NEW ZEALAND'S BORROWING POLICY.

Auckland Star, Volume XIX, Issue 138, 12 June 1888, Page 4

NEW ZEALAND'S BORROWING POLICY.

At the late meeting of the Financial Reform Association, some prominence was given to a private letter written by Mr Scobie Mackenzie, M.H.R, in which that gentleman gave his views very freely on politics generally and certain politicians in particular. In commenting upon this letter, the Chairman of the meeting said there was no doubt our loans were the sources of all our difficulties. Now, this seems hardly a fair way of stating the position. The loans themselves may be the innocent sources of our difficulties, but no one can deny that if those loans had been properly expended, and the interest payable on them placed on the right shoulders, this country could have carried the weight very easily; it would have greatly benefited by them, and instead of causing depression, the result would have been great agricultural and commercial prosperity.

Private individuals, public bodies, and Governments are perfectly justified in borrowing under certain conditions and circumstances. An industrious tradesman would be right to borrow money to build his house, paying off the principal and interest in instalments. By this means he pays interest, and not rent, and shortly becomes the possessor of his own property.' A city is perfectly justified in borrowing money in order to secure a good water supply or for any other necessity urgently required by the citizens, which they must have, and for which they are quite able to pay. And a State is also quite justified in borrowing mone^ under such a scheme as that theoretically propounded by Sir Julius Vogel and which culminated in our great Public Works and Immigration Policy.

New Zealand's earlier loans were necessitated by what was known as Mr Weld's self-reliant policy, under which this colony undertook to take sole control of its own internal affairs, altogether independent of the fostering care and military assistance of the mother country. Britain, it will be remembered, only too gladly acquiesced in this policy, withdrew all her troops and left us to our own devices. New Zealand, under these circumstances, was not only justified but compelled to borrow large sums of money for war purposes. Unfortunately, the handling of this money led to great extravagance in the Defence and Native Departments, the latter becoming at length an insatiable bogey, dominable by a. great Mystery Man, who claimed and was allowed to carry on his operations in strict secrecy. Large lump sums of money were voted the bogey without a murmur, as the Mystery Man declared that divulging tho secrets of the Department would bring down everlasting ruin on this colony. But after all, an equivalent was got for all this outlay. The Maoris paid for their defeat just as did the French when beaten by Germany. The latter paid their indemnity in coin and territory ; the Maoris paid in territory only. Had the land then confiscated been made inalienable, those military settlers who accepted employment in the New Zealand forces on the understanding that after a certain length of service they would receive grants of land, would have remained on their land for a time, at all events, and not parted, as many of them did, with their freeholds for a song to land speculators. Had those men remained —had they not been allowed to dispose of anything but the improvements—they might have made homes on their land. Then those settlers or their successors would be there to-day, and the big loans for defence and other purposes, extravagantly and wickedly wasted as they were, would not now be hanging like a millstone around our necks, for the increase of population and consequent increase of taxpaying power would.have relieved the pressure of the annual charge on our loans. As regards the still bigger loans for Public Works aud Immigration, that scheme included the placing a popular

tion from witittmt upon the waste lands pf the colony. It is not too much to say that had this notheen distinctly understood by the House that endorsed Sir Julius Vogel's proposals, had it not been indeed distinctly and emphatically promised by Sir Julius and his colleagues, that scheme of public works would never have been carried. It was understood when that scheme was passed that new and more liberal land laws should be adopted, and that the Government should re-enter possession of the large runs held on lease, as they fell in, for the purpose of locating settlers on them on easy terms. None of these things were done, the land laws remained unaltered, the large runholders, seeing the boom that was coming, rushed en masse to buy the freeholds of their runs, and the country was diddled. But does anyone really believe that had the scheme been carried out as promised, the influx of population and the settlement of the land would not have amply repaid the community for the great cost it had incurred . Public Works were constructed here, there, everywhere and nowhere; immigrants were brought in by the thousand at an enormous expense, but no encouragement was given them to settle on the land, and so when work got slack, they passed on somewhere else and the exodus is not vet finished.

However, the money has been spent and we have to pay the interest, those who by rights should have paid it or greatly assisted in paying it—that is, the great increase of population which was to be placed on the land—is conspicuous by its absence, and therefore the burden is placed upon other shoulders.

But surely some people have benefited by this enormous expenditure 1 It is not possible that all classes of the community are suffering from financial depression after the spending of these millions ? Sir Julius Vogel stated, a session or two ago in the House, that a certain select few in Hawke's Bay had benefited by the expenditure to the tune of several millions of pounds. His statement was not challenged, and he repeated it more than once. Who are these . And is it not possible for the Colonial Treasurer to reach these men by some other means than Customs duties 1 There seems no possibility of the property tax being repealed this year, but surely it might be so amended as to relieve the hardworking, industrious man of the tax on his improvements, and bring in those who have really benefited by the loans 1 That they are not got at by the present property tax, a very cursory study of the official returns will prove. In these returns it is shown there are 27,278 payers of the property tax, and only 500 of them pay more than £67 14s 2d towards it. A considerable number of these may be excised, being importing merchants. Now, we know for certain from other reliable official returns that we have 1,100 permanent absentees who own nine million pounds' worth of property in New Zealand. Where do these 1,100 figure in the, property tax return 1 Do they all pay less than £67 14s 2d 1 They pay nothing through the Customs, and if they can afford to live abroad at ease, drawing fat incomes from this depressed community, surely they ought to pay at least £67 14s 2d a year to the country that supports them. -.- -_-. ■-.

We would strongly urge upon our members the desirability of very closely investigating the incidence of this remarkable tax for the purpose of seeing whether by fair and judicious emendation the results of a man's labour and industry, and also merchandise, may not be in future exempt from" its operations, and that those who appear to be in possession of the country's wealth should pay more in accordance with their ability to do so.