FINANCIAL STATEMENT

Auckland Star, Volume XXII, Issue 143, 18 June 1891, Page 7

FINANCIAL STATEMENT

(BY TELEGRAPH. —PRESS ASSOCIATION.)

Wellington, June 16. The Colonial Treasurer (the Hon. M r Ballance) delivered the Financial Statement in Committee of Supply, in the House of Represetatives, to-night, as follows : —

Mr Perceval, —In asking the attention of the committee while I place before it a plain, utivarnished statement of the finances of the colony, 1 hope to bo as brief as the nature of the subject will permit, and not to weary lion, inembera by unnecessary details. CONSOLIDATED EXPENDITURE KOR THE YEAR ' 1890-91 (OKDINAFY REVENUE ACCOUNT). The estimated expenditure for the year 1890-91, including the Civil List and other perinanentcharges, amounted to £4,125,502; the actual expenditure Mas £4,175,198. There were savings in eomo classes of expenditure and excesses in others, but the net result shows an excess of expenditure over the estimate of £49,606, Under special Acts there is an excess of £19,140 arising out of the costs of two meetings of the General Assembly and the extra amount of compensation paid in carrying out the retrenchment proposola of the present Government. There was also an excess of £14,659 in the amount paid to local bodies by way of subsidy on rates, tiie explanation in this case being that the claims were more promptly sent in before the close of the year than was anticipated. In the Colonial Secretary's department there is an excess of £11,167, chiefly lor disctunt on drafts which was not provided in the appropriations of the year. This large item was no doubt partly caused by the high average of interest ruling in London. In the " working railways '' the excess of £27,892 is explained by the Commissioners in a memorandum attached to their estimates, and which they state arose from the necessity of employing additional hands, from the rise in the cost of fuel and stocks at the time of che recent strike, and by increased traffic. Under the head of " Minister of Defence," the expenditure exceeded the votes by £14,712. The Committee will remember that £7,000 was taken off these votes in Supply, but no saving was effected. Of the excess, £3.000 was incurred through the labour troubles of last year. The other increases principally arise from payment for arms and ammunition not sufficiently provided for in the votes. "Services nob provided for" amounted to £10,410. A large amount of this represents compensation and compassionate allowances granted to officers and widows of men of the defence and police departments, which could not be paid under the provisions of the Civil Service Act. ORDINARY REVENUE. The late Government . umated the revenue to bo received at "159,000, which included £55,000 for pr .ge duty for the whole year. It will, hovever, be in the recollection of the Committee that it was determined to discontinue the collection of the primage duty at the end of last September. The revised revenue to ba received was accordingly £4,131,500, instead of £4,159,000, as before stated. The actual amount received was £4,282,504, or £151,004 in excess of the revised estimate. With the exception of the revenue derived from the depasturing licenses, all the heads of revenue have been exceeded. Full particulars will be found in the tabl6 attached. EXPENDITURE AND THE REVENUE OF THE LAND FUND ACCOUNT. The estimated expenditure was £115,680 ; the actual figures are £116,108, or £42S in excess of the estimate. The estimated revenue was £96,600. while the actual receipt came to £164,270, or £67,670 in excess of the estimate. Large quantities of land in the Canterbury district were sold for cash, but the lands available for disposal in this way have been nearly exhausted, and even were the policy of wholesale disposal for cash justifiable it would be impossible to obtain the same amount ot revenue from this district again. As an illustration of whab I mean the value of land sold for cash in last year was £65,929, while the estimate for this year is only £4,000. The lame excess of cash receipts during the year provided a balance sufficient to pay off the deficit of £45,716 at the commencement of the year, and to have a surplus of £2,445 at the close of the year. RESULTS OF THE YEAR 1890-91. At the beginning of the year a surplus was shown of £36,568 19s 4d, after paying off the balance of the deficit at the 31st March, 1888 (£78,605 0s 8d). As I before stated, the receipts amounted to £4,282,504 9s 7d, making a total of £4,319,073 8s lid available for expenditure. During the year the total expenditure amounted to £4,175,107 13s sd, thus leaving a surplus of £143.965 15s 6d on 31st March laet, a result which must be very gratifying to the Committee. THE PUELIC DEBT. The gross public debt on the 31eb March, 1890, was £38,667,950, and the sinking funds accrued amounted to £1,386,186 (as revised after the receipt of the English accounts); the net public debt was therefore £37,281,764. On the 31sfc March last the public debt was £38,832,350, showing an increase of £164,400 during the pa3t year. The sinking funds accrued were estimated at £1,473,193, and the net debt therefore stands at £37,359,157. The present conversion operation papers will be laid before hon. members, showing what has been done, andwhat is contemplated with respect to the conversion of the remainder of our high interest-bearing loans, amounting to £868,900. Debentures surrendered for the conversion of the loan of 1863, due on the 15th March last, had to be deposited at the

