THE FINANCIAL STATEMENT.

Auckland Star, Volume XXXVIII, Issue 169, 17 July 1907, Page 6

THE FINANCIAL STATEMENT.

The LAND PROPOSALS

LIMITED ENDOWMENTS.

OPTIONAI, TEJTORE REINSTATED. REVENUE EXCEEDS SIGHT■ MIULIQjyS. PROPOSED MILLION LOAN. (By Telesrapti.—Parliamentary Reporter.) WELLINGTON, July 16. Plunging straight into figures, the Colonial Treasurer (Sir Joseph Ward) made no attempt to heighten the effect of the interesting Financial Statement which he read to-night. There was scarcely any preliminary matter, and the Premier, reading steadily, with, infrequent pauses, and taking no notice of interruptions expressive of approval, eoninleted. bis task in an hour and a half. As is customary, the Leader of the Opposition (Mr. Massey) asked when the debate would be taken on the proposals. The Premier replied that he wished to start on Fridays, but when it was suggested that members should have a few off days to consider a Statement so full of important proposals, he agreed that the debate should commence on ■Tuesday. He added in reply to another query from the Opposition that he could not say when the tariff proposals would be considered, probably the Land {Bill proper would go through first. The resolutions giving effect to the changes in the tariff announced in the Budget were "formally adopted, and the House adjourned at 9 o'clock. The revenue has surpassed that of any previous year, and, notwithstanding the heavy expenditure, we closed our books on the 31st of March last with the substantial credit balance of £717,825, a result which must be gratifying to both the House and to the country. REVENUE. The revenue for the year exceeded eight millions, the highest on record. The actual amount was £8,399,075, and compared with the revenue of the previous year, £7,584.359, shows an increase of £814,716, or a little over 10 per cent. The principal increases were:— Railways, £287,978; Customs, £243y629; stamps, £164,464; land and income tax, '£ 77,637; miscellaneous, £31,07*5; other , receipts, £24,822. Territorial revenue was less by :&9589. Comparing the- actual with the estimated revenue, there was an excess under every head. .

The expenditure of the last year or so was necessarily higher, the actualsum spent being £7,774,926, or £6§2,586 more than tbe previous year. Of this large increase permanent charges are responsible for £108,063, principally caused by payments of interest on new loaH3 and the cost of increased payments on old age pensions.

The charges ant&orised by. permanent appropriation show, as compared ■with the estimate, a saving of £12,828, while the votes for Departmental expenditure show but as credit has been given to the railways for the excess of revenue allowed by law of '£121,396, tie underspent amount on Departmental votes may be stated as £-67,----109. After charging £39,950 for Defence and War Loans' Sinking' Fund Account, we have a direct saving of £39,987 on the estimated expenditure for the year. The surplus of £788,795 from the previous year enabled to be transferred from revenue in aid of public ■works the sum of £775,000, whkSvif reckoned at Zi per cent, represents a saving to the State of £27,000 per annum for interest. The largest amount previously transferred on this account was £60,000. RESULTS.

The receipts for the year from all sources amounted to £8,4T8J356, the expenditure being £7,774,926, leaving a surplus on the year's transactions of £704,030, which, added to tbe amount of ; £13,795, left froni the previous year's balance, after the transfer to- the Public Works Fund of £775,000, gives us a balance- on MaTch 31 last of £717,825. TREASURY BILLS. Hon. members will be know - •that in accordance with the promise made in last year's Budget £150*000 ■worth, of outstanding Treasury bills have been paid off, reducing the flostting loan from £700,000 to £550,000. These bills have been renewed from year, to year, and practically become a peuna* ment debt This is- the first step taken towards clearing them off. I hope to •make further redempticsts from time to time, until they are all paid off. THE SINKING FUND. The proposal made in last year's Budget establishing new sinking funds in respect to certain loans has been given efieet to; £39;950,' representing one per cent, on £3,995,000, amount of loans raised for war and defence purposes, and £50,165, a like rate on the amount borrowed for the purpose of acquiring lands for close settlement, have been paid over to the Public Trustee, and by him invested in securi? ties returning four per cent, interest. THE -PUBLIC DEBT. The gross public debt on March. 31

