FINANCIAL STATEMENT.

Hawke's Bay Herald, Volume XXII, Issue 7194, 20 June 1885, Page 2

FINANCIAL STATEMENT.

Mr ±±amim,— l have too often ad-'. ■"-■•/.-$ dressed the Committee of Supply upon. occasions like this not to feel certain ':'.."• -)'M that I shall receive from hon. members ' ~ <C| a kindly and considerate hearing. : '\i-;' EEVENUE AND EXPENDITURE 1884-85. \, V-'-The general results of the year have T• v , already been published, and it is only -' ■/£ >f necessary I should briefly recapitulate' 3*k •'- --them. The year 1884-85 was comi^f? •; menced with a deficit of £152,112. For ' „'> £150,000 of this amount deficiency bills ' : " were authorised to be issued, maturing -"•'.- : on the 31st March, 1886; the balance of £2112 was discharged out of the : *; j year's revenue. I proposed last year V. r '. that the £150,000 should.not be turned .'/,' into a permanent debt, and I still hold to i : the same view. We must pay the amount ", • ." J off in the course of two or three years. V ' ■ \ ; I The transactions of the consolidated ; : I revenue for the year 1884-85, after :. v I discharging the deficit of £2112, and f J leaving outstanding the £150,000, :: , I shows accredit balance of £19,891 ; or, - i -"; J exclusive of the email deficit paid off, a . \ V; I surplus of £22,008. The total consoli- ; I dated revenue of the year amounted to ,;;' I £3,569,494. There was a deficiency in ' > / 1 the^ item of stamps, principally oc- .'',' I casioned by an expected increase of j postal revenue having by accident been .-■'.■ '.'-':■ I 1 twice oredited in the estimate. ' The . .. , railways also showed some deficiency, ' V I whilst the Customs exceeded to a small . I extent the estimate. The total de,-' . V » ficiency in the estimate was £22,016. '•'"-; The expenditure, on the other hand, •'. » j was less than the amount voted !by ...'-'," r £23,852, inclusive of £5982 expended ' f a on services unprovided for, so that the \. I result waß the surplus in the year's transI actions which I have already stated. Hon. ' members will bear in mind that the butplus of £30,000 anticipated in the 'J :.,'^ a Budget last year.waß reduced aubke- ' , ; ;j o J quently by the supplementary estimates V.h r I and votes. In the revenue was included- '; T ran amoant of £247,700, the proceeds of ; ;t I debentures issued under the Oonso- .: v ,r lidated Stock Act, 1884. Hon. mem- f J bers are aware that this amount was -;■-. /'-'■ ts J issued to represent the equivalent of the \ . d increase of the sinking fund for the year. ; d I shall later on ask the attention of the, . • .-f X) committee to this subject. The expend *y*| d diture for 1884-85 includes the undis-T \';t. v charged liabilities of the previous year^ > iy according to the plan introduced in 1880 of bringing only into the year's accounts >n the actual expenditure and receipts \ ;> [r within that period. ; )j

LAND FIND 188485. ' , - • 1^: The land fund account at the close p&Jl;': the year 1883-84 showed a balance ,<jf/' .'?""'■ £80,447. The revenue received during, ■, : the past year amounted to £160,969, of '. v which £92,432 was for cash sales, of land, and £68,537 for sales on deferred ';■'.'■'] payments. The expenditure amounted v;.'j to £209,485, so that at the beginning of ; ■;j the present financial year there was a , : .-'\ I credit balance of £31,931. ' ' i public works pond, 1884-85. , :-: \ The balance at credit of the Public ; ■ Works Fond at the end of Maroh, 1884, v was £488,912. From the instalments y| of the loan of one million negotiated in '. ' : < : January, 1884, £589,000 came to credit;; ,| after Maroh of that year, and from in- ■"';' atalments of the million loan negotiated l /J in January last £845,000 came to credit;' V-^S before the end of March, 1885. There >: $ was also an amount of £100,000 from Ji deficiency bills authorised to be issued * 1 last year in aid of the Public Works :Vi Fund, redeemable at the end of t ;''. '-■' % present month, and we further obtained :r ■ £500,000 of temporary advances. The ; :- total amount placed at credit of the ~ Publio Works Fund during the year ;< 1884-85 was £2,327,025. The expen'di- j ture amounted to £1,336,727, leaving; "■?. £990.298 at the end of March last with ,', which to begin the year. In addition .: < thereto we had the balance of the third .-; instalment of the three milllon-itfan^teUjif receive, 1 £155,000 • also the new loan of ; •'; £1,500,000 recently raised, amounting in all to £2,645,298, subject, however, . to the redemption of deficiency bills, £100,000, the repayment of temporary ■ advances, £500,000, and the advances to ■"■']■ be accounted for in the hands of officers, '- '■% * £250,000- : : p THB PDBLIO DBBT. '

