FINANCIAL STATEMENT.

Nelson Evening Mail, Volume XXI, Issue 321, 2 November 1887, Page 4

FINANCIAL STATEMENT.

The Financial' Statement was delivered by 1 the Oolonial Treasurer laßt evening in Coin- ' mittee of Supply, and the following rep6ru ' was ' telegraphed, by order of the Govern- ' m ut: — ( The Honorable Major Atkinson said : Mr Hamlin, sir, I have on several similar occasions had the honor of addressing you and your predecessors in that chair, but I need hardly^say that on no previous- occasion have 1 felt a greater sense of responsibility, and of the difficulties wiiich lie before us, yet I will add {hat never previously have I felt more confident that these difficulties oan and will be overcome, Bince the colony, and, I believe, this Committee, reflecting aB it does the mind of the Colony, ha 3 determined that our difficulties shall be met and dealt with in the rigbt epuit, I . wus o-.ly lai- ly that the country had begun in eai nest to recognise the fact that a serious financial problem had to be faced. Parliament was then told by the Hon. the Colonial Treasurer, Sir Julius Yogel, that every possible economy having been praotised in the proposed publio expenditure, additional taxation to the extent of £250,000 per annum must be imposed. Parliament, however, though as fully resolved as the Government not to let current expenditure exceed the ourrent revenue, emphatically refused the proposed additional taxation in the belief that further large reduotions were possible and could be made in the expenditure before imposing further burdens, so that these latter, if lvally needed, might at all events be reduced to a minimum. In consequence of this an appeal was made to the electors, but tbey fully confirmed the deoision of the laßt Parliament and I am here . to-night to propose tbe first step towards giving that deoision etlect. I take therefore as my starting point tbis firm Jc tei minu tion of the country for retrenchment— a determination which, under the still continued depression of trade and low price of somo of our main staples, no one cau say is not reason able. The Government at all events are among those who fully believe in the reasonableness of this determination, and they believe also that the country is prepared for the necessary self-sacrifices which it involves. To some extent, I hope, retrenchment may be effeoted by greater care in administration, but there is no doubt that, speaking generally, retrenchment meaus self-sacri-fice in some shape on the part of the community at large. Honorable members will, I trust, excuse me if I ask them to bear this very obvious but important truth in mind, not only in looking at the Qovernment proposals sb a whole, but when they come to deal with them in detail. It will not be necessary to refer at any length to the transactions of last .year, as they have been dealt with by the late Colonial Treasurer in his Statement of May last, bufc I desire here to oall your attention io the great difference there was in that year between recurrent revenue and expenditure. LABT YEAR'S DEFICIT. The defioit as given- by the late Colonial Treasurer for the year 1886-87 was £92,293, but if we omit from tbe revenue two considerable items which will not recur this year; viz., the surplus of £37,859, with which the year. 1886-87 began, and the windfall of £Jtfl4',749'of released Sinking. Fund, we shall find that what I have oalled the recurrent revenue fell short of the expenditure by £234,911. Bearing this faot in mind hon ■ members will he better able to understand how the late Government, after making all reduotions in expenditure they thought possible and expedient, felt constrained to propose no less a Bum lhan a quarter o? a million of taxation over that of the year ending 31st March last. It is desirable before going further that I should briefly refer to the position «f the LAND PUND ACCOUNT. " t must be remembered that although the Land Fund has been kept a separate account since 1879-80, and very wisely so, it is in law' a part of the Consolidated Fund, and wbiie a surplus should be used, not in aid of consolidated revenue, but upon roads and bridges to give facilities for settlement, any deficiency in - the Land Fund is properly a deficienoy of the Consolidated Fund and should be so treated. tin tfie 31st Mar6h, 1887, the Land Fund was in debt £54,263, so that if to the £92,293 we add, as we should, this £54.263 the deficit of the Consolidated Fund at the close of the year was £146,556, and as a matter of fact it is included in the deficiency Bills outstanding. PROBABLE DEFICIT FOR YEAR. I shall now proceed to state to tbe Committee what would be the probable deficit of the Consolidated Fund account at she close of the present yoar on the twofold supposition— firstly, that tbe expenditure continues at the rate prevailing when the present Government took office, .and secondly; that no additional taxation is, imposed. Let us look at the Consolidated Fund expenditure (ordinary revenue account) for the year 1887-88. The Estimates for the current financial year as laid Jbefore Parliament by the late Government havr ing been re-considered in the light of cix months actual experience with a view on the one hand of showing the probable savings which ander ordinary circumstances would have accrued in the votes at the end of the year, and oa the other of adding to the original estimates the oost of additional services for whioh no provision had been made, which so iar as they did not relate to service under permanent Acta, would have had to be brought down, and voted in the supplementary estimates, it now appears that the probable expenditure for the current year would amount to £4,118,395, as against the total of £4,088,804, appearing in the estimates of Jthe late Government. It is hardly necessary that I should enter into any explanation -of the differences between these two estimates, •or the Bavings and excesses in various direotions, and honorable members will find them -set out with sufficient fullness in the table which will be appended to this statement. I may remark, however, that the so. called ■savings on votes, which we ordinarily expect to- find at tine -close of a year will not prove so lcttge as usual because tbe estimates appear to have been framed with little margin over the. sums proposed to be aotually spent. Amongst Bervioes either not appearing on estimates, or insufficiently provided for are the following : — Interest on advances reoentiy obtained from Bank of New Zealand ; compensation for loss of oince, paid to officers whose services were dispensed with by the late Government; expenses attending a second Session within year; expenses of general election ; stock department insufficiently provided for ; liabilities in respeot of Indian and Colonial Exhibition ; additional exdhang-s on remittances to London. In arriving at the above estimated total of £4.118,395. I have not allowed for the percentage reductions of salaries, estimated to amount to £20,000, proposed by the late Government, but which had not been aoted upon when we took office. ORDINARY HEVENUE FOX YEAR 1887-88 'sDhe . revenue proper received for the six months ending with September last, was £1,510,863. This was £16,844 less than was received during the same period of the flnanoial year 1885-S6. The Customs yielded £29,446 less, and the railways £18,434 more than the previous year. To this must be , added the proceeds of debentures, amounting r to £258,184 issued last April under the Con- , SoJfidated Stock Act, 1884, on account of the J sinking fund to accrue during the financial Sear 1887-88, but I do not add the proceeds of eficiency bills sold, because my object is to ; ahow whatt he probable deficit will be at the .' end of year. The total receipts were, therefore, ] exolusive of the proceeds of Deficiency Bills, J £1,769,047. In estimating the revenue for : the remainder of the financial year I do so ' upon the assumption that taxation, including the Property tax, is not altered from last year. I may remind hon members that no ' Property tax has been collected, tbe annual Bill not having been passed. With regard to other items of revenue, I have adopted the estimates of my predecessors, except as J| regards stamps and railways. The experience of the paßt six months leads to the probability that stamps will not reaoh the estimate by £32,600, and railways by £50,000, and taking • these ciroumstances into consideration, I estimate that the revenue for si* months end- J ing 31st Marob, 1888, will amount to i £2,919,460, making a total of £3,788,507 for < the year as against £4,156,184, as estimated 1 by the late Colonial Treasurer, which in- 1 Oluded tbe proposed additional taxation. ) THE LAND FUND. j I have already informed the Committee that ; •on the 31s tMarch last there was a balanoe of ; £54,263 at debit of Land Fund Aeoount. On ] ha 31st March, 1884, there was a balance j ef £80,447 at credit. The Land Fund ex- 1

