 1938 4 1938 4 58-4 97 1947 4 1947 4 129-4 119 1948 4 1948 4 147-8 123 Value of imports (excluding specie) Volume of total imports (excluding specie), (1936-38 = 100) £(m.) .. Index No. 1932 4 24-6 1935 4 1935 4 36-3 72 1938 4 1938 4 55-4 105 1947 4 1947 4 128-7-115 1948 4 1948 4 128-2 114 Transport and Communication — Radio-receiving licences (000) .. 19363 192-3 1939 3 317-5 1948 3 421-0 1949 3 432-1 Railways — Passenger journeys Net ton-miles run Million.. Million.. 1933 1933 18-4 363-4 1936 1936 20-4 443-6 1939 1939 23-3 574-5 1948 1948 25-9 937-4 1949 1949 26-2 970-8 Motor-vehicles licensed (000) .. 1933 3 195-0 1936 3 228-2 1939 3 307-9 1948 3 360-9 1949 3 387-0 Finance — Net national income at factor cost Salary and wage payments (included above) £(m.) .. £(m.) .. 6 6 6 6 6 6 6 6 1939 1939 194-1 111-1 1948 1948 411-2 210-6 1949 1949 419-0 5 226-0 6

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xvii

_* CO CM I> i> X -H - CO © • © X 0-5 co -Hj< -5+1 rH i—1 os ir: lO CO © lCD CM © lO CO X "* 1 OS IQ o t^ X I^ t- ->* -V CO I- © H CO «* CM CM CO CM CM CM CO i -+ © CO X CM X 05 H rCO CO CO -f — ■^i ■^ -!■ X OS OS OS OS OS OS OS OS © OS OS OS © © X X X X X X -* -<* "tf "+< -# -* ■* -* T* ■* -*tH -* -+ -+ -+ -* ■* - ">* TjH OS © OS OS OS OS OS OS OS OS OS OS © OS OS OS © OS OS t> CO -f OS. ©5s ' H X PH © -* io OS CM - CM Ol »o O] © T* CM 0 CD i—1 CO CM lO o ICT -K © CO )~ OS CD —*H -+ X r-i CO CO co oi -* rH CM i— O! ICt -n m X CM -H O r-l -H r*. CO CO CO -r -r -r -# ** CO X 00 X X X X X X X XXX X X o c~ t- ■* OS OS CO —H © -H CO -H l> CO OS o © tco X © © X © OS © © X CO © CO CO CO t- © Il^ — —1 —1 co CO © CM h CM CO CO © 1—1 OS o • OS OS • rCO CO rn -r ■* ■^ -11 -11 © 32 OS OS OS OS OS OS OS OS OS OS OS X X X X X X CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO CO • OS OS OS OS OS OS OS OS OS OS OS © OS OS OS OS © © OS • CO l^ i—1 X CO —i CD OS X CM CD CD 1C >o CM -J CM CO CO tH lO CM CO i—1 CD t- «5 CI X CO CM lO t> CO tH CM lO © 1 —1 CO © CO CO • X X ■ " tCO CO «* ■* ■* -41 -41 CO CO CO CD CO CD CO © co © © CD © >o IC to lO lO Id CO © O «# X © © t~ lO QOHCO CO X rH rH © lO © CM lO © MKC CO co CO CM X CM lO lO r-i T* X X CO OS • l> . CO CO ■* -11 s# -4i -41 CM CO Ol CO CO CO CO CO -■# CO CM 1C (M CM CO CO CO CO CO a, OS CO CO CO CO CO CO CO CO CO CO CO co co • OS OS Oi Oi OS OS OS OS OS OS © © OS © os os • o o o o o V A 'A AAA X X M M M CD !D a a a. a a a a a a ■ a a a a a a T3^-S « c+* «rt erf crt <-rt crt «rt crt c+! « erf c+i c+i r-1 M >—11 —11 —1 a g > 4? 1 13 03 o -p o • S a o CD > O CD CO H i 1 C!3 S et bank-note circulation et overseas funds of banks (New Z business only and in New Z • S • o • s • o O a S3 CD -o © — Finance —continued ' Trading bank deposits (exclud ment} o M CD CO CD 1 In cS rO co V c8 CO IT* CD I s ! go 8 Ph O CD m & 'to O o •+= I a rustee Savings-banks — ■ New deposits Amount to credit of deposi a o o O CO .a > •8 2 ortgages registered . . ortgages discharged . . ind transfer transactions > ■*= o -p .& CD O £ M cS -P CD CO "JeSS CO -p p. CD a CD t> Ph o te . N "3 CD >-H a A ©s ©^ 5o 1-1 © CD Pn rt •2 £ oS Ph 8 IS o3 co "S3 00 § © © II CO 7 OS © OS %> u o Ph 5 s © © II © CO CO CM OS <c 'ce CO CO CD _o 'S Ph CD a H 3 +2 'efl on) — Food groups (1926-30 = 10 All groups (1926-30 = 1000 'artime prices index (15th 1942 = 1000) AA Ph H & SSrH S H §Ph 5 H M &

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1 Production year— approximately twelve months ended June. 2 Does not include factory processing of primary products. s As at end of March. 4 Calendar year. 6 Based on advance estimates and subject to alteration. 6 Not available. 7 Last week in March. 8 15 th December. 8 Average of production years 1936-37, 1937-38, and 1938-39. 10 In terms of purchasing power on basis of wartime prices index linked to retail prices index series. "Including amount to credit in. War Gratuity Savings-bank Accounts.

