THE FINANCIAL STATEMENT.

Press, Volume LVII, Issue 10738, 18 August 1900, Page 4

THE FINANCIAL STATEMENT.

[By Telegkavh.] WELLINGTON, August 17. The following is the Financial Statement, read in Committee of Supply of the House of Representative, this evening by the Colonial Treasurer, the Right Hon. R. J. Seddon:— Mr Guinness, —It is with confidence and pardonable pride that I submit my fifth Financial Statement since holding the position of Colonial Treasurer, and in it, as in those preceding it, a very satisfactory condition of affairs is demonstrated. The results of last year's operations show that the elasticity of our finances was understated, and the record surplus of £605,551 exceeds the most optimistic expectations. The phenomenal returns from railways and Customs clearly establishes the increased spending power of tbe people, whilst the increases from land and incomes prove the increased value of real estate. They also show that salaries have increased, and that those whose incomes are derived from trade, commerce, and the professions have prospered during the year. Savings through the under-expenditure of moneys appropriated in the various accounts go to prove that there has been careful administration and supervision, and it is quite consistent with good government that whenever owing to altered conditions expenditure of public moneys from tbe Consolidated Fund can be avoided without injury to the public service a real and tangible saving is effected. In this, as in the preceding Statement, it is deemed desirable to adhere to finance or matters closely allied therewith, and to place the financial position and proposals before member's in a plain, matter of fact and business-like form. I may as well state at thus point that an increased amount will be required from the Consolidated Fund, which will perhaps strike members as being unusually large, nut this should not take them by surprise., It must be remembered that increased and new charges, such as old age pensions £200,000, payment of our Contingents, harbour defences and defence forces £2_d,oGo* contribution to Ottawa and India £10,000, public healtu £5000, laud and surveys £140,u00, have to be met, and tliat such increased expenditure is desirable and in the best interests of the colony. For orphanages and inebriate homes I am also providing a new item of £15,000. The expenditure is necessary, and will provide for a long-leit want. I am pleased to announce that, notwithstanding the disturbed condition of China and the war in South Africa, our revenues are more than equal to meet the strains of our increased expenditure, and members will be glad to hear that after making due provision for the increased charges I have just enumerated, I see my way to fulfil the pledge given that tliere should be a reduction made by a remission of the Customs duties on the necessaries of life. Details of the proposed reductions" will be subsequently di.-s_.osed. It has been the practice for some years past to devote a .very large portion of the surplus of the previous year in aid of Public Works Fund. _'hi_ will", after this year, have to be partially, if not wholly, abandoned, as it is clear that with the increased expenditure chargeable on Consolidated Fund, together with the reductions in the Customs duties and other concessions, this assistance cannot be kejpt up. On the other hand, if we are to maintain a progressive policy, the amount to be raised in aid of the Public Works Fund will be greater and there will ba a corresponding increase of the public debt. It must 'be, however, admitted that the moneys transferred- from the Consolidated Fund have been expended upon works which are servicaable for all times. It is not um-easoaable to expect' future generations, who will reap the benefit of the improvements and conveniences which have cost them nothing, to pay their share of ths interest and to bear a responsibility as to the principal of further loans which may be required to complete the works inaugurated with surplus revenue. Wo owe nothing to posterity,, for it does not exist. It would be unwise to overtax ourselves and bear burdens which in af-.tr years posterity may conclude were not required, and which should have been left to them. They cannot repay us, for we shall have passed to worlds impervious to the public, to leave our colony better than we found it, and to load) posterity with such portion of our public debt as is contracted' to prosecute works for the development of the country is not unreasonable. Those who come after us will derive the benefit of these works, and will not have good grounds to complain. It must be clearly im_erstocd that I do not favour piling up a huge public debt, and trusting to posterity to pay. Indiscriminate borrowing leads to squandering and inflation, and booms caused by a large expenditure of public money end in disaster. The lessons tmight in the past in this respect must not pass unheeded. The necessity for more expeditiouslv prosecuting the construction of the North Island main trunfc and other main lines of railway with a view of developing the tourist traffic, promoting land settlement and industries, and connecting the large centres of population, is admitted, and demands our immediate consideration. The completion of our main roads and the construction of roads in the back-blocks during the next summer is an essential of paramount importance in order to encourage the close settlement of our lands. Therefore the borrowing proposals herein submitted, compared with those of previous years, are not unreasonable, and after careful consideration are found to be absolutely necessary to meet urgent requirements, There will be some disappointment that the amount proposed to be borrowed is not larger, but we must not overlook the condition of the money market, and that moneys could only be raised now at a considerable discount, in fact it would be unwise to place a large loan on the market under the existing conditions, and prudence demands that we should only ask for sufficient authority to meet pressing demands. The fact of taking power this session to borrow largely would have a depressing efijecfc on our existing stocks, and would at the same time prejudicially affect the raising of the money absolutely required this year to give effect to what I have herein foreshadowed, detailed particulars of which will be given by my colleague the Minister for Public Wdrks when he brings down the Public Works Statement. I regret to have to mention that there has been no favourable oppartunity up to the present to float the loan authorised last session. Temporary -arrangements liave been made under which moneys have been obtained with which to carry on our public works, to meet the requirements of the Advances to Settlers Office, and tQ complete the purchase of lands under the Land for Settlements *Act. The anticipated speedy termination of the war in South Africa shotdd brighten the outlook in the money market, but th-3 unexpected trouble in China has given things a set back, and