B. —6.

ESTIMATED EXPENDITURE. On the other side of the picture there is a saving of £620,000 in the cost of debt services, primarily due to two causes : firstly, to the fact that this year we obtain the full benefit from the public debt conversion operations ; and, secondly, to a saving in interest on Treasury bills. - As honourable members are aware, all bills issued for the purposes of the Banks Indemnity (Exchange) Act are now being paid off. The estimates of the cost of exchange on London for normal requirements show a decrease in comparison with last year's expenditure of £492,000. The amount of sterling required this year is somewhat less, but to the extent of £330,000 the saving is due to a recovery of past expenditure arising out of the sale to the Reserve Bank of the surplus sterling acquired under the Banks Indemnity (Exchange) Act. It may be explained that the exchange on £1,910,000 purchased in 1932-33 was charged to the Budget of that year, and, as a result, this balance of £330,000 remains after the suspense item has been extinguished. Against these decreases, totalling £1,112,000, have to be set off unavoidable increases in which "a few items are mainly concerned. Firstly, there is an increase of £160,000 in the payments for highways purposes, but this is the counterpart of the somewhat similar increase in the revenue item previously mentioned. Concerning this item, honourable members will recollect that last year legislative provision was made to retain up to £500,000 of these moneys for general use in the Consolidated Fund. It is considered advisable to make a similar provision in respect of the current financial year. In doing so, I am not unmindful of the necessity for maintaining the highways of the Dominion and have gone into the matter very carefully. As I have indicated earlier in this Statement, the provision being made for maintenance work this year is £255,000 greater than was expended last year, while for construction work on bridges, sealing, and surface improvements an additional £318,000 is being provided. The total increase for highways is thus £573,000, representing about 70 per cent, increase over last year's expenditure. An increase of £54,000 shown for "other special Acts" is mostly due to a larger amount of national-endowment receipts being available for the purposes of education and pensions, in consequence of which the net expenditure out of the votes is not as large as it otherwise would have been. Under the annual votes, the estimates for this year are £300,000 greater than the expenditure for last year. This increase is accounted for by an additional provision of £260.000 being made for Defence, chiefly for more up-to-date coast defences and aircraft, and £56,000 additional required for Naval defence. There is also a normal increase of £100,000 in pensions, but this, as well as various smaller increases under other votes, is offset by a reduction under Vote " Agriculture " of £195,000 due to smaller subsidies to manufacturers of fertilizers and the abolition of the special rebates on railway freights on those farm-products for which better prices are now obtained. The expenditure figures just referred to are included in the main estimates, which will shortly be in the hands of honourable members. Extended consideration has been given to the problem of the Government Superannuation Funds, which, as honourable members know, show a very substantial actuarial deficit. The Bill introduced during last session of Parliament provided for a revision of retiring-allowances and of conditions of retirement, and also for an increase in Government subsidies. The intention of these was to bring the Funds into an actuarially sound condition and thus to give an added and visible assurance of the payment in full of all benefits that may in future become payable. There has, however, been a marked reluctance on the part of contributors and annuitants to agree to the suggested changes. This reluctance the Government shares, and it is most anxious to avoid anything in the shape of interference with the superannuation rights of Government employees or retired employees. The aim is, therefore, to make some arrangement that will both preserve these rights and avoid the present difficulties in respect to the funds. There are two methods by which the payment of superannuation allowances to State employees on their retirement can be assured: either the building up of an adequate capital fund, or the acceptance by the State of responsibility for the allowances. In New Zealand the intention at the commencement of the superannuation schemes was that both methods should be used; but experience has

Debt services.

Exchange.

Highways revenue.

Annual Appropriations.

Superannuation Funds.

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