THE FINANCIAL STATEMENT.

Hawera & Normanby Star, Volume II, Issue 129, 9 July 1881, Page 2

THE FINANCIAL STATEMENT.

Major Atkinson delivered his Financial Statement to a crowded house on Wednesday night. He began by stating that his task was far more pleasing and satisfactory than that which had fallen to his lot when he last addressed the House, and. then procee<3e<3 to review the financial position of the colony since 1879. The folloiving summary of the statement is given as nearly as may be in the words used by Major Atkinson, explanatory matter only being excised : —

The Financial Period, 1879-80.

The Committee will remember the proposal . which was made in 1879, that in future the, receipts within the year should be dealt with as the revenue of the year, and the payments made within the year as the expenditure of the year. It will also be in the recollection of the Committee that it was determined not to apply this new system of keeping the accounts to the financial period' of nine months ending 31st March, 1880, but that whatever sum was required' to equalise the revenue and expenditure to that date should be provided for out of loan, so that we might start clear of liabilities. In consequence of this determination, I estimated, in making the Financial Statement last year, that the liabilities of that period would exhaust the available assets, with the exception of £9i910. This, however, had not proved to be the case, for, after discharging all liabilities in respect of the period now referred to, which came in course of payment to 31st March last, there remained a credit balance of £38,555, particulars of which will|be found on Table No. 1 attached to the Statement. The deficit, therefore, to 31st March, 1880, was £961,445, . being the difference between the credit balance of £38,555 and £1,000,000, the amount of the Treasury and deficiency bills issued in aid of the revenue. Expenditure of the Ordinary Revenue

of the Year 1880-81.

In the Statement which I had the honor to make to the Committee last year, I estimated the ooßt of the services for the year at £3,423,709, and the amount which would come for payment in the ordinary course of business within the year at £3,248,709. On the passing of the estimates these sums were modified to £3,348,889 and £3 123,889 respectively. The expenditure was £3,168,183, or £44,294 more than I thought would come in course of payment during the year. The Committee will not, however, look upon this fact with disapprobation, but rather, I venture to think, with satisfaction, when I tell them that it means simply that I took advantage of the opportunity of paying the amounts which I had estimated would remain outstanding at the end of the financial year, thus reducing these from £225,000 to £165,514. I may add that the total amount voted for the departmental services of last year, inclusive of land surveys, was £1,929,807, and the actual expenditure was £1,754,541, or £175,776 less than voted, and if from this we deduct the outstanding liabilities, we find that the services of the year have been performed for rather less than the votes, a result which, considering the searching revision to which the estimates were subjected by this Committee, will probably be thought very satisfactory. Ordinary Revenue of the Year, 1880-81.

I now come to the estimated revenue, as compared with the actual receipts for the year. I do not include here the receipts from land sales. Of these I will speak presently. The estimated revenue was £3,238,000, while the actual receipts amounted to £3,123,961, being £114,036 less than my estimate. It will be seen upon reference to the table to which I have referred, that the receipts from railways were less than the estimated amount by £111,377, but notwithstanding this fact, it will be gratifying to the Committee to know that through the economical management of my friend, the late Minister for Public Works, they have yielded about 3£ per cent, upon the £1,228,000 spent in their construction. The Properly Tax yielded £80,283 less than I had estimated, but of this sum £42,000 had yet to come in, being the amount outstanding and collectable on the 31st March, of the remainder £20,000 is accounted for by the alteration of the schedules, which was authorised during the session, and about £20,000 is an over estimate. I will, however, say no more about the Property Tax here, as I shall have to speak somewhat fully upon that subject presently. Telegraphs also yielded £12,562 less than estimated. On the other hand, customs and stamps (in the latter I include land and deeds) produced more than was estimated, the former by the sum of £57,634, and the latter by £10,886. The increase in the Customs and Stamp Duties is, I think, a subject for congratulation, as showing that the commercial depression under which we have been suffering is passing away, and that the spending power of the community is gradually resuming its normal condition.

Land Fund of the Year 1880-81.

The estimated expenditure chargeable against the Land Fund was £158,706, exclusive of £51,648, representing onehalf of the proposed subsidies to local bodies. I have charged against the Land Fund the full amount paid on account of subsidies. The total expenditure, including the sum of £110,506 for subsidies, has been £266,793. The estimated revenue from land sales was £200,000, but through the successful handling of affairs on the West Coast of this island by my hon. friends, the late and present Native Ministers, we have had most satisfactory sales of land in that district, which have brought up the receipts from the sales of land to the sum of £299,166. The expenditure having been £266,793, leaves a credit balance of £32,373. The liabilities outstanding at the close of the year amounted to £37,561.