Bank of England, and not later than the 14th of March, and all other debentures on or before the 15th June next. The Government have reserved the right to converb into 3-i per cent, inscribed stock (with aesent of holders) any debentures not brought in for conversion, on terms to be notified from time to time at the Bank of England. The stock agents have been able to make exceedingly satisfactory arrangements with the Bank of England, whereby the success of the conversion will be assured, and I need scarcely point out the saving that will bo 6fi'ected. PUBLIC WORKS FUND. Part I. : The balance at the credit of this account on the 31st March, 1890, including an asset of £87,974 Is 3d under the Government Loans to Local Bodies Act, 1886, was £233,675 11s 10d. During the year it became necessary to is3ue £24,000 debentures on account of the asset above mentioned. Some miscellaneous recoveries were also received, amounting to £5,781 4s Bd. The expenditure during the year amounted to £128,310 18s Cd, thus leaving at the close of tho year an available balance of £110,645 17s 9d. The outstanding liabilities are returned at £96,608 3s 10d. Part 11. (North Island Main Trunk Railway Loan): The balance to commence the year was £386,985 9s. The expenditure during the year amounted to £30,897, thus leaving an unexpended balance of £356,108, subject to £44,902 19s for outstanding liabilities. The allocations of this balance are as follow:- —For railway purposes, £232,424; for roads to give access to railway, £34,652; purchase of native land, £83,831. The liabilities against the railway amount to £26,103, and/against roads t0":C18,799. Part 111.-. At the beginning of the year the balance was £426,805 15s 4d. During the year the expenditure amounted to £175,462 7s 6d. The balance at the close of the year was £251,343 73 10d, and outstanding liabilities, £98,875 19s 3d. SUMMARY. Taking the three parts together, the available balance at the beginning of the year waa £1,047,406 16s 2d, which was increased to £1,053,248 0s 10d by some small receipts. The expenditure during the year amounted to £335,151 15s 3d, and the available balance at the close of the year to £718,096 5s 7d. The outstanding liabilities on the 31st March last are stated at £240,387 2s Id. .SINKING FUND. Under section 90 of the Consolidated Loan Act, 1534, it is enacted that after redeeming such debentures as may have been issued on account of increase of sinking fund of loan in respect of which the sinking fund has been set free, tho balance of such sinking fund shall be paid into the public account, and shall form part of the public works fund. Until the loans of 18C0 and 18G3, falling due this year, have been fully converted or paid off (the last parcel of the loan of 1863 is not due till 15th December next), it is impossible to estimate with any certainty the amount of the sinking fund accretions which will be payable into the public works fund. I may state that the loans having sinking funds which mature during the year amount to £491,100, and that the debentures, amounting to £178,924, issued in respect of the accretions of the sinking funds of these loans, are now outstanding. It is fair to assume that tho accumulated sinking funds will, at least, equal in amount the loans for which they were created. Wβ may, therefore, safely calculate upon receiving more than £300,000 into the public works fund, without taking into consideration the profit from the sale above par of the sinking fund securities, which have been mainly invested in our 4 per cent, inscribed stock. I propose later on to show how £100,000 of thisamountmay bespecially applied to "discharge an obligation, thus leaving a balance of £200,000 this year available for public worKs, the appropriation of which will be fully explained by my colleague in his statement. It will be seen that we have not estimated for receiving a larger amount of sinking funds from the conversion operations than will be actually available in the present year, but if the operations extend to loans falling due in future years, the sum receivable will be proportionately increased. Of course, in etating these figures, lion, members will understand that the conversion scheme embraces tho substitution of 3£ per cent, inscribed stock for the unconverted portions of the loans as they fall due, whereby the whole of the accumulations of the sinking fund are set free and become available.

ORDINARY EXPENDITURE FOR 1891-92.

For the year ending 31sb March, 1892, I have had very careful estimates prepared, and they will be laid before you. The expenditure as proposed will be found to amount to £4,155,105. Under the head of interest and sinking fund there is an increase of £34,687, mainly arising from an abatement last year of £15,750 from the amount payable on the new 3£ per cent, inscribed account, of an overlap of interest on the ten-forty debentures paid off. A new item of £8,856 has been provided for sinking fund ab 1 per cent, on the amount borrowed under the Government Loans to the Local Bodies Act, 1886. In order to carry out the provisions of the Act appropriations are increased ; also under the head of a special Act for the first time we had to provide a sum of £22,000 for the payment of our contribution towards the maintenance of the Australian Naval Squadron. An increased sum of £8,000 has been provided for compensation under the Civil Service Act, while £8,000 has also been added for payment of subsidies based upon the actual payments made last year. Coming; to the annual appropriations, it will be found that excluding working railways very substantial reductions have been effected in tho ordinary departmental expenditure. Provision, however, has had to be made for exceptional services, such as the census £12,500, for the Triennial Property Tax Assessment £13,000, and for discount on our remittances to London £3,500, the want of provision for which last year caused the Treasury vote to be overdrawn. Nobwithstanding these extraordinary votes, the estimate of expenditure for 1891-92 is £45,393 less than the expenditure of 1890-------91. It is necessary to refer specially to the small amount estimated for the cost of remitting money to London, £3,500, compared with the amount spent last year on the same item, namely, £12,435. I have entered into an arrangement with the Bank under which bills at 90 day 3 instead of 120 will be issued at par on London. The effect; of this arrangement, if it had been in operation on our finance last year, would have been a saving, the Treasury has calculated, of upward of £4,000, and if other things are equal, of course ther9 will be a similar saving this year. EXPENDITURE AND REVENUE OF THE LAND FUND ACCOUNT. The estimated expenditure for the current year amounts to £116,965, whereas last year provision was made for £115,680. Although the present estimated expenditure slightly exceeds the amount voted last year (arising out of the necessity for employingadditional surveyors and the charging of salaries heretofore paid out of the loan), a very considerable saving has been effected by the amalgamation of the separatedepartm'ents of Crown Land 3 and Surveys. 1 have not thought it prudent to estimate the revenue for the current year ab more than £92,700. Last year it was estimated at £96,600. The excess of expenditure over revenue for the current year according to the above figures results in a deficiency of £24,265, reduced to £21,820 by the surplus of £2,445 at the beginning of the year. This.deficit I shall deal with further on. ORDINARY KEVENUE OF. THE YEAR 1891-92. The estimate over ordinary revenue received will amounb to £3,906,500, or £8,004 less than the actual receipts of last