The amount of the publio debt on the the 3lßt March, 188^fes8 the sinking fund iMX3ount,^^S :1 i1§9,574: 1 903. The amount of that debt on the 31st March, 1885, was £30,649,199. It was increased by fresh isßuea and conversions, the conversions from a higher to a lower rate of interest, of coarse, haring a tendency to a larger prinoipal amount, but a less annual charge. The annual charge last year was £1,570,989, whilst this year it is £1,593,692, exclusive of interest on deficiency bilk, and on the million and a half loan. The increased annual charge is to be accounted for by the interest on the additional million, and by £64,000 which, owing to the conversion opera-' tions, escaped coming into charge during 1884-85. [Sir Julius then referred at considerable length to the floating of the two" last loans in January and March, pointing out that the latter brought a better price, although the market was less favorable to borrowers generally. • He also remarked that though the price obtained for the last loan was £100 ,3 a6d per cent. . that included some accrued interest, and stated that , the net prices realised for the four Australasian loans placed on the market about the same time were : — Victoria, £99 4s 3d ; Queensland, £97 3s 10d ; New Zealand, £96 9a 2d ; Adelaide, £99 5s 6d.] LO£N CONVERSION. On the subject of loan conversion Sir Julius said ;— - 1 should like to say a few words concerning the Consolidated Stock Act of last session under which conversion was effected. It will be remembered that this Act, which had .foe its objects the facilitating the conversion of loans and the saving the country the burden of the sinking fund while contemporaneous fresh loans were being issued, met with considerable opposition. There was at first great difficulty in making its operation understood. I have seen it stated in newspapers in the colony since last session that we had stopped paying the sinking fund. A very general statement has also been made that we were using the acoruing sinking fund, and I need not remind you of the unkind anticipations which were indulged in, that the credit t>f the colony would be injured by it. I claim a triumphant answer to all the opposition the bill met with in the brilliant success of^ its operations, and in its having entirely failed to do any injury to the credit of the colony. Do not let ' it be supposed that it escaped criticism. , Some active enmity survived the session. - A cablegram wbb even sent out from England, which appeared in all the newspapers in the colony, that the Stock Exchange objected to the Act. On what this cablegram was founded I have not been able to dificover. I have heard of no objection taken by the Stock Exchange, nor by any prominent members thereof. The Act was well considered at Home, and full explanation' of it made to the Bank of England, through whioh great institution we' emit our loans and conduct our conversion operations, subject to the directions of the loan agents. The Agent-General also, in the statistical paper with whioh it is , usual to accompany a loan, elaborately explained the effect of the Act on the sinking funds. That the Act and the operations proposed under it did not injure our credit is shown by the negotiation of the loans to which I have already referred. That it has been a splendidly useful Act is proved by the fact that ' through its agency we have con. verted ■*- £3,642,100 of the £5,772,500 of .consolidated debentures left nndrawn. This was the immediate aotion ; of the measure for whioh I had ,io : ■< undertake an amount of peraonal re-- > w ;? „

gte -.; :.; _, ' .. ' .■■■'. &0?ii?-\. sponeibility last session, whioh at the ||gS ; tj mo almost frightened me, thoroughly fe'^'K- convinced though I was of its value. g#JU V -The majority of hon. members whom I At; address are aware of the effect of the |if|; "; Aot: of last iesßion. They know that jp|v\ .-•-• it neither suspended the payment of the os%*.' sinking fund which we had engaged to fei :/ pay, ripr enabled us to use acorued sink- !§&?; lfcjg funds until thorough provision was Wi:-l£'tiA»&s for the loans to which they berlo'nged. The Act simply provided that 5^ .-we might create debentures to an &(\ : amount commensurate with the growth Jte of the sinking fund from and after the £<■-': ■''. end of March, 1884, the debentures gei to be extinguished by the proceeds of g; .: the<. sinking funds when they came to be |(V realised. Thuß if the sinking funds in* I* -... • oreaßed by a quarter of a million during ?■?. f- the year 1884-85 we were to create de(f; bentures to that amount. It could not j-v •;- be said that the creation of these deben- :: tures increased our indebtedness. It '^ •;',- left it precisely where it was, and this w . -was to be continued in anticipation of '-*£« ! conversions. If we issued under the j^V provisions 1 relating to sinking funds a ?;.. - million of new bonds, a million in ad- : v ~ dition to the accumulations to the end of ;> v March, 1884, would have to stand to our I/ credit in the sinking funds. During • the year past we issued debentures for V ;... £247,700, that being the amount which v : :i~~ it was computed by the Treasury ? j; • and Audit Departments would reprej£.;. sent the accretions of the einking funds during the years 1884-85. 15 As regards the terms of the conversion, 'p\- we give for the consolidated bonds other l;\ bonds bearing 5 per cent, interest for |f^ seven years, without a sinking fund ; at £'■, the end of the 7 years we give 4 per &v " cent, inscribed stock for the 5 per cent. ;V ? debentures at the rate of £107 for each. V hundred. Practically the result means this — the same annual charge for seven / \t : years, less the sinking fund, and there- * ;r, - after a saving of a little over % per cent. < f, \ on the annual charge, after taking into ,; consideration the expenses and a suffi- ( ;J. : cient annual provision to extinguish the £ •■&" additional capital stock, I may say r : "-"' in reference to the other financial * •- '•' Acts of last session that the c

"Westland and Greymouth Harbor Acts ' j^wtified my expectation. It will be ; — recollected that I contended it would :■ be better to guarantee the debentures . 'and not to borrow for the Boards. It proves as I expected. "W hen the Bank . of England and the maikst asked us to

.; undertake not to borrow further until / the end of March, 1886, they had no , difficulty in excepting from such enthe guaranteed debentures of Harbor Boards, and the guaranteed debentures have realised a fair price. _i It was to be expected that not being - directly issued by the Government, to „'■ say pothing of their not being inscribed L -stock, they would yield less than our loan. The Harbor Boards M obtain their money on splendid terms, Hwhilst the Government runs no risk, ■since it is secured by funds of the ■Board accruing in its hands. ™, ' - ■ FUTUBB POIIOY.

