THE FINANCIAL STATEMENT.

Press, Volume XLVI, Issue 7346, 26 June 1889, Page 6

THE FINANCIAL STATEMENT.

[Br Telegraph.]

The following Financial Statement wag iellvered in the House in Committee of Supply last, night by the Premier and Colonial Treasurer, the Hon. Sir H. A. Atkinson:— Mr Hamlin,—The accounts of the la.it financial year having been already pubblished, hon. members are in a position to know that the task before them this evening, though not, of course, without difficulties of its own, is a far more pleaBant one than either of those which fell to my lot on the last two occasions upon which it was my duty to present the Budget to this Committee. Our trade is renewing, our foreign markets have much improved, and our industries, large and small, with hardly an exception, show increased activity and steady progress. The policy of retrenchment and strict economy sanctioned by Parliament in 1887 t and since carried out by the Government to the best of their ability, has produced the result which, sooner or later, was bound to follow; and I have to-night the pleasure, unusual for some years past, of announcing a surplus. That surplus is not indeed a very large one, but it is a ■urplus, and those only who have really e ntered upon financial difficulties for the last few years, and felt the responsibility of helping to meet them, can appreciate to the full extent the satisfaction of again finding the balance on the right side of the account. The Committee, I am sure, will feel as I do this satisfaction, and will at the same time join with mc in the caution that we must be now doubly care* faL lest with the return of increased prosperity there should be any return to unwise or unnecessary expenditure. CONSOLIDATED FUND EXPENDITURE FOR YEAR 1888-89. OBDINARY EXPENDITURE. The estimated expenditure for the year 1888-89, including the votes taken upon the supplementary estimates and charges under special Acts, amounted to £4,084,054. The actual expenditure was £3,977,265. There was, therefore, unexpended of the amount authorised £106,789. Hon. members will find particulars of the unexpended ' appropriations in the tables attached to this Statement, and in the appropriation account. I may, however, here mention that the non-payment of any h^l W w«»«> of subsidies due to local bodies arises entirely from their neglecting to make application according to law, and that the total liability of £25,677 outstanding on the 31st March last is not unusual in amount, for in March, 1886, there was £51,736, and in March, 1887, £69,390 outstanding, one moiety of which last two amounts was chargeable against the Consolidated Fund and the ocher against the Public Works Fund. Hon. members will observe under Class 8, Education, that one vote, public schools, has been exceeded by nearly £6000, and that an under issue of nearly £7000 has occurred on other votes, bnt chiefly on the vote for school buildings. For-the first time in our finance the vote for last year for school buildings was charged entirely against the consolidated fond. £3000 was granted for that purpose, but when the Government found that it was necessary to exceed the vote for carrying on the public schools by i nearly £6000 we, thinking it right not to exceed the large total voted, £379,093, determined, as the only means of accomplishing this object, to proportionately diminish the amount to be spent upon buildings. This reduction in expenditure on buildings was made with much regret. Of two desirable objects we had to forego one; in the circumstances I hope the Committee will approve of the action of the Government. The' item is only a small one, but we were acting on the necessary rule that, at whatever temporary sacrifice, we must keep within i our: income if we wish co keep a sound finance. REVENUE FOR THE YEAR 1888-89. ORDINARY REVENUE. The total revenue estimated to be received during the year 1888-89 was £4,162,400; the actual amount received was £4,055,034, so that the revenue as estimated in the Financial Statement exceeded the actual receipts by £107,366. The Customs duties yielded less than the estimate by about £55,392. This will probably uot surprise members. It is certainly, under the circumstances, not an unreasonable margin of error, taking into account the great difficulty in forming an accurate estimate when something like a complete revision of the tariff takes place during ihe year for which the estimate is made. Tne railways also yielded less than the estimate by £38,865, but this was counterbalanced by a reduction in the expenditure of a still greater amount, so that the net revenue received was £360,016, instead of £338,162, as estimated. Stamps appear to have yielded less than estimated by £14,3& J. This arose through an error which should not have occurred, of twice ; including in the estimate certain postal receipts, the result of a misunderstanding between the two departments which have to deal with the question of stamps estimates, viz., the Stamp and Postal Departments. Registration and other fees fell short of the estimate by £8273, but- the estimate included £11,500 for rates to be received nnderthe District Railways Purchasing Act, which, however, through the failure of the Bill Introduced last year, did not come in. The only item of revenue in the receipts of the year which can be considered exceptional is a sum of £18,000, profit earned by. the Public Trust Office. This by law is made revenue, but for some reason the •mount has been allowed to accumulate in the office and has not been paid into public account year by year, as it should nave been. Of this amount £2567 was earned last year, so the latter sum was strictly revenue of the year, and the windfall was only £15,433. We shall always have such exceptional items on both sides of the account; for instance, in the same year we had to pay a sum nearly as large, ▼ia., £14,914, paid on account of abolition Of offices in carrying out retrenchment. LAND FUND EXPENDITURE AND REVENUE. The estimated expenditure of the Land Fund was £127,433; the actual expenditure proved to be £119,496. The expenditure was, therefore, less than the estimate by £7927. Of the expenditure, £23,336 was paid to local bodies as contributions In respect of receipts from deferred payment and perpetual lease land, and £15,497 for rates on Crown land. The estimated revenue of the land fund was £119,000; the actual receipts were £108,007, being £10,993 less than estimated. The amount received for land sold for cash was £11,006 more than estimated, while the ■mount received ■ for deferred payment land was £22,001 under the estimate. The deficiency of revenue, however, arose not from the fact of less land being taken up than was expected, for this was not the case, but partly because the perpetual lease tenure was preferred to the deferred payment, and chiefly because payment of Instalment* due was not enforced, the Government having refrained from doing ao in fulfilment of their promise to Parliament, consequent upon the rejection by the Legislative Council of the Fair Rent Bill. There was outstanding on the 31st March last a sum of £46,516, due on deferred payment instalments and perpetual tease, and other rents £31,785 on the former and £14,741 on the latter. I may say that Government have had all these holdings revalued, and steps have now been taken to recover the amounts due npon. thenew valuation, leaving for the decision of Parliament the question as to how the balances are to be dealt with. This question is surrounded with difficulties, owing to the land having been taken up in many cases at more than its value for cultivation, and to the very low; rates ruling (until quite lately) for agricultural produce during the last few years. The Committee wfll be glad to learn that more settlement has taken place upon the Crown lands of bonu fide settlers during the past year than during any year since 1881, There have been 65,188 acres of land taken upon the deferred payment system by 335 selectors, 204,642 acres on perpetual lease by 765 selectors, and 70,987 acres by 653 cash purchasers. This, I think, hon. members -win agree is a highly satisfactory record, and shows, notwithstanding the temporary emigration of some of our population, about which I will say a few words presently, our people have not loosened their hold upon this fine colony, bat, on the contrary, have taken a firmer grip by 1773 of them becoming proprietor of 330,817 acres more land than was held the year before. It is also evident that land taken up is passing Into occupation of the people, and not falling into the hands of a few. The expenditure of the Land Fund having been