year. In addition to the above, there will be issued ia aid of revenue £282,300 for sinking fund Increases as against £288,000 issuedduringthepast year. Adding these together, our total receipts are estimated to fall short of last year's actual receipts by the sum of £13,704. The revenue derived from " Stamps " is set down at £21,191 less than last year's receipts. Of this amount, £65,700 which has heretofore been treated as revenue will now be treated as a recovery in reduction of expenditure in connection with the San Francisco and direct mail services. Owing to the light grain crops 1 have deemed it prudent not feo estimate more than £1,114,000 railway revenue, which is £9,322 less than was received last year. Some exceptional amounts swelled the miscellaneous receipts of the past year, and as I do not expect their recurrence I have set down this item at £43,000 instead of £49,004. On the other hand, I see no reason why there should not be an increase under the heads of Customs and beer duty. I have therefore made a slight addition over last year's receipts to both these items. I expect the general acceptance of our land settlement proposal will cause an augmentation of £22,918 over the receipts of last year, derived from depasturing licenses, rents, etc., usually designated our " territoral revenue." ESTIMATED RESULTS OF THE YEAR 1891-92. As I have before stated, a surplus was brought forward of £143,965 15s 6d to commence the present year with, to which I add the estimated revenue for the year amounting to £4,263,800, together £4,412,765 15s 6d. From this I deduct the estimated expenditure of £4,155,105, leaving a surplus of £257,660 15s 6d at the end of tho present financial year. POSTAL ARRANGEMENTS. The question will now suggest itself to the Committee—in what way can this surplus be best disposed of? It must have been recognised that the tendency of the age is to increase the postal facilities of the world, and to reduce the cost of carrying letters. The time is not far distant, v c believe, when there will be an Imperial penny postage, probably within the next three years. The losp estimatod by the English authorities is not expected to exceed £75,000 a year. Of this amount a number of persons in England have offered to guarantee £50,000 a year, and public opinion is rapidly growing in the direction of adopting a minimum rate of postage as a means of consolidating or federating the various parts of the Empire. The postage at preeent with Australia is 2d a letter, and that to Great Britain 2{ s d, while to the suburbs of our cities and other parts of the colony the charge is 2d. So manifest an anomaly suggests a change in the direction of our proposals. The time has therefore arrived, the Government believe, when the penny post should be established in New Zealand. The cosb of the reduction in the present year is estimated at not more than £40,000, "and from calculations and comparisons with tho colony of Victoria, where the penny postage is already an accomplished fact, ib is estimatod that within three years from the present time, through the increase in the number of letters sent, the loss in the revenue will be more than covered. It is alno intended to ask for power to establish the penny post with the Australian colonies, and negotiations to this end are now being conducted by my colleague, the Postmaster-General. If this extension of the penny poet be adopted, the immediate loss to the colony in revenue will be about £1,200 a year. The Committee will agree that this is nob a formidable sum to secure so great an advantage as an intercolonial penny post. The postage on newspapers to the other colonies, now a penny, it is proposed shall in future be one halfpenny, and ifc is anticipated the increased number posted will prevent any material loss of revenue. It is .also proposed to reduce the telephone charges to a uniform rate of £5 a year, which we believe will nob entail any material loss to the revenue, as the increase in the number of connections in consequence \vill probably be large. The details of these and other reforms in the Foab and Telegraph Office will be explained by the FosfcmasterGeneral. The question of SETTLING THE LAN]) and carrying on the work of colonisation in the making of roads to open up land for settlement will have, we think, to be borne in future to some extent by the consolidated fund. Whether this can be done will depend, of course, on the progress of the colony in the way of yielding an increasing revenue, but ib will be recognised that bhe connection is intimate between a growing revenue and the extension of settlement. We propose, therefore, in the present year to apply the sum of £30,000 oub' of revenue for the work of opening up land for settlement. This amouiib will probably have to be supplemented by a vote from the public works fund. We propose to remit the native lands duty on leases, amounting on the average to about £6,000 a year. There appears to the Government to be no justification for imposing an exceptional duty upon the alienation of native lands for settlement, a work that ought to beencouraged rather thanrestricbed by the imposition of a duby which is irritating, and at the same time difficult to collect. I have nob disturbed the distinction which has been made between territorial revenue and the land fund, though I can hardly see any reason for its continuance. It is true the land fund in the past has been subject to strange and serious perturbances, throwing out all the calculations of the department, bub the elements of uncertainty have in recent years been reduced to moderate dimension, and the consolidated