Table No. 14— continued IMPROVEMENT IN NEW ZEALAND ECONOMIC CONDITIONS Most Recent Information compared with Earlier Periods

xviii

Depression Low. 1935-36. 1938-39. Recent Figures. Unit. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Year Ended 31st March, Amount. Prices Index Numbers —continued Wage-rates — Nominal: Adult males (1926-30 = 1000) Effective : Adult males (1926-30 = 1000) Index No. Index No. 1933 4 1932 4 833 1031 1935 4 1935 4 858 1025 1938 4 1938 4 1081 1137 1947 4 1947 4 1489 1269 10 1948 4 1948 4 1587 1272 10 Share pricesIndustrial (1938 = 1000) Finance, &c. (1938 = 1000) All groups (1938 = 1000) Index No. Index No. Index No. 1932 4 1932 4 1932 4 667 852 769 1935 4 1935 4 1935 4 1102 1120 1112 1938 4 1938 4 1938 4 1000 1000 1000 1947 4 1947 4 1947 4 1444 1697 1570 1948 4 1948 4 1948 4 1430 1609 1520

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Table No. 15 COMPARISON OF RETAIL PRICES OF BASIC FOODSTUFFS (In New Zealand Currency)

( ] ) Maximum prices. ( 2 ) Prices exclude Sales Tax. ( 3 )' Not available. ( 4 ) Wing rib. ( 6 ) Leg. ( 6 ) Average price, mid-October, 1948. ( 7 ) New series, prices not always comparable with previous quotations. ( 8 ) In jars. (') Up to 6 lb.

Table No. 16 MARRIED TAXPAYER—DEPENDENT WIFE AND TWO CHILDREN

xix

Item. Unit. New Zealand (Wellington) ( 7 ), June, 1940. Australia (Sydney), April, 1949. South Africa (Cape Town) April, 1949. Great Britain( J ), 12th April, 1949. Canada (Dominion Average). February, 1949. U.S.A.( 2 ) (Average Fifty-six Large Cities), 15 th February, 1949. s. d. s. d. s. d. s. d. s. d. 1 s. d. Bread 21b. 0 5£ 0 6 0 7i 0 0 Hi 1 41 Flour 251b. 4 5$ 5 If 7 4 5 8f 7 8i 11 11 Tea lb. 4 3i 2 2| 5 21 3 4(8) 5 li ( 3 ) Coffee 99 4 8(8) ( 3 ) ' 1 8f ( 3 ) • 3 If 2 7i Sugar y 9 0 6J 0 3i 0 3f 0 5 0 6f 0 6i Milk (fresh) Quart 0 7 0 8f 0 10 0 10 0 10J 1 1 Butter lb. 1 6 1 8f 2 6 1 4 3 7| 3 8J Cheese 99 1 5f i H 1 llf 0 10 3 Of 3 0J Bacon 99 2 0 2 Of 2 8| 2 0 3 7f 3 4f Raisins 99 1 0£ 1 1 i H ( 3 ) 0 11* ( 3 ) Prunes 99 1 0J ( 3 ) 1 8£ 1 0 1 OJ i li Canned peaches .. 30 oz. tin 2 3i 1 3i ( 3 ) ( 3 ) 2 n 1 7* Beef —rib roast .. lb. 0 10i 0 8 0 9 1 8( 4 ) 3 2J 3 Of Mutton—leg 1 2(9) 0 8f 1 1 1 6 ( 3 ) ( 3 ) Pork—loin 99 1 3 1 9J ( 3 ) 1 6(«) 3 Of ( 3 ) ,, —chops » 1 5 1 9J 1 7 ( 3 ) ( 3 ) 3 3£

Fixed Gross Income per Annum. Tax Payment During Financial Year Ended 31st March, 1947 : Residue, Including Universal Family Benefit, £52. Tax Payment During Financial Year Ended 31st March, 1948 : Residue, Including Universal Family Benefit, £52. Tax Payment During Financial Year Ended 31st March, 1949 : Residue, Including Universal Family Benefit, £52. Tax. Residue Tax Residue Tax Residue £ £ £ £ £ £ £ 400 .. 40 412 30 422 30 422 500 .. 64 488 51 10s. 500 10s. 41 511 600 .. 90 562 75 577 65 587 800 .. 146 706 126 726 116 736 1,000 .. 207 845 182 870 172 880 1,500 391 *1,161 353 10s. *1,198 10s. 343 *1,209 2,000 .. 613 *1,439 563 *1,489 553 *1,499 Income-tax at basic rate, plus 15 per cent. Combined charge at 2s. Income-tax based on income for year ended 31st March, 1946, and payable in February, 1947. Wife exemption, £100. Child exemption, £50. ♦Maximum rebate in tax, £26. Income-tax at basic rate, plus 15 per cent. Combined charge, Is. 6d. Income-tax based on income for year ended 31st March, 1947, and payable in February, 1948. Wife exemption, £100. Child exemption, £50. ♦Maximum rebate in tax, £26. Income-tax at basic rate, plus 15 per cent, less £10 rebate. Combined charge, Is. 6d. Income-tax based on income for year ended 31st March, 1948, and payable in February, 1949. Wife exemption, £100. Child exemption, £50. •Maximum rebate in tax for wife exemption, £26.