last was £64,179,040 against £62,191,040 at the close of the previous year, or an increase of £1,988,600 for the year. Of the million loan authorised last session for public -works, £943,600 was received during the year. TJhe balance, £56,400; already placed, will come to credit during the year for the purchase of lands ior closer settlement. Debentures to the amount of £53,040, were issued ■under the Land for Settlement Consolidation Act, 1900, and £60,975 under the ■Maori Land Settlement Act of 1905, for the acquisition of lands from Maori owners. To enable grants to be made to local authorities £180,000 had to be I borrowed, and £150,000 obtained to meet the requirements of the Advances to Settlers Office, and £20,000 to carry out the provisions of the Advances" to Workers Act, and a farther' snia of foi. seeaery. J*o-

vided for. Notwithstanding the. disturbed state of tEe money market, no difficulty has been "found in obtaining all the money required, .ytiecher f of Tβnewal or for new loaiis, on most -satis|aatory terms. A premium of 2 per cent had been obtained for many sales, and as high as 1 per cent- received for renewals in several cases. The sum of £2,168,766 fell due during the year. Of large sum, £1,648,466 .was renewed, £255,300 converted at gar, £261,800 paid off, and £320.0 remained outstanding, the debentures having not been presented. Of the increase of the., debt, the following items may be stated" to be of a directly interest-producing character :-HFor the purchase of land for settlement, £596,015; for railway construction and additions to open lines, £52,500; for loans to local bodies £180,000; for advances to settlers' £150,000.; for advances to workers, £20,000; for New Zealand consols deposit, £1384; total, £1,472,393. LAND FOR SETTLEMENT. Under the provisions' of the Land for Settlement Acts, frequent references to the Compensation Court, in order to arrive at the price to be paid for estates acquired for settlement, are necessary, and have proved unsatisfactory. An alteration in the present system is desirable, and the House will be asked to legislate to provide that under the Valuation of Land Act be the basis upon which the price is to be ascertained, with 10 per cent added when the estate is valued at less than £25,000, and 5 per cent when the estate is valued at between £25,000 and £50,000, and 2* per cent from f50,000 upwards. LOANS TO LOCAL BODIES. The work carried on by local bodies is recognised as of the greatest value to the people whose interests they serve, and I am satisfied that in the carrying out of that work the system of Government loans has proved of great service. That it has been largely availed of is shown by the fact that in all £2,194,138 has been advanced. It is only right that the people in several districts, who have shown a disposition by local taxation to help themselves, should have the advantage over those who have relied entirely upon Government assistance for carrying on local works, 'io meet this position preference will be given in proportion" to the amount of rate levied by the local bodies, and legislation, providing a scale to meet this, will be submitted to Parliament. In order to further assist local bodies I propose, from February 1 next, to reduce the rate of interest on the existing and future loans by half per cent.