XN000022-1974-02-27 — Page 15

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Wednesday, February 27, 1974

after allowing for several proposals for tax relief the main ones being

to encourage investment. The net result is that, in 1974-75, I am

Budgeting for a small furplus of about $20 million after allowing for

certain unavoidable commitments likely to arise during the year.

"Now only time will tell whether I have taken sufficient account

of the impact of the oil crisis on our economy and hence revenue yields.

The fact is we cannot afford to draw down our reserves in a year in

which, by a few relatively painless adjustments, the budget can be

balanced. There is a very simple reason for this: the cost of our

expanding public services and of our huge capital works programmes will

be immense. And even on the assumption that there is a steady growth

of revenue after the present turmoil is behind us, our reserves must

be kept in hand in case revenue unexpectedly fails to live up to our

expectations in any year.

"I explained the likely trend of expenditure over the three

years 1975-76 to 1977-78 at length in the budget speech. I pointed out

that, as far as I could see at the moment, the cost of carrying out

our various policies and programmes over these three years probably

exceeded the funds likely to be available by about $4,000 million.

"As the cost of running existing services will always tend to

have first call on our available funds, we must look at this shortfall

of $4,000 million in the wider context of the cost of our capital works

programmes over a longer period of, say, ten years. The cost of these

/programmes is