Hawke's Bay Herald. WEDNESDAY, NOVEMBER 19, 1879. THE FINANCIAL STATEMENT.

Hawke's Bay Herald, Volume XXI, Issue 5541, 19 November 1879, Page 2

Hawke's Bay Herald. WEDNESDAY, NOVEMBER 19, 1879. THE FINANCIAL STATEMENT.

It is not too much to say that Major Atkinson's financial statement; when published yesterday morning was read with almost universal consternation. It is almost equally ccrtaiu that its delivery sounded the death-knell of ..the Hall Administration. There is much in it to be commendedj but there is more to be condemned. There is an apparent boldness in facing our financial position which at first sight could not but meet with approbation; but further examination puts a very different aspect on the statement. The apparent boldness is found to bo little better than deliberate misrepresentation and "weak subterfuge. First the Colonial Treasurer devotes himself heart and soul to the task of showing that the estimates of Mr Ballauce were utterly unreliable and reckless. He by inference says that the receipts fell short of the estimates by £214,348. To got at this figure he strikes off £82,524 received from the sale of the reclaimed land and Supreme Court buildings at Wellington, which he contends should not have been put down to revenue, although at a later period he conclusively shows that it should have been included. He states that the expenditure included £72,000 paid off on account of the debts of the old Wellington province. The exact facts are that the Wellington Provincial Council borrowed about £70,000 to make the Thorndon reclamation, and sufficient of the land was sold to cover the loan, which was then repaid. Surely if the expenditure for the year includes this repayment Mr Ballance was right in crediting the receipts to revenue ? Then we have the grudging admission that the remaining £131,824 includes £50,000 uncollocted land tax, which will go to the credit side of Major Atkinson's next budget, reducing the actual deficiency on the estimates — for the £50,000 will be paid, though it will come to this year's account— to £80,000. The unexampled depression under which the colony labored during the greater portion of., the year caused a very large failing-oil" m the laud fund— far greater than anyone could have anticipated — or the year's receipts would have more than covered the expenditure. The peculiar nature of the deficit is that, unlike a fall in Customs or other revenue, it docs not represent an actual loss to the colony. We did not receive the money, but we did not part with the land, and we shall bo able to sell it at another time. Next Major Atkinson repeats his former statement that at the end of the year we shall have a deficiency of over £900,000 to meet. On Monday lie was compelled to enter more into detail than at his first statement, and we cannot, after his explanation, refrain from an expression of iinbounded surprise at the audacity which prompted the assertion. When the country was first startled by hearing of this enormous estimated deficit Major Atkinson by implication laid the whole blame at the door of his predecessors. It was their reckless extravagance which had brought the country^to this pretty pass, and on their shoulders should the whole responsibility rest. At the time we expressed our conviction that the real deficit would not bo more than £400,000, and a careful perusal of Major Atkinson's speech shows that we were rather over than under the mark. It is true that he anticipates a deficiency of £911,000, £051,000, or £819,000— for in three, different places we have three different sums named — but how docs this arise ? Major Atkinson creates it ! The real deficiency, if the country went on under present conditions, would be about one -third of the estimate, yet we were led to believe that (lie colony was brought by the Grey Government to a position in which it was drifting to the bad at the rate of £900,000 a year ! Now an examination reveals the fact that £350,000 of this defieency is created by the transfer of the land fund from ordinary revenue to public works revenue. Hitherto it has gone in defraying the expenses of governing the colony . Major Atkinson proposes to use it only in the construction of railways or other public works, thus supiilcmenting the money raised by loans. We do not object to this transfer. It may be admitted that the proposal is sound and statesmanlike — in fact, it should have been made the law when Mr Larnach first ini27oundcd the land revenue — but when Major Atkinson first announced the alarming anticipation of a deficit of £900,000 he did not tell us that of this £350,000 consisted of diverted revenue. The land fund last year realised £737,000, the expenses of surveys and administration being £240,000, thus leaving in round figures half-a-milliou to go to general revenue. Tho expenses o£ administration will still be defrayed from the landfund if Major Atkinson's proposals be adopted, thus leaving tho apparent loss to the revenue at £500,000. The rents from leases, which would properly go to revenue, must, however, bo deducted from this, leaving about £350,000 actual deficiency [created by the transfer. Next Major Atkinson repeals the land-tax, which, according to his own figures, would yield £147,000. It is not our purpose to argue now on the wisdom of this step — our object is merely to show how the deficiency has been created. The I fact that the land-tax will be replaced by j another tax is no argument against our contention, for if it were not repealed there would be less deficiency to make up, and the property-tax would be so much lighter. The deficiency is created, although it is afterwards made good. Adding this £147,000 to the loss by the transfer of the land-fund we get about £500,000 of created deficiency. But this is not all. Customs duties to the extent of |£15,000 and light duos amounting to . £5000 are to be remitted, making a total of £520,000 deficiency actually created by Major Atkinson. Deducting this from £819,000, which of the three sums named . appears to be the real gross deficiency anticipated, we find that if the revenue and receipts maintained their present position the actual deficiency would be only £300,000. This is a very different state of affairs to that which the colony was led to expect by the alarmist statements . of the Colonial Treasurer when he first spoke on colonial finances. This estimate

also pre-supposes that there would' be no increase in the land sales. If, as Major Atkinson admits, the average of laud sales for the last three years Verb tonaintainod, wo should next year, Working 1 ; .on the old system of using the land-fund as ordinnry revenue, have a balance instead of a de* ficiency at the end of the year. The consideration naturally Wises, What affect will the financial statement have on the welfare of the colony ? In asking this question we refer specially to the conclusions that the outside creditor Tvili draw about our real position. In the colony we have the statement in full, and can analyse it in detail ; but it is not so with the English capitalist. He will in all probability see a brief telegram in the Times announcing that the deficiency of £900,000 at first anticipated has been confirmed, and that it is to be remedied by a property-tax, increase of the stamp duties, and wholesale additions to the customs tariff, devised with a view -to the protection of local industries. Will that help us in floating the five million loan ? According to Major Atkinson's own showing we have anticipated the loan to a very large extent — m short, we have incurred liabilities which cannot be met unless at least £3,000,000 of the loan is floated. We can agree with much that he said about the reckless policy of the Grey Ministry which has placed the colony in such a strait, but that does not in any way justify the purposely perverted views of our financial prospects preseuted In his statement. Major Atkinson has been so utterly blinded by party spirit— so animated with the desire to prepare a financial statement which shall damage his opponents — that he appears to have entirely lost sight of the welfare of the colony. The same ideas and the same proposals could have been conveyed in language which would have done us no injury at Home, but then a grand opportunity of misrepresenting matters to the prejudice of political opponents would have been, lost, and Major Atkinson has preferred to inflict a most severe blow on the colony's credit rather than act fairly towards his predecessors in office. He has convicted himself of misrepresentation — that is evident on the face of his statement. How far he has done this we cannot know. All that we can analyse is the figures placed before us by himself; whether these figures are reliable is a question for financiers to decide. That they will be questioned in the House is certain ; for our purpose it is sufficient to show that, even taking Major Atkinson's estimates as correct, he did not on Monday night- deal with them in that fair candid, and above-board manner which his previous Parliamentary career would have led one to expect. The simple truth is that ho anticipates a deficiency of £300,000, arising from the depression which prevents the rapid sale of Crown lands, and that by a remission of certain taxes and a readjustment of our financial policy he makes it necessary to raise £600,000 in addition to the real deficiency.