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It is proposed to transfer this surplus of £809,000 to the Social Security Fund, and the necessary legislation to give effect to this will be introduced later during the session. This transfer will reduce the amount of subsidy otherwise payable to the Fund for the current financial year. Included in the expenditure (" Annual Appropriations : Other Services ") is a transfer of £272,000 to the Dairy Industry Account to cancel the indebtedness in the account resulting from the deficit in the guaranteed price for dairy-produce during the 1936-37 season. Full details of both revenue and expenditure have already been published and are shown in the Budget tables so I do not now propose to review the results in detail. It is worthy of note, however, that practically every item of taxation other than Customs —and for this item the receipts for 1937-38 were abnormal —showed substantial increases over the previous year. This fact is a clear indication of the greater prosperity of the people generally. PUBLIC DEBT. During the past financial year the provision of funds for expenditure on public works and other capital purposes resulted in a net increase in the public debt of £13,768,930. New issues, which were all made in New Zealand, were made for the following purposes: — £ Public works .. .. .. .. .. 9,622,279 Electric supply .. .. .. .. 180,000 Main highways . . . . . . . . 2,675,600 State coal-mines . . .. . . . . 95,000 State forests . . . . .. . . . . 175,000 Housing . . . . . . . • • • 4,000,000 Raised for redemption, but not used at 31st March, 1939 . . . . .. •• 1,107 £16,748,986 Against the increase of £16,748,986 are offset redemptions totalling £2,980,056, which were made from the undermentioned accounts : — £ Public Debt Repayment . . . . . . 1,756,618 Sinking Funds. . . . . . . . • • 228,030 Reparation and War Credits . . .. . . 5,025 Repayments of capital by other accounts . . . . 990,383 £2,980,056 The net increase of £13,768,930 has raised the total public indebtedness to £303,970,272, which at 31st March, 1939, was domiciled as follows : — £ London .. .. .. . • •• 156,853,016 Australia .. .. .. •• •• 879,600 New Zealand . . . . • • • • 146,237,656 £303,970,272 During the year revenue Treasury bills totalling £3,575,000 were issued, but all these were redeemed out of revenue, and consequently no revenue bills were outstanding at the close of the year. The money for housing and most of the borrowing for public works and other purposes were obtained from the Reserve Bank. This method of finance has the effect of increasing internal purchasing-power, and its usefulness is conditioned by the volume of production. In present circumstances, when sterling funds are short and imports have to be restricted, this type of

Transfer of surplus.

Public indebtedness.

Domicile of debt.

Treasury bills.

Reserve Bank credit.

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