penditure has therefore during the past three ' years exceeded the receipts by an average; of f £44,900 a year, and last year the expenditure 1 exceeded the receipts by £23,879. It is ex- ( pected that the receipt-* for thiß ourrent year, i estimated by ibe late Government at £108,9d8, J will be realised, and a revision of tbe expdndi- i ture estimated at £170,190resultsinaprobable J decrease of £26,000 Thus the expenditure J of the year would have exceeded the revenue by £59,417. I may say that this excess of expenditure is exolusive of the outlay, amounting to £168,266, which has been made from loan during the last three years in open~ iug up land before sale, and of liabilities £76,908 since incurred on the same account. It is also exclusive of £1891 expended on Village Settlements to 31st March last with liabilities of £67,886 since incurred, but this latter expenditure is to be capitalised and interest obtained for it in the shape of rent if possible — the money, however, has yet to be provided either from loan or Consolidated Fund, no provision haviug been made for it | by Parliament, RESULTS. The revised estimates of expenditure of ordinary revenue account being, as I have staled, £4,118,395, ond the revenue being £3,788,507. the expenditure will exceed the revenue by £329,888 on the ordinary revenue account, and if we add the excessive expenditure of Land Fund -£59,417— we get a total of £389,305. The late Government proposed to mset the deficit they anticipated on the ordinary Revenue account by additional taxation, amounting to £250,000, and by a percentage reduotion of £20,000 from salaries. With regard to Land Fund, they proposed that for a term of years, until increasing revenue will permit otherwise, the deficiency between land revenue and the land expenditure should be made up by charges on the land, supplied by such local local borrowing as may be required. How the present Government propose to deal with the deficiency of the Consolidated Fund as a whole, and prevent recurrence, I will shortly state, but first I must ask your attention to the public debt and Public Work Funcl account. THE PUBLIC DEBT. With the view of showing the effect upon tlie public debt of operations duriug the last three years of the provisions of " The New Zealand Consolidated St.ck Act, 1877 " and more espeoially " The Cousolidatad Stock Act, 1884," I have had a table prepared to accompany this Statement. The gross publio debt at the 31st March, 1884, as set forth ia table was £31.071,582, exclusive of £398,000 for deficiency bills. At 31st March, 1887, it was £35,741,653, exclusive of deficiency bills for £279,100 then outstanding. Since that date further deficiency bills to the amount of £715,900 have been issued, the total of those now outstanding being £995,000, in addition to the debentures for £258,184 issued in Apiii last for increases of sinking fund for current year. The amount at 31st March, 1884, in the table to which 1 have referred diffeis from the total given by tbe late Colonial Treasurer in his Financial Statement of 16th September, 1884. It is unnecessary to mention items constituting tlio difference except in one particular, beeuise the table prepared in 1884 was to a certain extent an approximate statement. The exception to which I refer is the exclu sion from the table of the amount of the bonds issued undei "The Consolidated Loan Act, 1886-7," drawn, redeemed, and cancelled prior to the 31st Maroh, 1884. It is true that the scheme of that loan required that the actual charge for interest and Sinking Fund in respect of the total amount of debentures issued should remain the same until the whole loan was repaid, and that after paying therefrom the interest on the outstanding portion of debt, the growing balance should be applied to annual drawing • but although interest continues to be paid on the drawn bonds to the Trustees of the Sinking Fund, there is in fact no liability in respect of principal of suoh bonds, which are actually cancelled from time to time and sent out to the Colony. The interest po paid is in reality a contribution of Sinking Fund from the consolidated revenue, and goes to swell the amount available at each annual drawing of bonds. It is right, therefore, to include in the debt only the amount of prinoipal for which the Colony is liable. It will be • observed from the table that during the three years ended 31st March, 1887, bonds for £9,796,800 were converted under the two Acts to which I have referred into other securities of the nominal value of £9,995,884 ; prior to that date bonds for £5,390,300 had been converted—now represented by a debt of £5,499,571, Complete accounts of all these , conversions, and the expenses attending the same, have not yet been received, and until they are an axact account of the saving effected cannot be made. I now come to consider the effect of those provisions of " The Consolidated Stock Act, 1884," which empowers the Colonial Treasurer to issue debentures in each financial year to an amount equal to to the accretions of the Sinking Fund for the year. The total amount of these accretions ior three years, 1884-87, was £741 728 of which the Consolidated Fund contributed £597,236, the balance of £145,491 being the product during the same period of investments made by the Trustees, partly in bonds of this Colony, and partly in securities of other colonies Tlie amount contributed out of the Consolidated Fund represents in case of each loan, except the consolidated loan of 1876, merely the 1 or 2 per cent, as the case may be on amount of outstanding debentures In the case of the consolidated or '•drawing" loan of 1867, aa it i s sometimes called, the amount contributed is 1 per cent on amount of original debt of £7,283,100 together with 5 per cent on tbe amount of bonds drawn and oancelled, which increases year by year, and is now £11,982,100, inclusive of the drawing in March last. I am desirous that the Committee should appreoiate the marked distinction in the accretions of Sinking Fund be tween the amount which the Colony contri butes direot from the revenue, and "interests received by the Truetees on their investments. I wish the distinction to be thoroughly understood, because I think considerable misapprehension exists with regard to the operii tions of the Act. When, in his Financial Statement of 1884, the late Colonial Treasurer, brought the position of the SinkiDtr Funds under tho notice of Parliament he did so with the object of propounding a scheme which would have the effect of relieving the Consolidated Fund of a heavy burden, ho said'l propose we ahould not be idiotic enough to tax the people to pay off a litt c fragment of our debt -no other Colonies does. Now, it is claimed that the maintenance of contributions of Sinking Fund direot from the revenue was an unnessary taxation on the people— a tax which, in view of our continuing to borrow, should without breaking faith with the bondholders bo re moved. Whether or not that is a right view to take, I shall not disouss, but the increases derived from past investments of theee contributions stand upon an entirely different footing ; they constitute no burden upon tbe people, and to the extent (viz £145,492) to which during the past three years ending 31st March last the Con solidated Fund has been aided by borrowed money— equal in amount to the accumulations of interest in three years received by the trustees— we have ventured to submit exceeded the avowed purpose of simply making good to tbe revenue the \ amount we had paid out of it in reduotion 'of our debt. I find it is not generally understood tbat such has really been the effect .1 the operation. I should, j however, add that what has been done has bean within the provisions of tbe J Act of 1884-85, which gave power to tbe | Colonial Treasurer to issue debentures for increases of the Sinking Fund from all sources, and tbat the result, as it was stated would be the oase, has been that as regards , loans outstanding at 31st March, 1884,' the net public debt bas practically remained stationary. PUBLIC WORKS FUND ACCOUNT. This account is now divided into thro < jseparate accounts, the separation boing i necessitated by the legislation of the session < of 1886, which had the effect of what has i been termed "ear-marking" the North Island Main Trunk Railway loan, and the loan authonsed in 1886 to the specific purposes set forth in the two Loan Aots. No 1 i account : This is an account of the balanoe t of the loans raised before 1886. The credit c balance m this account was on the 31st v March last £491,245, subject to liabilities a ? monntang to £335,774. On the 80th Se? a pember last there was a credit balance nf d 36247,292, eubject to liabilities amounE to o £280,495. Against this fund is charged aH ? huseellaneoos works, such as harbor, defences C jroads, bridges, school buildings, purchase of c Native lands, and telegraph expenditure, t