it seems impossible to gauge the time when we can with advantage place our new loans with a reasonable prospect of success. Under these circumstances I trust members will concur with mc in agreeing this year to the moderate proposals submitted. FINANCIAL RESULTS, 1899-1900. Having generally outlined the situation. I will now proceed with the details of the receipts and expenditure for the past year. As a fitting close to the finances of the nineteenth century, so far as they relate to tliis colony, I am, :as previously stated, able to congratulate the country upon a record balance. At the end of our last financial year this balance amounted to no less than* £605,551. and emphatically demonstrates the magnificent progress this colony made in developing its internal resources. The revenue for the year amounted to £5,580.386, to which £119.232 of other receipts were added, making a total on the revenue side of £5.699.618. The expenditure amounted to £5,140.128, leavin. a surplus on the years transact ions of £559,490. to which add the balance brought forward from tlie preceding year of £45,861 7_J49s,B'>_, less £450,000* transferred to the Public Worka Fund), and we arrive at tha

record balance of £605,351, which I have just mentioned. T_K ReVEN*.E. In framing last year's estimates on the revenue I most certainly had no idea that the colony's resources would expand to such a wonderful extent. The taxation as imposed is clearly not of an irksome or oppressive character, but as the amount received from indirect taxation is large ib is clear that it will stand reduction, and still leave a strong finance. The revenue last year was estimtited! at £5,249,600, while the receipts amounted to £5,580,386, or £350,786 iv excess of the estimate, and also £393,057 in excess of the preceding year's revenue. Tlie heads of revenue, except the "miscellaneous,'' exceeded the estimate, Customs by £127,500, railways by £146.600, stamps by £61,200, territorial by £24,000, and others by, smaller amounts." Miscellaneous would also have shown an excess had the amount of £61,832 been credited to this account upon recovery from the Land for Settlement accounts, as I indicated in my last Budget would be done. The Audit Office, however, decided the recovery could not be considered revenue, and therefore the amount had to be dealt with as an outside receipt, hence "miscellaneous" is shown as £52,800 less than the estimate. T_B —Xi-ENDIT .BE. The estimated expenditure upon all services _for last year was set down as £5,203,700. whereas the actual sums spent total £5.140.128. or £63,572 less than the amount estimated. The amounts which have i exceeded the estimate are few and call for 1 little comment, the principal item being railways, with £12.500, but as we have received from that source some £146,600 in excess of the estimated revenue we cannot complain. Most of the departmental expenditure lias been kept within the amounts quoted. Interest and sinking fund is underexpended by nearly £19,600, principally arising from the interest provided for our 3 per cent, inscribed stock not being required up to the close of the year. The Department under control of my colleague the Minister of Education shows a saving of some £23,000. In explanation of this I am informed that the capitation was not so largely availed of as estimated, owing to sparseness of attendance, caused chiefly by sickness amongst the pupils of many of the larger ( schools. Some of the larger items provided on the vote, for "charitable" purposes were also not paid over during the year. The other items of under-expendi-ture do not require separate comment. THE PUBLIC WORKS FUND. The year 1898-99 clos_d with a credit balance of £70,856, and during the financial year 1899-1900 the fund was augumented by receipt- consisting of £310,000 of old loan moneys, and £300,000 of advances made against the million loan authorised last session; £450,000 was also transferred from the Consolidated Fund, and some miscellaneous receipts, amounting in all to £2116 were added, making a total of £1,062,116' by which the moneys in the fund were supplemented. In order to make my figures clearer, I liave omitted amounts charged on both sides of the account. The expenditure during the year -mounted to £993,223, and the balance of cash and' advances at the close of last year was £139,749. I have previously stated that owing to the unsatisfactory state, of the English money market, caused by th. varying phases of the war in 'South Africa, no attempt has been made to float the last million loan, but very satisfactory an„lgement- have been made with our bunkers, w_s!rflby advances are being obtained so as to provide funds for the monthly requirements of the Public Works Fund.

LAND FOR SETTLEMENTS ACCOUNT. ■Large areas of land were acquired last year-for settlement purposes, and the outlay (including expenses) totalled £374,148. Bessie- this, the account was charged with £95,182 for interest paid by the Consolidated Fund upon d_benture- issued to provide funds for the purchase of estates. To meet th© whole of this expenditure, debentures amounting to £448,000 were created and sold, and with £46,355 derived from rents. £223 from small recoveries-, and £28,141 of balance brought over from the preceding year, the receipts 5 amounted to £522,719, and the expenditure, as above, being £469,330. there remained an available balance of £53,389 to begin the current year with. LOANS TO LOCAL BODIES. The balance in hand to credit of this account at the cwmomencement of last year was £4350. Refunds of unspent balances of loans were received amount—lg to*_B76, and £115,500 worth of debentures was created and issued during the year. These sums, amounting to a total of £120,726, have enabled payment, on account of loans to be madia- daring the year to locail bodies of £68,770, and towards opening up blocks of land for settlement £31,363, leaving at the end of last year a balance of £20,593 to credlit of the account. Up to 31st March last the total amount of the debentures credited and issued and cai-ied info this account was £1,353,000, and the total disbursements have been:—To local autkoritfes £999,542, to Lands and Survey Department towards opening up blocks of land for settlement £244,965, and to Public Works Fund £89,800, in exchange for debenture- nnd.r the Roads and BridgeConstruction Act, 1882. The business connected with the granting of loans to local authorities Iras largely increased. Late legislation has widened the field where—i iocal bodies can apply for assistance, and they have not been slow to take advantage of the opportunities offered. As indicated in my Budget of last year, a direct concession of _ per cent, has been made in the amount of instahnente in respect of repayments of loans granted, and further concessions in the way of reducing the amount of these instalments, while extending the periods, were also provided in the Amendment Act of last session. Fourteen County Councils, ten Road Boards, three Borough Councils, and two Drainage Boards, have availed