£119,496, as I have stated, and the revenue £108,007, there was a deficiency of £11,489 on the year's transactions. FINANCIAL RESULTS OF THE YEAR 1888-8 V I have said that the total ordinary revenue received was £4,055,030, and that the total ordinary expenditure amounted to £3,977,265. Therawas, therefore, a surplus for the year of £77,769. This surplus, of course, includes the primage duty, amounting to £46,132; and I have, in accordance with the declared intention of the Government and the implied sanction of the House, paid off £50,000 of deficiency bills, being part of the bills for £128,600 issued last year to meet the balance of the deficiency on the 31st March, 1888, which was not provided for. by the debentures issued in March, 1888. This Committee will, I am sure, think it a not unsatisfactory result of the efforts to live within our means made last session and the session before, that the colony has not only raised within this year enough revenue to meet the whole of the necessary ordinary expenditure, including in that a sum of at least £52.000 for purposes which have hitherto been invariably provided for from loan, but has also been able to pay off £50,000 of debt, and still have a small surplus in hand, and this satisfaction will not, I think, be diminished when hon. members come to critically examine the tables attached to this Statement, including the statement of liabilities, and also the appropriations. The statement of liabilities shows the total amount on the 31st March last, including those of the land fund account, was £152,541, while on the 31st March, 1888, the amount was £144,936, a difference of about £7600, but if we restrict the comparison to the ordinary revenue account we find that the liabilities on the 31st March last exceeded those of the previous year by £16,154. The liabilities of 1887-88 were, however, exceptionally low —they were far below the average of previous years—indeed they were not less than £85,700 lower than the liabilities of any year since the present system was brought into operation in 1888. The comparison should therefore not be made with the previous year, 1887-88, but with the average since 1880-81. That average was £166,000, being about £24,000 more than the amount of the liabilities on the 31st March last. Then again if we take the total of the thirteen classes of the annual appropriations we find that the liabilities on the 31st March last were nearly £1000 less than on the 31st March, 1888, and less by about £40,600 than the average liabilities of the last eight years. I have said there is a small deficiency of £11,489 in the land fund account, but this, as I have already pointed out, is more than accounted for by tne non-collection of rents, and will certainly be made good during the current year. Such then are the results of the year, and I venture to think they are results with which the colony may well be satisfied, especially when it is remembered that all this has been accomplished with a large decrease in the public works expenditure (excluding charges and expenses of raising loans), which has been for the last four years respectively— 1885-86, £1,239,528; 1886-87, £1.166,374; 1887-BS, £906,711; and last year, £528,453, and of these amounts there was spent within the colony in 1885-86, £1.013,338; in 1886-87, £1,060,474; in 1887-88, £802,711; and last year, £450,353.

