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Tuesday, 16 August 1960

Defence expenditure in 1960-61 is estimated to be £198,153,000, or £4,568,000 greater than in 1959-60.

The main items contributing to the variations shown in the table above are: -

Defence. - The increase of £111,000 is mainly in respect of salaries and general administrative expenses.

Navy. - The estimated additional expenditure of £2,423,000 is mainly in respect of new ship construction (£1,924,000), new works (£366,000) and plant and machinery (£232,000). Expenditure on pay for the Forces is estimated to increase by £60,000 and for civilian staffs by £25,000. There are reductions for aircraft maintenance (£127,000) and general expenses and general services (£187,000).

Army. - It is estimated that Army expenditure will decrease by £94,000. Reductions are estimated for pay of the Citizen Military Forces, mainly as a result of the cessation of national service training (£1,581,000), replacement and maintenance of existing equipment (£478,000), payments to civilian staff (£305,000), general services (£252,000), and new works (£214,000). Increases provided for are in respect of the pur chase of new equipment (£1,718,000), pay of the Permanent Forces (£437,000), maintenance of buildings and works (£248,000), acquisition of property (£173,000) and expenses of the Forces overseas (£257,000).

Air. - Items contributing to the increase of £1,429,000 are the purchase and manufacture of aircraft (£1.245,000), pay of the Forces (£911,000) and of civilian staff (£70,000), and general services (£219,000). There is a reduction of £1,127,000 for the purchase of equipment and stores, and of £82,000 for expenses of the Forces overseas.

Supply. - The increase of £421,000 is largely due to greater expenditure on machinery and plant (£221,000), new works (£125,000), repair and maintenance of buildings and works (£93,000), and Defence Standards and Research Laboratories (£215,000). A reduction of £373,000 is estimated for the maintenance of production capacity at Government factories. Expenditure on the Weapons Research Establishment is estimated at £18,086,000, compared with £18,893,000 in 1959-60. Australian expenditure on this account will remain at a net figure of £9,500,000, as in 1959-60. Any excess over this amount will be chargeable to the United Kingdom.

 

Total Interest and Sinking Fund payments in 1960-61 are estimated to be £3,487,000 greater than the corresponding payments made in 1959-60.

Sinking Fund contributions in 1960-61 are estimated at £23,202,000, compared with £19,190,000 in 1959-60. The main reason for the estimated increase of £4,012,000 is that, under the 1959 banking legislation, all payments from profits of the Reserve Bank and the Commonwealth Banking Corporation (estimated at £15,800,000 in 1960-61) will now be made to Consolidated Revenue.

Under the previous banking legislation, payments from profits of the Commonwealth Bank group, apart from profits on the Note Issue, were made to the National Debt Sinking Fund and this reduced the sinking fund contributions required to be made from Consolidated Revenue. (See Item No. 10.)

During 1959-60 the amount of Commonwealth war debt outstanding was reduced and this accounts for the estimate of interest payments in 1960-61 being £526,000 less than in 1959-60.

 

War and Service Pensions and Widows' Allowances. - Of the estimated increase of £8,185,000, £1,365,000 is attributable to the increases in pensions and allowances and the liberalization of the means test for Service pensions now proposed, £1,000,000 is attributable to the full-year effect of the higher pension rates granted in 1959-60, £2,000,000 to expected increases in the number of pensioners and rates of pension through re-assess ments of incapacity, and £3,700,000 to a fifth twelve-weekly bank payment of pensions in 1960-61.

Repatriation Benefits. - Practically the whole of the expenditure under this item relates to the maintenance of repatriation institutions, the provision of medical treatment for ex-servicemen with war-caused injuries, and the Soldiers' Children's Education Scheme. The increase in the provision for 1960-61 of £1,688,000 includes £369,000 for the extension of medical treatment to Service Pensioners as now proposed. The balance of £1,319,000 is due to such factors as an expected increase in the average price and number of prescriptions for medicines, increased medical sustenance, an increase in the service provided by local medical officers, and a fall in recoveries from Service Departments and in other miscellaneous receipts.

Miscellaneous. - The main reason for the estimated increase of £319,000 is that loan conversion and flotation expenses are expected to be greater in 1960-61 than in 1959-60 because a larger amount of war debt is due to mature in 1960-61.

Credits - Other Administrations. - Credits from other Administrations in 1959-60 exceeded new expenditure by £783,000, mainly as a result of payments received from other Governments for supplies and services provided in earlier financial years. Expenditure in 1960-61 is expected to exceed recoveries by £133,000.







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