— but not making it lower than 3$ per cent—the lowest rate at which we obtain money for lending to local bodies. RECEIPTS PROM LAND TAX. The receipts from land tax exceeded the estimates by £42,342, and were £61,586 in excess of the actual amount collected the previous year. Income tax receipts show an increase on the estimates of £15,866, and an increase on the revenue of the previous year of £16,051. The total revenue from taxes, therefore, produced £58,208 more than estimated, and £77,638 more than the previous year. Notwithstanding the purchases of estates by the Government, and the steady increase in the income-tax, the revenue affords gratifying testimony to the continued prosperity of the country. TELEGRAPHS AND TELEPHONES. By vigorous prosecution of the work of'constructing- telephone lines to isolated parts of the country the Department has been enabled to , open for public business no less than 146 telephone offices during the year. It is anticipated that the number for 1907 will be at least equal. The amount expended on telegraph extension during the financial year of 1906-1907 was £114.068; but there are liabilities amounting to £75,----110 on account of works, for which the Parliamentary authority was granted too late for the necessary expenditure to be brought within the financial year. DAIRYING INDUSTRY. The first essentials to excellence and purity in dairy products are strict cleanliness in the byres and the highest degree of freedom from disease in stock. The objects can be effected only by increased- inspection, and for this, purpose it is proposed to pay £8000 per annum out of the Consolidated Fund. THE EXHIBITION. The International Exhibition, which closed in April, proved to be the most successful held in New Zealand or in Australia. The cost to the country at present stands, in round figures, £ 60,50 a ;, but there will; be a further reduction upon this amount from sales' in course of prosecution. 4- car^ll l es " timate of the gain to the country has been made, which, gives a total of £360;000, so that ihe value of the Exhibition to the colony was £299,500. THE CIVIL SERVICE. To meet future eases it is proposed that statutory authority be given to the Governor to modify by Qrder-m-Council the statutory classification list of any Department, the order being subject to approval by both Houses by resolution. In this way, cases for alteration cm be dealt with as they arise, and the authority of Parliament preserved. Additional to classification, the Civil servants 5 amended classification for both Railways and Post and Telegraph service will be submitted as promised last session. I am having prepared a return showing the names and salaries of Oivil servants of, the colony* -which I propose laying on the table, of the House for the information of hon. members before the Estimates are considered. MINING INDUSTRY. The mining outlook is of a very hopeful character. The export of gold for the year 1906 was the'heaviest for a period of 35 years, while the output of coal shows a considerable increase over that of the preceding year. It is about double what it was 10 years ago, a sure indication of the progress of the industrial life of the community. The increase in value of our mineral products for the past year amounts to nearly a-quarter of a million sterling. Considerable activity has been shown in the development of the deposits of copper, antimony, and other minerals that are known to exist in various parts oi New Zealand, and for -which there is great demand at present in the United Kingdom and the United States for manufacturing purposes. It is believed thaet the best way to encourage the development of our mineral resources is by providing additional assistance towards cutting tracks, and opening up roads in the back country and mountain regions. Some promising discoveries Jiave been made during the past few yeaTS; but there are many difficulties in the way of getting in supplies and machinery and marketing the products of mines, for which better roads and tracks are indispensable. LOCAI/ GOVERNMENT. A comprehensive measure lor the consoiidatioa ami general- amendment mf