Before proceeding to diaouss the pro- ; poaala of the present year there are cer■jtaiu broad features to be considered to which I must ask the attention of the committee. We have arrived at a period JVof our history when it is necessary to cousider the nature and effects •of-, the taxation of the colony. The * Customs revenue, which is the most iraportant branch of the revenue, requires to be revised by reason of several ciroumstances which have come in ordinary course to largely affect its natural growth. I need only mention two of |hose circumstances —the one that the increase of production in the colony, in which I include manufacturing, has the tendency to sensibly diminish the import duties on many articles which have yielded increasingly large amountsin the past; and the other that alcoholic beverages from which the heaviest Customs returns have hitherto been received are showing a diminished consumption. Both J&ese facts are eminently gratifying—(the latter from a moral and social Ipoijit) of view, the exceeding value of isriSiGhyt will be impossible to exaggerate; .the former for both utilitarian land social reasons of only jess importfence. To put the case briefly, a less Kfpnsumption of intoxicating drinks fcneans increased .. happiness and social iw^Bll-being ; and larger local production ■paeans increased prosperity. It is clear E&at both these causes argue an infcreased power to pay Customs duties on whatever articles it is considered desirnble they should be levied. The returns mi: Customs duties on spirits during the ■ast three financial years are suggestive. ■They are as follows : — 1882 - 83, K4i0,517; ,1883-84; £403,500; 1884-85, p377,696; and for the first two übnths .of the present financial year Wie receipts have been at the rate of Hily £366*624 a year. Those persons refuse to Bee in the conditions of a Hj>w country the special circumstances Bjmoh render inappropriate their ranging Btemselveek-iinder the Old World Banners of Protection or Free Trade ■pay at least- meet on this common Broand — that fiscal requirements are the Bjtfniary objects of Customs duties. I B&nture to go a step further, and say Bt&re is no taxation more fair, juat, and Rgical. I ask Protectionists to agree BRith me in this, although they may see XL-Customs duties an ulterior object- in BJe encouragement they give to local ■coduotions ; and I aßk Free Traders to jEjader a)like acquiescence, although they ■K^y argue that the remission of duties to lighten the coat of living. In Hport, Customs taxation is a natural and vious species of revenue, and the Free who would specially diminish it, Mr/the Protectionists who would specially it, seek to modify natural conflßfions by artificial ones. lam fax saying that such a. modification is unwise. It constantly falls HHRn /the range of the duty of Parliaj^Beint to specially intensify or abate the of. 1 recognised principles. MEkI haveyet to show why I claim for duties the character I have to them. They are fair,, just, HRid logical, because it is reasonable that ■Bie' producers of other countries should HHitcomeKere to enjoy all the benefits MHiSit the. complicated machinery of ■Bovernment affords' to them without BKiitributing to its cost. This proposiis in no way affected by the ques|Hon. -of whether the ultimate charge the 'consumer rather than on BB^ producer. If it be admitted that it on the consumer alone, which open to question, as at least Bft"; some extent it affects the lesser or profits of the producer, it is still that the consumer who finds it HH^sirabls to consume exotic productions on their behalf contribute gomeBHti^Cto the cost of the Government, the - ; of ■.. trhieh enable those j^^^idaotions to find a market. Customs j^Kiti^s have in addition the two great of being cheaply collected BEdof falling oh those who in greater proportiong elect to consume goods. The average cost of HBlleoting 'Customs duties amounts to BBly £2 , 14» 3d per cent. But it is unthat the whole' taxation of the ■■Blony should be concealed, so as not to HBm&¥h|o9ie in a forcible manner to the [^^K-p^yer?. Hence, .together with in|H^^||»xation, there should be taxation direct character, and that ingenious _ medium stamp duties supHB^ofipfiif; leads', me to state that, to-, HHther with the^revision of the tariff, it B^Hpea|rable;to ,paßs -under review, the taxation of the classesr pi taxation re|^^Bfetp|be;,consiclered, if for no -, otker B^^Kgpiptjthey should be put upon an invwhich \. the^ feature , of BHKM^reaß|4ffip^i^