THE PUBLIC DEBT. The gross public debt on the 31st March, 1888, was £36,758,437; on the 31st March, 1889, it was £38,375,050, but deducting the sinking funds accrued, now amounting to £1,395,389, the net debt was £36,979,681, as against £35,545,610 la?t financial year. There were old loans paid off and new loans raised, this result of the year's operation on the loan account being an addition to the permanent debt of £1,616,613, but on the other hand it is material to note that by far the greater part of this sum, though borrowed, was not spent, but retained in hand to the amount of £1,857,696 on the 31st March last. I shall first refer to the loans paid off. Debentures for £25,000 of the New Zealand loan of 1885-6, due Ist October, 1888, and £25,000 due Ist January, 1889. were redeemed by the trustees of the sinking fund of that loan. Debentures for £40,900 of the Consolidated Loan of 1886-7, drawn for redemption in 1838, were redeemed out of the sinking funds provided for that purpose. Debentures for £131,600, issued under the Consolidated Stock Act, 1884, for increases of the sinking funds, were redeemed with cash received by Treasury from the Crown Agent after the drawing of 1883 as the holders of drawn bonds which had previously been converted. Advances to the amount of £500,000 obtained on security of debentures of the North Island' Main Trunk Railway Loan were repaid out of the proceeds of that loan. An odd sum of £87 under the District Railways Purchasing Act, 1885, was paid off out of the Consolidated Fund. The total amount of debt paid off was, therefore, £722,587. The loans raised were the North Island Main Trunk Railway loan, £1,000,000; the loan authorised in 1883, £1,000,000; debentures created for increases of Sinking Fund in 1888-8j.£263,200; for Government loans to local bodies, £75,000; and for State forests, £1000. These new loans amount to £2,349,200, and if we deduct the amount paid off, £722,587, we get £1,616,613 as above shown. In my Financial Statement of the 29th May, 1888,1 drew attention to £250,000 falling due on the Ist November, 1888, under the Colonial Inscribed Stock Act, 1882, and £49,500 ou the 15th December following under the General Purposes Loan Act, 1873, and I remarked that it would be necessary to obtain the authority of Parliament to renew these loans. Subsequently it was found that they could be dealt with under the Consolidated Stock Act, 1884, accordingly short-dated debentures for £299,500 were issued under that Act, pending creation of stock, and the securities under the old Acts were surrendered and cancelled. Incidentally to my reference to the debenture for £131,600 redeemed last year with cash received from the Crown agents after the drawing account consolidated loan debentures in ISBB. I may inform the Committee that at the drawing of 1889, converted bonds to the amount of £133,400 were drawn, which sum has been received and applied by the Treasury since the 31st March last to the redemption of debentures of, the same amount issued under the Consolidated Stock Act, 1884, for increases of the sinking funds. THE PUBLIC WORKS FUND. Hon. members are aware that for reasons mentioned in my last Financial Statement, and which it is unnecessary further to refer to, the public work fund now consists of three separate and independent accounts. no. 1 account.

The balance of credit of this account on 31st March, 1838, was £200,391, including £150,000 temporarily raised under the Loan Act of 1887, in anticipation of the £500,000 authorised by that Act. It will be recollected that an error in the 19th section of the Act prevented us from floating the loan. That Act was therefore repealed last session by a new Act similar in all respects t« the one repealed, except that the section containing the error was omitted. The loan was floated last year, and the account credited with £5,000,000; credit was also given for £3000 under the District Railways Purchasing Act, 1885-86, and for £19,426 recoveries in respect of expenditure of previous years. These credits, with the balance at the beginning oi the year, amount to £722,817, subject to the repayment of the temporary advance of £150,000 received in 1887-88, leaving £572,827. The expenditure during the year amounted to £240,258 for public Works and £28,758 for charges and expenses of raising loans, including discount, making together £269,016, and leaving an unexpended balance of £303,801 at credit of this account on 31st March last The principal items of expenditure were: — Roads, £104,631; public buildings, £34,592; lighthouses, harbor works and defences, £02,593, and telegraph extension, £12,047; the amount expended on other services being £38,394. Further information regarding this expenditure, as well as the expenditure charge upon accounts Nos. 2 and 3, will be afforded when my hon. colleague the Minister for Public Works makes his statement.

In addition to the balance of £303,801 at credit on 31st March last, there is an available asset under the Government Loans to Local Bodies Act, 1886, which authorises the conversion into a liability under that Act of debentures given by local bodies to the Treasury for advances out of the public works fund under the Roads and Bridges Construction Act, 1882. The Act of ISS6 gave power to the Treasurer to issue debentures for the amount of the liability created by conversion, and to pay the proceeds into the public works fund. That liability amounted at the 31st March last to £37,974, which, with the balance of £303.801 at credit, made £391,775 available for expenditure, subject to liabilities amounting to £165,273. no. 2 account. The North. Island main trunk railway loan of £1,000,000 authorised in 1882 was raised last year in connection with the million loan authorised last session. In anticipation of the raising of the loan,

there had been expended up to the Slst March, 1888, £478,000, leaving a balance of £522,000 unexpended. Last year there was expended £86,184, including £51,788 for charges and expenses of raising the loan, including discount, leaving an unexpended balance of £333,818, subject to outstanding liabilities amounting to £28,972.