the local government law will Ije iniro- \ duced;. but, having regard to the magnitude and importance of the subject and magy other matters which must : be dealt wiji, I do not anticipate that the. bill will pass this .session. It will, however, be circulated, so thiut its provisions can, be fully considered by all parties affected, ■and I hope Parliament .next session will put this important legislation on .the Statute In. cases where amend- '' xnents of the existing law are -neeaett you will be asked to make tfea LABOUR ADMINISTRATION. The administration of the Industrial Conciliation and Arbitration Act has dis- ! closed defects which must be remedied. These are chiefly the delays, which have often practically defeated the main object of this legislation. These delays have been due partly to the long intervals between the hearing by the Arbitration Court of disputes; but laamly to unnecessary and often vexatious appeals made from the Conciliation Board to the Court itself. Troubles that have arisen regarding the half-holiday show that factories should be dealt with in this respect. Bills to meet these points will be introduced. INFANT LIFE PROTECTION. Recent information which reached mc shows the need for further protecting infant life from neglect, often found In connection with the treatment of children. Legislation will be brought down providing safeguards -which experience has shown to be necessary. CHINESE IMMIGRATION. Neither here nor elsewhere has the poll tax succeeded in preventing the immigration of Chinese, so that need not be discussed, as the money is always found to pay the amount of "the tax to enable a certain number of Chinese to come in. It is very necessary in the best interests of the European inhabitants of this country that restrictions be imposed. Experience shows that the more effective and justifiable check is by means of a high educational test. This, it is hoped, with the present poll tax, will have the effect of restricting this class of immigrants. Legislation on these lines will be introduced. NATIONAL ANNUITIES. Hon. members will recollect that last year the Government circulated a bill to establish a system of annuities. The encouragement of thrift should be one of the main objects of every Government. It not only makes sure provision for declining years, and gives security against want, but in the present it serves as a healthy ch&ek upon the disposition to spend money in various forms of indulgence which are far from beneficial to our people. The bill will be introduced again, and will contain provision for voluntary contributions to a fund for the establishment of annuities. ROADING BACK BLOCKS. Good progress has bsen made with road ing and opening up, by means of bridle tracks, the lands recently taken up for settlement; but notwithstanding that the work done during the year just passed has exceeded in quantity that done during any previous year, settlement of new land has been so extensive as to render it impossible to provide access to the whole of it as quickly as is wished. However, with sustained perseverance and energy, and the provision of sufficient funds for the purpose, it is hoped that roading will, before long, overtake the needs of settlement. In addition to road works in new localities, a considerable amount of assistance has been given in the way of grants to local bodies for works in older settled parts of the country. POST AND TELEGRAPH CHARGES. The marked success oi the reductions in postage and telegram rates during the last few, years warrants further concessions. I therefore propose to make the following reductions: — To reduce postage on inland postcards from Id. to id., thus bringing the post within reach of the humblest members of the community; to reduce the fee for registered letters from 3d. to 2d., for at present far too many letters with valuable enclosures are posted unregistersd; to further reduce the inland letter postage, making the rate one penny for th** first four ounces, and Jd. for each two ounces thereafter, instead of one penny for each four ounces at present; to Teduee postage on magazines to Id. per lb., instead of Id. for each eight ounces. This concession, it is hoped, will be a great convenience to country residents. I intend, at the same time, to materially ■jftitjreasethei frequency 'of letter-carriers' deliveries in the business portion of the four large centres. On the telegraph side, it is intended to .abolish at country places the fee of; five guineas per annum at present charged on telephoning telegrams to the nearest telegraph office, and to reduce the same to £1. Later on, I hope to abolish the charge altogether. It is estimated that these reductions, in the whole, will mean a concession to the public of £20,000; but, after making due allowance for the increased business likely to result, I estimate the loss to the Department for three months, from January 1 to March 31 next, not to exceed £3800. The redaction of the postcard rate will be made a few days before Christmas, and the other concessions will come into force on January 1 next. RAILWAY CONSTRUCTION. Full details of the Government's railway works and proposals will be given in the Public Works Statement, which will be submitted by my colleague later on; but I may, however, refer briefly to one or two points. Our railway construction works have continued to make steady progress. On the North Island Main Trunk Rail-way especially a large amount of very good work has been done. The rail heads at the northern and southern ends of the line are now witMn 28 miles of each other, and tsh intervening gap is bridged by a good coach service, so that the through journey between Auckland and Wellington by-this route is already quite practicable. There is now every prospect of the promise of- completion of this great national undertaking by the end of 1908 becoming an accomplished fact. Expenditure on rail-way construction last year amounted to no less than £919,684, and in addition, to this,' £308,150 was expended on additions to open lines, and £117,915 on railway duplication works. The expansion of traffic on the railways in all directions calls for a much larger expenditure on rolling stock. To meet this position I propose to devote £350,000 out of the £1,000,000 loan for additions to the opened lines, so that a vigorous programme of providing rolling stock and other necessary facilities may be carried out without unnecessary delay. POSTAL BUILDINGS. The expansion of the postal business of Auckland and Wellington necessitates- further provision for carrying on the work of the Department in these two cities. Competitive designs "for the election of a building upon 'land ac-