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Table No. 17 INVESTMENTS IN NATIONAL SAVINGS NATIONAL SAVINGS ACCOUNTS

NATIONAL SAVINGS BONDS

(1) Includes Social Security tax payable on purchase. (2) Estimated, approximate figure only. (3) Includes interest payable at maturity.

xx

— Number of Depositors at End of Year. Total Amount of Deposits During Year. Total Amount of Repayments During Year. Excess of Deposits Over Repayments. Interest Credited to Depositors. J Total' Amount to Credit of Depositors at End of Year. £ £ £ £ £ 1940-41 127,034 718,077 460 717,617 717,617 (6 months) 1941-42 291,043 2,476,206 9,447 2,466,759 10,063 3,194,439 1942-43 327,560 2,425,204 25,255 2,399,949 71,675 5,666,063 1943—44 411,445 7,257,536 63,816 7,193,720 150,476 13,010,259 1944-45 454,633 7,267,400 178,444 7,088,956 357,733 20,456,948 1945-46 480,949 7,607,413 1,706,755 5,900,658 559,775 26,917,381 1946-47 499,740 6,175,368 2,306,164 3,869,204 773,260 31,559,845 1947-48 522,460 7,285,423 3,680,450 3,604,973 905,439 36,070,257 1948-49 545,437 7,032,119 3,943,079 3,089,040 1,037,921 40,197,218

— Purchase Value of Bonds Sold. (1) Net Interest Accrued on Bonds Redeemed. (2) Maturity Value of Bonds Redeemed. (3) Purchase Value of Bonds Outstanding. (1) £ £ £ £ 1940-41 (6 months) 611,709 611,709 1941-42 2,786,299 3,398,008 1942-43 1,356,301 4,754,309 1943-44 3,121,859 7,876,168 1944-45 2,609,105 10,485,273 1945-46 1,313,723 65,075 520,596 11,343,4752 1946-47 457,041 261,175 2,089,396 9,972,2952 1947-48 492,697 367,033 2,936,265 7,895,7602 1948-49 434,687 396,234 3,169,870 5,556,8112

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Table No. 18 INDEX NUMBERS OF VOLUME OF GOODS

Table No. 19 BURDEN OF PUBLIC DEBT Interest and Administration Charge as Percentage of National Income

xxi

Base : 1938-39 - (100) Produced in New Zealand. All Goods available for Use in New Zealand. Year ended 30th June, Available for Use in New Zealand. Imported. Total. Exported. Total. Per Head. Total. Per Head. 1929 1933 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 (*) .. 77 83 93 99 100 100 105 113 110 109 107 113 111 116 120 74 96 105 104 102 100 106 111 109 116 132 155 110 112 113 79 74 86 95 99 100 104 113 110 104 91 83 111 119 125 88 78 88 97 100 100 103 112 109 102 89 80 104 108 110 86 50 81 98 106 100 84 69 58 58 66 63 71 93 125 82 64 84 96 102 100 96 95 88 85 81 75 95 108 125 91 68 86 98 103 100 95 94 88 84 79 72 88 98 111 ( 1 ) Provisional.

£N.Z.(000) Year Ended 31st March, Interest. Administration and Management. Total Burden. Percentage of Net National Income at Factor Cost. London. Australia. New Zealand. Total. 1939 * .. 1944 1946 1947 1948 1949 6,712* 6,574 7,045 4,661 4,657 3,273 48 47 47 47 45 39 4,719 8,992 11,492 12,851 13,123 13,308 11,479 15,613 18,584 17,559 17,825 16,620 56 137 248 208 210 226 11,535 15,750 18,832 17,767 18,035 16,846 6-0 4-9 5-4 4-9 4-4 40 * Exchange has been assessed and added to interest charge.

Table No. 20 PUBLIC DEBT Maturity and Domicile of Debt Outstanding, 31st March, 1949

*ln respect of many of the loans the Government has the option to redeem the securities at an earlier date. For particulars, see 8.-l [Pt. I]. t Excludes debt as under : £ Advances from Imperial Government funded in terms of section Bof Finance Act, 1922 .. 24,100,200 Other debt on which interest has been suspended and principal repayments postponed by agreement with Imperial Government .. .. .. .. .. .. .. .. 2,090,909 £26,191,109

Summary of Departmental Investments £ Investments held by accounts within the Public Account .. .. 29,807,345 National Broadcasting Service .. .. .. .. .. 1,850,000 Marketing .. .. .. .. .. .. .. 31,253,510 Government Life Insurance .. .. .. .. .. 7,019,915 Government Superannuation Board .. .. .. .. 3,912,060 Maori Trustee .. .. .. .. .. .. 676,860 Post Office .. .. .. .. .. .. .. 142,343,650 Post Office : National savings .. .. .. .. 40,800,000 Public Trustee .. .. .. .. .. .. 13,084,180 Reserve Bank .. .. .. .. .. .. 65,045,325 State Advances Corporation .. .. .. .. .. 680,630 State Fire Insurance Office — Accident Branch.. .. .. .. .. .. 717,500 Fire Branch .. .. .. .. ... .. 1,150,600 £338,341,575