fund, to which both descriptions of revenue legally „ belong, must soon . receive back its erratic and wandering child. The land department has made a calculation of the sum it will cost in surveys arid administration to obtain the terriborial revenue in the present year, and the estimate is £40,000. In the past the land fund ha 3 improperly borne the corresponding charge, and this has tended very often to produce a deficit in the fund. There is an estimated deficit in the present year in the land fund through bhe probable decline in cash sales of £21,820, which I propose bo meeb by transferring a similar amount from bhe ordinary revenue account, which will come out of the estimated surplus. The simple and direct plan of dealing with the matter is to amalgamate the ordinary and land fund accounts instead of maintaining the distinction which has been made for irany years. This would have been done in the present year, bub that I desired to preserve the usual comparisons. The Committee may remember that my predecessor made a proposal in ISB7 bo pay out of the sinking fund account under the Consolidated Stock Act, 1884, to bhe amount of £40,000 a year, the deficit of the year 1888 amounting to £400,000. It was also proposed that any credib balance of ordinary revenue, from year to year, shall be devoted to the same purpose instead of being carried forward to the next account. Short-dated debentures were issued to cover the deficiency. The debb still remains, the arrangement to extinguish it not having been put in force. We now propose to apply £100,000 of the surplus of the year bo the reduction of this debb. We propose to place a tax of 24- per cent. on the money passing through the totaiisator, which will amount to about £10,000 a year, and for the remainder of the present year to about £5,000. These various proposals I shall now bring togebher to show the financial result :—Cost of penny postage, £40,000 (I do nob include the intercolonial postage, as the negotiations are not completed) ; £30,000 for opening up land for settlement, £6,000 duby on nabive leases, £21,820 to meet estimated deficib in land fund, and an appropriation of. £111,000 to pay off the debb in-

curred in ISBB to meeb the deficit of thatJ year. The total of theso various amounts is £197,820. Deducting this from the estimated surplus of £257,(560, we have a net surplus available to carry forward of £59,840. To this has bo be added the tax on the totalisator, amounting to £5,000, bringing up the surplus for the current) year to £64,840, which will be an ample margin to provide for the supplementary estimates and possible contingencies. REVENUE RESOURCES. i Direct taxation in the way of a land and income tax must remain with the development of our industries a fruitful source of income, and an equivalent of the amount obtained from the present property tax may for some time be a necessity. When the nature of our obligations will parmib ifc, we are of opinion that relief should be given on the necessaries of life now paying duties through the Customs, bub we must be certain while th.6 great object is being reached that we shall have sufficient revenue to meet the growing demand on the consolidated fund arising through the cessation of borrowing large amounts of money in the English market, for if we are to maintain our credit and financial independence, borrowing in that market must cease, while any local borrowing is likely to be confined to" the absolute necessity of carrying on those essential works of colonisation, such as the sebblemenb of the people on bhe land, on which depends directly the prosperity of the community. On the other hand if the machinery of Government could be simplified and judicious retrenchment carried bo ibs proper limit, the expenditure side of the account might still be considerably reduced, but we ara strongly of opinion thab any material reduction must come from a more direct and simple form of administration directed to the attainment of pracbical ends, and ib will be necessary to see bhab our measures of legislation do nob include liabilities which"will render this form of economy an impossibility. THE FLOATING DEBT. The amount of the floating debb incurred to meeb past deficits is £550,000. This will be reduced to £450,000 by the appropriation of £100,000 of the surplus of the year, as already explained. Can this floating debt be further reduced? The Government think thab though by law bha released sinking funds in connection with the loane undergoing conversion pass into the public works' fund, a portion of them should be used to pay off debb which was incurred to aid the revenue, and I propose to transfer from the public works account £100,000 of the sinking fund set free, bhus in bhe present year reducing the floating debb by the sum of £200,000, and leaving outstanding £350,000 to be dealt with ia future according to the state of our finances. I have also to add £128,605 paid off mainly by the primage duty to the £200,000 now proposed to be extinguished, and we shall then have effected a reduction in this species of debb amounting to £328,605. The aid to revenue in debentures issued against the sinking fund increases, belong to a differenb category from what I have been explaining. These debenbures must nearlyall be paid off by a self-acting system according to law. As I have shown,'about £179,000 will be available through the conversion operations to redeem debentures in the present year, in addition to the sinking fund released from the drawing loan of 1867, amount to £146,000. The nature of the complicated and ingenious operations under bhe Consolidated Act, 1884, is such thab while we are issuing debenbures in aid of revenue, in anticipation of the sinking fund falling in, we are at the same time paying off debentures already issued. Iv the present year we issue £282,300, and shall pay off abonb £325,500. SETTLEMENT OF THE LAND. My colleague the Minister of Lands will ask the Legislature to consolidate and amend the Acts relating to the disposal of the Crown lands. The limited quahtity of the public estates still available for settlement suggests the necessity of providing that ia future the bonafide settler shall be considered before the speculator and the monopolist. That the country may know the