Hon members will therefore see that without j further borrowing neither can our liabilities \ be met nor can necessary works of above i desoription be undertaken if we adhere to the ] wholesome restrictive principle of the Acts of « 1886. Noi 2 account : This is the aoeount | of the North Mand Main Trunk Railway ■ Loan. The unexpended balanoe on the 31st ' Maroh, 1887, was £674,314, Bubjeot to liabilties amounting to £187,981. On the 30th September last, the unexpended balance was £615,258, with liabilities amounting to £137,474. There is, therefore, a sum of £477,784 still available in this account, subject, how9ver, to the costs and charges of raising the whole loan. No, 3 account: — This is an account of the loan of 1886, being the amount authorised in 1886 to be raised for railway construction, £1,325,000, together with £242,800, representing certain distriot railway debentures sold on behalf of the Post Office, in conjunction with that loan. The credit balanoe on the 31st Maroh, 1887, was £1,012,030, consisting of amount in hand, £620,734, and balance of loan to be received £391,300. The liabilities, exclusive of the proceeds of the £242,800 district railways debentures, since paid over to the Post Office, were £326,651. On the SOth September last, tha oredit balance was £556,644, and the liabilities £304 004. There wa*, therefore, still available, £252,640 in thia aeoount. Tbe credit balance, however, of these three acoounts jointly are, as I have shewn only in part represented by cash, and the power of spending depends upon our realising the securities held to their oredit, and floating the 'North Island Main Trunk Railway Loan. The total cash available at 30th September last was £140,549, in addition to which we had £120,387 imprest advances in the hands of officers of the Government. The securities consisted of Deficienoy Bills, £19,200, district railways and other debentures, £139,058, and the North Island Main Trunk Railway Loan, £1,000,000, the total credit balance of these accounts being £1,419,194, against which there were liabilities amounting to £721.973. GOVERNMENT LOANS TO LOCAL BODIES. Up to the 30th September last we had borrowed £100,000 under the provisions of the '' Government Loans to Local Bodies Act 1886 " for the purpose of making loans to local authorities. Of that amount £71,686 had been disbursed at that date, i leaving a balance of £28,814 in hand, with : liabilities amounting to £99,181, to meet ; which a further sum of about £100,000 will , be required, consisting of balances of loans . to local authorities which had elected to take , their loans by instalments, £38.580 and i £60,601 for loans provisionally granted . in the first year of the Act but awaiting r the completion of the steps necessary •• to give the security required in connection f with the administration of the "Governt ment Loans to Local Bodies Act 1886. " [ I may further inform the Committee that r under sections 27 to 30 of that Act, deben \ tures for about £105,000 given by local j authorities under the provisions of th€ , " Roads and Bridges Construction Act ! 1882, " have up to the 30th Sept. last beer i converted into liabilities under the former Act, which (section 31) provides for the payment into the Public Works fund of al] , moneys arising from such conversions. II [ is the intention of the Government to ask | Parliament to appropriate a sum of £100,00 C for the purposes of the Act for the ' current year, Under section 45 of the 1 Act provision is to be made for the creation -. of a sinking fund for the redemption of the 3 debentures, but as the transactions of the ■J consolidated fund will end in a deficit at the j -close of this year, the Government do noi \ intend to propose to Parliament to appro- ! priate a sum for this purpose. Provision \ will, however, be made for it in the estimates 3 of next year. Before proceeding to speak j of the other proposals of the Governmen! 3 with reference to equalising revenue and *. expenditure, and of the proposals as to pub , lie works, I desire briefly to call attention I to the following subjects — Maori Lands, and , the Tariff. [ MAORI LANDS. . _ The apparently insoluble problem of deal j ing with the native lands in a fair and ; equitable way in the interests of Maoris and \ of the settlement of the country has occn- ' r pied probably more of the time of the 3 Government and Legislature of the colonj g than almost any other question. I do noi 5 propose on the present occasion to go at any length into the question. I shall only indij cate the broad lines which the Government , propose to follow in the legislation upon this ' subject. In the opinion of the Government [ there are large distrcts in the colony within j which many Maoris are living where the , same laws can be applied with advantage to ' the Natives and Europeans alike. We shall \ theref orein repealing, as we propose to repeal, ' the Crown Native Lands Rating Act, ask for ( authority to declare districts in which the _ law will apply equally to individuals of ' both races. The Maori on the one hand . will be liable to pay rates and taxes as a fellow subject of the European races, and on the other he will be permitted to deal with his land as freely as the European after the crown title has been obtained, except to this extent that he will be compelled to retain a sufficient amount of land for the maintenance of himself and family, and of those possessing large tracts of country it will be required that the land shall be sold in blocks only of a moderate size, and in all other districts of the colony which are not proclaimed and therefore not subject to taxation, the Maoris will not be permitted to part with their lands to anyone but the Crown except on more stringent conditions, but. however, in proposing final legislation on these subjects we shall in the recess consult with the Natives on the several points, but we intend at once to introduce a Bill to remedy certain pressing evils. THE TARIFF. The revision of the tariff is a question which has occupied a good deal of attention throughout the colony, and is one undoubtedly requiring the early attention of the Legislature, Until this question is settled with some permanence the trade of the colony will, in addition to its present unavoidable difficulties, continue to be disturbed and irritated by what can and ought to be avoided. There is uncertainty from year to year, I might say for a portion of the year from month to month, as to what our tariff is to be, and no hon member, I am sure, I doubts that damage to trade means loss to tlie whole community. The Government during the short time at their disposal have had this matter under their careful consideration and have come to the conclusion that the question should.not be dealt with during the present session because it is impossible to deal with it completely. The Government are strongly of opinion tliat it should not be touched until it can be so dealt with as not to need further serious revision for a considerable time to come. Wo have within the past two years had two serious but unsuccessful attempts largely to alter the tariff, resulting in great derangement of trade with all the loss which that brings, and without the smallest compensating gain, and the causes which led the liouse emphatically to reject those attempts still exist, and one, at all events, the general commercial depression, may fairly be considered, at least in its present severity, abnormal and temporary. Moreover we cannot afc present look so far forward in our finance as now precisely to forrsee what we shall require from the Customs, even for the near future, for on the one hand the changes the Government propose, and such further economies as they hope to make will correspondingly lessen the need for revenue. On the other hand they recognise that it will bo necessary to charge against revenue many works which are now charged against loan, such as public buildings, school bnildings and telegraph extension, so that with these uncertain elements at work, and looking at the fact that the time at our disposal is practically very short, and that we have ' work now before us which, if satisfactorily < done, will certainly mark this as an epoch ' in oui- history it seems to the Government clearly right that no attempt should be ' made to revise the tariff this session. J'ROrOSALS TO EQUALISE REVENUE TO \ EXPENDITURE. J I have now, Mr Hamlin, to answer a very f important question, a question in which s this Committee and the country aro at pres- <, snt very deeply interested. How, if possible, i without further taxation, are the revenue xnd expenditure to be balanced '! I have c ilready shown that the excess of expenditure c luring: the current year over the receipts )f the consolidated fund, inoluding the lanrl fj fund, will probably amount to £380,305, i' J)n the supposition that the expenditure $ jpntinues as at present, and shat no addin 4 sional revenue is obtained . by taxation, it t

