8.—6

To sum up the position that faced the country, the effect of the economic crisis on the public finances is now found to be fsuch jthat when this financial year opened the Government, as the executive head of the Dominion, had to grapple with the stupendous task of providing, in one way or another, for a prospective deficit of no less than £6,850,000, made up as follows:— Shrinkage of revenue — £ £ Customs .. .. .. .. 2,030,000 Land and income tax . . .. .. 600,000 Stamp and death duties .. .. .. 690,000 Beer duty .. .. .. .. 115,000 Railway interest. . .. .. .. 930,000 Interest on Public Debt Redemption Fund .. 165,000 Other items (net) .. .. .. 280,000 4,810,000 Expenditure increases—■ Unemployment subsidies .. .. .. 1,100,000 Debt services .. .. .. .. 350,000 Pensions .. .. .. .. 200,000 Subsidies to local authorities, &c. .. .. 125,000 Education .. .. .. .. 100,000 General election .. .. .. .. 75,000 Decrease in credits to votes .. .. 130,000 Other items (net) .. .. .. 250,000 2,330,000 Less adjustment (equivalent to underexpenditure for 1930-31) .. .. 290,000 2,040,000 £6,850,000 REMEDIAL MEASURES. This was the total amount that had to be provided for, but as honourable members are aware, a great deal has already been accomplished towards bridging the gap. In accordance with the provisions of the Finance Act, 1931, the salaries and allowances of Cabinet Ministers, members of Parliament, and the whole Public Service have been reduced by 10 per cent., while corresponding reductions have been made in the wages of all temporary men, whether employed by the day or by the hour or otherwise. Provision was also made for the reduction of various grants and subsidies that are or could be used for the payment of wages and salaries. These reductions relieve the expenditure of the Consolidated Fund to the extent of £1,390,000. Apart from salaries, the work of the Economy Committee has enabled substantial reductions to be made in the expenditure. From its nature, the expenditure under Permanent Appropriations does not offer a great deal of scope for reductions. Of the £17,000,000 expended last year, £15,650,000 was for debt charges, pensions, and transfers of motor-taxation. In the ordinary course, relief from debt charges can come only from conversions at lower rates of interest and repayments of debt, but some unexpected assistance will be obtained this year, and also next year, as a result of the proposals of President Hoover, of the United States of America, for one year's suspension of payments on account of reparations and inter-Governmental war debts. This proposal only directly affected New Zealand through the cessation of reparation payments. It will remembered that this year it was intended to apply reparationmoneys as a credit in reduction of the amount to be provided under the Repayment of the Public Debt Act, 1925, and about £85,000 has already been received during this financial year. The British Government, however, with characteristic generosity, in spite of its own great financial difficulties, extended President Hoover's proposal to cover the war debts owed to Great Britain by the Dominions. The offer was gratefully accepted by the Government. The war debt in question is included

Summary.

Remedial measures.

Reduction in salaries, &e.

War-debts postponement,

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