Hawke's Bay Herald. MONDAY, NOVEMBER 27, 1893.

Hawke's Bay Herald, Volume XXVIII, Issue 9539, 27 November 1893, Page 2

Hawke's Bay Herald. MONDAY, NOVEMBER 27, 1893.

SOME QUESTIONS COR MR WARD. The Hon. Mr Ward, Colonial Treasurer, will address tbe electors at tbe Gaiety Theatre, and will, no doubt, endeavor to prove that the present Ministry is what it claims to be, a non-borrowing one. If there is any meaning in the English language, "non-borrowing" means that since the Ministry took office the liabilities of tbe colony have not increased, save and except from conversion, operations, to which we shall refer later on.

Well, the net debt of the colony increased in two years, from March 31st, 1891, to tbe same lato tbis year, by £800,145— that) is, from £37,343,925 to £38,144,070, A large part of this in' crease, we are aware, represents additions throngh conversion Operations, That ts to say, when £100 df stock bearing 0 Decent interest is to b . converted into s\\ pei; cent stock, considerably more than £100 in the stock of the lower denomination has to be given for it. But there is a saving ln the annual Interest payable, and the colony is really a gainer, thongh there is a nominal additio_ to its debt. What the public would like to know is what portion of tbe addition lo the net debt is dne to beneficent conversion operations, and what proportion has been added for other purposes. The addi. tions for conversion cannot be Considered fresh borrowing — til it is to s.y, Ministers had not tbe handling of the money — but we want to know how any addition beyond that can be called anything bnt borrowing. We would also ask Mr Ward to stick to one Bet of figures, and nob juggle between the net debt and the gross debt, as he did at Winton, to suit his own purposes. This makes material differences. For example, in 18.2 Mr Ballance stated in bis financial statement tbat the debt of the colony had decreas?d. The Opposition called for and obtained a return showing that though the gros? | deb. had decreased from £38,830,350 to

£38,713,068. tbe accumulated .inking fund had also fallen from £1,486,427 to £1,037,862, leaving an increase, -instead of a decrease, in the net debt of from £37,343,923 to £37,675,206. Mixing up these two sets of figure, may tell with a publio meeting, but it is not gentlemanly or honest,

Next, es to tbe conversion of the Imperial guaranteed 5 per cent loan of £500,000. To this there was attached a sinking fand of nearly £250,000, according to the Agent-General. To get the sinking fund the Government paid off the loan, and to do so issued £610,000 in 3J per cent stock. The net amount received by tho Government wus £163,000. It appears from Mr Ward's speech at Winton that the £250,000 was partly made ap of £96,000 debentures, bearing 4J per cent interest. Mr Ward justified this transaction by saying that £2986 per annum was saved. He arrived at this by adding the interest on the £6oo,ooo loan and £96,000 debentures together, making a total of £24,335 per annam, while the interest on £610,000 at 3_\ per cent is £21.350 per annnm. Bat Mr Ward conveniently forgot that the £163,000 was, according to the Agert-General, invested at 4 per interest, wbich meant £6520 per annum, or that instead of an annual saving of £2986 there is an annual loss of £3534. That is not a large charge for £163,000 if it were the end of it. But it is not the end, by a very long way. Had the old arrangement stood the £500,000 loan would have been paid off, all but £96,000, by the £24,335 per annum, in 22 years. The total payments for principal and interest would have been £631,764. All liability wonld then have ceased, Under the new arrangement in 22 years we shall have p.id £469,700, or £162,064 less. But we shall then owe £610,000, and a further ultimate liability stated by Mr Ballance at £115,000. These two gams make £725,000, as against nothing. Mr Ward contended that the operation was better than raising a loan of £163,000. Well, to get that amount at the present price of 3§ per cents womld have meant the issue of stock to the amount of under £170,000. Taking it at that amount, tho interest payable in 22 years would have £130,000, and the principal would still be due, or £300 900 iv all, instead of £469,700 paid under the present arrange* ment and a farther liability ef £725,000. Bow can this be regarded as a profitable traosaciion ? And how can it be mode out to be non-borrowing? By the bye, nothing of this appeared in the Financial Statement, though Parliamentary paper B 2 shows that it was completed, or nearly completed, before the end of the financial year. That would have added £273,000 to the not indebtedness as stated above— that is to say, the accumulated fund was decreased by £163,000, and £110,000 was added to the gross debt.