actual state of affairs, I submit an estimate by the Surveyor-General of the agricultural land still available in the hands of the Crown. " The remainder," ho says, "of the agricultural land in New Zealand is so interspersed with country fit only for grazing ' stock, that it seems most fair to class both as one, for the low [grazing bush land of the North Island especially can be most profitably occupied in conjunction with the small areas of purely agricultural land within them. On this basis the lowlying pastoral and agricultural land fit) for settlement amounts to 2,850,000 acres." In a table accompanying this statement will be found the figures showing the distribution of this land throughout) the several provincial districts. The Committee will probably agree with me that when we consider thab upwards of sixteen million acres of the best land have already been alienated in fee simple from the Crown, there is some reason why the remaining available estate of less than three million acres should be administere d in the interests of the whole people of the colony. The time, it is believed,' has arrived when suitable areas will have to be purchased by the Crown for small farmers. In many parts of the colony the Crown lands available for this purpose <; iiave already disappeared, and if the population is to be retained, the wants of intending settlers will have to be met. A Bill will be introduced hedged round with the necessary safeguards to establish a satisfactory system of purchase. If borrowing in the English market is' t,o be discontinued, the means will have to be provided for carrying on the work of settling the waste lands of the colony. Recognising this fact, the late Government proposed to amend the Government Loans to Local Bodies Act to enable money to be advanced on the security of a special rate to be levied on the settlers. While there is merit in the proposal, so far as it relates to the means of providing the money, the present Government are not inclined to favour a system which entails the payment of another special rate, but we think thab if money advanced under the Act for opening up land for sale were made a first charge on the proceeds of the land there would be ample security without entailing a liability on taxpayers. Instead of the complications arising from assessing the rates to be borne by the land, we propose the simple plan of procuring an estimate by the SurveyorGeneral of the half of a block of land when surveyed and placed in the market, with an estimate of the coat of roads to open it up, whereupon the Minister of Lands would be placed in possession of bhe funds to the limit of one-half the estimated virtue of the land when it was ready for disposal, the funds borrowed for this purpose bo be repaid oub of the proceeds of land. The Government) think an amendment of the Act in this direction will give a fresh impulse to colonisation. NATIVE LANDS. The necessity of providing for the extension of settlement by the purchase of native lands will be seen from the limited quantity of Crown lands still available, and a vote will be submitted in the public works estimates for the purpose. Bub while reserving to the Crown the right) of purchase, the Government are of opinion that the time has arrived for an amendment of the law to enable the natives to lease their land either direct to the Crown in perpetuity or through a Board in which they will have confidence under. the land laws of the colony, to the settlers who are to occupy. Whatever is done therein by the natives under treaty in accordance with the principle of justice must be strictly

maintained. It will remain to reconcile by law the interest of the native race, and of the colony, so that the beneficial occupation of native territory may be hastened and finally secured. The Royal Commission appointed to inquire into this matter have drawn up a comprehensive report after a conference with the tribe.*, in which are explained and elucidated the provisions under which, in their opinion, this end may be attained. Mr colleague, the Native Minister, has given the subject much attention, and will introduce a Bill for the consideration of the Legislature with the object ot consolidating the numerous and complex native land laws into one concise and intelligible measure, and also of simplifying and reducing the cost of the ascertainment of title and other procedure of the Native Land Court. The etlect of this will, it is hoped, enable more rapid and satisfactory settlement of the surplus iand now lying unproductive in the possession of the natives. INCIDENCE OF TAXATION. I have now to ask the Committee to grant me their attention while I bring before it the question of the incidence of taxation, more especially in its relation to taxes on land and incomes. What is a land tax? The popular, and I believe the correct answer to the question is a tax on the value of land less improvements. This is the idea cf the land tax school. The necessity for stopping short of the ideal must be found in the imperative requirements of our finance, fch'o need for providing sufficient revenue to meet our obligations without unduly weighting the necessaries of life through the Customs. Wβ advance, therefore, just as far towards this ideal tax as the condition of a sound finance will permit us, and if we stop short of what some might desire, it must be remembered that the history of financial reforms and changes shows that the ends sought to be obtained were seldom, if ever, reached at a single effort. "We propose to introduce a Bill to abolish the proport\' tax, and to provide for a land and income tax, and in respect of the land tax, to grant an exemption on improvements up to the value of £3,000 for each owner, and also to impose a graduated tax upon all persons and companies, the value of whose land, leas the £3,000 of improvements, shall amount to £5,000. It is estimated that the deduction of improvements will cause a lose of revenue of about £69,000, and the graduated tax will bring in an increased revenue ot £61,890. I have not considered ib advisable to suggest a higher rate of graduated tax than that stated in the table. The payment of the additional sum of £61,890 will form an important extra tribute to the revenue by the holders of large