THE FINANCIAL STATEMENT.

Bruce Herald, Volume XIII, Issue 1211, 11 June 1880, Page 5

THE FINANCIAL STATEMENT.

In Committee of Ways and Means the following Financial Statement was made by the Hon. the Colonial Treasurer (Major Atkinson), who said : — ! Mr Speaker — When in November last I had the honour to submit for consideration of this Committee the usual Financial Statement, it was thought by many persons not unfrieudly to the Government that in estimating the probable deficit tor which it would be necessary to make provision by the first April last at £800,000, 1 had taken far too gloomy a view of the financial position. I regret to aay that anticipations in this respect have been more than realised, and that the financial results of the last nine months have proved leas satisfactory than I ventured to predict as probable. I for one have not the least doubt that the present check to our prosperity — a check wlncti has been felt at the same timo throughout the civilised world — is temporary only ; yet, bearing in mind the effect this check, and other causes which it might have controlled, have had on our finances, and also the amount of public debt as compared witii our population, the duty of economy and retrenchment has become clearer and more pressing. It is therefore gratifying to know that the plain facts of our nnaucial position which I had the honour to submit t> Parliament last session have fully awakned public attention to this vital subject and produced in the public mind a determination that the annual expenditure shall be brought within the annual revenue by reducing the one as far as compatible with efficieusy, and increasing the other so far as may be needed. Government propose, fcir, to ask Parliament to give practical effect to this determination. My ta-.k thcrefoie this evening, considering the extravagant habits into which we have fallen of late year.s i 3 one of unusual difficulty, and one in the execution of whicu 1 venture to hope lor that large measure of consideration which the Committee have kindly given me on former occasions. ftir, in submitting the financial proposals of Government in the last; Budget, I said it would be impi ssible to surmount our monetary difficulties ami escape the dangtrs of the position without something like a complete remodelling of finance, botu general and local, without careful administration by Ministers, and without the exercise of muca thrift and self-denial on the part of all classes of the community. In accordance with the opinion so expressed certain measures were introduced by Government and passed by the House last session, modifying very considerably our liscal system, but leaving untouched the system of local taxation and subsidies. The Govtrnment intend placing local bodies in such a position as will enable them to obiain as far ua possible sufficient funds for all necessary works, while drawing a broad aud distinct iine between local and general liuance, and such a scheme the Government will endeavour to mature ha oiv. me iiv.vd mtotmg vi jfarliarneut. To night I shall endeavour to redeem this promise. 1 trust, however, that the Committee will not ixj)eet too much. Tue subject is one beset ou every side with difficulties, and nothing but a strong determination on the part of local bodies to rely more on their own resources, and less upon external help than hitherto, will render any satisfactory solution of this vexed question possible ; but before submitting lo die consideration of the Committee the proposals of the Government, it will be more convenient that 1 should plaec before them the results of transactions for the last financial period which, through the change in the financial >ear, comprises nine instead of tweive mouths- Ttic Treasurer, having explained the actual financial result of the year, ended 30th June 1579, stated that the total expenditure to 31st March last was ±"3, 045, 0-19, as against £3, 1 1i'J, 539, the estimated amount, there being thus an apparent saving of £94,490 a year. A comparative return or estiI mated and actual expenditure in each class, with liabilities added, has been prepared, aud will be appended to this statement, i Ucsire, however, lo point out to the Conimittei; that, included iv the apparent saving of £9-1,490, tlieve arc several items arisiug merely from over estimate.-*, which cannot be regarded as savings, such as interest aud the 20 per cent, of land fund payable to counties. On tlu 1 . other baud, there are certain necessary payments for services not provided for, which reduce of course the amount of tiie total net saving of the period, under the head of annual appropriations, where aloue savings can really be effected. THE ESTIMATES. The revenue of the Colony for the nine months ending 30th Marcn ISSO, received during the period amounted to £'2,133,759, to which add £50,000 receivable Ist April from Land Tax, which the CuninntUe will remember w;;s include I in the esuma-.e, miking together £'_' .1(33,75!), tie estimated ;un..ui:t being ,£•2,445,200. The revenue then f. no fell short « f the autLcipated am.»m.t by £2(i1,441,. From returns which will be appended to the .SGatement when printed i ouourabic luunbi.rs will be ai lc to see t ie heads of revenue un ier which the deficiency has arisen. 