GENERAL ASSEMBLY.

New Zealand Herald, Volume XVI, Issue 5635, 8 December 1879, Page 3

GENERAL ASSEMBLY.

HOUSE OF REPRESENTATIVES. Monday, November 17. THE FINANCIAL STATEMENT. The following ia the Financial Statement as Metivi re ■. by tlio Hon. Colonial Treasurer -. -night : — M FACULTIES OF THE POSITION. Mr. Seymour,—The difficulties and dangers of the position into which we bave permitted our finance to drift are admittedly so great, and the time at the disposal of the Government lias been so short and 80 broken, that I feel confident I shall bave the sympathy of hon. inemb*-rs when I aik the committee for as favourable a consideration of tho proposals 1 am about to submit as may bo found compatible with careful criticism and a full discussion of their merits. Sir, I think that all those who have given any real thought to the question of our present financial position must have come to the conclusion that it will be impossible to surmount our monetary difficulties'and escape the dancers of our position without cornethiny like a complete remodelling of our finance both general and local, without careful administration by Ministers, and without the exercise of much thrift aud self-denial on the part of all classes of the community. WHAT MAY NOW BE DOXE. The period of the session at which we have now arrived renders it impossible to properly consider tho whole question of our iinanco this year. My unfitness for the responsible position I have tho honour to hold would be at once manifested if I were to pretend to l>.: capable in the short time 1 have been in ollioe of maturing and submitting in detail to complete a financial policy as thu Government believe to be practicable and licc-ssary. L shall, liowcvrr, sir, endeavour- to indicate clearly the general scope and direction, of that policy, anil to give what I hope the committee will consider sufTk-iuntly full details of such parts of it as we think it is possible to deal with this session. THE FINANCIAL SITUATION, But first it will he necessary that I should recall to tlie mind of the committee our present financial position, a position, sir, I venture to say, unparalleled in the history of the colony ; for, with abundant natural resources, with excellent credit, and with an increasing ordinary revenue, notwithstanding commercial depression, we find ourselves reduced to such a position as to cause the gravest anxiety to all true fricuds of the colony, and to necessitate important measures of b'iKinuial reform involving large additional taxation, POSITION OK THE CONSOLIDATED FUND RESTATED. In the speech, which I had tho honour to address to the House en the 1-lth of October last, I showed that the total expenditure within, :>n . on account of the year IS7S-79, was £1,000,901 ; that the total receipts amounted to £3,575,137, including therein the surplus of 1577-7S, amounting to £11(5,544, and the assets of the year* IS7S-79, am.uuting to £GG9S, realised sine,; 30th June, 1579 ; anl that the transactions of the year ended by leaving a (Illicit of £131,524. Notwithstanding the fact I have just mentioned, that wo b -gan it with a surplus of £11G,544, I showed that the deficit of £131.524 would have been £50,000 less had the laud tax for the halfyear been collected within the year. But I did not mention, as perhaps I ought, that the bills taken on account of the sale of the old Supreme Court site and the reclamed land in Wellington, anl amounting to £52,524 Ss 4d, were included in last year's revenue account. Of this amount, £33,114 15s Sd has been pai I, and £40,409 12a Sd remains outstanding. I found these bill: credited to revenue in the Treasury accounts, and did not, therefore, disturb the arrangement, although I am clearly of opinion that they should have been credited as if the amount had been received, in ca?k of course. But for this mode of treating the;e transactions last year's deficit would have been £214,34S instead of £131,524. This then was my starting point for the current year, a deficit of £131,524, to which I have ad.Ud the estimated expenditure for the year 1579-SO, amounting to £3,974,034, taken from the Estimites left in. the Treasury by the late Government, and obtained £4,105.555, as the year's estimated expenditure. From this amount I deducted the estimated revenue derivable from our preoonfe of income, amounting to £3,193,900, and arrived at a total estimated deficit of £911,95S to be provide for ; n .™. way this year. estimated expenditure and income of the year 1579 so revised. S; r> —Since I last addressed you upon this subject the Government have gone carefully through the eatyuatesoi expenditureas left liy our predecessors. The3e were necessarily imperfect, no provision having been made for several necessary services; and the Estimates, as now preeented, show an ncrease of £39,044, the total amount being £4,013,075, instead of £3,974,034. The total of these estimates is larger by £0117 than the actual expenditure of the "previous year, but it must be rememb; red that they include provision for interest on the new loan and deliciency bills to the extent of £11S,OCO, as well a3 the expenses attending the second meeting of Parliament within the year. We hope, moreover, by careful administration to be able, after further experience, to effect considerable reductions, but upon this point it is impossible to do more that promise that we will use our best endeavours to confine the expenditure within the narrowest limits, consistent with efficiency in the public service. We shall also during the recess carefully examine into the present organisation of the civil service, and see how far, by the combination of necessary offices and the abolition of unnecessary ones, the expenditure can be further reduced next year. Competent and well paid officers are absolutely essential to good government, while a Urge statlof under-paid civil servants is not only costly, but is in its very nature fatal to efficient administration. The estimate of revenue htvs a'so been carefully reconsidered, but, with the advantage of four months' actual collections to guide me, 1 am unable, I regret to say, to increase the amount estimated. Tt is possible that tho land fund may be underestimated, but I do not sic any reason to expect an appreciable increase in land eale3 until a fall takes place in the price of money, and this cannot be hoped for uutil a goud harvest has been successfully housed. THE DEFICIT. The problem, therefore, for solution is, how is this large estimated deficit, amounting after correction t:> £951,002, to be provided for this year, aud what action mast b<? taken to equalise our income and expenditure in future? for although it is somewhat unusual, I am compelled by our peculiar circumstances to look beyond the present year, and in some measure to take counsel fo>- the next But, before we can answer these questions satisfactorily, we must examine the nature of the deficit, and ascertain whether it is of a temporary or permanent character, because our mode of dealing with it will greatly depend upou the result of that examination. JSow, to enable the cummitlee to come to a decision upon this important point, it will be necessary to examine and compare the receipts of the consolidated fund for some time past. I propose to do so for the last three years, aud under three heads—taxations, services rendered, and land fund. Th re was raised hy taxation in the financial year 187G-77, £1,319,043 ; in the year 187778, £1,424,029 (being an increase of £104,35G over the preceding year); in the year IS7B 79, £1,505,237 (being an increase of £51,20S over the preceding year and of £155,594 over the year 187G-77; and this year the estimated amount of receipts is £1,512,300, being about £7000 only more than last year, though largely exceeding the receipts of the years 187G 77 and 1877 78 respectively. For services rendered (omitting for reasons 1 will presently give receipts from railways) there was received for the ycir £315,250; for the year 1577-7S, £3GG,3G7 ; for the year IS7S-79, £421,377; and this year the estimated amount is £401,G00. Here also, as in the case of taxation, it will be observed that the increase had been marked and steady during the three years named, and that while the estimates of the total receipts for this year in respect of services rendered ia about £20,000 less than the actual receipts of last year, an increase of amount in some of the items of receipts is anticipated. I will not trouble tho committee with remarks upon the separate items included under tho two heads of taxation and services rendered, but I may say that an examination of table A, which will be appended to this Statement when published, will show that in almost every case there has been a steady increase from year to year. As I have aaid, I have omitted the receipts from railways. My reason for so doing is that our railway system was too incomplete in 1876-77 to

