1943 NUMBER OF MELBOURNE DWELLINGS 237

tically half of them were sharing a dwelling with one other household only, i.e., they were not living in apartment houses; and it is a reasonable assumption that the majority of these would prefer their o m house if they could get it.

Finally, it is to be hoped that before the next Commonwealth Census consideration will be given to the desirability of intro- ducing a new definition of a dwelling which will not only be more workable from the standpoint of local authorities, but also more useful from the standpoint of social inquiry.

University, of Yelbou.me. WILFRED PREST.

THE NEW ZEALAND BUDGET, 1943-1944 It is not surprising that, with the elections but a few months

away, there was little new in the Financial Statement present& to the House on 3rd June last. Its outstanding feature is the close parallel with that of last year. There is no provision for increased taxation and the Minister has found some opportunity of increasing and popularizing the benefits of State expenditure. Such political expediency has been largely aided by the much more favourable external situation, a factor which has also permitted obvious economy measures to be shelved and a return to be made to the more detailed presentation of the accounts after the brief and scrappy picture given last year.

Expenditure. The following table shows the amounts actually expended' last year and the estimates for the present year in the four accounts covered by the Budget :

TABLE I Pzlblic ExperrcEiture, 1943 and 1944

Showing Actual Expenditure for the financial year ended 31st March,

Year Ended 31st March 1943 1944

1943, and estimated expenditure 1944. (Em.)

Consolidated Fundl . . . . . . . . . . . . 32-9 36.0 War Expenses . . . . . . . . . . . . . . . . . 144.0 148.0 Social Security Fund . . . . . . . . . . . . 16.0 17.4 National Development (Loans only) . . 3.0 6.5

195.9 207.9 -- 1. Allowance h a bem been made for transfer to social scervitp Fund and

War Expenw Account to avoid double counting.

238 T H E ECONOMIC RECORD DEC.

Mainly as a result of an unexpectedly large yield from income tax there was a surplus of over %.Om. in the Consoli- dated Fund after allowing for an unauthorized transfer of $200,000 to the Social Security Fund. This has been transferred t o the present year’s War Expenses. This appears to justify increased expenditure this year. The Minister is careful to point out that this increase is due mainly to increased debt charges, most of which is in respect of the war, and it appears t o call for spkial mention that a war charge is being met out of the ordinary revenues of the State. There are, however, other so-called war charges that are not so happily placed. Another rise of some importance is for increased war pensions.

The War Expenses account showed an expenditure of f144m. last year, Ellm. in excess of the estimates. This appears t o have been bridged by borrowings from the Reserve Bank, and/or Lend-Lease transactions which now appear for the first time and total E26-8m. as against E7.Om. for Reverse Lend- Lease. The position here is very di%cult to follow. “Lend-Lease is granted not in terms of money, but in terms of quantity of particular kinds of goods required for the war effort.” It is included in the accounts “to complete the picture of our re- sources for war’% apparently at‘ an arbitrary figure. I n so far as this is so and does not place us under any future l iab i l i t~ ,~ it would appear that the picture of our war expenditure is somewhat exaggerated. If this item is neglected (it shows approximately the same balance), our war expenditure will actually drop this year by some E94m.

Two interesting tables of statistical detail appear with regard to this account. The total war expenditure to 31st March, 1943, is analysed and related to sources of revenue. Of E239m. expended, E123.5m. (or 52 per cent.) has been raised by loans. Last year E14.9m. was spent under the heading of Civil Items, which’ this year are to comprise E16.0m. This item has been analysed somewhat more fully. It includes expenditure on subsidies to primary prodlucers for stabilization purposes, goods imported for State departments and essential commercial activities, and Imperial Government Food Contracts. One questions the propriety of charging such expenditure against an account linanmd over B t y per cent. by loan funds. Unfor-

2. 1948 Budget, P. 4. 3. This sentence appeara an p. 14 02 the Budget: “Although there is provision

for unused equipment to be,”t””ed, there is no DIVV~S~OII in the Act for payment to be made for the goods.

1943 NEW ZEALAND BUDGET 239

tunately, no analyses are given of the details under the other headings of the account. It would be interesting to have some idea, for instance, how the army spent its E90m. last year. Such secrecy is not calculated to dispel the widespread mis- givings, emphasized again this year by the Auditor-General, that extravagance and waste are considerable.

An increased transfer of €500,000 from the Consolidated Fund, plus cash balances in hand, enables increased benefits to be paid from the Social Security Fund. One cannot criticize increased Loan expenditure to provide such very essential revenue producing assets as houses and electricity from the National Development Account.

Eeceipts. The reaI benefits that will accrue from increased State expenditure are closely related to the source from which the revenue iS obtained. There would be little justification from the economic angle for increasing social services when the funds are obtained from indirect taxation, by loans or credit creation. I n the following table an analysis of the receipts (excluding lend-lease) to finance current expenditure for the last financial year is shown:

TBLE I1 Showing sources of State Receipts for the financial year

1942-1943.

1. 2. 3. 4.

f m Direct Graduated Taxation . . . . 31.9 Direct Proportional Taxation . . 27.2 Indirect Taxation . . . . . . . . . . 27.7 Loans . . . . . . . . . . . . . . . . 78-04 -

164.8 - The Minister has emphasized that 68 per cent. of the total

taxation was found by direct taxes. This evades two important issues. In the first place, nearly half of this type of taxation is not graduated, and, secondly, some ElOm. annually has to be found for interest.on the internal debt. It is a safe generalization that this is received by those who pay income tax. This means that on balance only some E20m., or 23 per cent. of the total taxation, is being contributed by way of graduated taxation of the more well-to-do section of the community. Further, the

4. Thk excludw National Development Loam which may be asawned a true capital charge, in that they are expended on income-bearing assets.

240 THE ECO.NOMIC RECORD DEC.9 1943

expansion of bank credit has proceeded at an alarming rate. According to the Reserve Bank Report, credit expansion in New Zealand from the outbreak of war to 31st March, 1943, totalled E36*2m.-an increase of €16.5m. in the past year. Under such circumstances any increased provision made for the poorer classes is largely illusory.

For the first time for c. number of years no taxation increases were considered necessary. This could have been a suitable occasion to rect'ifs some of the anomalies of the present system and bring it more into line with the principle of equity. There is no doubt, fo r example, that the present system of exemptions in our income tax throws an undue burden on the family man as compared with the unmarried person. This becomes more notice- able as rates grow more steep and some reform in this direction is urgently required. If taxation were more closely related to capacity to pay, perhaps the short collection complained of by the Minister would be to some extent avoided.

It is disappointing to realize that, at a time when so much depends upon initiative and inspiration, the lead- ers of a country can make such a small contribution to progress. The New Zealand Financial Statement follows strictly tradi- tional lines. Little imagination has been used to cope with the problems involved nor has any attempt been made to present the accounts in a more scientsc and accurate form. Much State activity is omitted altogether, the most meaee details of important expenditure are given, nor is any attempt made to assess its effects on the development of future policy. It is diEcult to see how enlightened democracy can flourish in such an environment. Modern trends in budgetary technique appar- ently have no students in this legislation.

Conclusion.

H. W. KING. Auckland, N .Z .