1 shall, howi ver, ro'er t") some of the lending uems. The revenue from Cust'im-. did not rcr»cu the estimated amount by £17,-T>s. This, although I fear chiefly c:used by tin: general depression throughout the colony, has been partly caused I believe by the awp.king of our population to the necefsity for cultivating more thrit ty habits aud practising greater self-denial. So far as it arises from these last named causes, tho Committee will agree with me in thiukiug it matter for rejoidog rather than regret, even although it may result in temporary inconvenience, so far as revenue is concerned. The stamp duties produced .02,921, less than the estimite, but this largo amount does not represent ai actual falling (ff t) that extent i.i the receipts of revenue. Hon. members know as s;ated in Minister..' returns uiatU' during the yiar that th.; gross revenue from stamp duties airing the nine months ended 3 1st March, amointed to £111,057, and refunds to £18,979, au unusual amount, but an estate wbbh paid £18,405 duty in the year 7S -79 was deiared by the .Supreme Court not chargeable, and the sum therefore had to be refunded ie February last, and is included in the refund' above mentioned. The stamp revenue, but for this unexpected occurrei cc, we uld have realised £ 1 4, 0 1 G less than the estimate, hstead of £32,921. The falling <ff in this instate is, I think, due to the general tlep'cs ion, Diit this branch of revenue will, without doubt, recover with returning prosperity. The recei)ts from railways fell short of the estimates by 1113,072, but the loss is counterbalanced to soc3 extent i by the not ii. considerable saving of £4,242 effected by my ho", fiieucl the Mimter for Public Works. '1 he laud revenue has I regret t<> say, produced only £'155,108, intead of £246,700. The postal revenue, hewver, ex-

ceedecl the estimate by £12,961, but of this sum ,£6982 wrs prcfiL" of the P.O. Savings Bank account, wbicli has heretofore been treated as incidental revenue. FINANCIAL RESULTS OF THE PERIOD ENDED 31ST MARCH, 1880. In my last Financial Statement I estimated that the deficit for the period ended 31st March, 1880 would amount to £796,586, which sum was increased to £826,163 by Supplementary Estimates. Hon. members will recollect that Parliament made special provision to meet this deficiency by passing the Treasury Bills Act, 1579, authorising the issue of Treasury Bills to the amount of £800,000, with the intention of adding this amount to the permanent debt of the Colony and thus sfarbing clear of the floating debt from 31st March, 1880, measures being taken to secure an equilibrium between revenue and expenditure from that period. In consequence, however, of the revenue of the last fiaancial period not realising the amount estimated by £261,441, it became uecessary to fall back upon the contingent authority, and issue Deficiency Bills as granted by the Public Revenue Act, 187S, and bills to the amount of j£200,000 wore accordingly issued, making a total issue of £1,000,000 in Trea ury and Deficiency Bills during the nine mouths. Government proposed to deal with this sum of £200,000 in the same manner as the JSOO.OOO which I have referred to, and Parliament will bo ask ;d to sanction a Bill to enable them to do so. The necessity for the adoption of this course will be obvious to members, and it exphiius why, for the period to which lam now referring, "fleet cannot be givcu to the proposal i. d'eated in last statement, that in future receipts and expenditure within the year should 'c regarded as revenue and expenditure for the. year. If it were probable that the revenue of one curront financial year would be able to hear the charge of liabilities outstanding on the 3lst' March, this mode of providing for them would not be suggested; but it is quite hopeb-s to expec'; it will. T.ie Treasurer then showed the expenditure for the nine months ended .'Jl^t. March last, £2,772,270; and liabilities nn same date £271,274 ; making a total of £3 17S 840. Tue receipts for the period eudeil 31st March were £2, 133,758 ; Laud Tax due Ist April, £59,000 ; assets, £5000; making L 2,155,758., 155,758. Taking, therefore, the total revenue from the total expenditure, I arrive at a rlrlicit of L 990.031 for the period ended 31st March, ISSO, to meet which, as I have already stated, Treasury aud Deficiency Bills have been issued to the amount of L 1.000,000. On the 30th Jane, 1879, the