themselves of the concessions by re-adjusting their existing loans as from February Ist last under the provisions of the Amendment Act of last year. The re-adjustments amount to £447,121 and the reduction in the payment of interest and other charges is £3881 .pea* aanum. As the Act provides only for adjustment taking effect from February Ist in ea«h year, only a few were able to avail them_elves of the advantages of the reduced rates during last year. I shnll submit proposals giving (greater f_cflit—is for adjustments, and anticipate that a larger number will take advantage during the current year of the concession;* granted. Local authorities are also beginning to have recourse to the very liberal provisions of the Amendment Act of 1898 for granting loans for purposes of irrigation, water supply, or water conservation, and large sums of money have been applied for to assist the local bodies to carry out these important public works. LAND AND INCOME TAX. In my last budget I anticipated that from causes which I specified I should lose land tax to the amount of £8500 a. year. This loss was, however, in part made up by enhanced valuations in certain districts, and «)djusted assessments consequent thereon, tlie receipts being £294,200, and the estimates £290,000. When the extended authority for which I mean to ask this session in an amended valuations bill is granted by Parliament, under whioh any valuations .which are too low can be raised, I do not anticipate any further decrease in the proceeds of the land tax. The continued increase in tt he income tax is satisfactory, and is a further indisputable proof that the country is doing sound business, and that its merchants, as well as its farmers, are in a prosperous condition. THE PUBLIC DEBT. The gross T>ubl„ debt on the 31st March, 1899, was £46,938,006. on the 31st March, 1800, it was £47,874,452, or an increase of £936.446 for the year. The net public debt on the ,31st March last was £46,930,076, or £849.349 in excess of the net debt of the preceding year. Tlie increase during the year of the gross debt was caused by the issue of interest-earning debentures to the amount of £619.062, by the.issue of debentures for £300.000 in anticipation of the million loan authorised by the Act of last session, less £85,000 repaid on account of the loans of 1896-98, by £50.400 of debenture* for Kinking funds accretions, and £51.984 additional 3 per cent, inscribed s-tock. in consequence of various conversion operations. These items make up the increase cif £936.446 already mentioned. In connection with this increase of debt it is

right to mention that no less than £448,0(13 was caused by the issue of debentures\jJor the purchase of lands for close settlement. Some very valuable blocks of land have been secured and opened up, and the interest payable upon the loan will be more than recouped to the Treasury. The sum of £115,500 was raised unci paid over to local authorities, or paid away in the direct formation of roads to open up lands for sa'e These moneys are also of an interest-earn-ing character, as also is £55.562 inscribed as New Zealand consols. Thus, of the increased indebtedness about 75 per cent has been incurred for purchases under which interest was repayable by tho-e."Neapin<» the advantage of borrowing!; and t. Nha*Tb>en no increased burden placed v'&plfiu. ~M , e . ral taxpayer, and the reaping a collateral advantage, were in no w iv lnjunously affected by tlie credit n* tlfe colony being pledged." A large parcel of debentures, amounting to over half a million issued under the Government Loans to I o Ca i Bodies Act, 1886. falls due on the 31st" De-' cember next. I do not proprrse on this occasion to convert these debentures into" inscribed stock, but I shall content mys e lf for the present with the provisions of'"the New Zealand Consolidated Stock Act of 1884, which enables mc to renew them f or a further term of years, and during their new currency the money market probably will be m a more favourable condition for a conversion operation. These aro the only debentures belonging to the permanent debt which fall due during 1900-01. REMISSION CF CUSTOMS DUTY. . The oft-repeated demand for a remissionm indirect taxation cannot longer pass u tl heeded, and it will be useful to compare the results of the two systems of indirect and direct taxation. Last year the contributions from the two principal sources were ; from Customs (indirect) £2,107,567, while j land and income tax (direct) produced £422,456. There can be no doubt, therefore, that there is considerable weieht in the argument that the wage-earning classes are entitled to relief by way of a reduction on the necessaries of life and such other commodities as are essential to their daily wants and requirements. The Government has now determined to make some considerable reductions in our Customs duties, but there has been some difficulty in selecting articles upon which remission should be made. On this question there are wide differences of opinion, and some of these are irreconcilable. Reductions made in prices of articles of daily consumption by a working man and his family mean a saving in weekly expenditure, and results practically in an increase of wages, or more correctly in an increase of the purchasing power of money. I therefore propose, and that with pleasure, to take off the whole of the duties on kerosene, rice, salt, coffee, and cocoa, mining machinery, agricultural machinery,' dairy machinery, dredging machinerj*. engines and boilers for mining juid dairying,, and portable and traction engines. Further, I propose to remit half the duty on tea (other than tlrat in small packages)," half the duty on currants and raisin-, half the duty on candies, half the duty on wax matches, leaving the duty thereafter equivalent to an average of, say. 30 per cent, on the value, and that the present duty on patent medicines of 40 per cent, shall be reduced to 15 per cent; that the present ! duty on drugs and druggists' sundries and chemicals shall be reduced from 20 per cent, to 15 per cent. The remissions on these heads amount to about £157,000. I had hoped to have granted remissions on other articles, but the abnormal expenditure this year under several headings does not permit mc doing so. It has ever been the policy of the present administration to maintain a strong finance, and as the colony has prospered thereunder, it is well to be" prudent, and I do not wish my name as Colonial Treasurer to be identified! with a deficit. There may, in giving effect to this proposal, be a slight disturbance in one or two of our industries, an_ those interested may complain that their ents aro prejudiced, but this canncf^t^. alio wed to weigh against ■what' is for >.3"*{ptyic good, j and the continuance of tnc£r_^r''which in some quarters, it is alleged, ''*fj*fae& unduly on the masses. The ireinissions on Customs duties, as stated pr-vktlisly, togeth„.,' with concessions on railways and 'pE„ny r ". postage, are estimated to reach over £300,000 per annum. To this, after the 31st