The Public Debt.

The gross public debt of the colony on the 31st March, 1880, amounted to £27,422,611. '-On 31st March, 1881, it was or, deducting the accrued sinking funds, £2,057,241, the net public debt was The public debt has further oeen increased, during the year by tb.9 conversion of £4,476,000 5 per cent, debentures into £5,371,200 4 per cents, under the option expired on 16th March last given to subscribers to the Five Million Loan of 1879. This operation resulted in an increase of the debt by £895,200. Since 31st March, 1880, the following debentures have been

redeemed and cancelled :— Nelson Waterworks Loan of 1869, £6200 ; North Otago District Public Works Loan of 1872, £6200. The net increase of debt during the year, exclusive of the increase by conversion into inscribed stock, was therefore £847,000, but inclusive thereof it was £1,742,900. Adding to the gross debt on the 81st March, 1881, the balance of the guaranteed debentures, £500,000, and the Treasury bills, £431,900, held by the Public Works Fund, the total gross public debt, when these securities are disposed of, will amount to £80,097,411 ; or, deducting the Sinking Fund accrued to 81st March, 1881, £2,057,241, the net debt will be £28,040,170, in respect of which the annual charges will amount to about £1,543,000. I may add that by the conversion of £4,476,000 5 per cent. debentures into 4 per cents, a saving of £8900 interest per annum has been effected. Public Works Fund,, on 81st March 1880.

The total ways and means available, subject to liabilities, was £3,778,173. During the past year, special receipts and recoveries, amounting to £43,175 came to the credit of the fund, making, with the balance of £3,778,173 at the beginning of the year, a total of £3,821,,347. The expenditure amounted to £1,960,974, thus leaving r.n unexpended balance of £1,860,878 at the close of the year. There remains to be appropriated for new services the small sum of £274,861, but in arriving at this balance of £274,861, hon. members will observe that £997,723 is set aside as a liability on account oi land purchase. Should, however, the policy, in reference to such purchases, enunciated by the Government, be carried out, the 'sum, which it will be necessary to reserve out of the existing balance, will not exceed £200,000. The available balance for future appropriation will amount to £1,072,586, instead of £274,861, as just stated. The expenditure within the year was £3,168,183, and the receipts from revenue, £3,123,961, exclusive of land sales ; but including the balance of £88,555 brought forward from last year's account the receipts amounted to £8,162,516, so that upon this division of the account there was a deficit of £5667. The expenditure for Land Fund was £266,798, and the receipts £299,167 ; the surplus upon this account being £32,373. The total expenditure, therefore, of the Consolidated Fond was .£3,434,976, and the total revenue £3,761,862, thus leaving a, surplus balance of £26,706 upon the actual transactions completed within the year.

Local Finance.

I now take it for granted that the local bodies will be charged with the making and maintaining the roads within their jurisdiction, and that upon those works the bulk of their expenditure will be made. The local bodies have other duties to perform,, if but that part of the problem relating to roads and bridges can be satisfactorily solved, the rest will follow without much difficulty. This, then, is the great question for solution — how are funds to be provided for the construction and maintenance of roads and bridges ; and the question naturally divides itself into two branches. Maintenance of Roads and Bridges.— The Government propose that Crown lands and native lands shall be rated, with certain exceptions, with which I need not now trouble the committee. The proposal is, shortly, this : that, within boroughs, the property of the Crown, with certain exceptions, and of Maoris shall, for the future, be rated under the Bating Act, 1876, the Maoris being, in this case, placed on the same footing as European owners of property ; and that country lands — Crown and native — shall be divided into two classes, agricultural and pastoral, shall be rated at £1 an acre for agricultural land, and 6s. Bd. an acre for paßtoral land, which amounts for rating purposes will be taken as the value of the fee simple. If the Crown and native lands are to pay rates, the question arises, Who is fo be responsible for their payment to the local bodies, and out of what funds are they to be paid? We propose in every case that the Colonial Treasurer be primarily liable, and shall pay the rates to the local bodies. The rates on Crown property within boroughs we propose to charge against the Consolidated Fund, the rates on country Crown lands against the Land Fund, and the rates on country native lands we propose to advance out of the money appointed by Parliament for the purpose, but to remain a charge against the actual land for which the rates are paid, and to be recovered without interest as a duty under the Stamp Act from the first purchaser or lessee of the land so charged. In charging the rates against the Land Fund the proposal, however, to advance rates upon native lands will require some explanation. As a matter of strict justice there is no reason why our Maori fellow - Bubjects should not pay their share of the coßt of local works, » which, as they are undertaken and completed, improve their lands in common with' the lands of European neighbors. But, although this might not unfairly be insisted upon, there are reasons which will, I hope, induce this House to make such provision as will, without unduly pressing upon the Maoris, deal fairly with the . local bodies who are charged with the maintenance of roads passing through native lands within its jurisdiction. The reasons are chiefly those of publio policy, I shall propose, if the House agrees to this plan, to charge these rates (on native lands) in the first place against the Consolidated Fund. We shall propose to increase the rating power to two shillings in the pound, a power already possessed by several of the local bodies, believing that the limit will be approved by the oountry, and be found ample for the duty. With regard to the valuations, experience has shown that they are required by law to be made much oftener than is necessary", thereby causing the local bodies a large and useless expenditure. The Government propose to relieve the local bodies entirely of this charge, and to save them from an unprofitable expenditure of not less than £16,000 a year. We shall ask the House to permit all local bodies to use for rating purposes the valuation under the Property Assessment Act, with annual correction. Construction of Eoads and Bridges. And this brings me, Mr. Seymour, to . the second branch of my subject — the Construction of Eoads and Bridges. After ■ carefully considering the subject, Government have come to the conclusion that the necessary funds can be obtained from the land itself, not only without injury,

