DOMINION FINANCES.

Gisborne Times, Volume XXVI, Issue 2344, 10 November 1908, Page 2

DOMINION FINANCES.

REVENUE AND EXPENDITURE FOR THE QUARTER.

THE PREMIER AND DR. FIND LAY IN EXPLANATION.

[SrrciAi, to “Times.”]

WELLINGTON, Nov. 9

For tho 'first time in 'many years tlie revenue for the quarter ended on September 30th last does not equal the expenditure. The figures are published in last night’s ‘‘Gazette” and are analysed by this morning’s “Dominion” as follows : —The quarter opened with a balance o>f £422,802 and ended with a balance of £396,181. The revenue amounted to £2,038.521 and the expenditure to £2,065,239. The expenditure exceeded the revenue by £26,718. This sum, £26,718, is the difference between the initial and final balance. For many years an item “Treasury bill's outstanding, £70,000” appeared in the balance sheet. Some of these were paid off in the last year or so, with the result that at the beginning of the quarter the outstanding treasury bills amounted to only £400,000. The paying off process has ended. During the quarter £200,000 of fresh bills were issued. The following table exhibits the operations for the quarter: Initial balance £422.902; revenue and recoveries, £2,038,521; total £2,461,423. Expenditure £2,065,239. Final’, balance £396,184. ‘Loss for the quarter, £26,718. In the September quarter of 1907 the revenue so exceeded the expenditure that it was possible to transfer £IOO,OOO to the Public Works Fund and yet-to end the quarter with a final balance more than £330,000 larger than the initial balance.

AN INSTRUCTIVE COMPARISON. The following comparative table is instructive: Revenue, 1907, £2,045,079; 190 S, £2,038,521. Expenditure, 1907, £1,609,791; 1908, £2,065,239. The revenue, that is to say, has fallen off by £6,558 and the expenditure has increased by £455,448. The expenditure has at last overtaken the revenue. The details of this unprecedented happening are of interest. The following are details of revenue : —Customs, for September quarter 1907, £860,769; 1908, £BOI,634; stamps £330,305 and £368,594; Postal £11,177 and £19155; Laud Tax £1334 and £10,168; Income Tax £4,01S and £4,322; Beer Duty £24,335 and £25,165; Railway £617,036 and £632,338; Registration Fees, etc. £36,244 and £25,180; Marine £6952 and £10,617; Miscellaneous £69,526 and £54,067. Total ordinary revenue, £1,964,426 and £1,971,290; Territorial Revenue £79,552 and £66,432; Recoveries £BOI and £799. Totalsj £2,045,079 and £2,038,521. It will be seen that there has been altogether a falling off of £6,558 in the revenue.

ENORMOUS GROWTH OF EXPENDITURE.

The expenditure has, as we have seen, grown enormously. The following are details: Interest and SinkFunds 1907, £195,037; 1908, £254,195. Other permanent appropriations, £241,217 and £283,294. Total permanent apjjrop nations, £436,254 and £537,489. Annual appropriations; Legislative £10,064 and £12,383; Finance £2,070 and £lO,93S ; Postal £175,314 and£226,960; Industries and Commerce £13,988 and £17,534; Old Age Pensions £IOB6 and £2450; Working R ailways £436,446 and £632,257; Public Buildings, etc., £9843 and £19711; Roads £4371 and £5482; Printing £11767 and- £15984; Stamps and Deeds £8761 and £9609; Native Department £9078 and £7170; Justice £37,512 and £39096; Police £38061 and £43,435; Mines £5964 and £8492; Internal Affairs £61924 and £20279; Crown Law Office £1056 and £1042; Defence £31109 and £42010; Customs £ll4OB -and £11,693; Marine Department £16,706 and £22,010; Labor Department £6509 and £9994; Lands Department £41,612 and £58,620; Department of Agriculture £32,836 and £42,364; Valuation £7934 and £8877; Education £198,837 and . £216,061; Health Department '£9,213 and £ll,068; Hospitals £25,058 and £32,989. Totad annual appropriations £1,173,537 -and £1,529,275. • From the 1908 figures must be deducted the sum of £<62, representing expenditure charged to J‘unauthorised” and now transferred. The grand totals of expenditure are thus: 1907 £1,609 - 791; 1908, £2,065,239. From the above table it will be soon that the chief increases causing the abnormal swelling of the expenditure are:— Increase of interest £59,158; Pensions £21,754; Postal Department £51,694; Railways £195,811 and Education £17,224. These account for nearly £350,000 of the increase. The rest is distributed over the various departments. PERTINENT COMMENT.