March next, must be added . the reduction in the mortgage tax, which will | amount to over £25,000 per annum. j REDUCTION OF MORTGAGE TAX. i For some considerable time interest on mortgages has steadily During th. past ten yeaa*a it has fallen about onefourth. This makes the Id in the £ on capital value -a v<ery heavy charge. The colony has conceded conditionally _ per cent, on mortgages under tihe Advances to Settlers Act, and _ per cent, to local bodies, on loans under the Government Loans to Local Bodies Act. It is also proposed to grant condition**—y a rebate of one-tenth on ■the half-yearly (payments of trents from Crown tenants, equal to _ per cent., and it follow-, therefore, as a matter of albßtract justice, that there should be some relief given by a reduction on mortgage tax. Many widows, orphans, and others, whose living depends on this class of investment, we heavily ta_ed, and I regret not being able to announce tins .emrssion as being immediately conceded. However, I intend to submit proposals later on in the «*»<«. that from and after 31sb March-next the mortgage tax should be reduced by id IB the£ ' PENNY POSTAGEParliament dhiring the session of 1891 passed an Act under which penny If^ 6 within the colony could be -established. From that time until the present. «wiHg to the demand upon our funds, we have aot been able to give to the public the ton such a cheap rate of postage would confer. It is pleasing to be able to announce tbat on unci after the Ist day of' January, 19H. a penny postage system will be estabhfihed within and without the colony. This colony will therefore be the first in Australasia to have a universal penny postage. I estimate that the loss of revenue by so doing will be about £80,000 per annum, but this will only bo of a temporary nature, for there will be an increase in the correspondence which will in time bring up the revenue to the ordinary level. The joss to the revenue duiing the miexpired portion or the present financial year will be abooq £20,000. . THE FINANCIAL YEAR 1900-1901. Having given honourable members a run* ning commentary upon the transactions or the past year, it is now time for them to learn something of the finances for the w- ; rent year. I have already mentioned that I they must not be surprised to hear that tne ! Estimates I shall have pleasure to nta*) Wfor them have increased in vol " me ,^"t i amount, but I can assure them they .have, been carefully scrutinised, and the vrtes asked for, although large, are required. to meet the necessary expenditure * hO . ™**J estimated expenditure out of the Consolidated Fund asau-ts to £5,441.523, &*&*_**£ actual cost of bust year which »«gj»-------£5.140.128. Last year the. appropriations including the amounts voted in the Supple-, mentary Estimates, totalled to Our fieuns for this year are thereio.e £301,395 in excess of the actual expend* ' tore, and £237,822 in excess of the estimates last year. The' principal items showing the increases have been previously referred to, but it is not out of place to give them here in detail * —Old age pensions £200.000, Lonfor Soutfi Africa £95.000 harbour, defences £14,000, defence foresee Ottawa and India contributions iIUIOH-. public health £5300. education, jreneral and technical. £462.643, lands and surveys £140,650. In addition to these, however, there are the interest and sinking funa £22,591, and natural increases arising trom an increasing population, and in the endeavour of the Covernment to provide greater comforts and facilities for our colonists, wick as aro given by the Education Department at an increased cost of £g6.339. ana the Post and TeP.egraph per-arrment £18,696. The increase of p&Lulation is also unfortunately primarily restrtmsible for nn increaw of £5643 in the Just if p Department. £20,624 in the Lunacy andJChnnt.-'ble Department, and £3157 in tho Police De; partment. The increased revenues ot-n-w. from Customs and marine find a corrfs--pondirv' necessity for iwTeased expenditure to the amount of £10.045, and for thesam* reason I am asking for an increase of *B6< lo for working railways after makitur most liberal concessions to the public The small increases of £3479 and £5553 respective!/ to th« Mines Department and for pub* lo and school buildings are absolutely necessary.

}' r Turning now to the revenue side, and notwithstanding the reductions I am recommending should be made in the Customs tuntf nn.l the~.mcessi.tns by the working Hallways Department and the hiss by adopting penny postage, lam informed'by the sevend departments that we can look forward to a total revenue for the year of £5.463.C00, including -the receipts fi*.m the sale of debentures for sinking fund increases This revenue is £16?,786 k-ss than was r"e' wived last year, but is £163,000 more than w..s cM.ini.ted for that year. The proposed c, " l, '" s """ s I m .. I,e from Customs, stamp, and railways produce a decrease'in tin- n-lative revenue, as a-ainst last year's receipt.--, of £84.557, £5898 and £61 613 re j.pective.y Territorial revenue also shows a falltug-olt t.» the amount of £22,229 and registration and maiine revenues to the ex -^'rV. l^! . i,,v *«w. namely. L-.X-1 in.,,, land ,ml -mom.- u\. £2708 from beiT duty. £.o2 from iiiiM.t-IUi^, )US an( i £2400 from the .inking fund debenture;, it will-m .his a. on former occasions, be contended tha I have taken a somewhat gloomy project of the outlook, that I ought rather U, I, lave tha:.the reduction on rail wav charts will conduce to an inueased trafficthat .!><• concessions in the Customs duties will le.ul to an increased consumption, and that the penny postage system wdl result in mon- etiers being written. This may happen but ,t would not be prudent on my par* to base my calculations on such sender grounds for, on the other hand there an- dark cloud.. i„ the Eastern horizon, and whilst all may end well, .still it is desirable to keep on the safe side B y tlie remissions and reductions in the taxation, and by the large concessions, very coi»id..rHbl« sum of £300,000 has been conceded to the colony. The oft-rejwated fallacy tint by under-estimating receipts and overestimating expenditure tlie Colonial Treasuivr creates a surplus is, of course pure nonsense, for the surplus is simply the difference between the actual receipts* and the actual expenditure, i-dded to any credit balance brought forwaid, and at the close of this year, as in every year since the present Government took office, I expect a •urplui. Hut. so far us I can forecast, it will be the smallest we have ever had. ' ESTIMATED RESULTS AT CLOSE OF CURRKXT YEAR. .Si ro*r fcim i ,tC , <i ™r*nditure being £5.441,5-3. and the revenue £5.463.000 we fc f V^ n _^ C * «/ >f revem,e «ver expenditure of £_l,4ri-y We commenced the year with a bal.ir.ee of £605,351. of which amount we propose to -transfer £500.000 to the Public Woiks Fund, leaving £105,351 available in the ( onsolid'tted Fund. This amount added to th.< surplus of £21,<r77, will provide £126.828 for the supplementary hstitnatcs aud unforeseen contingencies.

