COLONIAL FINANCE.

Auckland Star, Volume XXXI, Issue 209, 3 September 1900, Page 2

COLONIAL FINANCE.

(To the Editor.)

Sir,—May I be permitted to point out wherein New Zealand, In common with Australian finance, is on a rotten basis? There is no sinking fund. We borrow, borrow, but never pay, and apparently don't intend to pay. New Zealand's debt is forty-seven millions, and she pays away annually for interest £1,700,000, so that, since the public works scheme was started, we must have sent to England in interest about as much as our present national debt. That guess is a running jump at the amount, but as the greater portion of the loans were contracted, within _en years, at high interest, I am as likely to be under as over.

We are had every tirpe, and the foreign lender Is always "on the make." For our 3 per cents, he graciously gives u_ £9 10/ instead of £10; but in the course of a few \ months the stock is quoted almost up to' £10. I use £10 instead of £100, as the smaller amount seems to sheet home the argument more forcibly and familiarly.

Mention loans, and railways immediately start in the mind,-and we all feel it is good to construct railways—they pay anyway. But only one-third of our debt has gone to railways. Large sums varying from one to three millions are to be found debited to Maori war, immigration, public buildings, telegraph, bridges, raising loan, etc. In fact, instead of being a self-reliant, self-respecting colony, we seem to have nothing unmortgaged—and to the foreigner.

How often do we hear: "Let future generations pay their share?" If every generation paid its .share all would be well. But a generation has passed since the policy was started, and how much has that generation paid? It has not only not paid a penny, but seized all the sinking fund. An excellent example for future generations.

Legislate for tariffs—free trade or protective, as you choose—land tenure, equitable taxation, labour; they are all Important. But a sound basis for finance is the n-OS.-HoHpr.ta_it-o_ alk Ofcaokceei

the colony will prosper in spite of the present system, but such a system, piling up, as it does, a cumulative burden and handicap, is beyond justification, being entirely bad and radically vicious.

Mr Seddon has just let a grand opportunity slip of placing the colony in the forefront of Australasia and winning everlasting renown for himself. With such a majority, by boldly grasping the nettle, he could easily have given finance a turn in the only true direction. Instead, he has chosen the line of least resistance. He has a £600,000 surplus, which is, he plaintively says, too much, and at once proceeds to fritter it away. Yet, in the next breath, he asks leave to borrow a million.

So far I have been finding fault, and as I do not intend troubling you again, ask permission to suggest a remedy—for a remedy must be found—to be sound.

Treat the £600,000 surplus as the working classes' contribution—a very crude generalisation I admit, but. near enough for illustration. The free breakfast table remissions proposed, mostly to be reimposed, are too slight to be appreciated, therefore might have been returned to better purpose. Wherein does the working man. -as such, benefit by public works? Well, his chances of constant employment may be bettered; that is all.

The land-owner, merchant, and propertied classes generally are the folk benefited; therefore they should pay. If they pay down at once the resulting works become their' own, and subsequently, through rise of values, they acquire an unearned increment. By paying down, say, half a million yearly, they would save the accumulation of another £47,000,000 in their lifetime of unpaid debt, with its similar amount of interest, which had gone, never to return. Assuming tha working men's £GOO,OOO were devoted to railways, at £8000 a mile, that would equip 75 miles, or about ten miles more than the average of the past thirty years.

But I have no sympathy with penalising anyone, even the wealthy one, and-I fancy a compr.mise could easily be arranged. Say, £500,000 more were required on public works account; that amount could be levied on wealth In its various " forms. In reality, let It be a forced loan at 2?t or 3 per cent., with sinking fund added sufficient to liquidate the loan in 25;. or 30 years, each year's instalment of fund to be applied to purchasing bonds. As the colony grew so would the general revenue and the local loans could be increased without inconvenience.

The chances of booms and fluctuations would thus be minimised, and the man who was paying the piper would probably choose a good tune. Economy and efficiency might" be expected. We would then have our local Wall-street dealing in colonial bonds.

Two substitutes for local borrowing, on repayment lines, are (1) English loans with sinking fund; (2) a Parliamentary fund for debt extinction. I should be satisfied with either, only they would be absorbed into the maws of a needy Colonial Treasurer some very rainy season. Experientia docet.

Let any person who disapproves the present basis of borrowing, but disagrees with my suggestion, put forward a better. Our existing system being the worst possible, a better should be found. I would welcome any.—l am, etc.,

WM. S. AICKIN.