FINANCIAL STRUCTURE
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a comparatively small amount financed by borrowing. In 1965–6 capital expenditure totalled nearly $735 million.
The principal reason for these results, which appear so favourable, is that exceptionally rapid increases in population have generated internal economic activity which has raised the yield from taxation and other sources of revenue substantially without appreciable increases in their rates. Annual revenue expanded from $292 million in 1950-1 to $1,632 million in 1965-6. The rate of increase was affected by variations in such factors as the economic situation and inflows of capital, but the upward trend was continuous. In expenditure there was inevitably a time-lag before the government could develop the public and social services necessary for the increased population. However, as these services were developed— and the rate of their development has gradually accelerated-the margin between recurrent expenditure and recurrent revenue tended to narrow. For example, in 1952-3 recurrent expenditure absorbed only 57 per cent of the recurrent revenue, but by 1959-60 the figure had risen to 82 per cent with the consequence that in that year the surplus of revenue over expenditure could no longer finance all the capital expenditure. An overall deficit of $45-million thus occurred. Subsequent budgets anticipated further and sub- stantial deficits but statistics now available suggest that the economic strength and resilience of the Colony was underestimated, at any rate temporarily, for it was not until 1965-6 that another deficit was recorded.
The intervening years saw an upsurge in recurrent revenue, arising mainly from the very active trading conditions prevailing in the Colony, with the result that while recurrent expenditure continued at approximately the levels expected it absorbed a smaller than anticipated proportion of the recurrent revenue. By 1963-4 the proportion was down to 65 per cent and this in- creased only three points during the next two years. At the same time capital expenditure, though rising substantially, was lower than originally forecast while capital revenue, due mainly to heavy receipts from land sales, recorded marked increases. 1964-5 pro- duced a surplus of $78 million but ended on a somewhat restrained note. The property market, temporarily oversupplied with flats built speculatively for sale, had turned dull and, in a lesser degree, affected other sectors. Some businesses got into difficulties and