AdWtio.vai. Fi:\us for P.hlic Works. A larger expenditure will t-his year be required out. of our Public Works Fund It is only necessary to mention some of the larger items in our programme—my colleagues will supply the details—in order to -low that our proposed expenditure will be considerably in excess of the amount spent last year, which reached very nearly a million. This year a larger expenditure is necessary. If the main trunk lines of railway are to proceed at a mors expeditious rate, if our working railways are to be furnished with tho Westinghouse brake and safety appliances, if the necessary rolling stock is to be increased, und the lines are to be equipped to mest th? increased business, and if reasonable- public convenience L. to be met, we must, in justi.. to the settlers and Crown tenants, proceed expeditiously with roads and bridges and road- on goldfields. Tbe development of our mines, telegraph extension, and public buildings must be provided for. Besides these works, we must also take into consideration the fact that it cannot reasonably be expected that we shall be ab!e to transfer, as hitherto, any sum from tine C--n.«uhdattd Fund to assist in providipi< fur the expenditure for the first six months of next year, and we must, there--cn-e. have moneys to carry us on until P can ba again consulted. To ptcK ,£/' a ' ways and means in the Public Worlttiglnind for the present year, we had £13„.7H- of c;is»h in hand, and £700.000 was available out of the loan of last year, al**> £500.000 coining from the Consolidated Fund derived from the surplus at the close of. the year. These assets ma*, up £1,339.749. Taking into consideration, therefore, that tht> expenditure for the current twelve months will bo very eor.sid.rahlr increased, as I have already indicated, and that we must have sufficient loan money left to bust us for at least six months of next year, I am of opinir.n that it will be Wcessary to n.sk for authority to raise a Joan of "one million, so as to carry on our public works policy successfully. *3—.U'HKl—' Sa—UHKS AND I„CRBASED CaPI-TA-ITON'. The inequalities and anomalie. in the J-laries? of public kcliool teachers, who are in ninny cases in receipt of pay that is •mite inadequate to the work they do, have been for some time past little short of grave injustice, and call strongly for redress. From causes which it will be out of place to discuss here the total number of children attending the schools in many of the districts shows little or no increase; the number of schools to be maintained, is. however, greater than ever. On this account and in consequence of the increased irregularity of attendance, and of the large proportion of small schools in those part.-? of the colony where papulation i-* sparse, find especially where settlement is spreading, the —rain on the finances of the education boards in m great that they are unable, with the present grants, to do justice to the country uehools or to the teaching Man*. We propose, therefore to increase the total annual grant by about £28.000. which is equivalent to 5s oar bead for the average -tendance in all the schools of the colony, and. to deal with it in such a way as to remove the inequalities and anomalies which 1 have referred to. Tkchnk-a- Education. So much has been spoken and written in favour of manual instruction and technical education for the youth of the colony, that sfc does not require more than for mc to ray that substantial financial assistance will be given to tho existing technical schools, and for the extension of technical education into all parts of the colony, imrlu-ling hand and eye trainin. for the pupils in our schools, and the sne-ial training required for manufacturing.* agricultural, mining, and comnwvi*! pursuits in recent year*. The superiority of Ormanv and America as manufacturing nations has been clearly jtemonrtrated. and if the youth* of New Zealand are to hold thoir own in engineering and in skilled handicraft- and industries, a comprehensive system of technical education is of paramount importance. The Bill now in coiuve of by the Minister of ..Education'will I trust prove sajhsfactory. "*n*f find its wav into tbe Statute Book, as far as finnx-e i-> concerned, it is sufficient lor mc tosav that the necessary expenditure will U amply provided for in the Supplementary K-timnte-*.

New Mahkkts, I de«*> to draw a special attention to the tut pn«ibilitie* that present themselves for up a frerii and l«r£ e niarkettor the natural mvdm-fs of this country in botn -W.h Africa ami Chin... It is not unreasonBb!e t» a-sume that after the termination ol the pm.nf tr; iibles in the fomvr country th*r. nil! be a. permanent importation tor •frnie Wats to come of food products, in tne prvHlul-t'on of ml.hU this colony has shown hwJf t.< be second to none, and it is not itnph.l).il ( ;,> tint there will be a necessity lor maiiitunm- f..r some years to wm .<\ *" Ckinrse tenin>rv, standing armies of tne •weral r, uutries concerned in the present wunplieafon", and that this must, in the »»ttir.*» cr.nrv of thins-*, necessitate the importation of a class of food that was almost unknown there It would be of great ad*»Mta_.> if we could obtain a fair proportion of the new btminess. and I sincerely hope that the Mjtl'rpri.-inif steamship owners may >** their v.-ay to give a regular service, so »» tv adm't «'.f a steady outpour of our products t.i these countries. A vessel fcrtn c of coal to China has already been *-'"it ♦.. We-nport. and the improvement of i«» Wvvtport harbour has enabled tbe v-caiui-r to take some 5000 tons. With a Itttl- ,-if.entif.ii and dredging, 4000 tons »l«- «;'.d r..«i\v be taVen by the wune steamer. IhU i* :t ii Yxnerimont, and has been done *t ti„: rr... t urst" of the Admiralty. We may h .k ; .ward to other orders coming to H.\!:UI)UR DEFENCES. DEFENCE FORCES, AND VOLUNTEERS. U>'\ n„mb.r» will observe that the de-

eovi I , ex P eudi . t;ure this year amounts to _-0a,141. This i s a _ ar g e sum in proportion to our population of 800,000. It must, however, be borne in mind that a great proPortion of tlie proposed expenditure Ls nonrecurrent. We have, near a scheme approved by the Imperial Defence Committee, and it is our duty, compatible with the funds available, to give effect to their recommendattions. The circumstances which arose in connection with the equipping our Contingents for South Africa compel mc to ask for larger supplies 0 f stores, and to take care that munitions of war and necessaries for the field should be obtained and stored so •us to be ready for i»e in the colony at any moment. It is essential that we should have 20,000 rifles, and that they should be of the same pastern and calibre." One of the four field batteries has arrived in the colony, and this must be properly equipped. The provisions made on the Estimates are required irrespective of what may liereafter be dctermiu-d on with regard toformuig an Imperial Reserve. Last year our appropriations were for the capitation and equipment of 8000 volunteers. Since then 3000 have been enrolled, and applications are now in for 90 additional corps. A large number will not be able to earn citation money this year, so the amount asked will be sufficient to meet requirements. Appropriations are also rendered necessary in connection with the formation of rifle "clubs and cadet corps. Preferential Duties anii REaraoci ty. Having submitted important tariff proposals in the shape of reductions an the necessaries of life, it is not out of place at this time to review another question, namely, that of having preferential duties, with a v.ew of encouraging