Commenting upon these figures the “Dominion” says: “We do not for a moment suggest that a country with the great resources -possessed by the Dominion of New Zealand cannot weather the period l of depression which threatens it; .but we do most emphatically assert that the country has reached a stage in its affairs when the empty boasts of Ministers of tiie Crown must give way to deeds, when wasteful extravagance -must be replaced-hy strict economy; when wiCd talk about our abounding prosperity anust give place to a sober recognition that the revenue of tho country has failed to equal the expenditure. It is not a time- for panic; but it is a time for the recognition of the truth about the country’s finance. A HALF-YEARLY COMPARISON.

It is t further pointed out that the fiigures for the halfyear , read , very much better than the figures for the last quarter. The revenue totals- £3,830,439 as against £3,830,195 for the corresponding period of 1907, an increase of only £334. Tho previous halfyear for some time showed ra regular increase of over £300,000. The totals back to 1905 are:—Half-year to September 30: Revenue 1905, £3,179,937; 1900, £3,482,568 j 1907,

•23,830,105; 1908, £3,830,439. The lalf-ycars figures regarding the expendituro for the past three years are: Half-year to September 30 : Exaonditure 1906, £3,387,609; 1907 £3,523,836.; 1908, • £4,002,305. The “New Zealand'Times” deed not make any comment on the figures. It does not even publish the bare facts. The “Post” also makes no comment, but it wired the Premier (who was on he .special train for Auckland) suggesting that lie might like to reply to the comments of the “Dominion.” Judging 'from the Premier’s reply, however, the “Post” could not have sent the “Dominion” article in full, for the Premier’s reply, sent from Taumaranui, does not deal with the ■main point raised, but deals almost entirely with the question of tlio issue of treasury bills, a point that the “Dominion” did not mention at all in its leading article, and only incidentally referred to in its summary of the figures.

THE PREMIER’S REPLY. The 'following is the Prime Minister’s reply in full:—“In reply to your wire the prediction of the “Dominion” that there is a check, is, in my opinion, absolutely unwarranted. Our revenue for the seven months ended 30th October is £40,461 higher than it was for the seven months of i’ash year. This result is the strongest answer to the predictions of the “Dominion.” If they refer to tlio issue of £200,000 treasury bills in the last quarters returns, this is in anticipation of revenue and is quite justified from the fact that at the end of November, about a million comes in from land taxes alone, and those treasury bills will he paid off again next month. That course was adopted by -me for the reason that I wanted at present to utilise the ordinary revenue of the country for the various purposes of the Government, without in any waydrawing upon our bankers, so as to let them devote their resources for business purposes, both town land country. The banks have not asked for this, but I have adopted this course in the general interests of the country. The expenditure fis high and this was anticipated by mo in the financial statement. In any case the piecemeal criticism of onr financial position does not, in my judgment, fairly estimate the true position. The “Dominion” has done comparatively nothing else but predicted disaster since its inception and it makes one feel that the wish is father to the thought.—J. G. Ward.”

DR FINDLAY’S EXPLANATION. In addition to the foregoing the Hon. Dr. Findlay has supplied the “Post” with a lengthy (interview. He, however, puts the question more from the point of view of what we would have had in the way of revenue, if we had not agreed to certain remissions, instancing such things as the expected loss in customs and sheep tax and the diversion of pastoral rents from endowment lands from the ordinary account into an endowment account. Dr Findlay then goes on to say: “If you total the anticipated fall in revenue from the remissions of customs revenue the sheep tax and the diversion of pastoral rents, you would have £200,000 as the fall in custom’s revenue, £33,000 from the remission of the tax and at least £25,000 from the diversion I 'havo mentioned of pastoral rents. This would total £248,000, but instead of this fall of £248,000, which was anticipated by the Minister of Finance, I see by 7 the last financial statement by Sir Joseph Ward that there has been a small increase of £337. In other words, had it not been for the remissions and diversion of revenue made to provide a free breakfast table for the people, to relieve our sheep farmers of the sheep tax, and for the other purposes mentioned, we would have had an increase of revenue for the six months ending 30th September 1908 of £343,000. To rnako this clear we would have had £248,000, as shown above, and the increase of £95,000, which has taken place in the following sources of revenue: Customs £61,000; Registration and other fees,. £25,000; Pastoral rents £19,000; total £95,000. This, added to the £248,000, makes £343,000; hence the increase over the corresponding six months would have been the same as in the two previous years and it is idle nonsense to taillc about this country having received a check, and to indulge in alarming forebodings about the financial future of New Zealand. These observations could be still further emphasised by pointing out that the revenue for the last six months of the financial year is always much greater than for the first six months, for it not only includes' the land and incomer tax, but it .also includes the larger revenue which arises from the summer months of the year.” Dr 'Findlay adds that the quarter’s returns are a fallacious guide. He admits, however, that, owing to some financial pressure or stringency which the public have felt, those having amounts due to them by the Government in connection with the works and public services have sent in their accounts more promptly and have obtained payment as early a® possible. This has had the effect of crowding payments into the September quarter referred to much more thickly than in the.previous quarter. For instance, for the previous quarter the expenditure in the departmental annual appropriations amounts to £969,000, white for the September quarter of 1908 thoy amounted to £1,527,000, an increase of £600,000 ; while the. actual public obligations incurred would be about the same,—the 'difference being that payment, has been unusually closely pressed into the September quarter. A striking illustration of this is shown in the Post and Telegraph Department. In the June quarter only £70,000 of expenditure is shown, yliile in the September quarter there is £226,000 shown. Railways show £239,000 in the June quarter, and £632,000 in -the September quarter, the quarterly obligations of these services being about the same in both the Juno and 1 the September quarters concluded.,.