raeter of the population. Besides the very small number of persons who live upon their means, and the larger number employed by the Government, the occupations of the people may be divided aa follows : — Agricultural, pastoral, mining, maritime (in which I include fishing), manufacturing, commercial and professional, and domeatio service In each of these classes, excepting the last, there are both employers and employed, but for our present purpose we need make no distinction between them, because it is clear that the prosperity of any class means, or should mean, the prosperity equally of the employers and employed. Indeed, in a country with each a range of progress before it, it should be our ambition to see that facilities are open to the employed of to-day becoming the employers of to-morrow. If it be conoeded that the colony is not unduly peopled, or, in other words, that there is room in it for a much larger population than at present, we may eliminate from our consideration the expediency of promoting the survival of the fittest. In densely populated countries, concealed though it may be, the consideration that the survival of the fittest will in the end be the best, lies at the root of the indifference with which the interest of the separate clasces forming the community are regarded. Here we cannot in common prudence tolerate such indifference. It is essentially of the utmost importance to each class that the other classes should prosper. This seems so simple a truism that you may consider I am trespassing on your patience id leading up to and uttering it. Yet it appears to me of such immeasurable moment to our whole moral, social, commercial, and corporate system that I cannot proclaim it too loudly. In the absence of a disposition to give and take, the welfare of the country cannot be properly consulted. Those interested in any of the classes of occupation must recollect that the progress of the other classes is the surest road to their own. The towns must not ask an advantage from the country districts if they are not prepared to give something in return. The colony cannot become wealthy without manufactures on a large scale. The multiform conditions of town life afford a market to country producers, but the denizens of the towns cannot prosper unless they afford to country producers facilities for reaching markets and opening up lands. What I wish to establish is that it is cur duty to consider how all the classes of occupation can best aid each other, so that they may all equally progress and knit together into a selfreliant, self-supporting community. The most important point which arises from this contention is that if there are to be Customs duties which will affect the cost of production by country producers they must have assistance to open up their lands. The meanß the provinces afforded for opening up the lands by roads and bridges was the foundation of the colony's progress. We Have since gone in for more ambitious arterial systems. But the time has come ronnd when we must consider as a complement of thosesyetemsthegeneral opening up of the country, and especially those parts in which the present means are small. To base the aid we render on the present means of the recipients would be to give to those who have rather than to those who want. Hence I am free to confess that I recall a great deal 1 saw last sesßion about each district depending upon its own taxation. Of course this should be so in a measure. We capnot refuse to enable the districts which have prospered to prosper still further, but we must go beyond this, and remember, in the spirit of the old provincial aid rendered to young districts, that the feeble require special sustenance. The assistance cannot be based on the means of each — larger aid must be given in proportion to the poorer districts. Our proposal, then, is settled subsidies extending over many years, but divided after a plan which will give, greater consideration to the poorer districts. The scale will adjust itself — that is, as a district becomes richer its receipts, though perhaps larger, will be based on a lesser scale. This is not the place to fully discuss the proposition. I must refer to it to an extent little more than to elucidate our financial proposals. It is, however, necessary to explain that the long term of years to which we propose the colony should bind itself has for its object to settle the finance of the local bodies, and enable them to borrow on the securityof the subsidies. We are, moreover, distinctly of opinion that the local bodies should be released from tutelage. The conditions under which the subsidies should be expended should be prescribed and the Boards be held responsible for the proper expenditure of the money, but we do not approve making the expenditure subject to the supervision of the Government. The' experience of the Roads and Bridges Construction Act, and the enormous labor it has devolved on the Public Works Department, show the fallacy of a system in which the responsibility is divided. We can never have a satisfactory system of local government unless the ratepayers are made to feel that they have no one but themselves on whom to depend for a wise expenditure of the corporate funds. Let the most interested absent themselves from the district, or be indifferent to the proceedings of the local bodies, but let them understand that they do this at their own risk, and that there is no tutelary genius watching over the interests they neglect. One hears at times reproaches levelled at local bodies because of their great number, and of the many people engaged on them. If these bodies overlap and repeat each other's work, there is, of course, objection to them, but if they do distinct work I not only see no objection to the local duties being divided amongst a great number of persons, but much advantage in it. A theoretically perfect local system would be that in which nearly all the individuals rendered each his share of . labor to the General Government. Although we may stop short of so wide a division, there surely can be nothing 1 to take exception to in a division of labor that, for example, would give to some capable persons purely municipal - duties, to others attention to the harbors, to others care of the public libraries, and so on. It is, however, chiefly my duty now to deal with financial considerations, and I bave to say. that the Government consider that from a fiscal point of view the proposed endowment of local districts is amply warranted, apart from the contention I have submitted that it is for the welfare of the whole community that the several interests should help each other. The expenditure proposed is a wise investment. The openlag up country by roach and bridges enormously increases its value — I mean its intrinsic, not its speculative, value. We shall thus by means of the subsidies be constantly adding to the amount of property available for direct taxation. The unequal expenditure during the last three years on roads;, bridges, and analogous local works, Is a stirring plea in favor of the more regular system we now submit. A statement of past expenditure is furnished with the. usual tables. We propose to -repeal the Roads and Bridges Construction Act, but to fulfil the obligations incurred under it we propose that part of the charge of the subsidies shall for five years come out of loans, but the sum proposed from this source will be v very much less than we have grown into ' the practice of taking for these purposes from borrowed money. The amount of subsidies to looal bodies we shall submit is a sum not exceeding