iust be evident to anyone acquainted with sb he condition of the colony that something to aore is now needed to restore confidence w: han mere trivial economies. Our chief of [ifficulties have undoubtedly arisen in a I freat measure from a too lavish expenditure, Vi nore especially of borrowed money, oi Lhat must be stopped, and our first duty £ therefore is to apply the pruning knife with ai in unsparing hand, but that is only our pi irst, not our only duty, but there is another ni iot less important— we must indeed take all oJ possible means to prevent waste, both of our w >rdinary revenue and of money borrowed for li public works, but we must also promote the JRJ iettlement and occupation of the lands of s< bhe colony by rendering them attractive to o persons willing and able to cultivate JE bhem and to develope their many and varied n resources with their own skill and capital, t and we must also, so far as practicable, 1: encourage all our other industries by t all reasonable means in our power, i that is to say, we must encourage a such industries and by such means as will t in our judgment upon a general and careful r review of a difficult and complicated subject c really and in the long run increase the t wealth and prosperity of the colony. In thes ' ways we shall in due course raise an £ increased revenue without increase of ( taxation, or conversely, the same revenue < with less taxation. The results no doubt t concern the future, but a future nofc I 1 trust by any means far distant. There is 1 nqt a surer way of lifting the country out i of its present difficulties than by the < introduction of considerable numbers of i persons possessed of sufficient means i and knowledge to cultivate the land < profitably, not only as ordinary farmers but as fruitgrowers and growers of plants ; suitable for manufacture, or to supply other ' industries. Our efforts at retrenchment ; will be comparatively unavailing to restore prosperity unless we can obtain a consider able accession to our population of persons in a position to employ labor. We think the time for this very favorable, and should the liouse approve of the course we shall propose to it upon this subject, we hope to see at no distant period a considerable accession to our population of persons of the class above referred to. The time also apparently is very favorable to the establishment of Pensioner settlements. Muoh interest is being tak-rn in this subject by leading men in the United Kingdom and a good deal of thought and attantion has been given to the details of a scheme by a gentleman in Auckland, who has devoted a large amount of time and energy to the matter. The Government are of opinion that every effort should be made to induce a considerable immigration of this class of persons to the colony, as an essential means towards accomplishing the above important objects, and indeed the settlement of the colony generally. The Government propose to amend and simplify the land laws, and so far as possible make tbem uniform throughout the colony, to allow selectors full freedom of choice as to tenure, and above all, and as the dominant idea, to enable the bona, fide settler to get possession of a title to his land with the leastpossible delay and expense, and it is perhaps desirable here to declare thafc the Government fully recognise the wisdom of the principle whioh has been acted on since 1879-80, namely, that the proceeds of the sale and disposal of our lands should be treated nofc as ordinary revenue, but as a special fund for opening up the country aud promoting settlement. It would not be appropriate to speak here afc length of the mining industry, though of great importance. I may, however, point to two hopeful signs of th future, one is that the yield of gold from the quartz mines appears to be steadily increasing, and the other is the large, steady, and increased output from the coal mines. There can be no doubt that when the harbors on the West Coast are completed the latter industry will assume still larger proportions. The Government fully recognise the importance of developing the mineral wealth of the Colony, aud for that purpose of affording all facilities in their power fqr promoting legitimate enterprise, and they hope by the spread of wider and more exact knowledge of mineral and mineral processes and methods, by a more complete technical education, a good deal of waste may be avoided, and lodes of ores may be found and worked with profit, which are either now passed by or are not thought payable. The Government will b-j willing to assist in the matter of technical education so far as they may be able, and so far aa they can do so with real effect. The management of our railways from the first has never given satisfaction to the public. It would be a waste of time on my part to endeavor to explain the reasons for- the public dissatisfaction. The fact probably is sufficient for us that the public have long been greatly dissatisfied with what is called the management of our railways. I do not share in this dissatisfaction myself so far as the management goes, believing as I do fchat our officers on the whole have been efficient, and that ifc is the inherent defects of the system, and not the management, which are at the bottom of the dissatisfaction prevailing. The question of placing the railways under what is called a non-political Board of Management has been before the public for some years, and the introduction of that plan into Victoria haa enabled us in New Zealand to watch the practical working of the system. It is now admitted, I believe by all those qualified to judge in Victoria, that the system has proved a great success. The Board has now been at work for nearly four years, and I think it may be fairly said that the scheme has passed far beyond the stageof experiment Looking, therefore, to the dissatisfaction existing in New Zealand with our present system, and the satisfaction which the Board has given in Victoria, my colleague, the Minister for Public Works, will ask for leave to introduce an Act this session into Parliament to constitute a non-political Board af Management for the New Zealand railways. The Government believe they are fully justified in anticipating from this change a large increase in the net profits from the railways. In the meantime we have to deal with fche serious present deficiency in our revenue which I have stated.^ Now it is obvious that without an increase in the number of taxpayers there are only three ways in which a deficiency of revenue can be met, or rather its continuance and recurrence avoided. First, taxation may be imposed for the whole amount required; second, expenditure may be reduced to the "whole extent necessary, if that be possible ; third, reduction of expenditure may be made and additional taxation may be imposed which together shall make up tho required sum. PROPOSED REBUCTIONS OF SERVICES. It is hardly necessary for me to say that it will be impracticable to cover the ' deficiency of the current year by reduction of expenditure. Seven months of the : financial year have already passed, and it is impossible for two or three months to come to obtain much, if any, effect from reductions. The proposals, however, which I submit will, I hope, prove to be of a sufficiently comprehensive character to satisfy bhe most thorough reformer. There is an impression in the public mind that sufficient reductions can be made in public expenditure by reductions in the number and salaries of the Civil Servants, but I need hardly point out to hon members fchat ifc will be altogether impossible to effect fche whole of the necessary saving in fchat direction alone. It will be necessary also to curtail the conveniences and aids which are now being enjoyed by the public and local bodies, and I will now state to the Committee what our proposed reductions in the services are. In the first place we propose to begin with the highest officer of the colony, that of His Excellency the Governor. I need hardly remind the Committee that this reduction cannot take effect until the appointment of a new Governor. It has been said that the colony is likely to lose standing jind credit in England by reducing the salary of the Govern eir, but we have no fear, after carc'ul consideration of the subject, that ill effects will follow this reduction. Wo have no fear bufc that we shall obtain the services of ollicers of the same high standing as heretofore, and as to ' pur credit we have the fullest confidence 1 that the reductions and other economies t We are proposing will prove the existence i )f that first condition of commercial ( jonfidenoe, a determination to pay our way. i We propose then that the Governor's salary i jhall remain at £5000, but that this shall t delude the cost of his staff and a}l allqw- ■= fnces. This will be a total reduction of \ £2500 from the amount at present paid. We r ihink that the suni I have named above c

