B—6

16

RURAL CREDITS. The importance of improving financial conditions for primary producers, and the desirability of acquiring for our guidance the best available information on the subject, led in September last to the appointment of a Royal Commission consisting of Colonel J. J. Esson, C.M.G., Financial Adviser to the Government, Mr. P. H. Cox, an experienced banker, and Mr. W. J. Poison, a practical farmer. The Commission has visited all the most important countries and investigated the conditions governing land mortgage and agricultural banking. I expect the report will shortly be available, and have no doubt the inquiries and findings of the Commission will be of great value in promoting the well-being of the producers and of the country as a whole. Honourable members are aware that the Directors of the Bank of New Zealand have proposed to establish a branch of business on the long-term tablemortgage system to assist in developing and improving the conditions of the primary producers. Until the report of the Royal Commission is in the Government's hands, it is not proposed to take any steps in connection with legislation dealing with agricultural banking and finance. 1926 27, In setting out before honourable members the estimated position in the current year, there are first of all several broad considerations affecting the question of taxation and revenue tbat I will briefly refer to. As I have shown earlier in this Statement, the absorption of direct and indirect taxation by social and educational services shows considerable proportionate increase as compared with pre-war conditions, while the cost of defence is rising rapidly. These items bring before us some outstanding facts directly affecting taxation. It is, of course, always a question for Government consideration, and particularly since the war, what relief can be given to the taxpayer ? Further substantia] relief from taxation cannot be expected so long as the war-debt services have to be borne —an unescapable burden —which, combined with largely increasing social services, retard any movement in the direction of lessened taxation. In certain quarters there will no doubt be some criticism of the fact that I have not seen my way to recommend any reductions in taxation this year, but I am strongly of opinion that, the uncertain outlook in trade and finance calls for the utmost caution. Moreover, the various legislative proposals of the Government to be given effect to this year will impose considerably heavier charges on the Consolidated Fund, and this consideration applies particularly to the proposed scheme for assistance to large families. Indeed, it is possible that it may become necessary to raise additional money, but I am hopeful that the revenue will remain sufficiently buoyant to avoid this. Furthermore, I do not think it wise to make any changes in the incidence of taxation which may have the effect of yielding a lesser tax revenue this year. At any rate, so far as the proposal taxation of individual shareholders for company taxation is concerned,! think further consideration of this matter must remain in abeyance until the data now being collected is complete. I am also anxious to continue as long as possible the practice of applying surplus revenue to war-debt reduction, and I do no think relief from taxation at the cost of impairing that policy is advisable. I intend to ask for authority to transfer up to £1,000,000 to the Public Works Fund as ways and means permit. ESTIMATED REVENUE. I have given the most thorough consideration to all the expected variations or conditions likely to arise in the next twelve months, and I estimate the total revenue receipts into the Ordinary Revenue Account at £24,266,200. This is based on the present rates of land and income tax and the expected reduction in Customs revenue resulting from trade-balance adjustments. The expanding business of the Post and Telegraph Department will provide increased receipts.

Rural credits.

Long-term mortgages.

Position regarding taxation.

Estimate oi revenue.