£300,000 per annum for twenty-five years, of which one-half for five yeare shall be provided by loan. We propose that in this amount shall be contained some special subsidies to gol afield 8 oounties, and we intend still to continue the ratine of Grown lands, but the Crown's liability is not to extend to rates beyond fd in the pound. We uhall submit a power to the Governor to arrange with local bodies for making roads specially required to open up lands newly sold or about to be sold. I cannot refrain from adverting to one special power which we desire to place at the optional disposal of local bodies — a power which is as beneficent as it is likely to be profitable. I allude to providing dwelling-houses with small areas of laud attached for laborers all over the country at moderate rents, or on terms of purchase by instalments. Suppose, to take an example, that a local body puts up a houae at a cost of £80 on a piece of land of the value of £30 or £40, the total cost would yield a good return at 4a a week, with a right to the fee simple in about fourteen years, or at 53 a week with a right to the fee simple in about ten yeai*3. We propose to exempt these dwellings whilst under lease from seizure for debt. They may be erected by hundreds all over the colony. They will give to the laborers resources and means of comfort, the want of which has been apparent in this colony, and is painfully apparent in older countries. The local bodies will run no risks, for these properties will constantly acquire additional value, and be good security for the liability upon them. As to the properties themselves, I am supposing land to be used in the vicinity of towns and country townships, and they will become within the periods mentioned cf great value. It is intended the subsidies shall only be one-half for the present year. The reason is this — it is necessary to fulfil all the engageinets for roads and bridges either promised or entered into, including those under the Roads and Bridges Construction Act. The amount required for this purpose is very large, and a half year's subsidy for the present v>'ar seems sufficient. The amount of £300,000, which I have mentioned is the maximum amount which will be allowed, will be based on rates. It is estimated that according to the present rates it will amount to about £250,000, and for this year onehalf of that will be £125,000. We submit that for this year the consolidated revenue shall contribute £75,000 of that amount, and that £50,000 shall be contributed from the Public Works Fund. The subsidies will include small contributions to towns, and larger ones to road districts and counties. This is irrespective of the treatment which we propose to adopt with charitable institutions, and hospitals. I will ask hon. members to suspend their judgment on the subject until all the measures are before them. "We will, if acceptable to the House, at once bring down the local government and charitable aid measures. They are three in number. We will move the second reading and explain the nature of each, and then adjourn the debates until all of them are before the House. Hon. members will then be able to amply consider them as a whole, and take such a course concerning them as commends itself to fclieir judgment. I am aware that by this mode of proceeding we shall not be pursuing what are considered good party tactics, but a consideration of the kind is insignificant compared with the great advantage members will enjoy in having before them the measures in their entirety, with their nature fully explained. We consider, that besides the assistance which, through, local bodies we render to the cultivation of the soil by opening up the country with roads and bridges, special aid is necessary to the goldnelds districts. We also are of opinion that particular encouragement should be given to the establishment of fisherieo all round the coast. The advantages of a hardy maritime population are too patent to need comment. It only need be said that New Zealand seems eminently destined for such a population, and that the fisheries in its vicinity are believed to offer abundant inducements for the encouragement proposed. I come now to the consideration of the great body of persons engaged in manufactures of all descriptions. We cannot have this colony as wealthy and prosperous as it should be if manufactures do not hold an important position amongst its industries. With a good climate, abundant water and coal, an immense range of natural productions, and separated by a wide belt of ocean from other ifc possesses the natural conditions which should make manufacturing a success, but the earlier stages of all industries are beset with more or leas difficulty, and there is no proof whatever that any particular manufacture may not be suited to the colony because in its initial stages it cannot compete with goods of the same kind imported. Thus we are brought face to face with the theories which are ranged under the heads of Free Trade and Protection. Although, as I have previously said, the old world doctrines which are comprised under these banners are quite different in their nature to those which we have to consider, it seems impossible to prevent people dealing with the question as if we really had to fight out the question on the ancient field of battle. In any case, you have the right to ask the Government to frankly disclose their views. We are, then, neither Freetraders nor Protectionists in the sense in which those terms are commonly used. Wedo not believe the circumstances of the colony are such as to make it politic to adopt simple Free Trade principles, which resolve themselves into giving no advantage whatever to local producers, and to applying excise to countervail import dutiea. On the contrary, we think it is so important that all sections of the population should be profitably employed that it is impossible to apply any theory that depends for its basis on the supposition that the population, if it cannot find one occupation, must look to another, and be content te contend with the populations of other countries on equal terms, no matter what may be the condition of labor in those countries. On the other hand, we distinctly abjure a policy of Protection which would give to the followers of protected pursuits a State-aided guarantee of success, no matter how unsuitable those pursuits might be. We are far from saying there are not some industries which the State should foster, but these should be commanding, conspicuous industries, like that of the fisheries, and the fostering should be direct in character by bonus. But with regard to industries generally the question with those who pursue them should be, " Are they calculated, when the initial difficulties . are overcome, to stand on their own merits and defy competition?" As I have said, we hold that in the natural and logical course of thinge every import should be subject to a reasonable duty to represent a contribution to the expense of the Government, of the maohinery of which the importers take advantage ; but beyond that the Customs are a constant mode of taxation, cheaply collected, calculated to affect people otherwise free from taxation, and moreover, much depending on the voluntary contribution of the consumers who elect to use imported goods. It is not in the probable nature of events that for along period the colony should escape from the necessity of raising a large Customs revenue, and in fixing the particular items, whilst having first a regard for revenue requirements, we think it quite desirable to have a consideration 'for the occupations of