xxii

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£(N.Z.) Loans Maturing in Financial Year Ending 31st March.* Due in London Australia. New Zealand. Total Debt (Nominal Amount). Public. Departmental. Overdue Treasury bills Interest free 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1964 1965 1966 1969 1972 £ 7,500,000 1,250,000 7,322,579 12,000,000 6,31.1,679 7,339,656 17,238,187 16,000,000 5,000,000 £• 628,226 £ 3,185 5,000 4,350 16,137,635 4,592,430 11,229,430 9,023,545 6,069,860 18,636,290 29,543,070 21,188,245 10,005,820 7,081,660 18,772,580 23,332,305 11,088,510 9,339,815 £ 54,995,000 981,300 5,459,380 1,203,010 561,905 362,540 982,135 4,203,275 135,803,210 64,175,290 21,357,350 2,291,505 17,000,000 6,081,240 8,681,935 14,202,500 £ 3,185 55,000,000 4,350 24,618,935 1,878,226 10,051,810 12,432,440 16,908,029 6,432,400 31,618,425 33,746,345 156,991,455 74,181,110 28,439,010 27,375,764 17,000,000 36,753,201 19,770,445 40,780,502 16,000,000 5,000,000 Totals 79,962,101t 628,226 196,053,730 338,341,575 614,985,632f

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Table No. 21 LONDON DEBT* Movement in Balance and in Annual Interest Charge (All amounts in sterling currency)

1 Rectification of domicile during 1933 debt conversion operations. 2 Rural advances bonds incorporated in public debt as at 31st March, 1938. 8 Includes £18,000,000 borrowed under the Memorandum of Security, and repayment of loans on Ist January, 1946, and Ist February, 1946, amounting to £12,885,000 and £10,808,800 respectively. 4 Interest savings due to 1946 repayments : Memorandum of Security, £540,000 per annum; other loans, £1,064,000 per annum. 5 £11,221,609 4£-per-cent. loan repaid, making annual interest saving of £504,972 per annum • Conversion of £19,225,465 4£-per-cent. loan to £16,000,000 3-per-cent. 1/9/68 stock; balance repaid, £3,225,465.

xxiii

Year Ended 31st March, Debt. Interest. New Borrowings. Repayments. Net Movement. Balance of Debt. Annual |Movement CornCharge pared with onarge. i Previous Yea r. 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 Total £ io,602 1 101,125! 120,0©0 2 3,183,445 7,598,618 8,284,051 15,436,635 9,386,000 6,784,000 2,830,000 £ 503,200 37,000 2,260,300 1,974,914 4,000 2,173,190 7,090,300 12,900,077 10,917,900 8,552,471 6,609,444 41,392,100 11,341,608 3,225,465 £ - 492,598 + 64,125 - 2,260,300 - 1,974,914 + 120,000 - 4,000 + 1,010,255 + 508,318 - 4,616,026 + 4,518,735 + 833,529 + 174,556 -38,562,100 3 —11,341,608 s - 3,225,465® £ 135,209,594 134,716,996 134,781,121 132,520,821 130,545,907 130,665,907 130,661,907 131,672,162 132,180,480 127,564,454 132,083,189 132,916,718 133,091,274 94,529,174 94,529,174 83,187,566 79,962,101 £ 5,812,327 5,931,417 5,921,037 5,725,115 5,294,088 5,280,144 5,282,869 5,669,801 5,421,338 5,406,264 5,341,556 5,259,028 5,321,255 5,636,409 3,729,085 3,726,096 3,273,064 £ + li9,090 - 10,380 - 195,922 - 431,027 - 13,944 + 2,725 + 386,932 - 248,463 - 15,074 - 64,708 - 82,528 + 62,227 + 315,154 —1,907,324 4 - 2,989 - 453,0325 53,734,476 108,981,969 —55,247,493 -2,539,263 ♦Excludes funded debt arising from 1914-18 war.

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Table No. 22 PUBLIC DEBT STATEMENT SHOWING ALLOCATION OF INCREASES AND DECEEASES OF THE PUBLIC DEBT SINCE IST APEIL, 1936 £ £ £ Debt as at Ist April, 1936 . . .. . . 256,369,989* Increases — Investments — Bank of New Zealand shares .. .. 7,092,505 British Commonwealth Pacific Airlines, Ltd. .. 300,000 British Petroleum Co. of New Zealand, Ltd. .. 1,083,750 Christmas Island Phosphates .. .. 1,375,000 Linen Flax Corporation of New Zealand .. 300,000 New Zealand National Airways Corporation .. 1,225,000 New Zealand Woolpack and Textiles, Ltd. .. 150,000 Tasman Empire Airways, Ltd. .. .. 375,000 11,901,255 Productive — Housing .. . . .. .. .. 49,354,560 Hydro-electric schemes . . .. .. 25,920,974 Land settlement .. .. .. .. 4,759,833 Mining .. . . .. . . .. 4,339,661 Post and Telegraph service .. .. .. 5,330,461 Eailways .. .. . . .. .. 20,518,951 Soil conservation, irrigation, and drainage .. 3,517,092 State forests .. .. .. .. 4,852,669 118,594,201 Indirectly productive— Public buildings .. .. .. .. 7,041,197 Education buildings .. .. .. .. 8,571,525 Eoads and highways .. .. .. 17,817,939 33,430,661 Intangible— War expenses (1939-45) .. .. .. 203,874,694 Eeserve Bank exchange adjustments .. .. 20,000,000 223,874,694 387,800,811 Less Decreases — Investments — Nauru and Ocean Islands .. .. .. 218,871 State Advances Corporation .. .. 6,142,333 6,361,204 Productive — Harbours and lighthouses .. .. .. 534,722 Cash balance Public Works Account .. 681,010 1,215,732 Indirectly Productive — Miscellaneous .. . .. .. 13,247,040 Intangible■ —■ . War Loans (1914r-18) .. .. .. 8,361,192 29,185,168 Total net increase in public debt for thirteen years ended 31st March, 1949 . . . . . . 358,615,643 Debt as at 31st March, 1949 .. .. .. £614,985,632*

* Excludes £26,191,109 debt due to Imperial Government. See B-l, Part I, page 71.