should cover the total cost of. the Governor I to the colony. In the next place I will deal I with the Legislative and Executive branches t of the Government, and the Committee will, s I trust, excuse me if I take the latter first, i We propose then with regard to the salaries i of Ministers that the Premier shall receive <■ £800 instead of £1250 at present paid, c and we propose to reduce the number of i paid Ministers from seven to six, simultaneously with the reduction in the nuriiber i of members in the House of Representatives i which I shall, shortly mention. As to travel- i ling allowances it is obviously important that i Ministers should travel so as to make them- I selves personally acquainted with the wants i of the circumstances of the Beveral districts. : But the allowance should be arranged so as merely to recoup the outlay, and we propose to allow £1 10s a day while actually travelling on the public service, and to limit the ■ total to be paid to the whole Ministry to , £1000 in any financial year. The average . amount paid to each Minister for the last L three years hrs been £190. With I regard to the expenses of the ■j official residences of Ministers, we think _ that large reductions can be made. As to "Tinakori Eoad north" it should be sold, i as being too large and expensive. Of the E others we propose that one should be retain--3 ed as a residence for the Premier, b the cost of maintainence of all but [ the house itself being defrayed s by the occupant instead of from the public b funds as heretofore. With regard to the c other Ministers, looking to the difficulty f upon short notice of finding suitable house s accommodation we think it desirable that I this should be provided for some at least of s them if it can be done with proper safes guards against exceeding reasonable limits r of expense, and that those not obtaining t a house should receive a house allowance c of £200 per annum, but upon this subject • we will shortly make more specific proposals. .s I now come to the Legislative expenditure, c This is undoubtedly a question of some c difficulty, but in our opinion a considerable i- reduction in tlle Legislative expenditure ie ought to be made, and the reduction of n Ministers' salaries will tend more than js any argument to produce in the minds of y people of the colony not only a conviction of L t our sincerity in this question of rctrcnchjt ment but also of the necessity for retrench - y ment generally. The Government will n invite the Legislative Council to express by n resolution its opinion thab the honorarium y paid to its members should not exceed £100, d and we shall ask the House to reduce the L e honorarium paid to town members to £100, n with an allowance of £50 to country a members in consideration of the additional >f expenses necessarily incurred by them. We ■.s think that no payment should be made to L t the Chairman of Select Committees of either Le House, that all officers of Parliament whose ,c salaries are provided by Act should not io receive more than the statutory payment at i- present provided, all extras being struck off, 3- the salaries of the other officers of the House 1, being reasonably reduced. I may here take ,a the opportunity of imforming the Comis mittee of some proposals of the Government e ( which as involving economy are properly re mentioned here, but whioh are of considerie able political importance. The Governin ment intend this session to introduoe a Bill ry. to reduce the number of members of the Is House of Representatives to 70, inclusive of ej the Maori representatives, though this ie change cannot take effect until the end of [t the present Parliament, and next session it they will submit a Bill to the House alter ing the mode of elections wifch other necesx t sary reforms of the eleotoral laws. They is will also during bhe present session invite BS the Legislative Council to devise a plan by ie which their number may be reduced to 35, 3d one half of the number of members proposed re for this House, and thereafter limited to ie that number. Now let us consider what a . reductions are possible in the Civil Service. Ie The total number of persons in the i- pay of the colony, including the jf Governor, Ministers, Judges, and others, y but exclusive of police, military forces, and 1. country postmasters, is 7163, and the v amount ;e they receive in salaries, pay, and wages is 3 f £1,004.273. Of these 5862 are receiving r e weekly wages, pay. or salaries not exceeding g S £150 a year, the total amount paid to this a l class being £638,519. The Government do jr. not propose to make any substantial alterl( j ation in the payments made to these persons. w It is probable, ho\yever, that their numbers ie may be reduced, but at present there has 3 t been no time to go into this question. It in follows, therefore, that the amount of ;0 £365,754 paid to persons in receipt of ie salaries over £150 a year is the principal 3t amount upon which it i- possible to make c the reductions proposed. To the Depart y ments generally I do not propose here to 1S refer in detail, these will be dealt with in ie Committee by the several Ministers lt in charge of the Departments, but I y will say a few words upon our 3 . education system in regard to which, while n admitting tbat it has given great satisiacie tion from the purely educational point of lt view, specialists agree that, relatively to t population and revenue, the system is too t g costly. They differ only as to the means by , c which reductions may be best effected. The l_ proposals to be submitted by the Governrs ment will show where moderate savings c l may be made without weakening the system. [ c Our principal proposal will be to limit the capitation grant to the statutory amount of iV £3 15s a head as we think under the circum* ( f stances of the Colony this is ample for c necessary purposes, and not to pay capitation t upon any child under six years old, but we 3 ' shall make provision so that no country y school shall be closed in consequence of this ,j change. The saving on the Education vote c we estimate at about £60,000 per annum. ° REDUCTIONS. a I have had to consider carefully how to submit clearly to the House the reduotiono , that the Government propose, and have thought it best, in view of the short time at x tbe disposal of the Government, to bring down B a sohedule in which will be shown in one fc column the total amount of eaoh olass of . expenditure, as proposed in the estimates 3 introduced by the late Government in May " m last, with supplementary estimates added for 3 servioes, either inadequately, or not at all [ provided for ; in the next column, the re- _. duced amount which the Government propose , for the current year, seven months of which '■>. have already passed, and two more of whioh '_ will at least pass, before it will be possible for the reductions to take effect ; the third J column will show what is the amount of the reductions on the estimates for the twelve J months which the Government .already see ', their way to make, and whioh will take effect iv proportion as our proposals have time to operate. We propose to take one vote for eaoh of the classes and sums mentioned in the second column of the sohedule under the head of " annual appropriations," instead of following the usual course of taking votes ' for the several services on eaoh class. Hon. ] members will recognise that it could not be possible for the present Government in so short a time to bring down & revision of the estimates of the late Qovernment, showing in detail the reduotions we propose to make, and that there is no otber course open, in the oiroumßtances, than to take a vote for each olass of expenditure only. With regard to the reduction of a sum of £16,000 which has not been allocated to any class, but which will, when given effect to, be distributed over all of them in such manner as the Government may determine, a clause will be in- ' serted in the Appropriation Act which will limit the power of expending under the votes to the total amount of the classes, less the amount of £16,000. Before leaving this part of my subject, I wish to say that the Government in making reductions desire to use all possible consideration for the persons direotly affected, so far as iheir duty to the publio will allow, more particularly as regards those of speoial occupations such as Postal and Telegraph officers, and those now entitled to pensions and allowance. The Government will do their utmost to make the reductions and other ohanges press with as little hardship as possible, subject only to the necessities of the oase, and to their paramount duty to the public. Our proposals, if assented to by Parliament, will reduce the total amount of the departmental appropriations out of the Consolidated Fund for a full year by £25,580. The reductions comprised in this amount have been made up on the probable expendi-*-* ture for the same servioes during the ourrent financial year under the estimates and engagements of the late Government. I J may in passing inform the Com- j mittee that before making them, al! i services of a non-recurrent oharaoter, i sp far as they could really he traoed, ] were first eliminated from the Esti- j mates for the current year, suoh as expenses < if a general eleotion, and the aame course waa i