those who may be striving to aurmount the difficulties attending the earlier stages of ndustriea j but I distinctly state that the tariff should be entirely within the control of Parliament, unless, as in the case of beet sugar, a distinct contract is registered, and that Parliament, in dealing with the tariff from time to time, should not be fettered with implied engagements of an indirect character. I say to the manufacturers throughout the country that they will be unwise if they invest large sums in industries under the idea that these will be continually bolstered up by tariff arrangements. They may reasonably exercise their judgment as to the probable duration of the duties, which at the outset will asßist them, but their calculations should be made on the presumption that their industries within a reasonable period oan defy competition elsewhere ; and even beyond this, that there is fairly a prospect of their being able to supply outside markets. The Islauds and other countries accessible to New Zealand open good prospects of an extra market, and I am convinced there | are numerous industries of a substantial character that can be carried on in New Zealand with a reasonable prospect of defying outside competition and of supplying in the face of competition other countries. We shall ask for a revision of the tariff because tlie present one is too complicated, and lias lost, besides, its elastic character. One ■word more. We believe tlie Government, wherever it can prudently do so, should encourage local in preference to outside productions. It should do so in the interest of economy ; that is to say, in the prospect that the local producer will, be able to supply it in the end mu&li more cheaply and satisfactorily. In order to remove misconception as to competing value which now surrounds Government imports, they shall not be free from Customs' duties nor from reasonable wharfage charges. Without going at any length into the nature of the tariff, I may say it is framed on the principle of yielding revenue, and in the interest of simplicity, we have made as few distinctions as possible. The froe entries are enumerated, and the articles that are not enumerated are subject to 10 per cent. duty. We slightly increase the duty on spirits, we put a duty on foreign coal, and an extra duty on tea ; but we do not increase the duty on sugar. It is so useful for the purposes of fruit preserving, and making jams and preserves, that I should have been glad to reduce the duty on it. The other changes I need not now refer to. On the whole the tariff is calculated to do no more than restore the diminished power of the alcoholic duties, and of those with which local industries have interfered. We have thus a sure guarantee that it will come upon a population ready to meet it. Its effects on the people will be less harsh than the tariff of 1882. The question of direct and semi-direct taxation next calls for consideration. With regard to the latter —the stamp duties — we think they require revision for increase in one important respect, but principally with the view of surmounting the cleverness of those who under present circumstances manage to evade them. The succession duties are altogether inadequate. They are much less than in Great Britain, and it cannot be alleged that in that country there is an undue want of consideration for the possessors of property. ■ We have also to defeat the ingenuity of those who, with the ruling passion strong in death, pass the last days of the lives they have devoted to the acquisition of wealth in marvellous devices to deprive the State of the revenues which should be payable on their decease. With regard to direct taxation, it is no secret that Ministers prefer a land and income tax to a property tax, and that the House and the country are divided in opinion on the subject. We have come to the conclusion that a compromise is necessary and expedient. It is the case with all systems of taxation that there is great advantage in a people having become used to them. Thus we see in some countries the people educated to a mode of taxation which would be utterly distasteful to the denizens of other countries. The people of New Zealand have grown accustomed to a property tax, and if for no other reason a grest deal is to be said in favor of retaining it on that ground. We think it may be so modified as to deprive it of some of the features which are obnoxious to the views of those who prefer a different eystem of taxation, and it is our intention to make proposals in this direction. The primary alterations we wish to make are to provtde for the exemption of agricultural improvements upto a certain sum, and also to provide for the exemption of machinery up to a certain amount. I know that by this compromise I may be giving pleasure to a few hon. members who, aocustomed to look upon obstinaoy as the highest virtue, are delighted when they can point to a modification of opinion on the part of their opponents. For my part I have a high admiration for a public man who has the courage to boldly avow a change in his opinion. Therefore, if I were able to admit, which I cannot, that I have virtually changed my views, I should not dread doing so, but I must not be understood to have much changed my opinions on the subject of the property tax. I look on it as unwise in principle and undesirable in its effects. I should prefer a simple land tax, in the assessment of which the valuation of improvements was excluded, and an income tax, if the land tax: required to be supplemented; but, as I hare said, a great deal of heed has to be given to the fact that people become accustomed to any system of taxation after a time, be it good or bad. Again, nothing could be more objectionable than a constant change from one system to another, and it seems probable that if some compromise be not effected we shall oscillate for years between the two systems of property and land tax. Again, though an income tax is in my opinion a fair way of getting at the earnings of the people, it has features of an objectionable nature to which it would take years to become accustomed, and I may say further, as far as I am personally concerned, that whilst I prefer a land tax to the complications of the property tax, I am not insensible to the risk one runs in imposing a land tax to its being supposed he is favorable to such a tax, not for income purposes, but for destroying existing rights. lam no friend to parcelling out the land in large estates, ' and I hold that as regards our future disposition of the lands we are free to deal with them in the manner that is best calculated to put a numerous population on the soil, but when I look back at times past, and remember how trom time to time special inducements were offered to rich men to buy large estates because of the money being wanted — often, in fact, for the sake of money the .public estate was frequently sacrificed — 1 can see no justification for disturbing bargains, which, however unpolitical, were entered into , with deliberation. I was an advocate for checking the system of land acquirement. I desired when the railway policy waß commenced to double the price of land exposed to free selection. I do not think I took part in the occasional bargains which were made for obtaining large sums from wealthy purchasers, but good faith is of priceless value. In the course of time some of these estates may be wanted for settlement, and when they are the State has a perfect right to take them on payment of compensation ; but at present we have millions of acres, and do not require anything of the kind. I am therefore weir disposed to a cotn--1 promise whioh does in fact give a land • tax. but accompanies it. I am sorry to

cay, with a tax on the capital value of personality instead of on the incomes of its possessors. I was also, it. may be remembered, opposed to any property tax or land tax unless it was localised, Here, again, I have somewhat modified my views. If such a tax were localised the towns would obiefly enjoy it, and the country distriots, which more require it, would get the least. For the sake of that mutuality of interest to which I

have alluded it is better the State should

collect the whole and average its distribution. I carried last year the repeal of half the property tax, and I said that I would like to do away with it all if the charitable aid could be localised. I propose now to return it to f d in the pound to cover the amount of charitable aid contribution, which it is still intended the State should supplement. LOCAL EXPENDITCBE. To meet the subsidies to looal bodies and to contribute to the increased defence expenditure, property should surely bear its share of this burden. It will not, I think, be possible to bring into force at once the changes proposed. In respect to the deductions for improvements a fresh valuation is being taken, but it cannot be completed in time to take effect this year. EXPENDITURE DUEING THE YEAE. The committee are no doubt prepared to learn that provision will have to be made for the increased expenditure this year. Last year a sum of £64,000 for interest on a converted loan was saved to the year by the process of conversion. It arose in this way. The conversion during 1883 provided for an exchange of securities in January, but the iuteresb was thrown so far forward in 1884 that the full year's payment of interest did not come within the year, and thus the amount of interest payable yearly was apparently reduced by about £64,000. Then there ia the increased interest on the third million loan, and half a year's interest on the million and a half just issued. On the other hand there is the reduced interest in respect of the conversion of the 5 — 30 debentures and the floating debt, and there will be a considerable saving this year on the item of £30,000 for exchange for paying interest in London. Still, on the whole, the permanent charges show an increase. There is one increase which is purely nominal. As the honorarium to members is become payable by permanent Act it has been transferred to that heading from the claßß "Legislature," under which it formerly appeared. There are other items of increased expenditure, such as that for the Colonial Exhibition in London, for making the triennial valuation under the Property Tax Act, the usual large increase for the education vote, and the increased expenditure for defence purposes. There is the ex* penditure for the direct mail service, but of course there is the revenue derived from it. The English mail service costs us less than formerly, but we have not yet doubled the postal receipts because of having two mails a month.