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Table No. 23 Allocation of the Public Debt as at 31st March, 1949, According to the Expenditure Appearing in the Departmental Accounts £ Bank of New Zealand (shares) .. .. .. .. .. 7,967,505 British Commonwealth Pacific Airlines, Ltd. .. .. .. 300,000 Christmas Island phosphates .. .. .. .. .. 1,375,000 British Petroleum Co. of New Zealand, Ltd. .. " .. .. 1,083,750 Education buildings .. .. .. .. .. .. 16,070,336 Eorests (State) .. .. .. .. .. .. 6,790,706 Harbours and lighthouses .. .. .. .. .. 1,667,638 Housing .. .. ... .. .. .. .. 49,747,380 Hydro-electric schemes .. .. .. .. .. 38,080,486 Land settlement and improvement .. .. .. .. 25,435,031 Linen Flax Corporation of New Zealand .. .. .. .. 300,000 Mining .. .. .. .. .. .. .. 5,346,038 Nauru and Ocean Island phosphates .: .. .. .. 192,044 New Zealand National Airways Corporation .. .. .. 1,225,000 New Zealand Woolpack and Textiles, Ltd. .. .. .. 150,000 Post and Telegraph services .. .. .. .. .. 18,816,651 Public buildings .. .. .. .. .. .. 12,956,050 Railways .. .. .. .. .. .. .. 81,466,811 Reserve Bank exchange adjustment .. .. .. .. 20,000,000 Roads and highways .. .. .. .. .. .. 45,740,196 Soil conservation, irrigation, and drainage .. .. .. 7,634,560 State Advances Corporation .. .. .. .. .. 31,910,788 Tasman Empire Airways .. .. .. .. .. 375,000 War loans (1914-18) .. .. .. .. .. .. 30,483,435 War expenses (1939-45) .. .. .. .. .. 203,874,694 Miscellaneous assets and services .. .. .. .. 4,774,892 Cash and investments in hand .. .. .. .. .. 1,221,641 £614,985,632*

* Excludes £26,191,109 debt due to the Imperial Government; see B-l, Part I, page 71

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Copy of Prospectus of Internal Loan NEW ZEALAND GOVERNMENT LOAN Issue at par of 3-per-cent. Stock Maturing 15th May, 1964-66, and 2£-per-cent. Stock Maturing 15th May, 1955-56 Interest payable 15th. May and 15th. November Authorized to be raised in accordance with the provisions of the New Zealand Loans Act, 1932, whereby the interest and principal are a direct charge upon the public revenues of the Dominion Trustees may invest in this Loan under the powers of the Trustee Act, 1908, unless expressly forbidden by the instrument (if any) creating the Trust The Reserve Bank of New Zealand gives notice that, on behalf of the Minister of Finance, it is authorized to receive applications for the issue of stock in terms of this Prospectus. The proceeds of this issue will be used partly for repaying existing loans and partly for National Development purposes. 1. Applications. —Applications, which must be accompanied by a cheque for the full issue price of the stock, may be lodged at the Reserve Bank of New Zealand, Wellington, at any Branch of any bank in New Zealand, including trustee savings-banks, at the District Treasury Offices at Auckland, Christchurch,or Dunedin, or at any postal money-order office in New Zealand. All cheques should be drawn in favour of the Reserve Bank of New Zealand, Wellington. Applications must be for a multiple of £lO, with a minimum of £5O. 2. Securities. —New Zealand Government Stock will be issued in either of the following forms, as may be directed by the applicant in the form of application : (a) Ordinary Stock transferable by Memorandum of Transfer without payment of any fee and free of stamp duty unless the transfer is by way of gift. (b) Death Duty Stock, which in terms of section 40 of the N.Z. Loans Act, 1932, may be tendered at par by the executor or administrator of a deceased stockholder in payment of Death Duties in the estate of the deceased Stockholder. Death Duty Stock is not transferable as such but may be exchanged for Ordinary Stock. 3. Registration.—The Register of Stock will be kept at the Reserve Bank of New Zealand, Wellington, where transfers will be registered free of charge. Any minor of the age of ten years or upwards is entitled to be registered as the holder of Stock and to execute transfers thereof. Ordinary Stock and Death Duty Stock will be registered in the name of the applicant, and Registration Certificates will be issued as soon as registration has been effected. If a Certificate of Title is required, application should be made on the prescribed form. 4. Interest.—lnterest will be paid half-yearly on the 15th May and 15th November in each year, and the first payment, representing interest from the date of the lodgment of the application moneys up to the 15th May, 1949, will be made on that date. The first payment will in every case be made to the original subscriber and will be paid by means of warrants forwarded by post from the Reserve Bank of New Zealand. Subsequent payments will be made by means of interest warrants forwarded to the stockholder as at the due date of payment. The Reserve Bank of New "Zealand, however, will accept directions from stockholders for payment of interest to any agent in the Dominion, and existing instructions for the payment of interest will apply to stock issued in terms of this Prospectus.

