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Tuesday, 16 August 1960

Total cash requirements of the Commonwealth Government in 1960-61 are estimated at £1,796,503,000. On the basis of existing rates of taxation and other charges, total cash receipts are estimated at £1,775,082,000, which is £21,421,000 less than estimated requirements. The revenue proposals announced in the Budget Speech are, however, estimated to add a net amount of £40,924,000 to receipts in a full year and £36,914,000 in 1960-61, thus producing an excess of total cash receipts over total cash requirements in 1960-61 of £15,493,000. It is intended to apply this prospective cash surplus of £15,493,000 to the redemption of Treasury Bills.

The estimated total of cash requirements in 1960-61 (that is, £1,796,503,000) is £89,711,000 greater than actual requirements in 1959-60. The main elements in this increase are: -

(a)   Expenditure on war and service pensions and repatriation benefits, and on civil pensions and other benefits payable from the National Welfare Fund, is estimated to increase by £41,208,000 in 1960-61, £10,077,000 of this being attributable to the additional benefits now proposed;

(b)   Payments from revenue to the State Governments are estimated to increase in 1960-61 by £29,192,000;

(c)   The approved Loan Council programme for State works and housing in 1960-61 is £10,000,000 greater than in 1959-60.

After taking account of the new revenue measures proposed, the reecipts of the Consolidated Revenue Fund are estimated to be £1,609,496,000, or £177,678,000 greater than in 1959-60. On the other hand, loan proceeds are expected to be considerably less than in 1959-60; a decrease of approximately £40,000,000 in loan proceeds has been assumed. After taking account also of the current receipts of the Sinking Fund available to finance redemptions, total cash receipts in 1960-61 are estimated at £1,811,996,000, or £134,126,000 more than actual receipts in 1959-60.

In 1959-60, expenditure from the Consolidated Revenue Fund, excluding the transfer payment to the Loan Consolidation and Investment Reserve, was £1,390,436,000. In addition, £11,986,000 of Defence expenditure was met from Loan Fund; hence the total of expenditure ordinarily met from the Consolidated Revenue Fund was £1,402,422,000. The comparble figure for 1960-61 is estimated at £1,483,753,000. It is proposed to charge all of this expenditure to the Consolidated Revenue Fund and, in addition, to appropriate £125,743,000 to the Loan Consolidation and Investment Reserve, thereby balancing the Consolidated Revenue Fund.

For 1960-61, the approved Loan Council borrowing programme for State works and housing is £230,000,000, or £10,000,000 greater than the 1959-60 programme, Pending a review of the position at the end of the first half of the financial year, the Commonwealth is making advances on the basis of an annual programme of £230,000,000. For purposes of estimating the Commonwealth's financial requirements it has been assumed that the borrowing programme will in fact be £230,000,000 and that the gap between this amount and loan proceeds available towards the programme will be filled by Commonwealth assistance from its own resources. Loan proceeds, which totalled £189,767,000 in 1959-60, are expected to be substantially less in 1960-61. It is assumed that they will amount to £150,000,000.

Loan finance will again be required in 1960-61 to finance advances to the States for War Service Land Settlement. The amount so required is estimated to be £2,750,000, compared with £6,937,000 in 1959-60.

Including repayments of loans from the International Bank, redemptions of maturing securities amounted to £77,433,000 in 1959-60. Total redemptions in 1960-61, including redemptions of overdue securities and repayments of loans from the International Bank, are estimated at £80,000,000.

The redemptions of £77,433,000 in 1959-60 were met from the National Debt Sinking Fund and, as the current receipts of the Sinking Fund available for that purpose were £53,435,000, the Sinking Fund drew on its balances to supplement these current receipts. This involved the realization of some investments of the Fund by way of sales to the Loan Consolidation and Investment Reserve. For 1960-61, current receipts of the Sinking Fund available to finance redemptions are estimated to amount to £52,500,000 which, if redemptions are £80,000,000, would fall short of that amount by some £27,500,000.

In 1959-60 there was a net increase of £2,850,000 in other Commonwealth balances which supplemented the funds available from loan proceeds and current receipts of the National Debt Sinking Fund for meeting commitments outside the Consolidated Revenue Fund. No net change is expected for 1960-61.

The foregoing figures are brought together in the table below which compares the prospective overall cash result of the Commonwealth in 1960-61 with the actual cash result in 1959-60.

 

The approved borrowing programme for State works and housing in 1960-61 is £230,000,000. If loan raisings available for this programme are £150,000,000, a further amount of £80,000,000 will be required to complete the programme. An estimated £2,750,000 will also be required to finance War Service Land Settlement advances. It is expected that the amount required to complete the borrowing programme for State works and housing and to finance War Service Land Settlement advances will be provided by way of a special loan and that a subscription to this loan will be made from the Loan Consolidation and Investment Reserve.

As mentioned above, the current receipts of the Sinking Fund in 1960-61 may fall short by some £27,500,000 of the amount required to finance redemptions, including repayments to the International Bank, and it is therefore proposed to utilize some of the balances in that Fund.

The manner in which it is proposed to finance the various expenditures comprehended in the 1960-61 Budget may be set out as follows: -

 

 

Further details of the Consolidated Revenue Fund estimates are given in Statement No. 3 and details of Loan Transactions, 1960-61 are given in Statement No. 4.

 

 







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