quitted for ,that purpose in -Wellington will, at an .early date, be invited, and I hope, to be able .shortly to arrange for ;a site in the city of Auckland:, to provide for the requirements there. THE 'LAND QUESTION. It has always been one of the cardinal .doctrines of the Liberal party in New Zealand that the prosperity of the community, as a whole, is directly and closely connected with the prosperity of our farmers. So iar from there being any antagonism between town and country, they. are interdependent. Neither can flourish alone, and the wellbeing of the one must react for goo,d on the other. Guidtjd by this principle, the Liberal Administrations of the past ha\'e striven to benefit both. The towns have been fostered by tariff reforms and industrial and humanistic legislation of various kinds; the country, by liberal measures for the settlement of the land and the financial help of the settlers, and by innumerable services rendered to all kinds of farmers by the Agricultural Deparement. In addition to this, both town and country shared the booh of liberal railway facilities, cheap postal aria telegraph rates, development of trade routes and foreign markets, and many other advantages with which hon. members are familiar. When the present Government took office they felt that the existing system of land tenure had in many respects served its day, and no longer met the requirements of the people. We therefore submitted proposals for a change, and these have been discussed during the recess, and detailed proposals in the light of information since obtained will be submitted in due course. For the information of hon. members I may mention that in order to prevent excessive holdings and aggregations of estates in land, and at the same tune to leave scope for the enterprise and energy of settlers, the graduated land tax will be increased on estates of £40,000 or upwards in unimproved value, and in computing the value of business premises in town and country, and in the case of country estates the principal homestead site will not be. included. Present holders of lease in perpetuity will be offered the option of the freehold, and, instead of having to incur the risk of auction as previously proposed, this option will be given at a price to be fixed by- arbitration as on the date on which they gave notice of intention of purchase. Proceeds of sales will be paid into the Lands for Settlements Account, and be applied in acquiring new estates for settlement. CROWN LANDS. Of the existing unsold Crown lands, a substantial part, say 9,000.000 acres, will be set aside as a national endowment, and tbe residue will be open on the optional system, as at present, save that instead of the present lease in j>erpetuity there will be a renewable lease, that is, a lease for the term of 65 years, with perpetual renewal for similar terms, the rent for each term being fixed by valuation of the land without improvements, as at the commencement of each successive term. NATIONAL ENDOWMENTS. Lands will be disposed of only on the renewable lease system, and the proceeds of the endowment land will be devoted to education, old age pensions, 75 per cent for the former, and 30 per cent for the latter. GRADUATED LAND TAX. In pursuance of the. Government's steady and persistent endeavour to secure closer settlement of the country, proposals will be laid before Parliament providing for increasad rates of graduated land tax in the eases of very large estates, in order to induce their subdivision and to prevent aggregation. To this end I fropose, while making no alteration whatever in the present scale of graduated land tax payable by owners of less than £40,000 unimproved value, to substitute a new scale of graduated land tax for presentation in respect of owners of £40,000 unimproved values- and over. This new scale (to he called tbe initial scale) will commence at £40,000 (unimproved value), with a graduated tax of 8/ per cent., and rise thousand by thousand in successive uniform increments of one-fifth of one shilling per cent., until the maximum rate is reached at £200,000 (unimproved value), when it will be £2 per cent. To this initial scale will be added an additional rate of 25 per cent, of the scale rate. Business premises in. town and. country will be exempted from the operation of the abovementioned additional rate, and in the case of country estates the principal homestead site will be similarly excluded; the reason for this being that it is not intended, nor, indeed, would it be justified, to attempt to have business premises and homesxeaas ent up or reduced, or interfered with. They do not stand in the way of settlement of our people on the land, and the object of the graduated land tax is to prevent large areas becoming centred in individuals or companies. Tbe rates of graduated land tax under the initial system are higher than the present rates, the new initial rats oi £40,000 being as already mentioned) 8/ per cent, against the present tax of 14-16 in the £, which equals 7/3J per cent, while M«e new initial rate on £200,000 is £2 per cent, instead of the present 3d in the £, which is £15/ per cent, while to this initial rate in all cases, except those above stated, must be added the additional rate of 25 per cent. The total graduated land tax on a property of £40,000 (other than business premises in town or country), not owned by an absentee (who is liable at present to an addition of 50 per cent on the total graduated land tax payable by him), will, therefore, be 10/ per cent of the unimproved value, and on one of £200,----000 unimproved value, £2 10/ per cent. These percentages represent taxes of 1 l-5d and 6d in the £ unimproved value respectively. I propose to exclude minerals, standing timber, and growing flax from assessment for land tax, both ordinary and graduated, except in cases where such are held for speculative purposes, or as a monopoly, and to assess instead for income tax the profits derived. I submit that this will be fairer than the present one of dealing with the mineral, timber, and flax industry for taxation. The present method has proved inequitable and unsatisfactory in the past. The assessment of minerals for land tax, owing to the great difficulty of estimating the value of mining property, has so far practically resulted in the escape of the owner of mines from land tax, while unlike the lessee of a mine, who is liable for income tax on his profits, the owner has hitherto been exempt from income tax. The assessment of standing timber and growing flax for land tax, although practicable, causes hardship in, connection with the graduated land tax in the eases of the bona-fide timber and flax industries, and, as regards timber, it is calculated to unnecessarily hasten the destruction of valuable forests. If all these proposals are given effect to this year, I estimate that the total land tax revenue will exceed the receipte of last year by. about £70,000. ' "

