8.—3.

39. We append to this report (Table VIII) a detailed statement of the Budget position for recent years, with preliminary estimates for the current year and next year. It is necessary here only to summarize the information. The revenue position is as follows :—

The Decline in Revenue.

Public Revenues (Preliminary Estimates).

The decline in revenue from 1929-30 to 1932-33, despite increased taxation, is thus estimated at approximately 30 per cent. This is not surprising. We have estimated a fall in the national income at the present time of 27 per cent., and during the process of readjustment to lower prices this fall will go on. As some taxation —for example, Customs revenue and income-tax —falls in greater proportion than the fall in national income, it is only to be expected that the revenue should suffer heavily. 40. On the expenditure side of the Budget the position, based on current operations, is as follows :—

Expenditure.

Public Expenditure (Preliminary Estimates).

41. In the expenditure for other permanent appropriations increasing provision has been made for unemployment subsidies. On the basis of present legislation these are estimated to amount to £1-45 m. in 1932-33. They are a charge on the Consolidated Fund, and must therefore be provided from the public revenues. But this is not the only expenditure on unemployment. The contribution from the Consolidated Fund is a pound-for-pound subsidy upon the expenditure of the Unemployment Board. Apart from this subsidy, the revenue of the Board is derived from special taxation, which is estimated to amount to £1-45 m. in 1932-33. Strictly speaking, therefore, both revenue and expenditure of the Budget should be increased by this amount. Hence the position in ] 932-33 is estimated to be as follows : — £ m. Public expenditure .. .. .. 28-17 Public revenue .. .. .. 18-91 Deficit .. .. .. £9-26 Since 1929-30 a net expansion of expenditure, including a large provision for unemployment and assistance to the farming industry, of approximately 12 per cent., and a reduction of revenue of 30 per cent., have brought about an estimated deficit of £9-26 m. 42. It should be added that this deficit includes the net payment of interest on the war debt after allowance has been made for reparations receipts. Should the Hoover moratorium be extended from the 30th June next a further relief to the extent of £600,000 would be available. Even then, however, the estimated deficit will be £8-66 m. It is clear that drastic action must be taken to deal with this sum and to place the public finances upon a sound basis.

The Deficit.

Hoover Moratorium.

15

(Figures in £ m.) 1<)2q _, n 1931-32 ' 1932-33 • j (estimate). (estimate). Taxation .. .. .. 19-48 15-77 13-58 Interest .. .. .. 4-41 2-76 2-46 Other receipts .. .. 1-46 3-80 1-42 Total revenue .. : 25-35 22-33 17-46 J

(Figures in £ m.) iQ9Q_w 1931-32 1 1932-33 (estimate). | (estimate). Debt charges .. .. .. 10-73 10-57 11-07 Exchange .. .. .. .. 0-37 1-10 Other permanent appropriations .. 6-50 7-46 7-72 Annual votes .. .. .. 7-97 6-83 6-83 Total expenditure .. .. j 25-20 25-23 26-72