tross public debt of the Colony amounted to L'2:V222,311 ; on 31st March, ISSO, it was L 27 422,611, or deducting accrued sinking fund, L 1,505,498, the net public debt was L25, 61(5,113. This amount i- exclusive of the Treasury and Deficiency Bills for L 992.000 held by the Public Works Fund, and the LSOO.OOO unsold debentures of the loan of IS7O, guaranteed by the Imperial Government;. Sirce 30th June, 1879, the loan of L 5,000,000, 000,000 authorised last year has been raised. <~m Ist: March last Treasury Bills to the amount of L 432, 000, forming part of the public debt of 30fcn June, 1579, matured, and were temporarily redeemed out of the Public Works jf'und, provision having beeu made under the Treasury B'lls Act, 1870, for renewing them to 31s'c December, ISS2, aud exchanging them at that date for debentures with a currency of three years. During the nine months ended 31st March additional Treasury aud Delici* ncy Bills to the amount of L 1,000,000, 000,000 have been issued in aid of revenue. Uf these Bills L 550.000 have also b?en taken up temporarily by the Public Wo:ki Fund, so that the actu-il addition to the public debt by the new loan and these Bills amounts at present to 15,000,000. On the other hand, guaranteed debentures amounting to L 5,000,000 have been redeemed, and debentures of the North Of ago District Public "Works Loan for £7,700 have bet n paid oil", makim; altogether £.507.T00, which si. in homy de^u-oted from .£"5, 000,000 le»ves n, net increa.se to the public debt of £4 200,300. When the Imperial guaranteed debentures for £8,000,000 are sold, and the whole of tue Treasury and Deficiency Bi'l^i now held by the Public Works Fund, an 1 representing to the Consolidated Fund to the extent of £992,000, are issued to the public, the gross dei't will amount to i'29,"_'14.()11, or deducting accumulated sinking fund, £1,805.4!):}, the debt will be i' 27,409,113, subject t> an actual charge of about £1,535,000. In this statement of the public debt, the last loan of ;J5,000,000 is treated as uniuscribed. Should the whole debentures be converted on the terras oflered, the public debt will be increase 1 : by L 1.000.000,. 000.000, but, instead, will be reduc vl by LIO.OOO per annun . Parliament will be asked during the present Session to make provisions for extending to 31st December, ISS2, the currency of certain Treasury Bills amounting to L 390,000, partly hilling duo within the current year, and grant authority for cxchaugiiu: them at that date for debentures wilh ;i curiency of t.lneo years, as in the case of the bills for the L 442.000, provided for by the Treasury Ijills Act, i 879. Similar provision, as I have already said, will also Le required with respect to Deficiency Bills for L 2,000,000, 000,000 issued under the Public Revenue Act, 1878, forming pare uf the bill amounting to L 1,000,000, 000,000 issued during the past financial period. Before leaving the question of the public debt, tiio Committee will naturally expect p«>iue account of the raising of the lean of 1,5,000,000. in last year's Hudgtt I ;aid Government had rea.-on to believe, ironx advices received from Li udon, that not more than L 3.000,000. 000, 000 of the LH, 000,00, could then be successfully floated. When, howevi r, the time arrived for placing the loan on the m rktt, the loan agents considered, it would be safe, ai.d aske 1 for the \s bole amount at once, and the resuk pr;>v< d f.':,at they were riaht. il;id they hucjeideii m floating the L 3,000,000, 000, 000 ouly in stead if t\w, whole amount our position at the pres-jn: m m nc would have been one of grave embarr.i,^ nient. The Committee will understand this M-hen \ tell tnem that it has been necessary up to the presjnt time to use the loan to the extent of upwards of L3,0G0,000, of which L 1,815,000 was for expenditure, and L 1,342,000, 342,000 fur advances on the Consolidated Fund on 'i'rrasury and De riciency Bills. Now that these facts are before them honorable members will easily appreciate the anxiety of Government List session when it was considered ctrtain that not more than L:>, 000,000 of the loan could be raised at once, and the remainder not for a year at least thereafter. They will also understand how necessary it w-is that our agents should oiler the loan at such a price as would insure its sale. In the absence of the loan agents' accounts which have not yet been received in the Colony, I am unable to state the precise net price realised for the loan, but after allowing for discount commission, and accrued interest on the bonds the price is about 95\ for 5 per cent, debentures and 7 9 A 'for those conver'.et iuto 4 per cents., at the close of the year 1878-79. The balance to the credit of the Public Works Fund amounts to £506,205, of which £'298,543 is represented by advances in the hands of officers of the Government, the cash