mrsued with reference to payments under s jermanent Aots, such as allowances to mem} v iers of the General Assembly attending 4 1< iecond session of Parliament. If in determine ng the amounts of these reduotions any non? •eourrent items have been over-looked, th 6 r smission will probably be adjusted by the i incurrence of other items of a like oharaoter f Jn the Estimates for the .next flnanoial year; \ We already see our way then to effect Depart* c mental reduotions to the extent of £25,500, t md we believe we can make still further, c md, we hope, substantial reductions by s means of a more perfeotly organised system 1 and amalgamation of offices compatible with i eaoh other. It is clear that sufficient time I must be given any Government undertaking c the re-organisation of the Service, and full i power must be given to that Government, if 1 the work is to be done successfully, but when ! i the work we are now proposing to do has j been done to the satisfaotion of the House, if ] it is not to be again undone, it will be neces- 1 sary that far greater restrictions should be placed upon the Government of the day than is the_ case at present. Vigorous retrenchment is effected by one Government in times of depression ; they are replaced by another Government and much of the work they have done, if times are a little more prosperous, or if a more sanguine view of the proßpeots s taken, is undone by their successors. I may give an instance of what I mean. In the year 1880 there were seventeen Inppeotors of the Police. After careful consideration, it was determined that eleven Inspectors could perform the work, and reductions were made accordingly. Eleven Inspectors satisfactorily performed the work up to 1884 at a oost of £4,300 having 445 men of all ranks under them ; there are now no less than eighteen Inspectors at an annual cost to the Colony of £6 000, the total number of police being 502- I simply give this as an instance as showing how it will tend to economy if the number of officers of tbe several grades in tbe seivice is limited by Act of Parliament. The Government are of opinion that if the reforms now being instituted are to be permanent it will be necessary to classify the Civil Service, limiting the number of each class, and makiog it necessary to report to Parliament the employment of any extra or outside assistance. The Government have a Bill in preparation, but it would be premature to introduce it during the present session. We propose to make the main changes, and to see that they work well before asking Parliament to legislate. I may say, however, that a leading provision in the Bill will be the appointment of a Civil Service Board, through whom all appointments and promotions will be made. If we are to have a really efficient service the tenure of the officers must be reasonably secure ; a cadet must be able to look forward to the service he enters as a profession, and one in which his advancement will depend upon his capacity, character and attention to his duties, and not upon the favor of the Minister of the day. This, under a well considered Aot, can be done at a minimum cost to the country. Before leaving the subject of departmental expenditure I would say that there appears to he a considerable waste of money in travelling. I have not yet had time to look as fully into the matter as I should have wished, but the Committee will probably be surprised to learn that the amount expended upon travelling during the year, from the lst October, 1886, to the 30th September, 1887, was £5647, Ido not mention this as exceptionally large, but as an example. This inoludes the expenses of Ministers, but does not inolude the commuted travelling allowance which is granted to mauy officers ; there is, however, some portion of it returned to the Colony in the way of railway fares, but it is impossible to ascertain the amount to whioh the railway revenues are benefited. The Government are of opinion that very considerable reductions should and oan be made in this item, the leading principle to be kept in view being that the allowance is merely to recoup legitimate expenses actually incurred. PROPOSED SEDUCTIONS IN OHANTS IN AID. I now come, Sir, to the consideration of grants to local bodies, and, however painful it may hej, we must recognise the fact that if the assistance now being given to them is to continue, our taxation must be increased to a proportionate amount. "THE CROWN AND NATIVE LANDS RATING. ACT, 1882." In the first place let me ask your attention to the Crown and Native Lands Eating Act. When this Act was passed it was estimated that there would be a sufficient surplus in the Land Fund to pay rates on the CroAvn Lands. That estimate-has, however, proved incorrect ; as a matter of fact the Land Fund is insufficient by more than the amount paid for the rates on Crown lands, to meet the charges as voted by Parliament. It must also be admitted that the advantages conferred by this Act have operated very unequally in various parts of the Colony. It is with much regret that the Government propose that it should be repealed from Maroh next, with the necessary reservations as to securities given under the Act, for nothing can be fairer than the principle that all land, by whomsoever owned, should contribute to the maintenance of the roads of the district in which they are situated; but, as money must be found for opening up new land for fresh settlement, and we oannot always continue borrowing largely for that purpose, it seems to me better in the interests of the Colony to use tho Land Fund at our disposal than to apply it as it has been applied, since the passing of the Crown and Native Lands Eating Act, to. tho relief of local taxation. By the repeal, however, of. this Act a very large question is opened up, « the question of the Maoris paying rates upon their lands in settled distriots, as their fellow settlers of the European race are doing, and it seems to the Government that the time has arrived when the Maoris should be placed on an equal footing in this and other respects with their European fellow subjects in those districts which may bo properly called settled distriots. I have already referred to the correlative rights which it is proposed should be conferred upon the natives to compensate them for being called upon to perform this duty. If the Act whioh wc< are now considering is repealed there will be a saving to the consolidated revenue through the Land Fund of £34,000 per annum, and a further saving of the expenditure of the money now borrowed to pay the native rales of £10,000 per annum, for although this money is reoovor&bde, it will be some years before it will be. There has been recovered up to 30th September £1843, and there is at present outstanding on this ac count about £32,200, which has been '■ borrowed from the Public Works Fund. SUBSIDIES TO LOCAL BODJES^ These subsidies, under existing arrangements have always been regarded by everyone acquainted with our financial position, as a most preoanous source of revenue to local bodies, and th.c late Government, no doubt with mi\oh regret, proposed to Parliament to reduce the amount of the subsidies paid last year by one-half for the ourrent year ; and I Sir, also with much regret, have 'now to make a similar proposal on behalf of the present Government, and we hope to be in a position to oontinue them at the same rate next year if Parliament shall see fit ; but we are of opinion that after the present year these subsidies should be charged wholly upon revenue and not as now one-half upon loan, and further that they should be separated from our ordinary finanoo and not only fixed for a definite time but be paid from a definite souroe as, for instance, by appropriation to the purpose of a given fraction of the Property Tax. For tho present there is no doubt that the looal bodies are hardly pressed to provide funds to oarry on their necessary works, and we regret we can do no more for them. 1 do, however Wish the Committee to understand me as representing that the Government by ceasing to pay rates on Crown Lands, and the sub-, j sidles are effecting a saving to that amount m the public expenditure— Ußing that term m a popular sense. We are, indeed, reHaving the consolidated revenue to the full amount, as is cur first duty, but wo are throwing upon localities whatever amount out of these sums is absolutely required for carrying on necessary services, and, so far as the change induces local economy, there ia an absolute saving in all senses, and it ig clear that if we are to restore our finances to a satisfactory condition, and if we are to recover our credit in London, it can only be done by making a very firm stand against all expenditure whioh oan be possibly avoided It may, no doubt, be said that not only these* grants, about wbioh we are speaking, but also much larger sums of money could be profitably spent by the local bodies, and I do not J propose to dispute that assertion. The inswer seems to me to be that we have not i sot the money to spend, that we have been spending far too frsely, and that we inusUj