No. 3 Account. At the 31st March, 1888, the. balance at credit of this account was £546,334, including £150,000 temporarily raised under the Loan Act of 1887 in circumstances similar to those referred to in my remarks on No. 1 account. The loan of 1888, which authorised £500,000 to be raised i for thi* account, having been floated last year the amount available for expenditure, including the balance at the beginning of the year was, therefore, £896,224. The expenditure during the year was, for railways, £251,801, and departmental expenses £12,000. The charges and expenses of raising the loan, including discount, amounted to £24,366, this making the total charges £278,160, leaving an unexpended balance of £618,000, subject to liabilities outstanding amounting to £164,394. SUMMARY. The balance of the Public Works Fund as a whole on the 31st March, 1888, including the loans authorised but unraised. amounted to £1,903.(535. During the year this amount was augmented by £3000 under the District Railways Purchasing Acts, 1885-86, and £19,426 recoveries on account of expenditure of previous years, making the total £1,991,061. The expenditure on Public Works amounted to £528,453, but including charges and expenses of raising the loans, including discount £104,912, the total charge amounted to £633,365. The balance left at credit on the 31st March, 1889, was therefore £1,357,696, to which stande the asset of £89,974 referred to in my remarks on No. 1 account, making together £1,445,670, subject to £368,639 of liabilities. The unexpended balance consisted of — Cash in the public account .. .. £515,550 Oα fixed deposit in London.. .. 230,000 Temporary investments— Debentures of the loan of 1370, guaranteed by Imperial Government 476,000 Debentures under Government Loans to Local Bodies Act .. 25.009 Westport Harbor Loan Debentures 55,000 In the hands of officers of the Government .. .. .. 56,606 £1,357,699 Available under Section 12 of the Government Loans to Local Bodies Act. 1886 .. 87,974 Total £1,474,670 GOVERNMENT LOANS TO LOCAL BODIES. In last year's Financial Statement I stated that up to 31st March, 1888, £125,000 had been borrowed for the purpose of making loans to local bodies under the provisions of the Government Loans to Local Bodies Act 1886. There had been paid over to local bodies £108,841, and thac the engagements of the Treasury on account of loans not then fully taken up, or not at all, with regard to which all the necessary steps under the Act had beeu taken by the respective borrowers, amounted to £29,224. I also stated that, responses to a notice published in the Gazette in January 1888, under section 16 of the Act, applications to the amount of £78,330 had come in. nearly all of which had been provisionally granted. I have now to inform the Committee that during the past year a further sum of £75,000 was borrowed by the Treasurer to make these loans, bringing up the total amounts borrowed to £200,000 on the 31st March, 1889, and that further sums to the amount of £83,475 were handed over to local bodies, making a total of £192,316. During the year refunds co the Treasury amounting to £940 were made under section 18 of the Act, which provides for repayment of moneys borrowed in excess of the sum required to complete any public works. The balance at credit of the account at the close of the year was therefore £81,624. The engagements of the Treasury at the same date in respect of the loans amounted to £25.920, irrespective of applications for £2775 from local authorities who had not completed all the necessary formalities. Of the total sum of £192,316 paid over, £174,381, including intercut to date of inscription, has been inscribed up to the Ist February last under the 22nd section of the Act, the Treasury having in many cases elected to inscribe debts of local authorities in preference to requiring them to give debentures. The payments made between the Ist February and the 31st March carry interest at 3 per cent, until the Ist February, 1890, in accordance with the provisions of section 2 of the Amendment Act of 1887, at which date the amounts, with interest added, will be inscribed in the registers under the authority of sections 27 to 31 of the Government Loans to Local Bodies Act, 1886, whi<:h provides for the conversion of debentures issued by local bodies under the Roads and Bridges Construction Act, 1882, into a debt under the former Act. Debentures to the amount of £110,550 have been converted, and on the 31st of March last the amount of debt' inscribed in the register in respect of such debentures stood at £87,944, which,' together with the moneys lent under Act, £174,380, made a total of £262,255 on the register at the end of last financial year. In March last applications for further loans were invited by notice in the Gazette, resulting in applications for £63,311 being provisionally granted in April. Local bodies were; however, informed that a Bill would probably be introduced in the coming session of Parliament with a view to increase the rate of interest payable on loans maturing the current financial year, and that the loans provisionally granted would, if accepted, be subject to such additional rate of interest as Parliament might see fit to impose, not exceeding 6 per cent. ESTIMATED EXPENDITURE FOR THE YEAR 1839-90. ORDINARY REVENUE ACCOUNT. I now come to the consideration of the expenditure and revenue of the current year, and according to custom I first deal with the expenditure. The estimated ordinary total expenditure is £4,117,311, of this £1,613,205 is for interest. Hon. members will bear in mind that of the £1.888,405, which appears as interest and sinking func under the permanent Acts, about £275,200, although charged agaiuet revenue, is recouped to the consolidated fund by the issue of debentures under the Consolidated Stock Act of 18S4. It is very necessary to remember this fact, as the larger sum is often spoken of as the amount of annual interest we have to pay, and so our financial position is assumed to be worse than it really is. Full details of expenditure will be found in the Estimates, which will be in the hands of hon. members immediately. There are no items requiring special remark, bnt I may call hon. members' attention to the increase in the education vote, which is necessitated by the usual annual increases in children of the school age. The estimates also include £255,000 for school buildings. I must, however, point out that although we have increased the salaries of officers receiving less than £200 a year by a total of £41,532, and of officers of higher grades, to rectify inequalities, which I hist session announced should be inquired into, by £1605, and have also increased the expenses of the Native Land Court by £3000 to enable the Court to cope with the large increase of work coming before it—l say, that .notwithstanding these increases, the proposed expenditure under the thirteen classes annually voted is £30,033 less than the amount granted last year. I hope that this fact will reconcile the Committee to the moderate increase which we have thought fair to propose. Provision is also made for the continuation of subsidies to the local bodies at the same rate as was paid last year. LAND FUND. The estimated expenditure chargeable against the land fund is £122,000. This is a small increase upon the expenditure of last year, which was £119,496. This increase, however, arises from the management of roads having been transferred to the Survey Department from Public Works. TOTAL ESTIMATED EXPENDITURE. The total estimated expenditure is, therefore, £4,239,321, being £4,117,331 chargeable against ordinary revenue, and £122,000 against land fund. ESTIMATE REVENUE FOR THE YEAR 1839-90. Assuming the present estimates to remain unaltered, I estimate that we shall obtain for the year 1889-90, a return of £4,187.800. This amount includes the estimated sum of £205,200, which is paid as sinking fund to the Trustees of the sinking funds of revenue investments of accrued sinking fund, and then recouped to the consolidated fond by sale of an equivalent amount of debentures issued under the Act of 1884. I have estimated the receipts from the Customs at £1,550,000, and I have reason to expect they will reach that amount, but trade has not yet become settled and steady, and there are even yet,

