The Press. SATURDAY, FEBRUARY 4, 1899. PUBLIC FINANCE AND FALSE ESTIMATES.

Press, Volume LVI, Issue 10263, 4 February 1899, Page 6

The Press. SATURDAY, FEBRUARY 4, 1899. PUBLIC FINANCE AND FALSE ESTIMATES.

In the play • of Aristophanes called "Plutus"—first performed about 2307 years ago—one of the characters intro-, duced is Poverty. And in the dialogue Poverty says that she is the cause of sofcriety and of right living. Indeed, it is through her that many blessings she says flow to mankind. We do not know if Poverty's statements in the dialogue can well be answered, but if they can there is one view of the good that Poverty does in a State that we have not realised. Poverty keeps our Government economi- : cal, and makes our living' aa a nation

simpler, and frees us from oppressive burdens. So soon as a State Treasury gets full of money all kinds of extravagance result. We know from our sad experience in New Zealand that when we can borrow easily, and when we have plenty of money to spend—got front our overflowing revenue or loans—we are extravagant and wasteful. If, for example, it were true that we have had surpluses since 1890, ranging from £36,000 to £521,444, the increase of debt during that period, of over six millions, must be condemned by everyone who appreciates economy. Unfortunately, the surpluses claimed by the Colonial Treasurer have been "bogus"—made up of borrowed money and carrying down credit balances from one year to another. Let us give an example of what is going to be dono tliis year. The Treasurer started with a credit balance of £521,144. If this is treated as a receipt £or the current year, the balance will probably exceed that amount by over £150,000, and Mr. Seddon will boast of a surplus of about £700,000. Of course, it is no surplus. The true surplus for the year would only bo the difference between the balanco at the beginning of the year and that at tho end, and would be, if the balance : were £700,000, nearly £180,000. To get at I a real surplus we should also have to enquire whether any money had been bor- , rowed to pay sinking funds, «S:c. We are ' not, however, concerned at present with describing how "bogus" surpluses are made. 'Iho fact that we have what ara called credit balances, and that our borrowings continue and our expenses mount up, should really set us enquiring whether it is good finance to have large balances carried forward, or whether each year should not deal with its own revenue. This is the English custom. If there is a credit balance in England it is at once •applied in reduction of debt. The more our credit balances increase, the higher our debt mounts up! It is a ridiculous and unsound system of finance, and perhaps until we are poor we shall be unable to obtain economy and reduction of, taxation. In England and in. other countries where there is a sound system of public finance, whenever, as we have said, a credit balance is realised it is applied to a reduction of debt and for the next y ear —_s there was a balance —taxation is reduced. We have done the very opposite. W_ have increased our debt, and increased our taxation. The conduct of our Treasury cannot be defended.

I How has this wrong system been continued? We believe it has been con- , tinued because the Parliament has been I systematically deceived. False estimates have from time to time been submitted to the House of Representatives. We may take what took place in 1897-1898. The revenue of 1897-1898 was £286,229 more than the estimate. That is, the Colonial Treasurer under-estimated the receipts by that amount. In the expenditure he was equally at sea. He overestimated the expenditure by £66,702. And it has to be remembered when he gave these estimates to Parliament more than half the financial year had expired 1 Can any excuse be found for such estimates? When Mr. Seddon delivered his Budget in 1898 we stated that his estimate of revenue and expenditure were both* erroneous, and the view we expressed was echoed in the House by Mr. Pirani and others. Nine months of the financial year, have expired, and we find on looking over the published accounts for the three quarters that our estimates will come nearly correct, and Mr. Seddon's be again egregiously wrong,

We will- give illustrations. Mr Seddon estimated that the Customs revenue would be £1,995,000 for the current year. This estimate was made in August, when, he held in his hand returns for one-third of the year showing an increase of over £11,000, compared with the first four months of the year 1897-98; yet this estimate was £252 below (the actual Customs revenue of 1897-98. And we find that the Customs revenue that has reached the Treasury for the period ending 31st December, 1898, exceeds the same period in 1897* by no less than in round numbers £30JQ0Q. What a false estimate Mr. Seddon gave, the House! The same falsity is seen, in his estimate of Railway revenue. Though at the time he made his estimate-r-after four months' running of the railways in the financial had been ah increase of Railway revenue of over £25,000, he estimated that the Railway receipts would show a decrease of £5721 We stated at the time that this was a false estimate, and the published returns show that our statement was true. ,*—c increase in the Railway revenue up to the end of December has been about and the increase of the holiday traffic does not appear in the December Treasury returns. In fact, we do not know if there is a single estimate made by the Treasurer that will prove. correct. . The land and income tax was estimated to produce £390,000. The income tax has not yet been collected, and the total amount received of land tax and income tax is about £300,000, and the income tax will give about £120,000. The Treasurer's estimate will be about £30,000 wrong on this item, and the Treasurer had the valuations and the income tax returns when he made his estimate! Why then, is he so far wrong? If we look at other items there is the same tale to tell. . Beer duty has been increasing for years, yet the Treasurer estimated a decrease of £1179. For nine months the increase has been about £2700!" The territorial revenue was to show a decrease of £38,296. For the nine months that have passed the increase has been, compared with the previous year, £28131 In fact, without particularising other items, we" may say all the Treasurer's estimates are false. The expenditure has also been wrongly estimated, though the disproportion between the estimates and the actual expenditure will not be so large as in the ease of the revenue receipts and estimates.

We do not believe that these estimates have all "been made by the heads of departments at theso ridiculously false amounts. Did the head of the Railway Department really imagine that the Railway revenue would not increase ? If he did, he has not a grasp of the Department 'he is managing. Did the Secretary of the Customs know so little of the commerce of New Zealand, with an increase of many thousands for four months before him, as to estimate a slight decrease in the Customs ? We cannot believe it. But, if they and other beads of departments have been so incompetent, how comes it that the Treasurer was not able- to point out to them the futility cjf their estimates ? This is not the first time that false estimates have been submitted to Parliament. We had to record the same

in 1898 of the 1897 estimates as we hays to record in 1899 of the 1898 estimates. As we have said, adding the false estimates together the result was £352 00(1 different from what tho Treasurer expected, and this year it will be more than £200,000! What would the directors of % company think of their manager if ho made such blunders ? Or what would tho manager or inspector of a bank say to a merchant, who was their customer, who could not give a better financial forecast ? And it has to be remembered that, when tho Treasurer gave his financial forecasts in one year seven months, and i n tho' other four months, of the financial year had expired. Can there be any possible explanation of these false estimates? Thero are two possible exphw a . tions. Either tho Treasurer has so little grasp of our pos j. tion that he blundered, and keeps blundering—he is a babe in finance; or else he deliberately made false estimates so as to mislead the House, ami thus keep on the borrowing or high taxation policy which he has kept on.doing all the years of his office. Wo do not know of a third explanation. Perhaps, as j\l r% Seddon has been on the "stump" for two months, and' will no doubt spend the ' next few months before Parliament meets in travelling up and clown the country electioneering at tne colony's expense" he might volunteer any other explanation he has. No Treasurer New Zealand h_s ever had has published such false .estimates, and, for tho reputation of his office and the colony, if there is a satisfactory explanation it might be vouchsafed to the public.