but with advantage to settlement. We propose, therefore, that after the land has been surveyed and the roads marked out, an estimate of the cost of forming and metalling the main road through the block shall be prepared by the local body having charge of the district ; that to the fixed upset price per acre of land to be served by the road shall be added a sum, according to situation, sufficient to cover the cost of construction, and that the money so obtained shall be set apart and paid over to the local body under safeguards, to be used for that purpose only ; and we further propose that when half the land in any block is sold, the Government shall advance the money to complete the main road through the block, recouping itself from time to time as the rest of the land is sold. We now come to the roads of the second class; those unconstructed main roads running through settled or partially settled districts. [Condensed, the proposal is as follows :—lt: — It is proposed to constitute a Eoads Construction Board, consisting of the Minister of Public Works and three members of the House, to which it is proposed to grant £150,000 out of loan. The approval of such a board having been obtained to any work, the board with the consent of the ratepayers, might levy a rate.] Thus, for the purpose of main road construction, for every pound which the district finds, three pounds is added to the Land Fund. In case more money should be applied for than the Board has at its command, grants pro rata would be made, but all applications in cases where a main road or bridge had been destroyed or washed away by a flood would take precedence. We have now only to consider the third class of road, that is district roads. To enable road boards to make these district roads, we propose to ask the House to make a free grant of £100,000 to the Eoads Construction Board, and to permit it to borrow another £100,000, at 5 per cent, from the Trust Funds, thus making a fund of £200,000 available for this purpose. We propose that this fund should be self-supporting, and that it should be dealt with in this way : Suppose a Eoad Board wants to borrow £100 for a small bridge or other work. It would submit an estimate of the proposed work to the Eoads Construction Board. On ascertaining that there was money available, and after taking an affirmative vote of the ratepayers, the Eoad Board would strike a special rate, which would produce £9 a year for thirteen and a half years. I think, with every desire to help the boroughs, we must recognise the fact that the surest and most effectual method of helping them is to encourage successful settlement upon the land. With a wellroaded and prosperous country, the difficulties of the boroughs will end. Estimated Expenditure from Ordinary

Eevenue, 1881-82.

The Estimates brought down last year for the twelve classes of services under the control respectively of the Speakers of both Houses amounted to £2,108,613. Estimates for the same services are, tor this year— £1,774,612 only ; or, in other words, £834,001 less than those of last year. Hon. members will see that upon every class, without exception, there is a reduction, and that in Class ll.— that of the Minister for Public Works — there is a reduction of £52,492, notwithstanding the fact that the Estimates for the current year are for an average mileage of ninetythree miles greater than was worked during the past year, and that ample provision is made for their efficient working maintenance. Such a result, then, as the reduction of £281,501, or including £52,500 for contingent defence, £334,001 in twelve classes of the Estimates iv one year is a work upon which I think I am fairly entitled to contratulate the Committee. The total proposed votes for the year, inclusive of liabilities which now appear in the ordinary votes, is £3,270,532, divisabie into two parts — permanent charges amounting to £1,570,919, and annual appropriations amounting to £1,699,612, in which latter division alone can reductions be made at present. Estimated Expenditure from the Land

Fund, 1881-82.

