The Press. MONDAY, SEPTEMBER 13, 1886.

Press, Volume XLIII, Issue 6544, 13 September 1886, Page 2

The Press. MONDAY, SEPTEMBER 13, 1886.

The condition of the revenue, to which, we referred in a previous ieene, has a Tery important bearing on the question of borrowing. In his Statement in 1884 the Minister of Public Works laid down certain principles which should guide the colony in deciding as to the amount of money that should be borrowed from time to time. It was understood that the principles were those upon which the Government intended to act, and there were many who, although holding to the opinion that borrowing should stop, were willing to admit that if the Government acted upon the policy indicated the colony would not be placed in any serious difficulty. Briefly, the views expressed by the Minister were that the country should regulate its borrowing by the amount of the surplus revenue available. "If we " accept," he said, "the starting point " of this year, which I have assumed, '' we shall have to ask ourselves how, " without increasing the taxation, we " may have the means of meeting the " annual charges on the mone} bor- " rowed for the work of colonisation.' " There are three sources of increased " revenue, or increased means, to " which to look forward. First, the '* natural net increases of revenue " from year to year. Second, the " increase of revenue from new rail** " ways, and also the increase of " revenue (apart from natural in- " creases) from existing railways, as " they are fed by new railways, roads, " and bridges. And third, the annual " saving from reduced rates of interest " on loans converted, apart altogether " from the saving of the expenditure of " sinking fund, with which I have in , " this statement nothing to do." The " natural increase" of revenue for some years to come, the Minister put down at £50,000, and he put down the average increase of railway revenue during the next two or three years at £25,000. "Well, what was the result ? The total actual revenue, including the railway revenue, fell short of the estimate for the financial year ISB4-5 by a small amount, and the same remark applies to the following year. As regards the two principal sources, the Customs and railways, the figures were as follows:—For the financial year ending March 31st, 1885, there was a slight increase in the Customs above the estimate, and a considerable falling off" in the railway revenue. For the financial year ending March 31st, 1886, the actual Customs and railway revenue fell short of the estimate ; while this year, to all appearance, the revenue from both sources is likely to show a very material fajling off compared with the estimate. We are not now considering whether the principle laid down by the Minister in the above extract is a sound one or not, but assuming that the Government recognise its soundness, what course should they pursue with regard to borrowing when. they find that there are no " nataral" increases either of the Customs or railway revenue ? Is borrowing to go on all the same and is the taxation to be increased in order to pay the interest ?

We have seen that if things go on as they have been doing during the< last few months, the financial year at its dose will show a deficiency on the estimates of over £200,000. The estimates of revenue, the Treasurer pointed out, were framed on a strictly moderate basis. No pretence was made of expecting any natural increase in either branch of income. Yet, notwithstanding the modesty of the estimate, it is not being realised. As we pointed out on Saturday, this state of things is probably partly due to the spread of temperance principles in the community and to the habit the people have gradually acquired of living lesß extravagantly. It is only reasonable to suppose that with the return of more prosperous times the community will continue to practice the habits of thrift which have been so painfully forced upon so many. At any rate, no Treasurer is justified in framing his estimatesupontheassumption that people will squander their resources at the first appearance of better times. As the population gradually increases, it may be taken for granted that the revenue will gradually increase also, and a sound financier will only calculate upon a gradual improvement in the consolidated fund. Even after making allowance for material reductions in the ordinary expenditure,-and assuming tbat the most rigorons economy is practised in all departments, there are certain branches of expenditure which will expand with the growth of population. What we desire to ask is : is there any probability during the next year or two of a surplus being realised of the character the Minieter of Public j Works calculated upon when he made his statement in 1884 ? In other words, is a policy such as he sketched out at | that time practicable ? We do not believe it is. The experience of the last two years goes to prove that the *nly sound conclusion to arrive at is, as Sir Robert brouT pointed out daring the last recces, that every million borrowed now means £40,000 a year " additional taxa- " tion." Last session Parliament sanctioned a loan which, when raised and spent, will add to the taxation about £60,000 a year, and when the North Island Trunk loan is raised and i spent the addition to our burdens will have reached about £100,000 a year.

Wβ may therefore expect, when Parliament next meets, to find, the Treasurer coming down wiih proposals for amending the tariff so as to place more revenue at hie disposal. We invite the taxpayers of the colony to consider what they desire should be done in such circumstances. Should euch proposals be brought down Ministers should be invited to reconcile their present policy with that which they enunciated shortly after taking office. Two years ago natural causes were to be depended upon for everything. The revenue was looked upon as elastic. It only wanted being extricated from the confusion into which it had fallen through the blundering of the previous Administration. Borrowing was to be conducted on a moderate scale, and the interest upon the new loans was to be provided oat of the natural increases of revenue. We hear nothing now of natural increases, and a great deal about natural decreases. But

though the " natural increases " have not been realised, the borrowing based upon those increases two years ago has gone on, and the -question is, how long and to what extent, are the people of New Zealand prepared to be taxed in order that it may be continued. Aβ we have often pointed out no one who knows New Zealand doubts our ability to pay if compelled to do so. But the number of those are rapidly increasing who look upon taxation for such a purpose as a heavy drag upon the colony, and as a serious interference with the productive power of the community.