CONTROVERSY ABOUT THE RETURNS.

FURTHER LIGHT ON- THE SUBJECT.

There is quite- a controversy in the local press in regard to the fact that the revenue for tlio quarter in the consolidated account does not equal the expenditure. The facts are undisputed, for all three papers have now published the figures and they agree as to the deductions to be derived from the fact. The two morning newspapers are at variance, while the “Post,” which had recently been the most destructive critic of Government finance, is stitll silent. The matter is of sufficient interest and importance to warrant my sending you a summary of the main contentions. | The “New Zealand-Times” points out that the Premier,., in his Budget speech, showed that there would be a reduction in revenue and an increase in the expenditure for the year, and it summarises bis forecast is follows: Estimated revenue £B,985,000; estimated expenditure £B,662,993 ; excess' of revenue £322,007 ; add balance from last year £767,849; estimated surplus £1,089,856. The “New Zealand Times,” further points out that the Premier, who had the latest details at his finger ends, is ablo to state that the revenue for the seven months ended October 30th is £40,461 higher than it was for the seven months of last year. Taceforc, although tlio returns slu.w a discrepancy of £26,718 on • be past quarters’ operations owing the vrgint demands made upon the treasury'lor several quarters, there is absolute! v no reason to doubt that when the accounts are made up ik the end of the year the expectations of Sir Joseph Ward will not only be fulfilled but largely and gratifymgly exceeded.- In regard to the issue of £200,000 worth of treasury bills, the “Times” says: “It was necessary to anticipate revenue, and the Government, instead of drawing upon its bankers in the ordinary way and thereby restricting their, resources for advances in other directions, to the detriment of the general trading community, issued bills which, -upon maturity, will be met by revenue from taxation falling duo at that period.” THE “DOMINION’S” CRITICISM. The “Dominion,” in further reference to the subject, points out that tho Premier, in his reply, does not challenge tho facts as stated. “If,” it says, “wo were wrong in stating that the expenditure for the. September quarter exceeded the revenue by £26,718, why does ho not say so? If we were wrong in stating that for the September half-year for several years past the increase of revenue has totalled over £300,060, whereas tor the half-year just ended the increase was a little more than £3OO why is he silent on the point ? If wo were wrong in stating-that, on the other hand, tho expenditure for the same period had increased by £478,000, why does not the Prime Minister denounce our inaccuracy h The plain fact is that Sir Joseph Ward cannot question the accuracy of our figures. He knows that we were correct when we stated that the normal rate of increase in the revenue of the country had shown a marked falling away, whereas the rate of increase in the expenditure had grown greater. He knows that the expenditure for the quarter exceeded tho -revenue; he knows, despite his assertions to tho contrary, that a check has occurred in the" upward tendency of things. Ask the bankers, ask the merchants, ask the retailers, ask the farmers. The Prime'Minister can call us names but he cannot cover up the facts. The “Dominion” also quotes the Budget Statement and Sir Joseph Ward’s recent Taumarunui assertion that tho net results of the Budget estimate will be produced, viz., that after setting aside £BOO,OOO for public works and £60,000 extra for the navy, there will bo a balance available of ,£229,556. Against this recent statement, however, the “Dominion” places the estimate given by the Premier himsel'f at Palmerston North on October 19th last as follows: “Revenue £8,985,000, expenditure (including interest on new loans) £8,903,346, excess of revenue £Bl,654, add balance on April Ist £767,849 total £849,503.” Of this he proposed to transfer £SOO,OOO to public works, leaving a net surplus of £49,503. The Prime Minister, who has stated that: the not results of his Budget Estimates will be produced has “already” predicted that they will not be “produced.” It is further pointed out that in liis Palmerston speech also, tho Prime Minister said ‘-‘Our opponents, in their effort to adversely criticise the Government, overlook the fact that I have jpaid out of revenue £300,000 of tho boating debt of £700,000 of treasuary bills whereas tho balance-sheet in the “Gazette” of Thursday shows that the quarter which opened with £400,000 of treasury bills afloat, closed with £600,000 of treasury bills afloat.”