tay our hand for some time even from i iseful looal works or raise funds for tbem c ocally. t SUMMARY OP SEDUCTIONS. C Adding together the whole of our proposed r eductions;, we find tbat w*b en complete effeot t b given to them the expenditure chargeable t or a year upon the revenue of the ' Colony c vill be reduced by £300,000. I shall for the i lonvenienoe of members briefly recapitulate i ihe leading items of which this large sum is t jomposed :— Salaries of Ministers, £3450; < illowance to members of the General Assem- i jly, £10,000; departmental appropriations, t 6252,520 (including reductions ia respect of f Ministers' residences, travelling allowances, 1 fee.) ; rates on Crown Lands, £34,000 ; mak- < ing a total of £300,000 for a full finanoial < pear. The amount we shall probably be able J to obtain by these reductions within the cur- : rent financial year will be about £71,000, : partioulars of which will be found in a table : appended to this Statement. . PROPOSALS RELATING TO THE OUBBENT YEAB. I have already informed the Committee that it is estimated the expenditure of the Consolidated Fund during the year ending March 31, 1888, would exceed the revenue by £389,305 if expenditure proceeded at the old rate and further taxation be not imposed. This sum will, lmwever, be lessened by the savings during the remainder of the year arising from the reduotions we shall be able, to give effect to, estimated at £71,000, and we propose to still further reduce it by INCBBASINQ THE PBOPEBTY TAX from thirteen-sixteenths of a penny to one penny. These reductions will leave a sum of about £253,000 expended in excess of revenue to the 31et March next to be provided for. This, together with the deficit of last year, amounting to £92,293 on the ordinary revenue account at 31st March, 1887, and £54,623 on the Land Fund account, makes a total of about £399,500, for whioh provision has to be made. It will also be necessary to meet the amount to be paid as compensation for loss of office. This will probably be a considerable sum ; indeed, large in proportion as the ultimate saving is large, but it is impossible to state the amount, even approximately at present, until the Government have determined upon the specific reduotions aod amalgamations whioh will have to be made if Parliament should see fit, as we trust it will, to ratify our proposals, and limit the total oost of respective servioes. Now, I must ask honorable members to bear in mind that, as I shall hereafter explain, we are proposing to reduce greatly the rate of our Public Works expenditure, and also so to shape our ordinary finance, as gradually to enable the Consolidated Fund to bear many charges for works now borne by loan. If we succeed in doing this, as I think we must, it will entail a heavy bur--den on the revenue, and render it impossible for it to meet the large amount to which I have referred, otherwise than gradually. The Government, therefore, propose that the proceeds of the debentures issued under "The Consolidated Stock Act, 1884," for the interest on investments of the Sinking Fund, which I have referred to in my remarks upon the public debt, amounting now to about £40,000 a year, but increasing yearly, and which for four years, inoluding the present year, bave been paid into the Consolidated Fund and used as revenue, should; from Maroh next, be applied to redeem yearly a like amount of this deficit until the debt is finally extinguished We propose also that any credit balance of ordinary revenue from year to year shall be devoted to the same purpose instead of being carried forward to next account, and in the meantime we propose that short-dated debentures, payable only in tho Colony, shall be issued to cover the two amounts. PUBLIC WORKS PBOPOSALS. The Committee will naturally be anxious to know what the Government propose about public works and further borrowing. It will undoubtedly be necessary to plaoe the North Island Main Trunk JRailway line upon the London market early next year. The late Government had contemplated issuing this loan about the end of this month, but, owing I suppose to the result of the elections, the matter was allowed to staud over, but in order to obtain necessary funds, the Colonial Treasurer made arrangements with the Bank of New Zealand here to advanoe £50,000 repayable in London in April next, on securities jf this fund. No 1 account, which contains the balances of the loans raised previous to 1886* is really exhausted ; there was to the credit of the account on the 30th September last £247,292, with liabilities amounting tr £280,495, of which at least £162,000 v' come in for payment by March next, lep- A only £85,292 for expenditure next yea r VI . D outstanding liabilities of £118,495 *'«V . therefore evident that no new vo f " J taken against this, account, a ," es oan b colleague, the Minister for JP t,- y ™ \ n assures me, and he will show V ubll^ Wo ™ his Statement, that there ' when he make amount of at least £150,r Jf B .^ *° 'J impossible to avoid r' J?° * hloh l 4 * 1 " b absolutely necessary * ■ ffl*" 1 * as f the y/ r takings already *** >Z^t l^° therefore, be aut> J°* l »$ a nd the y ™ 9 < ponn\<tt t^i^im*.' /°»sed this session. Tbe, Lands bST \ d * of roads t0 °P en *P Cro ™ Swf„? JBle - P»M° buildings and sohoo exteSon F -«?5"« of Native lands, telegrapl o!r"'' Bndllarbor defences: in point o '•£?»!* c '- tJIS0 .OOO»s a liability, though no IwiiM, to book ' alm °st as much as the lia °"»" as whioh have been brought to book am mw.st therefore bo provided for. In No. ! Account the North Island Main Trunk Eail way loan there are ample funds to continm the work for three years at least. In No. I Account the funds for several importam works, which must be completed, are praoticalljr exhausted, and therefore without furthei funds it will be impossible to continue, aftei the present oontraots are done, either the Manawatu Gorge line or the Gtago Central I even up to the Middle of March whioh is the least distance which it must be carried to be of any practical use at all. There are three courses open to Parliament:— (1). We may stop these works for which funds are exhausted : (2) we may use some of the cash to the credit of the unexhausted items, either in No. 2 or No. 3 account, to continue the work of the exhausted items ; or (3) we may determine to raise another loan. The choice thus forced upon us is not a pleasant one, and yet it must be made. With regard to the first course the Government is of opinion that all works, the stopping of which will not materially retard the progress of the country, should be stopped. A mere present inconvenience must nofc be considered, but to go further than this, would they think, be a very unwise and .shortsighted polioy. The Government, therefore cannot recommend the adoption of the first course. We will now consider the second course. Shall we use the money allocated to one work temporarily or permanently upon anothergwork ? If the House should so determine, it will be possible with the money at our disposal to find the funds to carry on the necessary work to a moderate extent by borrowing from one account in aid of the funds exhausted in another, and by doing this and limiting our public works expenditure to an average of £70,000 a month, for the next fifteen months, which I am informed it can be gradually j worked down to, as compared with !an average of £97,000 a month, whioh it has een during the last twelve months, namely, from the end of September, 1886, to the end of September, 1887, it will be possible to find the means of oarrying on cur Publio Works until the end of Deoember, 1888. Difficulties would, however, probably arise, if we postponed taking authority to borrow until next session, in the event of any serious disturbance of the English money market, for by tha I end of Deoember, 1888, even if Parliament I does give authority to use the balanoes ash above suggested, we shall have run veryl close with the Publio Works fund, and iti would then be necessary either to cease altogether to undertake anything further, or else to obtain a loan upon the best terms we could. In order to understand our real pssition, in fact, it is necessary that the Committeo and the country should clearly recognise that by tbe end of December, 1888, in the absence of any further loan, and even if transfers from one fund to another are authorised, the total cash to oredit of all loan accounts will be only about £370,000, and we should have liabilities already in- , ourred and rapidly accruing due, to about an I equal amount* And besides this the works i in hand," or soarcely any of them, would be J complete, or iv a profitable state, as the borrowing from one fund to the other, in order to keep things going, would necessarily ' leaye every fund short for the purpose for which it was originally intended. J The second of our alternative courses is therefore a possible one, if Parliament sees; at to adopt it, though, after ntudh consider- ' ition, the Government do not feel justified j