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5. Repayment.—The Minister of Finance reserves the right to repay the 3 per cent. 1964-66 Loan at par at any time during the period 15th May, 1964, to the 15th May, 1966, and the 1955-56 Loan at par at any time daring the period 15th May, 1955, to the 15th May, 1956, on giving at least three months' notice in the New Zealand Gazette of his intention to repay. If not previously redeemed, the 3-per-cent. 1964-66 Loan will be repaid at par at the Reserve Bank of New Zealand on the 15th May, 1966, and the 1955-56 Loan will be repaid at par at the Reserve Bank of New Zealand on the 15th May, 1956. 6. Exchange on Remittances.—Cheques in payment of amounts subscribed to this Loan will be accepted free of inland Exchange. 7. Commission.—Commission at the rate of ss. per £lOO of Stock issued will be allowed to Bankers and registered Sharebrokers. Copies of this Prospectus and forms of application may be obtained at the Reserve Bank of New Zealand, Wellington ; at any branch of any bank in New Zealand, including trustee savings-banks ; at the District Treasury Offices at Auckland, Christchurch, or Dunedin; at any postal money-order office in New Zealand ; or from a member of any Stock Exchange in the Dominion. The list of applications will be opened forthwith and may be closed at any time determined by the Minister of Finance. Reserve Bank of New Zealand, Wellington, 20th April, 1949. Copy of Prospectus of London Loan Consent of His Majesty's Treasury has been obtained to this issue in compliance with the Order made under Section 1 of the Borrowing (Control and Guarantees) Act, 1946. NEW ZEALAND GOVERNMENT 3 PER CENT. STOCK, 1973-1977 Interest will be payable half-yearly on the Ist June and the Ist December. The first payment, at the rate of ss. per £lOO Stock, will be made on the Ist June, 1949, in respect of Stock issued for cash. Issue of £7,000,000 Stock Under the New Zealand Loans Act, 1932 Price of issue £lOO per Cent, payable as follows : On application .. .. .. .. .. £lO per Cent. On Thursday, the 10th March, 1949 .. .. £2O per Cent. On Friday, the 27th May, 1949 .. .. .. £7O per Cent. £lOO per Cent. The Government of New Zealand have observed the conditions prescribed under the Colonial StocJc Act, 1900, as notified in the London Gazette of the 14th December, 1900, and the Stock is, therefore, an investment authorized under the Trustee Act, 1925, and the Trusts (Scotland) Act, 1921. The Governor and Company of 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 such amount of the above Stock as is not required for issue in exchange for holdings of New Zealand Government 3£ per Cent. Inscribed Stock, 1949-1954, in accordance with the offer contained herein.

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Under the provisions of the New Zealand Loans Act, 1932, the principal of and interest on the Stock are charged upon the Public Revenues of 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. 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 not directly or indirectly liable or responsible for the payment of the Stock or of the interest thereon, or for any matter relating thereto. The following information is furnished by the High Commissioner for New Zealand : Under the provisions of the New Zealand Loans Amendment Act, 1947, which replaced the Repayment of the Public Debt Act, 1925, resources are made available, under the control of the Public Debt Commission constituted under the Act, for the purchase of New Zealand Government Securities on the open market for cancellation or to pay them off at maturity, thereby providing the Commission with the means of effecting an annual repayment of Public Debt. The Act provides for the annual appropriation to Loans Redemption Account of a sum equal to one half per of the Public Debt coming within the Act and outstanding at the end of the previous financial year, together with a further sum equal to four per Cent, of the debt repaid or redeemed under the 1925 and 1947 Acts before the same date. Since September, 1939, the Dominion has repaid under the provisions of the 1925 and 1947 Acts, and from other sources, over £50,000,000 of New Zealand Government Stock issued in the United Kingdom, thus reducing the New Zealand Public Debt in London to £106,200,000. During the corresponding period the value of New Zealand's exports has risen from £46,500,000 per annum to over £120,000,000 per annum. The proceeds of the Stock issued for cash will be applied towards the redemption on the Ist June, 1949, of New Zealand Government 3J per Cent. Inscribed Stock, 1949-1954, which is not exchanged under the terms of this prospectus. The stock, if not previously redeemed, is to be repaid at par at the Bank of England on the Ist June, 1977, but the New Zealand Government reserve to themselves the right to redeem the Stock, in whole or in part, by drawings or otherwise, at par at the Bank of England on, or on any date after, the Ist June, 1973, on three calendar months' previous notice being given by public advertisement in The Times, in which case the Stock to be redeemed will cease to bear interest on the date so fixed for redemption. The Stock will be transferable by deed, in multiples of one penny, free of charge and stamp duty. The Bank of England have been appointed Registrar of the Stock. Interest will be payable half-yearly on the Ist June and the Ist December; the first payment, at the rate of ss. per £lOO Stock, will be made on the Ist June, 1949, in respect of Stock issued for cash. The interest due on the Ist June, 1949, will be paid (less Income Tax) by coupon if the relative Scrip Certificate to Bearer has not been registered on or before the 2nd May, 1949 ; in all other cases interest warrants will be transmitted by post and Income Tax will be deducted from payments of more than £5 per annum. If allotments of the Stock in respect of cash applications and applications for exchange of New Zealand Government 3£ per cent. Inscribed Stock, 1949-1954, do not reach the total of £7,000,000 Stock, the balance of the Stock will be issued for cash to the Reserve Bank of New Zealand on the terms of this prospectus.

