8.—6.

The Greymouth Harbour Board debt of £260,000 was guaranteed by the State, but was taken over and became part of the public debt as the result of the passing of the Greymouth Harbour Board Amendment Act, 1935, which provided for a readjustment of the finances of the Board pursuant to an agreement entered into with the Government, whereby the subsidy formerly payable to the Board ceased and the Crown became entitled to the revenue from the special coal rate applicable to coal shipped from the Port of Greymouth. Against the gross increase of £3,836,591 referred to must be set redemptions to the amount of £1,856,710, funds for the purpose being derived from the following sources: — £ Public Debt Repayment Account . . . . . . 1,440,215 Reparations and war credits . . . . • • 3,330 Repayments of capital by other accounts . . . . 413,165 £1,856,710 Of the debt redeemed, £187,900 was held in Australia, £1,261,615 in London, and £407,195 in New Zealand. As already indicated, the net effect of the year's operations was an increase in the debt of £1,979,881, bringing the debt as at 31st March, 1936, to £282,561,098. There were, however, other movements in the debt which are worthy of note. The debt held in London decreased by £2,260,300, and in Australia by £590,900. This means that the external debt of the Dominion to be provided for out of our exports has fallen by £2,851,200. The debt domiciled in New Zealand increased by £4,831,081, but behind this is a decrease of £2,995,770 in the debt held by the public, and an increase of £7,826,851 in the debt held by Government Departments. These movements represent a considerable improvement in the debt position as a whole. Any particular reduction in the debt held abroad represents a lightening of the debt burden upon the Dominion. While it involves a redistribution of income, the debt held internally involves no net burden on the Dominion as a whole, but the charges on the debt held abroad mean so much less available for the purchase of goods for consumption in New Zealand. I may add that it is the Government's policy not only to refrain from further borrowing abroad apart from conversion operations designed to lighten the interest burden on the existing debt, but to endeavour to reduce steadily the amount of overseas indebtedness. The position in regard to the domicile of the total public debt of the Dominion as at the 31st March, 1936, is as under: — £ London . . . . ■ • • • • • 158,711,930 Australia .. .. • • • • • • 1,592,650 New Zealand .. .. .. • • • • 122,256,518 Total .. .. • ■ • • £282,561,098 As far as conversion operations are concerned, honourable members are already aware that arrangements have been made for dealing with £5,869,989 of 6-per-eent. stock in respect of which there was a right to repay on or after the Ist August. Notice was given of the Government's intention to on this date, and applications for conversion and cash subscriptions were invited in London for a total of £4,000,000 3-per-cent. stock at an issue price of £98 10s. per cent. Applications received were, for conversion £1,558,000, cash subscriptions £1,238,000, leaving £1,204,000 to be subscribed by the underwriters. The complete success of the issue was unfortunately marred by the reaction from the world affairs at the time, but, allowing for this, the issue was a satisfactory one, and the Dominion was congratulated upon it by leading financial opinion in London. The return to investors over the term of the new loan is £3 2s. Id., while the cost to the Government, after allowing for the redemption of the discount on issue and other expenses, will be £3 4s. lOd. per cent. The balance of the 6-per-cent. stock,

Greymouth Harbour Board debt taken over.

Debt redeemed.

Effect of debt operations.

Domicile of debt.

London Conversion Loan, 1936.

2—B. 6.

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