The Government propose that any balance there may be left from land sales after payment of the charges it is intended to place upon them shall, by law, be paid into the Public Works Fund, but without prejudice to the public creditor. The estimated expenditure chargeable against land sales is as follows: — For charges fixed by Acts of the General Assembly, £84,960; for the Crown Lands and Survey Departments, £134,584 ; for rates to local bodies, £27,000 ; for roads and bridges, a sum not exceeding £150,000 to be paid to the Eoads Construction Board, the balance of any after payment of these charges to be paid over to the Public Works Fund.

Property Tax.

I will now, Mr. Seymour, in accordance with the promise made in the early part of this Statement, again refer to the Property Tax. The Act, Sir, although requiring some amendment, has been found upon the whole effective, and now that its provisions are generally understood, it is admitted throughout the colony that the taxis thoroughly fair in principle, and that it has generally worked satisfactorily. In reference to the ownership of land, there are, I find, 21,761 freeholders inside boroughs, and 43,058 freeholders of country land. The total number of freeholders in the colony is 60.658, being somewhat less than the aggregate of freeholders of borough and country lands, because some owners of property hold land under both designations. The total expenditure made for last year, including outstanding liabilities, but exclusive of land-tax charges, was £31,000, being made up of the following items : Cost of valuation, £16,000; salaries, £7275 ; preparing tables, £700; miscellaneous, including cost of collection, £7025. With regard to the valuation, I find it has cost about £3000 more than the land-tax valuation, the valuation under the latter tax being £13,000, and under the Property Assessment Act, £16,000; but if the proposals of the Government are Agreed to, and this valuation is • used by the local bodies as the basis for their rating, the whole of the cost of this assessment will be saved to the country during next year, the saving going into the coffers of the local bodies. The estimated cost of the Property Tax department for the next two years is £12,000. For this year I shall ask for £6000, exclusive of liabilities, 60 that the total cost for three years will not, I think, exceed £44,000, and the total receipts for that period, provided the present rate of one penny in

the pound be continued, will certainly reach £860,000, thus making the total cost of the tax a little over 5 per cent, upon the amount actually paid into the Treasuiy.

Eevenue for Year 1881-82.

Before, Sir, I proceed to the consideration of the estimated revenue for the current year, I desire, with the permission ot the Committee, to refer to one or two important questions which are doubtless occupying the minds of hon. members, and the first which presents itself to most of us is, I think, — Will it be necessary to impose fresh taxation this year? I am happy to be able to inform the Committee that I can answer that question with an emphatic negative. The general reasonableness of the expectations, as well as the dangers, of the policy of 1870 is fully exposed in the revenue returns and the trade and population statistics of the last ten years, and these justify me in recommending that, whilst avoiding what I will call high pressure finance, we should arrange for the construction of all the defective links in the trunk lines of railway, necessarily at a reduced speed, but without intermission.

Returning to the Property Tax. It will be in the recollection of the Committee that when the Act was passed it was determined, on grounds of public policy, not to include foreign capital as liable to taxation. On fuller consideration, Government have determined to ask the Legislature to bring the excluded capital within the Act this year. We shall therefore shortly ask leave to introduce a Bill to amend the Property Assessment Act in the direction indicated, and for the purpose of correcting some faults and unfairness which have appeared in the working of the Act. Should the Act,he amended as proposed, I estimate that taxable property under it will be increased by no less than £11,000,000, of which estimate particulars will be furnished when the Bill is under consideration. The amount, at one penny in the pound, would yield, say, £45,000, and in the present condition of the revenue will enable us to propose, first, a reduction in the Customs duties, and second, a diminution of the Property Tax. We propose to admit free of duty — calicoes, white and grey ; moleskins, corduroy, colored cotton shirting (all in the piece) ; axes, spades, shovels, and to admit free or reduce the duties on a variety of other articles, which I need not now detain tlie Committee to enumerate. All these remissions and reductions tending to encourage local manufactures. With respect to the Property Tax, we shall ask for the continuance of the present penny rate till September next, to be reduced after that date to one half-penny for the remainder of the year.

Ordinary Eevenub.