lam Informed, stocks in hand to be cleared before the increased duties came into force. It is, therefore, impossible to make a Tery accurate estimate, and I wish to soaxd myself by pointing oat the difficulties under which my estimate is made. With reference to railway estimates, hon. members will see that an increase to the revenue is anticipated to the extent of about £281,800, but as expenditure is estimated about £28,800 more than last year, the net revenue receivable is only increased from £360,000 to £370,000. It is natural and right that the Commissioners should not cake too sanguine a view of affairs, but I certainly hope the result of the year's workings will prove to be larger than they anticipate, Is will be seen that there is a satisfactory increase of £36,683 under the heading of depasturing licenses and rents. This arises from an increase in the rate of pastoral rents and from the larger area taken up on the perpetual leasing system, a system which is becoming popular, and which, as hon. members are aware, gives the lessee the right to purchase within thirty years. I will presently make a few remarks about the property tax, which it is estimated will yield under the new valuation £18.000 less a year upon the present rate than under the valuacion of 1836. I shall also say a few words upon the subject of the tariff of 1888. The land fund is estimated to produce £136,103 for the year 1889-90, particulars of which will be found in the tables attached to this Statement. ESTIMATED RESULTS OP THE YEAR 1889-90. From what I have jast said, hon. members will see that I estimate to receive a total revenue of £4,323,900, against a total expenditure of £4,239,351, but excluding the land fund from both sides of the account we get a revenue of £4,187,800, against an expenditure of £4,117,331, thus showing a balance of £70,469 at the end of the year 1889-90 if my anticipations are realised, but to this amount 1 add what is left of last year's surplus of £77,609, after paying off £5000 of the deficit of tne year before, viz., £27,769, and get a surplus of £98,238, of which about £55,000 will be applied to the further reduction of floating debt, leaving a sum of £33,238 at the end of the current year, which is certainly not too large a margin to work upon, especially if the proposal the Government will make for the continuance of the Otago Central Railway shall be adopted, but I trust with careful management that will prove sufficient. PROPERTY TAX. I will now fulfil my promise and say a few words about the property tax. I have said that under the new valuation it is estimated that at the rate of one penny in the £, the tax will yield about £16,000 a year less than under the old valuations. This arises from the falling oif in the reputed value of real property more or less throughout the colony. There has been a fair increase in the value of personal property, but, as hon. members know, thtre has been a considerable fall in the reputed value of real property, sneaking generally. This fall, although in one sense to be regretted, is, I venture to think, on the whole, nothing but advantageous to the colony at large; for we all know that the price of land ruling throughout most parts of the colony was for a time, and .to a considerable extent, its speculative value, rather than its value for use—its value to the speculator (often nothing more than a gambler in land), not to the claas of men whose well-being means the prosperity of the colony—the bona fide occupiers of the soil. We may well put up with a temporary loss of revenue caused by a return to a more wholesome state of things. I promised last session to consider carefully this question of the property tax during the recess, and to give the House an early opportunity this session to discuss the question. The result of the consideration of the matter by Government is that I shall propose certain modifications, which will require legislation to give them effect This will enable the House to debate fully the whole question at an early date, as I propose to introduce the necessary measure to give effect to the proposed alterations in the course of a few days, and to ask for its early consideration. I may here state, .without going into unnecessary particulars, that ;we propose, amongst other things, to exempt from the tax all machinery, which, however, will be strictly defined, and to allow any owner or the Property Tax Commissioner to have properties re-valued under reasonable restrictions without awaiting the triennial period. These remissions and the fall in the new valuation will cause an estimated loss to the revenue of about £20,000, ac compared with the amount received from tne property tax last year, but Government do not propose to aik for any new tax to meet this falling off, hoping that there will prove to be sufficient elasticity in the general revenue to make it good. I do not now propose to enter into any arguments in favor of the property tax or of the remissions proposed, as they will come more appropriately when the Bill to which I have referred is before the House for consideration. THE TARIFF. I have had a aeries of tables prepareb for the information of hon. members, showing the results of the ten months of the year in which the tariff has been in force in imports and duties as compared with the imports and duties for the corresponding ten months of the year ending 31st March, 1888. The comparison is necessarily very imperfect, owing to articles being differently grouped, and to different rates of duty being charged on items that were before in the same group. I have examined the matter carefully, but so far as I can see it is unfortunately impossible at present to deduce any law, or even found any satisfactory arguments, as to the effects upon trade ana industry produced by the tariff. The time has been far too short, and the disturbing elements too large, especially the extensive speculative clearance made in May, 18S8, in anticipation of the increased duties. One thing however I may point out—that the tariff has been successful in producing the revenue required of it.