T-tj-h! SHEEP TAX. This tax was imposed in the year 1877, and, as -will be seen from the statute, for a specific purpose, viz., for- inspecting sheep, with the view to the eradication of the then -widely-spread disease, "scab." Happily, the flocks of this country are now entirely free from it. This trouble and the cause for the tax having now disappeared, the reason for its continuance no longer exists. Moreover, cattle, horses, and pigs entail more expenditure for the eradication of diseases peculiar to them than sheep erer did, and yet there is no tax imposed in respact to this class of stock. The amount collected under the sheep tax is barely £20,000 a year, and I propose that Parliament should repeal it altogether. This concession, I am satisfied, will meet with general approval, as the sheepf arming industry has reached such dimensions that it behoves us to assist it in every legitimate way. NATIVE LANDS. I anticipate that the labours of the Commission will go far to effect a solntion of the native land question, which has been almost a night-mare to successive Parliaments. In order that no delay may take place in carrying out the settlement of the people on the unused lands, they have, in the last report, asked that their recommendations be submitted to Parliametn for action. I feel sure that Parliament will be only too anxious to pass such legislation speedily, and satisfactorily settle the many difficulties that have arisen over the Maori land administration. Parliament will also be asked to pass legislation to provide that all native lands proposed to be alienated, either under leasehold or freehold tenure, be • disposed of, after full advertisement, by .public competition. THE LOCATION OF ENDOWMENT 4SEAS. A considerable amount of doubt seemed to exist in hon. members' minds last session in reference to the areas of lands in the several districts to be set aside for endowment purposes, and in order that the proposals may be fully understood, I desire to state that the nine million acres proposed to be reserved for endow-' meiit purposes are distributed proportionately in each district, as follows :-rAuckland, 900,000 acres; Hawke's Bay, 135 ? 000; Taranaki, 90.000; Wellington, 90,000; Nelson, 1,350,000; Marlborough, 450.000; Westland, 1,035,000; Canterbury, 1.800.000; Otago. 2.250,000; Southland, 900,000; total, 9,000,000. THE CUSTOMS DUTIES. The complexity of the existing Customs tariff has long been the cause of complaint from merchants, and trouble to the Department. A bill to simplify it will be introduced, and the Government intend to propose readjustments and remissions, which will facilitate trading operations, and assist industries, and, last, but not least, will sensibly lighten the cost of many food articles of general consumption. Details will be submitted by resolution in the usual way. I may add that encouragement will be given to some of our important industries in cases where foreign competition appears to press unfairly on the capital invested, and to depress the wages,. of workers. The question of the importation of articles of shoddy clothing has received very careful consideration. The matter is one of an extremely difficult nature to deal with. Mere imposition of duty will not sulfide, andj~ in my opinion!, separate legislation vrill be necessary. The whole subject has been examined with a view to submitting proposals to check the system under which our people are imposed . upon by not knowing the class of articles they are I estimate that the total remissions of duty will amount to about £375,000; but with the expansion of trade and the development of the country it may reasonably be anticipated that as, in case of postal remissions, the revenue will steadily recover. By an alteration in the weight of the contents of packet tea, the intention of Parliament has been evaded, and quantities of packet teas, made slightly over weight, have consequently been admitted free of duty. As the packing can be done most satisfactorily in New Zealand, the duty will be fixed at 2d per lb upon packets containing up to olb in weight, and this should effectually prevent the evasion that has been practised.. As a matter of fairness to holders of duty-paid stock, provision will be made for the prOr posed exemptions or remission of duties to come into operation on November 1 next. This, I am satisfied, will be recognised as fair treatment to those concerned. The increases, including general and preferential, amount to £121,000; the difference between decreases and increases is, therefore, £254,000. The increases have been made with the object of assisting local industries and imprc|jing trade within, the British Empire. In this connection I' may say that the duty on agricultural machines and implements, upon which products of the soil are so largely dependent, is not increased. I propose, however, to renew the provisions of the Agricultural Implement Manufacture, Importation, and Sale Act, 1906, for three years, in order to prevent unfair exploitation of New Zealand markets. An alteration has been made with the object of keeping out cheap and inferior qualities of boots that have been imported, and with this object a specific duty per pair, in addition to an ad valorem rate, is proposed; but the cost of those boots chiefly used by the majority of the people will riot be greater than at present, and as this has been met in the tariff, children's boots and shoes remain on the fice list. THE FLOUR DUTY. I am keenly alive as to the desirability of enabling our people to get the necessaries of life (and first among these is bread) at the lowest possible price. The question of removing the flour duty has been given most anxious and lengthy consideration. The removal of the duty would practically stop wheat-growing in New Zealand, and leave us entirely dependent upon South Australia or other supplies. We now consume in New Zealand not less than 5,580,000 bushels "of wheat per annum, and last year it is estimated 222,183 acres of wheat were threshed. Our wheat fanners' interests, therefore, demand the strongest justification before we prevent their growing this cereal. The removal or substantial reduction of the flour duty would, it is believed, cripple every flourmill in New Zealand. We would then be exposed to flour importers, who could, without difficulty, effect corners as has frequently been done in America. The flounnilling industry employs some hundreds of hands, and, under the existing tariff, which has been continually in force for 2S years, vast sums have been expended in establishing and equipping flourmills in different parts of the country. We cannot lightly make a change which will crush an important local industry like this without, direct injury to ■. many, individual?. Tie duty on flour, is 1/ per 1001b. Its removal would, if tha whole