We have now, Mr. Seymour, to consider on the above basis the ways and means for the current year. I estimate the total receipts of the year from all sources in ordinary revenue account will amount to £3,297,650, full particulars of which hon. members will find in Table No. 8, attached to this statement. Of this, £1,826,000 is to be raised by taxation, and £1,471,650 is recoverable for services rendered, &c. Speaking, then, first of amount raised by taxation, we find that the Customs duties last year yielded £1,307,635. This year I have estimated them at £1,360,000, or at an increase of about L 53,000, which, considering the steady and satisfactory improvement in the circumstances of the colsny will, I think, be fully realised, but from this amount it will be necessary to deduct if the remissions which I have just suggested are agreed to, thus leaving the Customs duties for the year at £1,345,000. The Property Tax I have estimated to give £270,000, upon the supposition that the amending Bill of which I have spoken becomes law. But of this £42,000 is from that part which remained uncollected of last j'ear's tax upon the 31st March last, so that the tax is estimated to yield this year £228,000. I have said that the estimated expenditure to be made within the year (and hon. members will understand that this now includes outstanding liabilities) is £3,270,932, to which I add the deficit at the end of last year, £5667, making a total of £3,276,198, and the estimated revenue is £3,297,650. Deducting, then, the estimated expenditure from estimated revenue, we have a surplus of £21,452, a result, Sir, which, if allowed, will, I think, be extremely satisfactory, as showing the steady progress of the ( olony, and the wonderful elasticity of our own resources.

Land Fund.

Eeceipts from sales of land are estimated^aV; £333,000. Adding, then, the bala|[ce' < ,&t credit of Land Fund on 31st March!,' £32,373, to the* estimated receipts from land sales, we get a total of L 365,373, and deducting therefrom expenditure, L 246,551, there remains a surplus of i>118,822, which will be payable under our proposals to the Eoads Construction Board. The feeling has been gradually growing up of late years, not only here, but in the Australian colonies, that the several Governments might, with great advantage to the community, give some further facilities for the investment of local capital in small amounts than is afforded by the Post Office Savings Bank. That institution has been a great success in putting within reach of thrifty people a place for the safe keeping of small savings, and it is satisfactory to know that, notwithstanding the hard times we have had for the last eighteen months, the deposits have steadily increased. It is also a gratifying fact well worthy of note that no less than five-sixths of the deposits are for sums of less than LSO. Government think it possible that many of these depositors, as well as the public generally, might be glad of a more permanent form of investment, if one can be provided which is at the same time secure and easily convertible into cash. I shall therefore submit for the consideration of the House a Bill authorising the issue at par of a loan of L 250,000, the principle and interest of which will be payable in New Zealand only. I propose that the loan shall bear interest at a rate not exceeding five per cent.; and that it shall be issued in the form of inscribed stock, with a right to the subscriber to obtain from time to time bonds payable to bearer of LlO and upward. Before concluding, it may be desirable, Mr. Seymour, to glance briefly at the progress of the colony since 1870, and to compare it with that of our great neighbors in these seas. The population in 1870 was 248,000; it is now 489,700. That is," it has almost doubled in ten years. And what, Sir, have our power-

fill and attractive neighbors, Victoria and New South Wales, done during the same period ? In 1879 the population of Victoria was 726,599 ; of New South Wales, 502,860. It is now 858,582 and 750,000 respectively, thus showing an increase in the Victorian population of 18 per cent., and in that of New South Wales of 49 per cent., while in New Zealand the increase has been 97 per cent. Then, Sir, let us look at the value of our imports and exports. In 1870 they were respectively L 4,639,015 and L 4,822,726. Last year, that is for the year 1880, they were — imports, L 6,162,01 1; exports, L 6,352,392, showing an increase of L 1,529,936, a not unsatisfactory result when the universal commercial depression of the year 1880 is remembered ; and lastly, let me compare the net revenue of 1870-81, exclusive of land sales, and the revenue appropriated to local bodies, with that of 1880. In the former year it was L 1,057,218, in the latter, L 3,123,960, a difference, Sir, which is ample to cover all the additional interest we have to pay, and with a good margin to spare to provide for the increased cost of Government. It may, however, be said, that this increased income does not arise from natural growth, but from the far heavier taxation under which the country now labors than in 1870. But is this so, and are we in truth more heavily taxed now than in 1870? I venture to think we are not now taxed more than in 1870. The taxation per head was L 3 4s. 6d.; it is now L3 lls. 9d., but Education is now paid for by the State, an additional charge since 1870. If, therefore, the rate per head of the cost of education, 9s. 9d., is deducted from the taxation of 1880-81, we find it is less now by 2s. 6d. than it was in 1870. For these and other reasons we may claim that our Immigration and Public Works scheme has been fairly successful.