OTAGO CENTRAL BAIL WAY. Last session I made a promise to the House that I would, with the Minister for Public Works, visit the country on the route of the Ocago Central Railway, in order to judge for myself as to the desirability of continuing that work, and make a proposal iv accordance with the conclusion I came to. In fulfilment of that promise the Minister for Public Works, the Minister for Defence, several members of the House, and the Engineerin,Cuief and myself visited the Central Ocago district shortly before last hristmas. I was tnueh pleased with the country, and came to the conclusion without any doubt that the railway ought to be continued, if it could be done without an infraction of policy we are all agreed on, that is without recourse to a new loan. We think it can be done, and a Bill to give effect to our proposal of at once continuing the line will be submitted for consideration of Parliament.

MIDLAND RAILWAY. I may mention an important enterprise with which the South Island specially and the. colony as a wlioleie deeply concerned— I mean the Midland Railway. The Company have now realised three-quarters of a million as a further .instalment of their capital, but which i<; is estimated will enable them to make the stipulated expenditure at the Springfield and Nelson ends of the line, arid to continue the line to Reefton and towards Lake Brunner on the West Coast, rib is a matter for congratulation that this important work, ■ colonial in ' character, is now to be pushed forward with vigor. It is to the interest of both parts of the colony, not less than of the Company, that it should be brought to a successful issue. To the colony its success means not only the completion of the main trunk railway system from end to end of the Southern Island, including the connection of important centres now {Isolated, but also the permanent settlement of a large tract of country, which but for this railway could only be settled very slowly and with diffiC ty * VILLAGE SETTLEMENTS.

My colleague, the Minister of Lands, has visited the village settlements north of Auckland, in the Forcy-inile Bash and in the south, and I visited the one near Titnaru. A most instructive return ha* been prepared, and will be laid upon the table of the House, giving interesting details of the settlers and settlements. The general conclusion to be drawn from past experience is that village settlements snpply a want, if formed of a small number of small settlers in a neighborhood where some work can be conveniently obtained, where land is of good quality, and, most important of all, where the settlers are of the right sort. This general principle, we think, is clear, bnt the application in particular cases which we had in view needs further consideration. I may state, however, that in newly settled districts we have kept It in mind, and have made suitable reserves. DISTRICT NOETH OF AUCKLAND. The country north of Auckland was visited during the recess b? three of my colleagues, who had not been previously