consumer, enable him %o ibny a 4lb loai id cheaper than at present: If this could .secured it would, be a- great achievement;- but experience too often proves that the full benefits of such .remissions are not transferred to customers, and as bakers do not deal in farthings no reduction in--the -price of bread would result, unless bakers gave up the halfpenny per loaf, which is the whole benefit of the -remission. That they would do so is at least very doubtful, and for this uncertain gain to the community, some propose that we should make "a change which would virtually extinguish our wheat-growing industry, throw out of employment large numbers of men, and ruin our flourmillers. There are some indications that the reason of the present price lies in an entirely different direction. If, upon the vei-y close and thorough inquiry I. am now making, I am satisfied that the pFesent price of bread is due to any monopoly, or ring, or combine,- then the Goveiaiment will not hesitate to introduce legislation this year to defeat such combination and secure to our consumers this necessary article of diet at a fair competitive price, and with the responsibility that my position entails I would impress upon the flourmillers of the country that in their, -best interests they should remove any causa that exists for the present position. RECIPROCITY WITH CANADA. When iri London recently, the Prime Minister of Canada expressed himself as favourable to the establishment of reciprocal trade between' Canada and New Zealand, and negotiations with this object iji view are proceeding. I propose to ask the House to give power to vary the duties, either on the dutiable or free goods list, between New Zealand and British countries with whom reciprocal treaties may be entered into, such reciprocal (treaties being afterwards subject to the ratification of Parliament. ESTIMATED REVENUE AND EXPENDITIjag. Turning now to ways and means for the current year. After' a careful consideration I estimate that the ordinary revenue receipts proper will amount to £8,200,000, or £199,075 less than last year. I have deemed it prudent to somewhat discount the receipts from the railways, Customs, and stamps, which benefited last year by the Exhibition. Moreover, account must be taken of the large concessions already referred to which I propose to make under the various heads. Against these abatements, however, must be set the normal increases, which are warranted by the prosperity of the country and buoyancy of the trade. After weighing all these factors I set down our reVenue to be de- - rived from Customs as £2,800,000, or £141,040 less than last year; railways should reach £255,000, or £71,396 less; stamps should yield £1,340,000, or £25,727 less; Beer duty should return £105,000, or £2552 less; registration and other fees, £27,445 less; and miscellaneous should be short oi last year by £5885. On the other hand, I anticipate that with the proposed increases in the new scale the land tax will pro.- ' duce £515,000; income tax, a total of £ 795,000, or £ 69,791 more than last year. Territorial revenue, set down as £256,000, is £5100 better than the previous year, and marine Is expected to yield £109 more.