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Issue of Stock for Cash Applications, which must be accompanied by a deposit of £lO per Cent., will be received at the Bank of England, Loans Office, London, E.G. 2. In the 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 any instalment by its due date will render the deposit and any instalment previously paid liable to forfeiture and the allotment to cancellation. Instalments may be paid in full at any time after allotment but no discount will be •allowed on such payments. Applications must be for £lOO Stock or a multiple thereof; no allotment will be made for a less amount than £lOO Stock. Allotment Letters will not be posted before the 28th February, 1949. Scrip Certificates to Bearer, in denominations of £lOO, £5OO, £l,OOO and £5,000, with coupons attached for the interest due on the Ist June, 1949, will be issued in exchange for Allotment Letters. Scrip Certificates must be surrendered for registration at the time when the final instalment is paid ; in the case of registrations effected on or before the 2nd May, 1949, the coupon for the interest due on the Ist June, 1949, must also be surrendered. The first interest payment in respect of Stock issued for cash will be at the rate of -ss. per £lOO Stock and will be made on the Ist June, 1949. The List of Cash Applications will be opened and closed on Friday, the 18th February, 1949. .Issue of Stock in Exchange for New Zealand, Government S\ per Cent. Inscribed Stock, 1949-1954 Holders of the above Stock, which will be redeemed at par on the Ist June, 1949, are invited to apply to exchange their holdings, in whole or in part, for New Zealand •Government 3 per Cent. Stock, 1973-1977, on the terms set forth in this prospectus. Holdings of New Zealand Government 3| per Cent. Inscribed Stock, 1949-1954, in respect of which applications are accepted will be exchanged, as on the Ist June, 1949, into New Zealand Government 3 per Cent. Stock, 1973-1977, at the rate of £lOO of such -Stock for each £lOO Stock surrendered. Holdings of New Zealand Government 3|- per Cent. Inscribed Stock, 1949-1954, in respect of which applications are accepted will be known until the close of business on the 31st May, 1949, as New Zealand Government 3£ per Cent. Inscribed Stock, 1949-1954, " Assented ". Interest at the rate of £1 3s. 4d. per £lOO " Assented " Stock will be paid ■on the Ist June, 1949, to the persons who are registered as holders of " Assented " Stock at the close of businesss on the 2nd May, 1949. The first interest payment in respect of Stock issued in exchange for New Zealand Government 3£ per Cent. Inscribed Stock, 1949-1954, will be a full six months' interest and will be made on the Ist December, 1949. The total of New Zealand Government 3J per Cent. Inscribed Stock, 1949-1954, •outstanding is £7,322,579. This offer of exchange is limited to a total amount of £7,000,000 3J per Cent. Stock and the list will remain open until applications in respect ■of this amount of Stock have been accepted, provided however that applications will not be received after the 28th February, 1949. Applications for exchange must be made on the special printed forms which have been sent by post to all registered holders of 3|- per Cent. Inscribed Stock, 1949-1954 '(in the case of joint accounts to the first-named holder or to the first-named holder whose registered address is in the United Kingdom). Applications in respect of Stock ■Certificates to Bearer must be lodged at the Chief Accountant's Office, Bank of England,

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London, E.C. 2, and must be accompanied by the relative Stock Certificates bearing the coupons dated the Ist August, 1949, and subsequently; the interest due on the Ist June, 1949, will be paid by warrants transmitted by post. A Commission of ss. per £lOO will be paid to Bankers or Stockbrokers on allotments made in respect of applications bearing their stamp, viz : On cash applications .. ss. per £lOO nominal of New Zealand Government 3 per Cent. Stock, 19731977, allotted. On applications for exchange .. ss. per £lOO nominal of New Zealand Government per Cent. Inscribed Stock, 1949-1954, for which applications are accepted. Prospectuses and forms may be obtained at the Bank of England, Loans Office, London, E.C. 2, or at any of the Branches of the Bank of England ; at the Office of the High Commissioner for New Zealand, 415, Strand, London, W.C. 2 ; at the Bank of New Zealand (the bankers in London to the Government of New Zealand), 1, Queen Victoria Street, London, E.C. 4 ; from Messrs. Mullens & Co., 13, George Street, London, E.C. 4 ; from Messrs. J. &A. Scrimgeour, 3, Lothbury, London, E.C. 2 ; or at any Stock Exchange in the United Kingdom. A copy of the authorizing Act may be inspected at the Bank of England, Loans Office, during business hours until the 4th March, 1949. Bank of England, 15th February, 1949. Copy of Prospectus of Internal Conversion Loan NEW ZEALAND GOVERNMENT CONVERSION LOANS Interest payable 15th June and 15th December Issue of 3-per-cent. Stock at Par Repayable 15th June, 1961/64, and Stock at Par Repayable 15th June, 1954/55 In conversion of Stock Maturing 15th June, 1949 Stock Maturing 15th February, 1949/50 4-per-cent. Stock Maturing 15th May, 1949/52 Authorized to be raised in accordance with the provisions of the New Zealand Loans Act, 1932, whereby the interest and principal are a direct charge upon the public revenues of the Dominion Trustees are authorized by the Trustee Act, 1908, to invest in New Zealand Government stocks unless expressly forbidden by the instrument (if any) creating the trust. The Reserve Bank of New Zealand gives notice on behalf of the Minister of Finance that New Zealand Government securities will be repaid as indicated hereunder Securities to be repaid at maturity— stock maturing 15th June, 1949. Securities to be repaid before maturity— Notice has been given in the New Zealand Gazette of intention to repay the New Zealand Government securities described below on the 15th June, 1949 : Description of Securities — stock maturing on 15th February, 1949/50. 4-per-cent. stock maturing on 15th May, 1949/52.