in that part of the colony. I much regrettime did not permit mc to visit it, as I had hoped to da The opinion they formed of the district generally was very favorable. The Minister for Public Works, in the Public Works Statement, will state what we propose with regard to the Main Trunk Line north of Auckland. He will also make a proposal with regard to utilising the Puhipuhi kauri forest estate. CONDITION hXD PROSPECTS OF THE COLONY. I will now, Mr Hamlin, with the per* mission of the Committee, call the attention of hon. members to some prominent and important facts relating to the condition and prospects of the colony, but before doing so I will say a few words on an apparently adverse fact—the only one of any significance I have met with, which has naturally excited a good deal of discussion. The colony has lost by emigration, during the last two years, 9580 people; that is to say 9580 more people left than arrived iv Ne .v Zealand. Or these 4476 were males above fourteen years of age. This is a fact which, especially at first, must excite regret, and for it many remedies have been suggested. I have given the matter anxious consideration, for Government recognised as duty to find remedy if one was to be found. But I came to the conclusion that in the circumstances of this colony and neighboring colonies no remedy was possible that We could consent to apply, for the only effective remedy in ray opinion was the continuance of large public works expenditure. It is evident, I think, that during the many years that we have been continuously spending very large sums of money on public works, not the General Government only but local* bodies also, a numerous class has sprung up who have been relying on public expenditure as a means of livelihood, and many of whom do not care to live the life or ordinary settlers. In support of this view I would point to the fact that, as our expenditure on public works decreased, so the tide of intercolonial migration turned against us. Taking merely the expenditure within the colony itself, our expenditure out of loan for work done iv the colony during the year 1886-87 was, in round numbers, £1,040,000, and for the year 1888-89 £423,000, so that we have been spending during the last year at the rate of £717,000 per annum less than we were spending two years ago. This, I take it, would in itself far more than account for the wages of 4476 males who have left us, but in addition to this there has been a considerably decreased expenditure on public works by local bodies. Of the total number who had been employed on public works some were no doubt absorbed by other industries, but the less versatile or more restless drifted away. There is no doubt that the recent exceptional discoveries of gold and silver in the neighboring colonies, and the extraordinary prosperity which the colony of Victoria hi\s enjoyed during the last two years—the same period during which we have been m\kiiig a large reduction iv our public works expenditure—have also tended in a marked degree to induce many persons who do not or perhaps cannot afford to look far ahead, to try their fortunes on the other side. I have, therefore, come to the conclusion that the loss of a small percentage of our population was inevitable when we began seriously to contract our large public works expenditure, and that looking at the circumstances of the case, we have passed through the ordeal remarkably' welL To the reduction of the public works expenditure is also largely traceable a reduction which has recently taken place in our railway traffic, and it is satisfactory to find that this is so, rather than it should be due to a falling off of the legitimate internal trade of the country. Now let us take the last half of the same period of the same two years of which I have just been speaking, and see what our permanent industrial population has been doing, so far as this is shown by our exports. Hon. members will find attached to this Statement a table showing in detail the exports for the last two years. From this it will be seen that in every article of importance, with one exception, there has been an increase during the last quarter, and in many of them a large increase. This table will well repay a study. It will be seen that the export of grain has increased from 3,630,843 bushels to 5,584,488 bushels, grass seed from 164,550 bushels to 274,772 bushels, frozen meat from 49,36;i,8781b to 63,003,472 lb, and it needs no prophet to say that this important industry will only reach its limit in quantity and price when some efficient organisation for its sale and distribution shall have been established in the United Kingdom. Butter has increased from 2,272,6201b to 3,631,370 lb, cheese from 3,381.5J61b ; to 3,731,849 lb, and sawn timber from 33,791.992 ft to 44,219,840 ft. The flax industry may be said practically to have sprung into existence during the last year, the export having increased in that period from 1812 tons to 5603 tons, and is is still rapidly increasing every month. But besides the increased quantity of our exports, there has been also in the main items a marked increase in value. The value of the excess of exports, exclusive of wool, last year over those of the year before, may be taken at no less than £992,000. The one exception to which I just referred is an important one, that is wool, and it seems probable there is a falling off in the quantity exported, but to what extent it is difficult to say, as experience tells us September is the only quarter in which an accurate estimate can be., made. It is also satisfactory to know that the quantity of wool locally consumed in our mills has increased from 2,00(J,lo5!b8 in 1887-88 to 4,007,9631b (?> in 1886-89, and this increase must be set off against any decrease of exports. The total exports for the year 18S7-83 were of the value of £8,415,745, while those for the year 1838 S9 were £7,345,185. I will not trouble hon members with details of the products of our local industries for home consumption. They would, of course, be necessarily im?erfect, but it will be seen from the figures have just briefly given about our woollen manufactures, to what a magnitude some of these industries have already grown, while as to the quality of their products, we have ample proof that they are steadily and deservedly gaining in public favor, and that a large nunioer of the articles produced would do credit to any country iv the world.

The mining industry is, I am happy to say, in a mare hopeful condition tiiat ib has been for some years. The yield of gold for the year ending 31st March last was 208,9020z, against 191,9610z for the previous year,* .being an increase of 10,9580z. Special machinery and appliances are being constructed—some of which are in operation —for working the auriferous beaches of the Middle Island, and from trials already made are believed to be likely to prove successful. By improved systems of hydraulic sluicing, also, low-lying ground, formerly unpro iuctive, and drifts considered valueless, are now worked at a profit, and it is hoped that the improvements which are being made in machinery and appliances for the reduction and treatment of ores will solve the question of treating successfully the refractory ores of the North Island, and be the means of lodes being worked which hitherto have been considered non-payable. Oar coal mine* are being gradually developed. The output last year was 613,895 tons, as against 558,620 tons for the previous year. Further extensive works in connection with this industry are contemplated, some of which are in progress, and when completed a large increase in the output of coal may be expected. Recent discoveries in Stewart Island show that tin ore is distributed over * largo extent of country, both in alluvium and lodes, and it is inferred that rich deposits will be discovered there. Very little work, however, has as yet been done.

