4
In consequence a number of insurance companies have been required to increase their paid-up capital, and some others have either dropped
out of the market or have had their authorization withdrawn. This
essentially interim legislation has therefore effected some weeding out
ahead of the comprehensive bill. It is hoped to introduce it this session.
THE PUBLIC FINANCES
11.
12.
The state of our public finances remains very satisfactory.
Revenue collections so far this year have exceeded expectations,
due largely to high yields from interest tax and stamp duties, and of
course land sales. If the present trends continue, revenue will"
substantially exceed the original estimate and the budgetted surplus of $7,800 million will be surpassed, thereby reinforcing its
disinflationary effect.
13.
Total expenditure for the year is now expected to exceed the estimate by nearly 10%, mainly because of substantial increases in
salaries, increased spending on public works, and the desalter.
14.
At present we can easily meet the increased expenditure and still
achieve a larger budget surplus, and clearly purely budgetary restraints
are not a problem. However, not only must we allow for the possibility of
revenue falling off while the need for public expenditure does not, but
in this inflationary situation there are macro-economic restraints on
expenditure that cannot be ignored if our goods are to remain competitive
and our currency remain stable. What the Government can do may be limited
in comparison to the more massive effect of the private sector on credit
creation and consequently total final demand; but it is still important
that Government expenditure should not fall too far out of step with the
growth of the economy. This we will watch.
/THE ECONOMY
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