balance in public account beiiii; £207,602. During the nine months from 30th June , 1579, to March 31st last we received on account of proceeds of the five million loan £4,249,000 and certain special receipts and recoveries amountiug to £22,549 making, with the balance at the beginning of the period, a total of £4,775,054 On 31st March the cash balance in public account, after providing for outstanding orders on the Bank, was iv the Colony a,nd in London together, £862,410; and the advances in the hands of officers of the Government, amounted to £315,763, making together £1,178,173. We then issued during the nine months ended 31st March last, £3,599, BSI. Since the beginning of 1870 we have borrowed for public works to the extent of L 18 ,700,000, which amount has been supplemented to the extent of L 364.794 by stamp duties aud other receipts, making a total of L 19,064,794. Our

net "expediture during the same period on services permanently charged against the" fund has amounted to £1,528,621. To this sum I add advances in hands of officers of Government on 31st March last, 1315,763, and estimated sum of L 200.000 for discount and charges of raising last loan, making altogether Lid 902,384, which being deducated from L 19,064,794, the total ways and means leaves a balance on 31st March of L 3,264,410. Hon members will, however, bear in mind that of tbis sum £1,342,000 is represented by Treasury and Deficiency Bills issued in aid of the Consolidated Fund. It will be seen that the large amount of liabilities to which I have re ferred will absorb the whole of the cash at credit of the Public Works Fund, and will necessitate the sale of .£469,000 of Treasury and Deficiency Bills hypothecated to that fund. Means for new works and services will therefore be represented by £873,000 in Treasury and Deficiency Bills, being the balance of £1,342,000 now held by the Public Works Account. S© much, then, Sir, for the history of the past. — The Treasurer then propounds his financial scheme for the future at considerable length, and, amongst other proposals for consideration, will be two Bills for amending local Government. One of these will remove the present restriction upon rating, that is to say, it will permit local bodies having a right to rate to levy rates to any amount they consider necessary for local requirements, not exceeding 2a in the £, or beyond that amount if passed, as a special rate. It will authorise boroughs and other local bodies to -borrow at any rate of interest ratepayers may <fchoose to give, and to any amount, subject only to these restrictions :— (1) That principal and interest of all new loans shall be made payable in New Zealand ; (2) that any local body desiring to raise a loan shall levy a special rate sufficient to cover the interest and sinking fund upon the money proposed to be borrowed, such rate to be continuous until the debt has been repaid. The bill will also require that any local body which has already borrowed upon its general revenue shall, before again entering the money market, levy a special rate to cover in terest and sinking fund upon the existing loan or loans, as well as providing by special rate for the new loan. The intended taxation of Maor! and Crown lands is next discussed, after which the Treasurer comes to the second bill, the title of which will be "The Local Public Works Bill." It provides for the constitution of an unpaid Board, consisting of the Minister of Public Works, the Engineer-in-Chief, tke Surveyor General, and the "Public Trustee. The duties of the Board will be to pay the rates on all waste lands of the Crown, to pay the rates on the Maori country lands, to make grants in aid of the construction of main roads, to advance money to construct district roads. This will be done from funds the constitution of which I will now describe. As I have before said, we shall ask Parliament to set apart the proceeds of land sales for special purposes, not permitting it to be used for the ordinary expenses of government, charging against it only the cost of its administration, including survey. Now, I think that after this year we may fairly estimate the annual receipts from land sales for some year 3to come at not less than ,£300,000. I believe honorable members will agree with me that this is a moderate estimate, looking at the fact that our unsold lands are estimated at a low average as worth £12,500,000. — In referring to boroughs, tbe following passage occurs : — I do not desire to make light of tne present loss to these bodies of the subsidies. My proposals will no doubt necessitate for a time a reduced expenditure, but there will accrue to the boroughs the permanent right to tax Government and Native property of not less than one million in value. I say permament, for I think no one can doubt that if once the principle of taxing Government