That portion of the thrift of the colony, which is represented by the assets of friendly societies, is steadily increasing year by year. According to the last compiled tables there were at the end of 1887 21,928 members of registered friendly societies, and the value of their accumulated fund was £383,515. Without allowing for any increase of members in 1888 it is fair to assume that the natural increase of the funds would be at the average rate of £1 per member, the value therefore of the funds may be stated approximately at £410,000 (inclusive of £15,600 in Post Office Savings Bank) at the end of 1888, and the increase for that year £23,000. In addition to these funds the assets of other societies registered under the Friendly Societies Act and of societies registered under the Trade Unions Act are approximately £10,000 and £3000 respectively. In the Savings Banks of the colony on 31st December. 1886, the amount held in deposit was £2,133,780. in 1887 it was £2,407,775, and in 1888 £2,691,692. In 1888 the depositors numbered 01,296, in 1887 the number was 87,498, and in 1838 it was 103,018. The average amount at credit of each depositor was, in 1830, £23 3s ; in 1887, £24 6s ; and in 1888, £26 Is. Between 1886 and 1888 the amount of deposits increased by nearly £558,000, and the number of depositors by 11,750. Of a total number of 8188 depositors in the Post Office Savings Bank 02,831 persons, or nearly three-fourths of the whole, had sums not exceeding £20 at credit. I append to this statement a very interesting table I have prepared, showing

the remarkably steady increase since 1888, both in mc number of depositors and the amount deposited, and I would particularly draw the attention of the Committee to this instructive fact, that the number of persons having deposits in the Poet Office Savings Bank not exceeding £20 Increased from 57,388 in 1886 to 6UW3 in 1887, and to 62,831 in 1889, and this is irrespective of similar small deposits with Savings Banks established under the Savinge Bank Act, 1858, with regard to wmch I have not the data before mc. The progress of the Government Insurance Department and the position of its policies and business may be viewed as affording farther indications of the condition of that class of the colonists (and it is a large one) who exercise prudent care and forethought for themselves and families. During the past year new assurances amounted to nearly £800,000, showing an increase on the average of recent years, and approaching in amount the whole of the new business affected by foreign life offices having branches in New Zealand. The average amount of individual assurances was larger than in the previous year, being close on £270, which is an increase of full £50 per policy as compared with the average of the three years immediately preceding. The average amount of policies discontinued is smaller than that of any year since the initiation of the office, while the policies surrendered have been smaller in their total amount than in the preceding year. The accumulated fund has been augmented by £1,23d.000 during the year. This fund at the present moment exceeds a million and a half sterling, having doubled in amount during the last six years. It is instructive to compare the total ordinary life assurance of Sew Zealand with that of other countries. The population of .New Zealand possess £24 of life assurance per head, whilst in Australia this average is £19 per head ; in the United States, £8 ; Canada, £9 ; and in the United Kingdom, £12 per head. The number of policies possessed by every thousand of population In New Zealand is 80; in Australia, 65 ; the United States, 15; Canada, 24; and United Kingdom, 26. The average amount of policy in the United Kingdom is £487; in Canada, £376 ; Australia, £300; in the United States, £554; and New Zealand, £295. It is gratifying to note that while the average sum assured by each policy is less in New Zealand than elsewhere, the total number of policy holders in this colony bears a larger proportion to its total population than is the case in any other English community, and though individual policies average a less sum than elsewhere, the number is so much greater. That total sum assured divided amongst the whole population gives a lamer sum per head here than anywhere else. Th's, coupled with the facts I hove given concerning savings-banks and friendly societies, means two important things— that in the means of saving, and in the will to save, the people of New Zealand are at, least not behind their kin in other parts of the world. The last fact I will mention, is an important one, the greatly improved credit of the colony in London ; I will give only a single instance. Eighteen months ago our 4 per cent, stock was selling rather heavily at 9Ji; it is now worth from £105 to £106, with an active market. I venture to think we shall see a further rise when our true present position comes to be really known, and a fair and unprejudiced comparison Is made between New Zealand and other Australian colonies.

In conclndiiig, Mr Hamlin, I would say that io giving prominence to these encouraging facts, I desire again to impress on hon. members what I said in the beginning of my Statement, thatour public expenditure will still require the most watchful care. My object has been, whilst drawing attention to many satisfactory evidences of increasing production and improved -values, to lead to the conclusion that it is by such means, aided by public and private economy, rather than by large public expenditure, that the permanent prosperity of the colony will be secured. That, Sir, in all I have to say. I have I believe laid before tha Committee all information needed to enable hon. members clearly to understand the financial position of the colony, and to judge of its substantial and most satisfactory progress, especially in the occupation of the land and the steady, I might say rapid, developments of its industrial enterprise. In 1887 in disclosing to the Committee the difficulties which then lay before it and the Government, I ventured to say that with the necessary efforts and sacrifices those difficulties were well within our power to overcome. Parliament and the people took entirely the same vlewr, and the facts and figures which I have just laid before you enow, L tra.it beyond question, that they were right—right, I say, not only in the belief we could overcome our financial difficulties,' but in the deeper underlying belief on which the othor rested, the assured belief in the vitality and resources of the colony.