trade and establishing reciprocity. There are. in the first place, preferential duties as applied to manufactured goods from the Mother Country. The next is reciprocity with Canada, and it will not be unreasonable, seeing the large and growing trade with America, if we were to ask that nation to admit our wool and sucn other 2>roducts as they require, duty free. They are paying heavy subsidies to vessels nominally for carrying mails, but there can be no doubt that the real object of the American Government in so subsidising a line of steamers is for the purpose of trade with New Zealand and other colonies. Tlie changed conditions by the establishment of the Commonwealth in Australia render it advisable to amend the existing law, which, while giving power to reciprocate with tho other colonies, does not extend to the Commonwealth. As to whether we can reciprocate with tlie Crown colony of Fiji is also questionable. That it does not apply to Tonga or the other islands in the Pacific is beyond doubt. It would be to the advantage of the islands as well as of this colony if power were taken to reciprocate. Our trade with Fiji and adjacent islands has been steadily increasing. With greater facilities, with reduction in freights, and with a reciprocity trawtv greater expansion of trade would result.. The same course of trade applies to Tonga and the Cook Island group. Some of the trade we had with Samoa and th? Hawaiian 'group will ba prejudicially affected by the altered conditions now obtaining. It'is the intention of the Government to-ask for an appropriation to defray the extra cost that would lie entailed in subsidising a mail steamer to insure regularity and low freights. No commitment beyond existing arrangements will be entered into prior to tlie House having authorised the necessary expenditure. TRADE WITH THE ISLANDS. 11 - knOTrn tha 4 the residents of the b lji Islands are favourable to, and have moved m the direction of, annexation to New Zealand. Large questions are invaluable interests require attention, and the greatest care must be exercised. Tlie British G-'-vernment in May las. established a protectorate over the To'ngan and Savage Islands, and at the beginning of this -ear the Cook Islands Government and the Arikis requested annexation to Great Britain. On my visit the maijority of the European inhabitants pres.n-ted a "petition to ma asking for annexation to this colony. This, in due course, was forwarded to his Excellency the Governor, and there tbe matter at present rests. Setting aside the largr issue involved, then, members will notice an item on the Estimates of £5000 advance to the Copk.lsknd Government for the purchase of a.n auxirkiry oil engine soforvoner. This colony, whilst assisting the Cook Island Government and the island reerdsnts, will reap a collateral advantage, and the advance will be at the same time well secured. We must look to these islands as one of the markets for our produce, and in return we shall take the fruits, coffee, copra, cocoa, etc. We are at the present time subsidising a mail steamer to carry tire mails to the Islands, but what is required is a vessel to act as a bender to collect the fruit at the various small islands, to bring it to Raratonga, and then to ship it on board the large steamers. This would secure a lower rate of freight, and be a means of ensuring the fruit coming to market in New Zealand in good order. One of the conditions imposed would bs that preference should be given to the distributing of New Zealand goods and products. SAN FRANCISCO MAIL SERVICE. It will be in the recollection of members that the House of Representatives authorised the Government "to extend the San Francisco service for twelve months from the first day of April. 1900, on the terms and conditions then obtaining. The House further empowered the Government to enter into negotiations for a sixteen or seventeen days' service once every four weeks, and an alternative, service for every two or three weeks, also stipulating that "at least one British-owned vessel should be employed' in either service. The result of the negotiations was to be submitted to the House for confirmation this session, and not to have effect until approved of by the House. The position at present is that the contracts for the renewal of the service which was entered into in 1898 and expired on March 31st of this year, has been renewed with the Union Steam Ship Company of New Zealand until the 31st March, 1901. The Oceanic S.S. Company, better known as the J. D. Spreckies Company, has been associated with the U.S.fe. Company in carrying out the contract. The Oceanic S.S. Company i has now secured from the United States Government a ten years' contract for a service between San Francisco and Australia. It is stated, -hough not officially, that the subsidy to be paid is £50,000 "a i year. The steamers more than comply with the conditions laid down by the House. Messrs Spreekles and Co. have offered to perform a seventeen days' service between Auckland and San Francisco and a twenty days' service bstween Sydney and San Fran- • cisco every three weeks each way, for the payment of £30.000 per annum from Australia and New Zealand, an essential condition being that the services should be performed exclusively by vessels registered in the United States. The offer could not ba dealt with, seeing that it conflicts with the resolution passed by the House. Further complication- exist, inasmuch as Hono-

"ulu being now a port of the United States, vessels trading there are subject to the j provisions of the American maritime law, which prohibits the conveyance of pas- I sengers or cargo to port* of the United States except in vessels owned or registered in that country. At the present time the net cost in carrying our mails by weight, is is about £11,000 a year. I understand that the Australian Governments have not yet agreed to accept the terms offered by j the Oceanic Steamship Company. What I proportion of the £30,000 per annum asked by the company was to be paid By this colony was not defined, but it is qnic-e clear that,' favourable as this colony is to the San Francisco service, it would be too great a luxury to pay for if it were to cost us much more thaii we are paying at the present time. Owing to the condition* stipulated by the American Government, $_c resolution of the House passed last session cannot be complied with. Later on, when the Government are in a position to better define the situaition, proposals -will be submitted by my colleague, the PostmasterGeneral. PACIFIC CABLE. The prospects of this great Imperial and colonial work are more favourable than they were some Utile time ago, when it looked as though Victoria and Sew South Wales were prepared to accept the offer made by the Eastern Extension Company, which would have prejudiced the construction of the Pacific cable. These Governments are, however, again in line with Great Britain, Canada, Queensland, and New Zealand. Tflere is every reason to anticipate that the construction of the work will soon be put in hand. Tnders will .probably soon be eaUetT Tor by the board appointed by the committee for the manufacture and laying of the cable. PUBLIC HEALTH. » It is a matter for sincere congratulation that this colony so far has virtuaJy escaped a visit from the bubonic plague. Legislation and administration of a somewhat drastic character became, however, a necessity. The legislation of the past respecting public health was cumbersome and lacking in nece_ary powers and the division of responsibility rendered it unworkable. It is proposed" to bring into existence a Health