estates, and it will be paid by lees than 3,000 owners. In addition to the deduction for improvements there is to be an exemption of £500 from owners' land, and it is not proposed ' to grant the exemption when an owner's land, less the deduction he may claim, will exceed £1,500. Thus, if a farmer has land worth £800, the improvements on which are valued at £300, the exemption would make him not taxable ; and with land worth £1,200, and improvements £400, the taxable balance would be £300. In the assessment of the tax, owners will be allowed to deduct from the land the amount of any mortgages, and the mortgagee will pay the tax on the total of bis mortgage at the same rate as the ownerori his land —that is. Id in £ ; but the graduated tax will fall entirely on the owner, and he will pay on the full value, less the allowance for improvements. For the purposes of the tax it is considered that the mortgagee ie a part owner of the land, and that therefore he should share with the owner the responsibility in the matter of the tax, to which principle, however, we make the graduated system an exception. But I may here state that an owner will not be asked to pay the land tax on the value of the interest of any tenant who holds a lease in which he has a marketable goodwill. The tenant will be assessed with the valuo of his interest. Wβ propose to graduate the tax on the following scale :—On a total taxable value of £5,000 to £10,000, id ; on a total taxable value of £10,000 to £20,000, • on ditto, £20,000 to £50,000, lgd ; on ditto, £50,000 to £190,000, l£d : on ditto, £190.000 and over, lgd. Ib will interest the Committee to know what a land tax is expected to yield on this system, supposing the ordinary tax to be Id in the £. The result of an all-round tax of Id in the £ on persons as distinguished from companies has been estimated by the Property lax Department at £177,596, and the graduated division of the tax on persons at £46,567. The all-round tax on the land of companies ab Id amounts to £27,361, and the graduated at £15,323. If we add these amounts together we obtain a grand total of £266 847. I attach a table giving the amounts that would be payable on estates held by persons and companies, and trom this ib will be seen that more than £25,000 Will be paid as a graduated tax in respect ©f the land of owners each of whom has a greater value than £100,000. These owners are less than fifty in number. As a strong and readily-grasped argument in favour of a graduated land tax, 1 have had published with the table attached to this statement another giving the proportion between the numbers of those wh own land and the value held. This table deserves the most careful attention ot all who really desire to sec the occupation ot our lands placed in a more satisfactory condition, and it will convey a highly interesting lesson to those who habitually profess to believe that landed property in this colony i 3 so owned as to secure anything approaching the largest possible production Aliening the principle -of a graduated land tax, the Committee will probably desire to learn how its incidence bears on wealth compared with the taxation paid by members of the working classes. I will endeavour to show the amount of tax paid through the Customs respectively by an artisan and a labourer* each having a fami.y cf five, the former receiving 53s a weeK or £137 per year, and the latter 59s a week or £101. per per year. The Sffrmn ivould pay in duty £12 10s 4d, equal to 9'l per cenb. on hie earmnee. while the labourer would pay £11 Uβ 5d or 114 per cent, on his earnings This allows for no broken periods or for periods of sickness or non-employment, during which the earninge might cease, while the payment of duty, at least to some extent, would continue. Let us now see what owners of land ■worth £105,000 would pay in a graduated land tax, deducting £3,000 for improvements A lgd tax would amountto £690, or about 9* per cent, on an assumed income of £7,350. " In addition he might pay 3 per cent), on his income to the Customs. The result illustrates how inequitable has been the Bystem of the tax prevailing in this country, and exhibits one efficient cause of the tendency of wealth to accumulate rapidly in the bands of a few. Assessments will be made of both the improved and unimproved value and it is hoped the efTorb will be more successful than in the past to secure a fair and even valuation, for there is reason to fear that many of the larger estates have not been assessed at their fair cash value. It is proposed to give greater power to the Tax Commissioner, in order to et.sure a Lore equitable result. Having dealt with the land tax and its incidence, I now come to the consideration of a tax on incomes derived from trade and commerce. Wβ believe the property tax to be grossly-un-just in its operation, imposing without fiiecrimination burdens on capital, whether productive or nob, and discouraging industry. For this obnoxious form of taxation we intend to substitute an income tax ot Iβ in the £1. There will be an exemption ot £150, and a dedution by way of abatement of a like amount from incomes which do not exceed £600. Companies will be subject to the same rate of income tax, but it will be understood in all cases where the income tax ie charged .thab ib will not be

3vied on profits derived from land which is t cached by the land tax. Under the head- » iff of companies are included all joint t tock corporations, banks, shipping, fire I nd marine insurance, and gold mining com- i sanies. Tbere will not be an exemption in < he case of companies. The revenue de- ' ived will not be so large as at present, bub .' he incidence of the tax will be more equitble, and those corporations which are in a ] .rogressive stage will be breabed lenienbly, j 'hile bhose thab are making large profits : rill pay proportionately. Life Insurance i Lssociations are at present charged Id in ' he £ on the amount of their funds invested n the colony. THE INCOME TAX. We propose to charge an income tax , s in the £ on the income derived from iersonal property in the colony, but the md tax will be charged on their land. It 3 estimated thab they will not be so everely taxed as in the past, and the Iterations will, I think, serve ac n encouragement to invest in the olony, and will, I am glad to cay, fford some relief feo institutions that are erving a most beneficial purpose. In rder to prevent misconception, it will be pell for me to state distinctly that the ncome tax will not be levied on any inome derived fi'orn land, or from money snfc on mortgage. Such property will be abjecb to bhe land tax only. In harging tax on incomes derived from irofeasions and from occupations in yhich a profit £s nob made from capital .nd on salaries, we propose to exempt ,11 incomes of £300 and under, and to ieducb £300 from all incomes above this imount. An income of £500 will, therefore, >ay on £200, and an income of £1,000 on i7OO with a rate of 3d in the £ on the firsb ;200 over the exemption, and 6d in the £ ibove bhab amount. A person in possession if a £500 income will pay under this pro)osai £2 10s per annum ; in possession of "600, .