. The estimated expenditure out of the ordinary revenue for the present year upon all services is set down at £7.987,347, or £2J2 J 422m.ore.than, the actual expenditure of, last year. , ". Of this increase the permanent, charge? are responsible for £40,959, of which interest and sinking fund absorb, £17,717; old age pensions, £2-2,000. The amount, registered tor, Departmental, appropriations is £171,463 in excess of last year. The demand for increased postal and telegraph facilities necessitates an additional £ 70,000 being asEed for; the education services require an additional £50,000 ; defence, £31,000; lands survey, £20,000. On the other hand, there is a reduction in the amount asked, for for the Colonial ■ £ 89,000, votes for census and the International Exhibition, not being required for this year, while the Railway Department is satisfied -with £19,000 less than expended last year. ESTIMATED RESULTS. The estimated revenue is £8;200j000, and the estimated expenditure £7.987,347 —excess of revenue, £212,653. Add the balance from last year, £7T7,825, and the total is £930,178* From this amount I propose to transfer £700,000 to the Public "Works Fund, to set aside £30,000 for the Civil Service Superannuation Fund, and then leave a balance of £200,478, from which, of course, provision will be made for the- usual Suppler mentary Estimates. PUBLIC WORKS. Due provision must, of. course, be nude for carrying on gut public works. The balance on March 31, as already stated, was £359,400. To tETs may be added £56,400, balance of the million, loan authorised last session. As stated, I propose to aid the fund by transferring from the Consolidated Fund £700,000 of surplus of last year, thus making the total ways and means £1,115,800. This amount, however, is insufficient to meet requirements, and, therefore, I propose asking Parliament for a million loan to be raised locally. A SUMMARY VIEW. In conclusion, it may be convenient if I focus the chief fiscal and other financial concessions I have placed_ before members. The remissions of taxation, are: Customs, £375,000; sheep tax, £20,000; rates and interest to local bodies, £6000; post and telegraph Tates, £20,000; fees of inspection, of dairies, £8000; totalling £429,000. The increases are: Customs, £121,000; land and income tax, £70,000; total, £191,000. I can assure honourable members that I >am not losing sight of the necessity of maintaining strong finance. The concessions are justified by fhe steady prosperity ol New Zealand, prosperity -which has its broad and solid base in. the- great natural advantages which are beiijg dei velpped by our people.