THIS YEAE'S ESTIMATE OF EXPBNDITTTKE.

Besides the increases in expenditure which I have already mentioned there are those for the payments which have to be made to the Harbor Boards of Westport and Grey mouth under the Acts of last year, for though those Boards were gifted with endowments it was provided that the management was still to remain in the hands of the Public Works Department. Hence the full receipts are carried to the public revenue and the payments are made under the authority of the Acts themselves. The reduction in the Colonial Secretary's Department is partly due to a less rate for charitable aid. I hope that through the bill we are introducing the amount in future years will be much, less. The Treasury shows a decrease on the whole, notwithstanding the heavy item of £15,000 for revaluing under the Property Tax Act and the sum set down for the exhibition. The Postal Department shows apparently a considerable increase. It is occasioned by the necessity of placing the amount on the estimates for the payment of the direct mail service with England, although those payments are exclusive of bonuses to come out of postages. The receipts are, however, taken into account in the estimates of revenue. There are also additions for ordinary purposes. The Education Department shows the usual increases for capitation allowances. The Native Department increase is more seeming than real, as some portion of the expenditure last year was charged to the civil list. The Mines Department shows a small increase on last year's rate. The Minister for Public Works will inform the House concerning the expenditure on the working railways and in the Public Works Department, and the Minister for Defence and for Lands will enter into the necessary explanations concerning his departments. lam glad to say the expenditure in the Survey Department has been considerably reduced. THE CIVIL SERVICE. There has been no subject which has so' much engaged the consideration of the Government during the recess as that of the Civil Service. We have made several reductions in the Treasury by adopting as far as possible the suggestions for avoiding keeping unnecessary accounts. There are also savings proposed in the Audit Department. I do not regard this department as one in which the saving of money is the first consideration. It has work of the greatest value to perform, the cost of which should not be grudged. With regard to the departments generally I express the opinion of the Government when I say that we do not consider they are over-officered. The pay of the civil servants in this colony is less than in any other colony, whilst the officers are certainly on the average not inferior in capacity and capability. The civil servants are in the unfortunate position of being unable to defend themselves if they are attacked, and it is not a popular thing for a Government !to defend them. I have had exceptional opportunities of judging, and I am of opinion that the civil servants of New Zealand are subjected to a heavier strain of work than is the lot of other civil servants. It is a service that is reasonably manned to perform the aye : rage departmental work of the year, but during a large part of the year, say two months before Parliament meets, and during the session, it is subjected to a heavily increased strain, and to that strain there is a cheerful submission. I now come to the question of classification, which in other words means plaoing the civil servants to some extent beyond the influence of caprice. [Sir Julius here described the various advantages and disadvantages attendant upon the positions oocupied by civil servants, and then continued.] We propose that there should be a right to only one month's notice or salary if the officer has not been more than eighteen months in the service, and to only three months' notice or salary after a longer service. To make -the Government independent of those considerations which always create reluctance to dispense with an officer's service, we propose farther that it shall be a condition of any officer's joining tho service in future, no matter in what capacity, that 10 per cent, of his salary shall be impounded, to be invested at compound interest, and to be given to him on his leaving tne service or to his representative on his death. As regards the classification, as we do not think the House will consent to its involving large expenditure, we propose to introduce it in a manner that will make its effects gradual, so that as its operation in the direotion of increase becomes developed