Department, with full powers and responsibilities. MIDLAND RAILWAY. This long-pending dispute has, so far as tlie law is concerned, been finally settled, the Judicial Committee of the Privy Council having decided in favour of the colony. The litigation has been tedious and costly, but that is compensated for in the full vindication of the honour of the colony. I take this opportunity of stating that the colony is greatly indebted to the Crown solicitors and Mr H. D. Bell, also to the Under-Secretary of the Public Works Department. Mr Blow, for the very able manner in which the proceedings on behalf of the colony have been conducted. The one great and irreparable loss has been the retarding of settlement in Canterbury, Nelson, and Westland, owing to the lands within the prescribed area being locked up practically for ten years, and the delay in the completion of the railway. A Bill will be submitted for the purpose of doing justice to occupiers who have made improvements on land within the Midland railway area. In order that they may be satisfactorily dealt with a large number of applications liave been held over pending the result of litigation. I advise that .special powers should be given the Commissioners of Crown Landsun Canterbury, Nelson and Westland. The vigorous prosecution of the Midland trunk line and "the settlement of the land within the area and the removal of the embargo on the timber industry will be welcomed by the residents of the district and the colony. OLD AGE PENSIONS. The amount asked for for old age pensions, viz.. £200,000, may appear large and more than was anticipated, but a number of pensioners of the Maori race was a factor not contemplated, ard was not ascertainable at the time the Act wa-s passed. It has been urg-ed that there are a number oi aged aliens in The col.ny who have in the past neglected their opportunities to bscome naturalised, but who are in every respect deserving colonists, and who comply with the other condition?. A Bill was introduced last session reducing the terms of naturalisation from five years to one year prior to makins? a claim for* the pension. In the Bills to be introduced thus session for the purpose of makinc* the Acts permanent, amongst other provisions th° power will be taken to meet these cases. Experience in working the Acts has proved that a number of deserving colonists, some of whom have been in the colony for thirty and even forty years, have b-3?n prevented from obtaining pensions owin"- to the iart that they have been absent from the colony during the total period of more than two ypars. I propose to submit .■>- amendment of the law removing this disability, provided the persons concerned have not been f-bsent from tbe colony for ■>. total oeriod of more than four years, and have been in tlie colony at least four years prior to the p,n-*sing of th" Old A"c Per-sinn Art. The fords at r-nr disposal have been sufficient to prevent the payments of these pensions h?ine felt by the fa-pavers With so*—c slight amendments in the details there wifl ba no need for any serious objections to the measure being made -permanent. BACK BLOCKS AND OTHER ROADS. Last year J called attention to the necessity for constructing roads to give access to lands occupied by Crown tenants in what are known as the "back-blocks." The expenditure for this purpose ha.s been very Isrge but not nt, all in excess of tbe necessities of the setters. As many of the farms are more suitabl. for dairying than for any other properly <mnvpleted roads to enable creameries and factories to be pptahlished are of paramount importance. Products of erood marketable value have been allowed to rot on tbe selections, there bein.*- no wav of getting them to a road or railway. Out of the million loan this year I propose to allocate, as was dcsie last year. £.50,000 for these roads. Tbe roading of Crown and native lands, and the maintenance of mem arterial roads also demand attention. There are many parts of the colony, more particularly in the North of Auckland and in the Rohepotae and Gisborne districts, which have no railway communication. In the winter time tlie roads are almost impassable. It is only just that sufficient, money shall be allocated to provide better road—g. MAIN TRUNK LINES OF RAILWAYS. The North Island Main Trunk Line of Railway takes the pride of place so far as public attention is concerned. The Government have come to the conclusion that the route for the most expeditious construction of the railway is rbe central one. Parliament has authorised this, and the surveys of it are the most advanced. It is the shortest, and presents the fewest difficulties in the way of speedy construction. The Government have been asked to pledge the colony to complete this line within three years. To do so, unless at enormously increased cost, would be an impossibility. After referring to tha work that was being

done, and that was proposed, the Colonial I Treasurer said—When tho House meets ! again ths most exacting will have no reason to complain of tbe prujjness that has been ma_e. From a fin_nc_al standpoint no one will have reasonable grounds for complaint in respect to the allocation for this line, j We must not forget that the speedy com- j pletion of the Otago Central, Midland, Wai- j para-Awatere, and other important Jin-— within a reasonable time is necessary. To starve the const__etkm of these lints so that an abnormal amount of money might be spent on the North Island Trunk Rail- j way* would be strongly resented. Last j year, for railways, £300,000 was allocated but "of the million loan. This year we> propose, to allocate £500,000. and tol—Wl * nto - consideration the ext*_|ttrturaV to the 31st March last, this aßoc_tion pract—a-lly means more than do-blin"- the expenditure for the current year fn finally deciding that the central . I-oute shall be the route for the North Is__d i Trunkf Railway, t_e necessity for connecting Taranaki with the Auckland railway service has not been overlooked. The settlement along tliis route, the coal deposits, and the timber available, render it imperative th_t the necessary surveys should be authorised, and provision made for the requisite funds. Along the east road there are forty miles almost without metal. This is one of the best dairying districts in the colony, but the condition of the roads renders it almost hopeless for settlers, most of whom are Crown tenants, to carry on successful operations. A narrow gauge railway to remove these disabilities could be constructed expeditiously and cheaply, and as a means of carrying gravel for the roads, retiirniiK' with produce, coal, and timber, itwould "pay and fully justify the experiment. There are other parte of tlie colony where narrow gauge railways would prove a success. LAND FOR SETTLEMENTS. i The sum expendeu iii the purchase of private lands last year (including expenses) was £374,143, a sum far too small as compared with the demand. The five di.trictin which land is most required for close settlement are Hawke's Bay, Wairarapa, -.fart-borough, North Canterbury, and Otago, and given necessary meai_ our intentions this year are, if possible, to double the purchases of the preceding years. There are other districts that in a lesser degree have eligible estates for -subdivision. It was thought by many that the graduated land tax and a "tax on absentees would have the effect of causing subdivision and thus promoting close settlements. 