Theo we have tho borrowing within the colony. From a return recently Issued from tbe Government printing office we learn that during the financial year ended 31st March, 1893, tbe funds of the Post-office, Government Life Insurance, Pnblio Trnat, and Commissioners of Sinking Funds were invested in Government debentures and Treasury bills, hearing interest ot the rate of 4£ per cent, to the extent of £326,300; while the Public Trust Funds were invested in fnrther Treasury bills, bearing 5 per cent (since renewed at 4J per cent) to the extent of £59,090. These departments in addition invested their funds to the extent of £133,800 in debentures under the Government Loans to L.eal Bodies Act ond Native Land Purchaso Aot, Apparently, therefore, during 1893 the Government borrowed £519,100 of trust fundsIt is stated tbat £137,000 of the Post, office fund and £10,000 of the Public Trust account was iv exchange for other sconrities. That is, £132,600 deficiency bills, bearing interest at 5 per cent, held as security by the Post office, and £10,000 J n Treasury bills held by the Pub'io Trustee, were exchanged for 4J per cent debentures. Deducting these sums, therefore, the total trust funds apparently borrowed by tbe Government were £372,100, How does Mr Ward make out that this is not borrowing ?

But the list Is nob concluded yet. There is a curious history attaohed to the issue of Treasury bill.. Under the Publio Revenues Act of last year Treasury Bills to the amount of £1,476,000 may be leaned. Mr Ward at Winton said this amount was previouely authorised all but £26,000 for a specific purpose. Quite so, but he forgot two very important facts. When the present Ministry took office the issue ol Treasury Bills was limited by tbe Publio Revenues Aot, 1885, to £500,000, and their currency to three months. They were, in faot, promissory notes issued to pay interest in London, against revenue to come in, and in no case could they have ourrenoy more than three months after the end of tbe financial year. But in the first year of the present Ministry's tenure of office tbe limit was raised from £600,000 to £900,000. The currency was, however, left as bofore. The following year —in 1892 — a uither issue of £550,000 was authorised, making the total £1,450,000, still they had only three months' currency. Last year the total issue authorised was inoreased to £1,476,000. S3 that the present Ministry have inoreased this form of indebtedness by nearly a million. The seoond and most Important fact whioh Mr Ward suppressed was tbat tlie currency was increased from three months to five years— to March 3lßt, 1899. In other words, instead ot short accommodation loans money is being borrowed for a long term, and will then most certainly be added to tbe

funded debt. If that is not borrowing, what ls ?

We have only one more que .tion to ask, bat it brings us to the bed rock of fact. Mr SeddonolalmedatFeildlng that through the conversion operations, though they bad resulted in an apparent Increase in tbe actual public debt, the. interest payable was less by £60,000 a year. Aa usual when the Premier wrestles with figures he got a bad fall. But it is a fact,

if we can accept the pub'lo accoants as correct, that the interest and sinking f and payable ou the funded debt has fallen from £1,804,675 in 1891 to £1,837,169, a reduction of £27,406. Now, If tte Government bad not been borrowing in otber directions, there should have been this saving on the annual charges for interest, But instead of that the total charges rose frora £1,858,263 in 1891 to £1,901,898 this year. In other words, instead of £27,406 less interest we are paying £43,545 more. If the oolony has net borrowed, how is this £70,951 accounted for? Are we throwing it away ? Or did we get value

tor it ? If we did get value, does not the

increased interest mean a large increase in money owing— ia other words on money borrowed? We a_k the Treasnrer to quote the figures for this year, and not

those for 1882 as he did at Winton, not only because they are the latest, but because, according to his Financial State' ment of July laßt, only nice months' interest on the large conversion operations in progress in 1892 waa payable in that year.