. .i ly „¥ .11. »-) -.}' H« n reoomnfendihg it, because, while breaking [own the safeguards whioh the JHouse set ip against spending th^jnoney provided fo* »ne work upon, another' workJ,.vit would levertheless fail to place us in a satisfactory position. In other respects the: Government are strongly" of opinion that the jolony does - not want such a policy, f it can be called a policy, as is invojfvbd ta nerely saying "that we will not borrow ;his year, let us wait for a year. " What to, >ur opinion, the Colony wants, and waiits. imperatively, is a total change of policy aa to borrowing altogether. We want bo to/ shape our Publio Works expenditure aa to be able to cease borrowing entirely at an. early date. We want first and at once, to reduce this expenditure, to reduce it largely, and to reduce. it at a constantly increasing rate, sp as practically, and within a short time, to reach the vanishing point. We think it quite possible to reach this desirable end, but nofc by the seoond of the proposed courses. The third course consequently, in our opinion, seems to be by far the most prudent, and the Government, therefore, though with great reluctance, recommend that authority should be granted for a loan during the present session of £1,000,000, to be raised at such time, as under all "oircumstances the Government may deem most favorable. If Parliament agree to this we shall ask that the purpose of this loan shall be distinctly defined, that no new undertaking shall be put in hand, . and further that we shall give a distinot pledge that no more borrowing will take plaoe for three years from March 1888. We S. ÜBt xi n ny oase > as I have shown, place the North Island trunk railway on the market early next year, and as it is inadvisable to make repeated applications to London for money the Government think it important to be in a position to place . both loans on the market at the same time if they should be so advised. We ha^e come to this conclusion, as I have said, with extreme reluctance, but it is, we believe, in the interests of true economy. The Committee, I trust, has ample evidence before it that the Government is entirely in earnest in its intention to retrench, to strip all superfluous expenditure, to see, in homely language, that the colony lives within its means, and. we should have been glad to avoid what to a hasty judgment may look like inconsistency in retrenching our ordinary • expenditure while proposing to borrow further for public works, but you cannot bring such a system of publio works as ours to a sudden end without absolute disaster. We believe, and I think that the Committee will agree with us, that if we at once shortly stopped the large important works now on hand and unfinished' and comparatively useless, we should be> losing far more than we shottld save, in other words practising extravagance in the ' name of economy. My lunrrricnd, the Minister for Publio Works, will, I think, he. able to show in his Statement, that with' the expenditure we propose our principal. works can be brought to what may be called a state of interim completion, where we: may pause without serious loss, and the Committee will observe the safeguards we propose, and the condi* tion we annex that no further borrowing shall take place at all events for three years from March, 1888. ' If hon, members will add the amount of the proposed loan to the available balance left of previous loans, and divide the totally three years and a half over which it is to #6 spread, they will fiud that it amounts tr £690,913 a year as available for pub 7 ' £ works of all classes, and if they wiJlliu*'' «Jw compare this with the actual exper '■'*££>. from loan on publio works for the }'' years, which has been ab th ' asa y a^\ £1,381,866 a year, they will - * l&? & expenditure we propose is »' dee-tnac w*e exactly 50 per cent. Ia * .o a rate less by is at onoe to reduce » word our policy largely and as w-.* 1 " 8 expenditure and as I ha^ '&$& as Possible, stantly increase** ««* •a * ' * °°£- time the loan fee? m J* 80 - that by the lutely relieved r' ,*£ endfld w « ma y b ® abw> * ing furthe*- It ji the , nec essity of boraow* that polioy V J is > therefore, an application of with gene -»f tapering off which has met will stow * al a PP roval in the colony, Mid this O "*. trusfc i receive the approval of j ver ymmittee. If that approval should be £ ar a, it will enable our public works to be 9 ried on without any sudden break, but at greatly reduced rate of expenditure for the next three years and a half, by whioh j time we hope to hhve transferred to the consolidated fund a large number of worlds 8 hitherto charged upon loan, and to reduce " to very narrow limits our expenditure oh 18 other works which are rightly charged on 19 loan. y THE MIDLAND RAILWAY, . '• There is one large and important work, the s Midland railway, which I have not men* c tioned, and to which I shall here but : briefly 8 refer. The Government intend to deal wife 8 the question immediately in another Way. ; The importance of the work in a colonial ■> sense has been repeatedly recognised by the y Legislature, bnt the Committee will frsire ■j seen from the papers laid on the tablcfthafc ' l fche negotiations with the Company are stilW * incomplete in important partioulars. : The •' * Government, however, hope with the further 1 aid of the Legislature to bring these-negoti* ■ ations td a successful conclusion. * CONCLUSION. a Ref ore I conclude, the hon members -will ■ no doubt desire to be made acquainted with 3 the probable effect of our proposals upon » the position of the . consolidated fund 6 next year, and what prospect there- is * of our being able to equalise revenue and f expenditure without resorting to additipnal ' taxation except for the purpose of relieving | the loan of certain charges ' which I have 1 already indicated should be borne upon the | revenue. I have no doubt they will be * pleased to hear that on the assumption that the ordinary revenue for 1888-89 coimes up to the amount now estimated for the current year, and after making provision not only for half a year's interest,; £20,000, on. the North Island main trunk railway proposed to be raised iv April next, but pro^rwing for the extinction of, say, £40,000 of the deficit at the end of this year in the manner already stated to the Committee, we hope to be able, as nearly as can be .now foreseen, and it will be our earnest endea ror in 1888-89, to carry on the servioes of i.he colony chargeable upon the ordinary reven ue Avithout being under the necessity of peoposing additional taxation. With regard ±o the land fund, if our proposals with respeot to it are agreed to we have every reason to hope that the revenue will be quite equal to. the expenditure without sacrificing ; the public estate. And now, Sir, I have completed my task. I have laid before the Committee as ' dear and complete an account as I could frame of the financial position of the Colony, and of the measures :* whioh, in'the opinion of the Govewament, are best calculated to relieve it of its present difficulty and to prevent their recurrence in the future. The account I have given : neither conceals nor e7:aggerates those difficulties, while it shows that it is entirely within our oWn power to "overcome them.. It needs but the w ; ill to do it, and themeasures I have proposed—embodying,as they do t,he trite but vitali economic principl.es of foregoing suohi things as we Cjan more easily spare than pay fay, of making such money as we spend produce the best possible results, and of increasing and' encouraging the wealth producers of the Colony, and embodying also, last but not least, a wholesome self.reliancet— hese measures will I trust, ' commend them* selves to this Committee,' as I believe the I will to fche country at large. i Sir Julius Yogel asked the Premier when he proposed to allow the Statement to be debated , Major Afckmson t , S aid Friday, if thatwas agreeable to the leader of the Opposition. h„t £ 6 ?-, B^ that wouW ** convent but hewould like it understood thatthe deffi night be postponed till Tuesday if the House vas not ready. He asked when 'thYPublfo Works Statement would be brought down. The Premier said he could not fix the date r et, to-morrow he proposed to tabl« » mJ^T * he House' degired he J woHdf S pS^KJ & The House adjourned at 9-10 p.m.