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Interest on Securities Being Repaid.—lnterest on the securities to be repaid will be calculated up to and paid on the date fixed for repayment, after which interest will cease. Interest payable for any period being less than a full half-year will be calculated on a daily basis and paid by warrants which will be transmitted by post. Offer of Conversion.—The Reserve Bank of New Zealand gives notice that on behalf of the Minister of Finance it is authorized to receive applications for the issue of stock in conversion of any or all of the above securities. In accordance with the terms of this Prospectus holders of convertible securities are offered conversion as from the 15th June, 1949, into either : (a) 3-per-cent. stock maturing 15th June, 1961/64; or (b) stock maturing 15th June, 1954/55. Interest on the new securities issued in conversion will be paid half-yearly on the 15th June and 15th December, and the first payment will be that for the half-year ending 15th December, 1949, and will be paid on that date. Death Duty StocJc. —Any person who accepts the offer of conversion into either of the new issues may stipulate in the form of application that the whole or any portion of the stock (being a multiple of £5) to be issued to him will be available for payment of death duties in terms of section 40 of the New Zealand Loans Act, 1932. The attention of persons who hold Death Duty stock in the loans to be repaid is directed to the fact that the conditions of availability for payment of death duties will not attach to the securities to be issued in conversion unless the necessary stipulation is made in the form of conversion application. Death Duty stock is not transferable as such from person to person but may be exchanged for ordinary stock which is transferable. Applications. —Holders accepting the offer of conversion must transmit their applications on the prescribed form to the Reserve Bank of New Zealand, Wellington, or ,lodge them with the District Treasury Officer at Auckland, Christchurch, or Dunedin, or with any branch of any trading bank or trustee savings bank or at any postal money-order office in the Dominion, for transmission to the Reserve Bank. Applications for conversion may be for the whole or a part of any holding to which this offer applies, but must be for a multiple of £5 and must be accompanied by any relative documents of title such as certificates of title to stock in cases where such certificates have been issued. In the case of stock certificates maturing 15th June, 1949, the coupon in respect of interest due on that date should be detached before such stock certificates are surrendered for conversion ; in the case of stock certificates maturing 15th February, 1950, and 4-per-cent. stock certificates maturing 15th May, 1952, all coupons in respect of interest due subsequent to the 15th June, 1949, should be surrendered intact with the stock certificates. Securities Not Converted.-—Any registered stock subject to the offer contained in this Prospectus and not converted will be repaid at par on the 15th June, 1949. The non-receipt of an application for conversion by the 14th April, 1949, will be taken to indicate that repayment is required and a warrant will be issued and forwarded by post to the registered address of the stockholder in time for negotiation on the 15th June, 1949. Repayment of stock certificates will be made only on receipt in the Reserve Bank of the actual stock certificates accompanied by an application for repayment. New Securities.—New Zealand Government Stock will be issued in the following forms as applicants may direct — (a) Registered stock transferable by Memorandum of Transfer : (b) Death Duty stock under section 40 of the New Zealand Loans Act, 1932.

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Transfers. —The Register of Stock for both the new issues will be kept at the Reserve Bgfnk of New Zealand, Wellington, where transfers will be registered without payment of any fee. Such stock will be transferable in amounts of £5 or multiples thereof. Certificates of Title.—lf certificates of title evidencing ownership of the stock are required applications should be made on the prescribed form. No fee is payable for the issue of a certificate of title. Repayment.—lf not previously redeemed stock of the 3-per-cent. Loan 1961/64 will be repaid at par at the Reserve Bank of New Zealand on the 15th June, 1964, and stock of the 2|-per-cent. Loan 1954/55 will be repaid at par at the Reserve Bank of New Zealand on the 15th June, 1955, but the Minister of Finance reserves the right to repay at par the 3-per-cent. Loan at any time on or after the 15th June, 1961, and the Loan at any time on or after the 15th June, 1954, on giving at least, three months' notice in the New Zealand Gazette of his intention to repay. Interest on New Securities.—lnterest on registered stock of the new issues will be paid free of inland exchange by means of interest warrants which will be transmitted by post at the risk of the stockholder. Existing instructions for the payment of interest in the Dominion will apply in respect of the new issues. Closing of Registers.—The Registers will be closed for all transactions on the 14th April, 1949. The final payment of interest, and the repayment of principal or conversion as the case may be, will be made on the 15th of June, 1949, to the persons who on the 14th of April, 1949, are registered as owners of the respective stocks. Commission.—Commission at the rate of five shillings per £lOO nominal value of convertible securities will be allowed to bankers and registered sharebrokers in respect of conversion acceptances bearing their stamp. Copies of this Prospectus and forms of application may be obtained at the Reserve Bank of New Zealand, Wellington ; or at the District Treasury Offices at Auckland,. Christchurch, or Dunedin. The lists for the loans will be opened forthwith, and will be closed on the evening of the 14th April, 1949. The Reserve Bank, however, is authorized to accept applications, after the closing date specified in any case where, in the opinion of the Bank, application prior to such date was impracticable. Reserve Bank of New Zealand, Wellington, 15th March, 1949.

By Authority: R. E. Owen, Government Printer, Wellington.—l 949.

Price Is. 3d.]

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