its effeots in the direction of decrease of expenditure will begin to make themselves apparent. [iSir Julius detailed the various classes, seven in number, with which it was proposed to deal, and the salaries and rates of increase in respect to each.] LAND FUND. The expenditure for the cunentyear is estimated at £208,971. This includes the usual charges under special Acts. The revenue for the year from land sales is estimated at £163,960, so that taking into account the credit balance of £31,931 at the end of last year we shall have a deficiency on the 31st of March, 1886, of some £13,000, which is likely to be reduced by the payments not being made within the year. REVENUE OF THE YEAR. Sir Julius Yogel then entered at great length into the financial proposals of the Government, but the very voluminous nature of the Budget Statement precludes our inserting his remarks. He concluded by moving the following resolution:— "That in lieu of the duties of Customs now charged on the undermentioned articles the following duties of Customs Bhall, on and after the 23rd of June, 1885, be charged thereon on importation into New Zealand, on being cleared from any warehouse for homo consumption, namely: — Spirits or strong waters, as defined by the Customs Duties Consolidation Act, 1882, 14s 6d tbe gallon ; bitters, 14s 6d the gallon ; wine, 5s 6d the gallon ; wine, sparkling, 6s 6d the gallon ; wine, Australian, 4s 6d the gallon ; tea, 6d the lb ; arrowroot, corn flour, farinaceous food, mazena, raaccaroni, prepared groats, sago, tapiocn, and vermicelli, Is 2d the lb; bacon ami hams, 3d the lb ; beef, salted, 4s the cwt ; boots and shoes, men's No. 6 and upwards, 17s 6d per dozen pairs ; boots, youths', Nob. 2to 5, 14s per dozen pairs ; boots, boys', JN"os. 5 to 1, 8s 6d ditto ; boots, women's, Nob. 3 and upwards, 11s ditto ; boots, girls', Nos 11 to 2, 8s 6d ditto ; Nos. 7 to 10, 7s ditto ; boots, children's, Nos. 4 to 6, and slippers, 3s ditto ; women's lasting and stuff boots, 7a ditto ; goloshes of all kinds, 3s 6d ditto ; slippers, men's, women's, and children's, from No. 7 and upwards, 4s ditto ; butter and cheese, 2d the lb ; candles, tallow, Id the lb on reputed packages of that weight, and bo in proportion for packages of greater or less reputed weight; candles, stearine, 2d ditto : candles, paraffin or wax, 2£d ditto ; candies, not otherwise enumerated, 2§d ditto ; cement, Is 6d the barrel ; chicory or other vegetable matter applicable to the uses of chicory or coffee, 3d the lb ; coals, landed, 2s the ton ; doors, plain, 3s each ; doors, glazed, 6s each ; fish, tinned, potted, or preserved, 2d the lb, or reputed package of that weight; fruit, pulp and boiled fruit, not otherwise enumerated, 2d ditto ; iron barbed wire, 2b the cwt ; jams, jellies, marmalades, and preserves, 2d the lb., or reputed package of that weight ; paints, ground in oil, 2s tbe owt. ; paints, mixed ready for use, 4s ditto; paper wrappers, brown, 3a 3d ditto ; paper bags, 7s 6d ditto ; piokles, Is per dozen, pints or reputed pints, and in tbe same proportion larger or smaller sizes ; rope and cordage, including houseline and marline, 6s the cwt ; stearine, paraffin, wax, and Japanese wax, 2d the lb ; soda, bicarbonate, 2s the cwt. ; sashes, plain, 3s the pair ; sashes, glazed, 6s the pair ; soap, common, 5s the cwt. ; agricultural implements and machinery, not otherwise enumerated, casks (empty), ahooks, duok in the piece, garden lawn mowers, garden pumps, garden rollers, garden syringes, gasworks machinery and materials other than gaspipes, iron bridges and materials not otherwise enumerated, oil (cod-

liver), paper (writing), for account books, of sizes not less .than the size known as demy, when in original wrappers, and with uncut edges, as it leaves the mill ; textile fabrics not less than 18 inches wide, of cotton, flax, hemp, or jute, or of mixtures thereof, the market value of which, as defined (section 4 of the Customs Laws Consolidation Act, 1882) in the country whence the same were exported is less than 4d per yard ; railway plant and materials not otherwise enumerated, for the construction of railways and tramways; sulphuric acid, slates (roofing), all 5 per cent ad valorem ; aerated and mineral waters, 15 per cent, ad valorem ; bags (flour and hessian), baskets and wiokerware, bellows (other than blacksmiths), bicycles and tryciules and part of same, brass cocks, valves, unions, lubricators, and whistles, building materials not otherwise ..enumerated, castings of metals not otherwise enumerated, chaff, cork soles and aocks, drain pipes and tiles, glue, iron boltendg, blank nuts and washers, gates and gatepost girders, and columns for buildings, magio lanterns and all apparatus and appliances for same, moulding! (gilt and other) ; paper and card-board boxes (not containing goods imported therein) ; perambulators ; printed billheads, advertising posters, and printed papers not otherwise enumerated ; provisions (preserved), not otherwise enumerated ; pumps and other apparatus for raising water; upholstery; vegetables, preserved and dried ; watch cases and watch movements, 15 per cent, ad valorem ; woollen manufactures, viz., coatings and trouieringa, melton, buckskin, and kersey cloth, tweeds (shepherd's), and clan plaid, serge, shirtings (flannel), mantle and costume olotha, tweeds and serges, shawls, plaids, and travelling rugs, carriage cloth and saddler'a serge, knitted shirts, jerseys, jackets, pants, mufflers, hose, and socks, wheeling, fingering, and hosiery yarn, 17£ per cent, ad valorem ; apparel and clothing of every description not otherwise enumerated, whether wholly or jartly made up, 20 per cent, ad valorem ; blankets and woollen rugs, carpets and druggets, carpet bags, carriages and carriage wheels ; and fruits (bottled) 20 per cent, ad volorem. Besolved, that on all goods, ware, and merchandise not enumerated above, or in the table of duties o£ Customs annexed to the Customs Laws Consolidation Act, 1882, and not included in. the list of articles exempt from duty to subsequent resolution, there shaft be charged a duty of 10 per cent, ad volorem. Resolved that in the event of any of the duties hereby imposed not being confirmed, or of reductions being made in the rates specified above, the amounts levied, collected, and paid in excess of the duties as may be imposed by the Customs Act, based on these resolutions, shall be refunded to the persons who paid the same. [Then followed a resolution declaring a long list of free goods, which our space does not permit us to reproduce.] Major Atkinson asked what course the Government desired to pursue as to the discussion of the Statement P It was evident the House would not be in a position ob Tuesday to discuss the whole of such an important Statement as the Treasurer had just made. He (Major Atkinaon) would be prepared on Tuesday to discuss the financial proposals of the Statement, and leave the other portions till another opportunity. Sir Juliua Yogel said the Government were desirous of giving the most ample opportunity for discussing their proposals. They would be guided by Major Atkinson's own wishes in the matter. If the hon. gentleman preferred it they would discuss the Local Government Bills and the Financial, Statement separately. The Government would bring down the bills next week, read them a second time, and then take the, discussion on the Financial Statement.

Major Atkinson thanked the Treasurer. He (Major Atkinson) quite concurred with the course proposed to be adopted. The House adjourned at 9. 45. ,