-€5 per annum ; of £700, £7 10s per mnum, and so on. Considering the comjarafcive independence of those in posiession of salaries or incomes above £300 a /ear, bhe smallness of bhe rate will comnend itself as fair. On the other hand it vill be recognised thab possessors of • uch incomes should not be asked to iontribute the same proportion as those ,vho derive their incomes trom property, deferring generally bo the alleged inquisitorial character of an income tax, I beg to issure the Committee that I have given this ny most careful consideration, and I fail to liscover any reason why the assessment for in income tax should be more vexatious to :axpayers than thab for property tax purposes, and I am convinced thab it will be possible to so adjust the mode of collecting as not to increase, at all events, the inconvenience of the taxpayer. I have now to bring together the estimates of land and income tax of the amounts receivable under the different schedules of the Bill. Land tax, including land and mortgages under schedule A, £266,847. Income tax under schedule B, including banks, life insurance, goldmining, fire and marine insurance, and other companies (omitting profits from land and mortgages, and companies debentures other than mortgage debentures) £47,300. Income tax under schedule C, from trade and commercial, £40,000. Income tax under schedule D, professions and salaries, £15,010. These amounts added together give.a grand total of £369,147. Pending the results, however, of the triennial valuation of property, shortly to be made, it will be safe to deduct from total estimate 5 per cent, as a margin, thus arriving ab a total neb revenue of £350,690. At the end of the present year, the new system nob coming into force until next; March, the different estimates will be revised in the light of the returns, and it will then be possible to make a more accurate forecast of the receipts. SUMMARY OP TAXATION SCHEME. The proposals I have the honour of sub' mitbing bo the Committee will tend, I believe, to adjust the direct taxation ef the country in accordance with the capacity of the different classes of the community to bear it. The exemption of improvements up to £3,000 on land affords a material relief to the farmers and improving land owners, while ib directly encourages thrift in conveying the intelligence that industry and labour no longer mean additional burdens. The graduation of taxation on the large estates in accordance with the principle of bhe equality of sacrifice, will act in bhe direcbion of placing a check on monopoly. New Zealand is a colony of comparatively limited area, and ib is for the people bo say whebher the land, out of which all must live, shall be widely distributed, or whether it shall be held by a privileged number. Our policy, we be- ; lieve, raises the issue in the most practical form, while it will be seen not to be unfair, when wo compare the baxabion contributed by different classes. The abstract fairness of an income tax on profits derived from trade and commerce has never been questioned. Our change in this respect gets rid of a number of exceptional taxes, which rest on no principle, subsbibuting a single tax on profits realised. The comparatively light income tax under the head of salaries and professional incomes will fall only upon those who are in a position to "contribute ib without inconvenience, the exemption of £300 affording ample protection to all who will come within the limit of the schedule. If, on bhe whole, wo have nob gone far enough in bhe opinion of some, or too far in bhe opinion of obhers, we ask for that consideration which would weigh the difficulbies of a largo and comprehensive change in the incidence of taxation, and the difficulty of providing sufficient revenue to meet the necessities of our finance, and ab the same time relieving the industrial classes from the crushing effect of an unjusb system. If we have nob accomplished all that some anticipated, our proposals, at least, will have gone a very great distance towards the end we have in view. Had the land tax of 1878 been retained and improved, we shaulcj by this time have had perhaps the fairest, system of taxation of any country under the British Crown ; but the retrogressive step taken a year later has produced the opposite result, and we are now in the position of thoee who have been wandering on the wrong path, and are forced to cautiously retrace their steps. It is in the light of this experience we submit our proposals with the full confidence that the country is ripe for them and will accept them. RESULT OF THE CENSUS. Before concluding, I consider it my duty to direct the attention of the Committee to the lesson conveyed by the census returns of the population recently issued. Briefly, the rough result of the census, as shown by the enumerators, gives a population, subject to revision, of 623,352 persons, not including Maoris, against 578,482 persons in March, 1886, making an increase for five years of 44,870. But the natural increase for this period, being the excess of births over deaths, is 64,168, so thab the loss by excess of departures over' arrivals is 19,298. The arrivals recorded in the five years were 73,386, and departures 83,948, giving a loss of 10,562 persons. It would thus appear that the unrecorded departures amounted to 8,736 persons. The real outflow of population from the colony has evidently nob been returned to the Registrar-General in the monthly statement, and it is well known that—in the years 1888 and 1890 and of late —the steamers for Australia were greatly crowded owing to a disposition on the part of the population to leave mainly for New South Wales. Now here is a loss of wealth and wealth-producing power in the departure of so many people from ourshoresto seek employment in other colonies, which demands the serious consideration of Parliament. Wβ naturally congratulate our-:

