8.-1 [PT. ll].

Consolidated Fund—Ordinary Revenue Account — Costs, charges, and expenses of conversion— £ s. d. £ s. d. Premiums paid in cash, treated as costs of conversion .. 23,832 3 5 Mi,scellaneous costs .. .. .. •• 14,654 12 7 _ 38,486 16 0 Less amount received in cash to increase premiums to a multiple of £5 16,319 7 8 Net costs, charges, and expenses of conversion .. .. £22,167 8 4 The total of the premiums allowed on conversion was £498,902 17s. 3d. Of this, £23,832 3s. sd. was paid in cash from the Ordinary Revenue Account and treated as costs of the conversion. Against this latter amount was set off £16,319 7s. Bd. received in cash to bring premiums up to a multiple of £5. This £16,319 7s. Bd. represented additional loan-moneys received, but, instead of being added to the public debt, was applied towards meeting the amount of premiums paid in cash, thus reducing the costs of conversion. The difference between the £23,832 3s. sd. and the £16,319 7s. Bd.—namely, £7,512 15s. 9d. —plus unpresented premium warrants, £135 135., gives £7,648 Bs. 9d., and this amount deducted from the premiums of £498,902 17s. 3d. gives £491,254 Bs. 6d., which was the amount of premiums for which new securities were issued and by which the public debt was increased. The net costs of conversion, amounting to £22,167 Bs. 4d., were not added to the public debt, but were borne by the Ordinary Revenue Account, and the separate loan accounts were correspondingly relieved of this amount of additional liability at the expense of the Consolidated Fund. The departmental accounts and balance-sheets relating to such separate accounts will thus in future show a more favourable position than would be the case if the separate accounts had been charged with the full costs resulting from the conversion of their loans. The New Zealand Debt Conversion Act, 1932-33, applied to all existing bonds, debentures, or stock charged upon the public revenues of New Zealand if domiciled in New Zealand and bearing interest at a rate of over 4 per cent, per annum, and, read together with the Finance Act, 1932-33, required the reduction of interest on all such securities by 20 per cent, (but so as not to bring the rate of interest below 4 per cent, or in the case of securities free of income-tax below 3| per cent.) or by 33| per cent, in the case of " dissented " securities, i.e., securities held by persons who signified their dissent from conversion. Further loans were, however, raised by the Government at the rate of 5 per cent, per annum under the Banks Indemnity (Exchange) Act, 1932-33, and under the Finance Act, 1931 (No. 4), section 7 (2), as amended by the Finance Act, 1932-33 (No. 2). Other securities have also escaped the statutory reduction of interest, through not being issued in the form of " bonds, debentures, or stock," and it is difficult to see why such securities should be exempted from the general reduction which has been made in the rate of interest on Government securities, merely because the security has been issued in a different form, as, for instance, in the form of a Treasury bill. Banks Indemnity (Exchange) Act, 1932-33. The following statement shows in a summarized form the transactions under the above Act up to 30th June, 1934 : —

Statement showing the Result of the Transactions under the Banks Indemnity (Exchange) Act, 1932-33, from the Date of Operation of the Act to the 30th June, 1934.

VIII

m „ , Transactions for Transactions for TaI , . 'iv. Nature of Transaction. 31st March 19S3 Year ended Three Months ended to 30th June 1934 31st March, 1933. 31st March, 1934. 30th June, 1934. to 30tn June, 1934. £ s. d. £ s. d. £ s. d. £ s. d. Amount raised by the issue of Treasury 2,380,337 0 0 29,384,731 15 0 7,067,750 0 0 38,832,818 15 0 bills under section 7 of the Act, for the purchase of surplus exchange on London, and including the payment of exchange thereon Amount provided for purchase of sur- 0 10 0 3,870,203 5 0 2,166,962 10 0 6,037,166 5 0 plus exchange from funds not raised by the issue of Treasury bills under the Act Total amount provided for the 2,380,337 10 0 33,254,935 0 0 9,234,712 10 0 44,869,985 0 0 purchase of surplus exchange =*= ' i — —' — — , — and the payment of exchange thereon (in New Zealand currency) £ s. d. £ s. d. £ s. d. £ s. d. Amount paid to the banks for purchase 1,910,000 0 0 26,684,000 0 0 7,410,000 0 0 36,004,000 0 0 of surplus exchange under section 4 of the Act Exchange paid to the banks on above 470,337 10 0 6,570,935 0 0 1,824,712 10 0 8,865,985 0 0 surplus exchange under section 6 of the Act Total amount paid for the pur- 2,380,337 10 0 33,254,935 0 0 9,234,712 10 0 44,869,985 0 0 chase of surplus exchange and the payment of exchange thereon Amount of discount on Treasury bills 18,111 17 0 620,290 15 2 236,096 2 4 874,498 14 6 issued under the Act : — : Total expenditure incurred 2,398,449 7 0 33,875,225 15 2 9,470,808 12 4 45,744,483 14 6 under the Act (in New Zea- —■ —.—===—a . —i . . ■- land currency)