property is admitted it will n^ver be possible to retrace that step. The rates on all Government property it is proposed to charge upon the Consolidated Fund, as being properly included in ordinary expenses of government. I trust. Sir, that the purposes which I have thus briefly sketched will commend themselves to hon. members as at any rate the basis upon •which this important question of local finance may be ultimately settled. We are all of opinion, I think, that the subsidies should v^ease if means to a reasonable extent for carrying on the necessary works can be provided in a betti r way, and I submit that our proposals are better in every respect. The scheme is sound, because it is based upon two principles which are no»v unanimously accepted in this House. First, that the proceeds of land pales should be applied to opening up and settling the country ; secondly, that the landowners must for the future practically find the means to maintain the roads of the Colony ; and it has, moreover, this great additional advantage — that it will enable us to complete the separation of general and local finance. The estimated expenditure for the ensuing year of the consolidated fund is gone into minutely, and the Treasurer points out that there will be a net saving in the expenditure of L 341,000, and this without impairing the usefulness of the local bodies, the efficiency of the public service, or shifting burdens which should be borne upon revenue to loan or other funds. The total proposed vote for the year, exclusive of liabilities, is L 3.473 709, but of this we cannot spend and bring into the accounts within the year more than L 3,245,700. This advantage will not recur, but fortunately comes to our aid now, thus giving the revenue time to recover its normal condition, as we have every reason to hope it will by next New Year. There are some items of expenditure to which I desire to call the especial attention of the Committee, showing the reductions which have been effected and the direction in which the Government think further roductions are possible and should be made. It will perhaps astonish hon. members to hear that we are now paying over L 1,000,000 a year salaries, pay, and wages, and L 18.070 for pensions. This includes our railway employees, and our ordinary complement of constabulary and police. Of this sum, L 644,000 is for salaries, pay, and wages of L 2500 a year and under. The reductions already made are considerable, but the Government promises to still further grapple with the question during the recess. The estimated revenue for the current year is put down at L 3,190,000,, 190,000, including L 335,000 from the land fund. After alluding to the exemption ci persoral effects, furniture, books, etc., from the Property Tax, and the consequent loss of about L 40.000 to the revenue, the Treasurer proceeds thus : I hope to obtain from the Beer Tax during tbe current year LBO, OOO, at the rate of LIOO,OOO per annum. It will be within the recollection of honorable members that I proposed last year to introduce a bill to increase the succession duties, but that through want of time the bill was not circulated. 1 propose to proceed with, that bill, and should it become law [it will increase the stamp revenue this year by about LIO,OOO. Summarising then, Sir, my proposals for the convenience of the Committee, they amount to this : The deficit as shown by the difference between the estimated expenditure and revenus is LB7OO, to which I add the L 40,000 loss by the exemption proposed in the Property Tax," making a total of L 48.700. The estimated produce of the Beer Tax is LBO,OOO to which I add the LIO.OOO for increased stamp duties, and obtain L 90.00 showing, if cur expectations prove to be correct, a credit balance of L 41,200 with which to end the year — a margin, as the Committee will agree, none too wide. At the close of his address, the Treasurer moved — " That towards raising the supply to be granted to her Majesty there shall be levied and charged, on and alter the 9th day of June, 1880, an excise duty of 6d per gallon on all beer; porter, or other malt liquor brewed or made in New Zealand before removal from any brewery, rel-

lar, wareho^e, &c, or other place in which the same may j> stored j such duty to be levied, collected, »d paid in such manner as, the Commissioner may direct. Of .customs now charged on the undermentioned articles, the folio wig duties of customs shall, on and after the 9p day of June, 1880, be charged thereon orfhe importation into New Zealand, or on being cjared from any warehouse for home consumptijpi, viz. : — Ale, porter, beer of all sorts, ciderand perry, in bottle, per gallon, Is 9d ; ale, prter, beer of all sorts, cider and perry, in bilk, the gallon, Is 6d." The resoution was agreed to after a long discussion, aol the House adjourned at midnight.