selves on the increase of the exports, bn t the reason for congratulation eufiers serious abatement when the discovery is made that more people are leaving than are arriving in the colony. If we cannot retain our population, we should know the reason why, in order that the remedy for £ucn a state of afiairs may, if possible, be applied. ,1 The returne of the census took us all by surprise. No one imagined the loss had bt>en so great, or that the exodus had made co large an inroad on the New Zealand-born population. It is not satisfactory merely to repeat the cry that the cessation of public works bas been the cause of the exhausting emigration which has been going on. Doubtless this may be one of the causes, but, if so, there W the greater reason to shape our policy toovercome the difficulty. It appears to the Government thab the first thing to be done is to obtain an accurate knowledge ot the J facts. How many people are- unemployed, why employment does nob exist for all. whether labour should not bo organised by the assistance of the Government so that ib may be more eqnally distributed, and more easily find employment ; in a word, what is wanted in this respect is a system under which statistics may be furnished to a central office at frequent intervals, weekly or monthly, of the state of the labour market in every part ot the colony. The unemployed evil appears to be centred principally in the large ciiies to which men oub of work seem to be attracted. A3 the first step in the treatment of a disease is to submit it to a careful diagnosis, so we must know .the con- | ditions surrounding the unemployed malady before we shall be able to overcome it. We are thus naturally leu 1 to the practical consideration of the establishment of labour bureaux in the different centres of population under the charge of & Minister of the Crown. Having obtained our information, next step, of course, is to apply it so as to utilise this wealth in the form of human beings who are wandering through our streets in search of work, or who are leaving us altogether because- tbere appeared no gleam of hope if they remained. COXCLVSIOX. I have referred to the cessation of public works as one of the assigned causes of the exodus. Does ib not show thab the method of carrying oub public works has been radically vicious, when they no sooner cease than those engaged in them are compelled to emigrate. If the public works had been made subordinate to settlement they would have created a demand for population ; OU the other hand from the way they have been conducted they have been instrumental in driving it aw&y. I submit as a subject fortheearnesbconsiderationof bheCommitfcee that not a mile of road or railway should be constructed by the colony in the future, without provision being at the same time made for the location of people engaged in the work on land, if possible, in the neighbourhood. This may mean a radical change in the method of entering into contracts, and ib cerbainly will on bail more direct responsibility on the part of the Government, but it will transform into sturdy settlers, with a stake in the country, a large proportion of those who, seeing no prospect here, are ready to embark for other lands. With a view to immediate relief, and stopping the exodus, we propose to put in hand euch public worke as are of a reproductive character, and for which moneys are available. Our first duty as legislators, it appears to me, is to see that ib is made easier for the people to have comfortable homes. A great aggregate of wealth may be built up in the hands of a comparative few while the many may be pauperised; but this is not civilisation, and ib is nob a sign of healbh in a State. In the Financial Reform Almanac for 1891 we have the following appalling statement of facts:—"ln London one person in every rive will die in the workhouse, boepitaW QF Ittnatiq asylum. In 1888, out of 79,000 deaths in London 19,179 were in workhouses, 7,113 in hos--pibala, and 380 in lunaeic asylum*; moreover, the percentage is increasing. In 1887 ib was 2\. - 6 of the total deaths, in 1888 it rose to 23 - 3. The increase was exclusively in the deaths in workhouse., and infirmaries. Considering that comparatively few of the deaths are those of children,it is probable that) one in every four London adults will be driven into these refuges to die, and the proportion in the case of the manual labour class must be still larger. The number of persons who die whilst in receipt of outdoor relief is not included. The number of pauper funerals is not given in the official returns, but ib is computed to be ab least one-third of the total number of deaths, and that in spite of millions of insurances in burial clubs and industrial insurance societies : and this is the civilisation of the most civilised and wealbhiesb city of the world !" Well may we question the economical social system of which this is the product. Should we not seek to establish our civilisation in this new land on a broader basis, in a deeper sympathy for humanity ? Nor need we fear that in pursuing this aim we ehall fail to reap thab material prosperity of which financial statements aim ab being the embodiment. The wide diffusion of wealth and industry among the people are the surest guarantees of a buoyant revenue and a healthy exchequer. I see only fcho closest relationship between a people well placed and fully employed and a State enjoying the highest credit and discharging every obligation, moral and legal, imposed upon ib. In urging these considerations, we are reminded of a maxim which I believe to be the essence of all sound financial and social economy, that the safety of the people is the highest law, and demands the first consideration of the State. I have, sir, to return thanks bo hon. members for bheir attention.