'Such, however, has not been the result. It has been urged upon the Government that the time was ripe for bringing into line direct and kidireet taxation, and thus furthering subdivision and increasing the number of small holdings, thus placing a larger number of people on the land. On investigation, however it will be found that the. land comprised within very many of these large estates, is entirely, unsuitable for agriculture or close settlement. The Government have come to the conclusion that evolution by purchase is more equita_„ than taxa.l-n, seeing that many who would pay the increased taxation could not cut up or sell their estates, neither would the Government purchase. where lands are suitable for close settlement, and the necessarily existing earth hung_r, it is tbe wisest course to carry out a vigorous laud-for-settlement purchase policy. Land for workmen's homes near the large centres of population must be acquired-more expeditiously.. In order to encourage the punctual payment of rent it is proposed to obtain the authority of Parliament to grant a rebate of onetenth of each half-yearly instalment of rent, equal to _ per cent., provided the tenant pays within a limited period after the rent •falls due. REBATE RENTS TO .CROWN TENANTS. Returps have. disclosed the fact that we have a very 1 large number of Crown —-ante, and it is natural to anticipate that the number will yearly itacreass. In some cases there is a grievance in regard to the rent, which it is claimed is too high. The Fair Rent Bii.l is the remedy for fctds. In other cases the complaint _efe._'ti> the size, of the- sections. If mistakes were made in the classification of tl- land they should be rem-died, and if the sections were large enough when the subdivisions took v place, and 'subsequent changes now render it irnpos—ble lor tenants to make a living, amalgamation should be promoted. The law provides for this, but complaints are made that the Laud Boards refuse to give effect to t!a-£ wish-"- of V.ie legisLature. Considering that on the 31st March, 1890, out of 11,684. Crown tenaoats, no kss than/ 3784 w-tre in aa-i-irs with their rents to the amount of £52,891, and that such arrears had been, reduced on the 31st March {Ibt to £16,000, owing by 1709 tenants, whil— the tota.l number had. increased to 16,406, the colony has every reason to congratulate itself on the improved position. In order to encourage the punctual payment of rent under th. Lands for Settlement Act, it is proposed that the 'ls-see not being in arrear with any pr.vious imslalmient of rent or other- money payable undier his lease, is to be ent-tled to a rebate of one-tenth of each halfyearly msta__ient of rent wliich he pays within one month after the day appointed for the payment, thereof. Such rebaite may be deducted and retained by tihe lessee from the full nominal amount of the instalment when making the payment. OUR BOYS AT THE FRONT. After referring in terms of eulogy to the despatch of the Contingents to South Africa, and the conduct of our men, the Colonial Treasurer said: —I hope before the session ends to see the end of "the war, and to arrange for Parliament to have the opportunity to tender to our boys at the front and their relatives our heartfelt thanks and appreciation of their sea-vices. MTNING, DREDGING, PROCLAMATION OF RIVERS. The large extent of gold-bearing alluvial rivers found to exist and profitaible under dredging operations, has marked a development in gold mining unexpected. and most pr.fitable. The one great drawback has been tho conflict betwen land-owners and owners of riparian rights on the one hand and those holding licenses for dredging claims on the other. The unwisdom of selling land in the vicinity of existing goldfields and in belts of auriferous country, has been fully demonstrated, and the State must now step in and in many cases decide what shall be the paramount interest. - A commiesicm was set up to enquire and report as to certain claims for compensation in respect to riparian rights and land affected by dredging in Otago and Southland. The amount involved is considerable, bat from what is taking place all over the goldfields it is simply touching the fringe of a veiled financial trouble. The Government see no alternai five but to repair in many cases for daim ! compensation. How far those profiting by | such an arrangement should contribute and ! in what form I must leave for future developments. j INDUSTRIES AND LABOUR. In referring to the position of our industries, which, he said, were of a most satisfactory character, the Colonial Treasurer said the wage-earners of the colony were better off than in any other part- of the Empire. Work was plentiful, and land-owners and farmers complained that unskilled labour was not obtainable, and with more expeditious prosecution of our railways, roads, etc., the position would become more acute. The Arbitration and Conciliation Act is working very satisfactorily, and this session I hope Parliament will place on the Statute Book the Working Men's Compensation Act. Seeing that the State is a large employer of labour, and that the Act. if passed, will apply to its workers, the Colonial Treasurer will have to provide funds to meet claims that may arise. RAILWAYS —IMPROVEMENTS AND ADDITIONS TO OPEN LINES. As indicated in last- year's railway state-ment.-the rapidly increasing business of the Railway Department necessitates important imprcwemen— and additions to working railways. During the last five years the revenue of the Department has increased, notwithstanding the large reduetiors in rates and charges, from £1,150.851 to £1,623,891. This necessitates large additions to our rolling stock, and immediate provision must be made in this direction'by placing more locomotives, more carriages, and more wae_ons un the lines. The work of relaying the principal lines with heavier rails, additions and improvements to railway stations, rebuilding ar.d strengthening msny of our bridges, a~,d the enlargement of our railway wcikshops, and the provision of signals, safely appliance-, and improved brake power, demand

our immediate, attention. It is proposed to undertake this work in a vigorous manner, and for this purpose to ask for authority to spend £500,000 per annum during the ensuing five years. RAILWAY CONCESSIONS. The concessions made in the ordinary passengers' fares this year amount approximately to £75,200 per annum. Previous reductions have included reduced school excursion fares, largely reduced holiday fares, sheep rates reduced by 20 per cent., agricultural produce rates by 20 per cent., iroz.n meat, butter, cheese, milk, firewood, lime, chaff, manures, and scrap iron reduced, totalling in value on 31st Marco iast £294.239. The tv>tai reductions in rates made since the Government assumed control of the railways amount to no leas a sum than :8J69,439. v THE -ST-TE__£NT AS A WHOLE. The conclusion arrived at, and the proposals submitted, will stand the fullest scrutiny. It _as not fallen to tne lot of any previous Colonial Treasurer to announce in a financial statement remissionand concessions in taxation amounting to what, from tlie present outlook, would be £350,000. The circumstaince<s over which the Government have no control have prevented further concessions being granted, and we cannot go further at pies.nt wit., prudence. The facilities granted by -.-vi railways will be enjoyed by all, and the "free breakfast table,"' long desired and spoken of, is now fast becoming an accompushed fact. We propose to cemmenct the century by giving a universal penny post, which wi.l suitably mark the occasioi. and redound to the credit of New Zealand. After referring at some length to the chief .eatures of the statement the Colonial Treasurer said that no one could deny that our colony is prospering.