eompare fairly with the receipts in 1879 ; but, accordiog to the comparative statement of receipts and expenditure on the railways by the late Minister of Public Works in August last, the figures 1 have given under the head of services rendered do not show ,13 large an increase as I might fairly claim. It is not, howev-r, desirable in any way to overstate tin ease. I have not thought it necessary to tike the receipts of more than three years for comparison. Had I done so, however, tho only deduction to be drawn from a careful | consideration of tho figures would certainly not have weakened my conclusions ; on the contrary, the further back we go, tbe stronger would my case appear. It may then, X think, be fairly stated that our receipts from taxation are steadily increasing, as also our receipts from services rendered ; and that the slight check which the revenue (derivable from these source?) has met with during the curraot year is temporary only, and is fully accounted for by the general depression of trade throughout the world, Ihis fact, 1 snbmir, gives us confidence in the future, as showing indisputably that our population is hard-working and prosperous. In the financial year IS7G 77 we received from land sales £570,519 ; pastoral rents, £135,030 : total, £1,005,855. In the year 1577-7S, land sales, £1,440,824 ; pastoral ri-nts, £145,738: total, £1,58G,562. Last year land sales, £737,694 j pastoral rent?, £132,035 : total, £809.729 ; and the estimated reveue for thii year is for land sales, £-245,000 ; pastoral rents, £132,000; total: £380,000. It will be seen that the land sales last year only reached £737,094, having fallen short of the estimate by £354,304 ; and that this year they are estimated to produce only £245,000. Here, then, we find the cause of our deficit, the falliug off in the Cro.vn land sales. If last year they had reached the estimate, and could be relied upon this year to yield £1,150,000 (this amount being about the average receipts of the last two preceding years), we should this year have had a small surplus, instead of an estimated deficit of £591,002. In other words, under our present system we require from land sales, exclusive of the cost of survey and administration, something like £900,000 per annum in aid of ordinary revenue. It may be, I think, f;>ii]y anticipated that, with the return of prosperity, the annual sales will again be in excess of the estimates for the curr 111 year. With these facts, then, bofniu yo-J, sir, we are in a position to aftirm that, should we contiuue to treat land sale receipts as income, and were we content to sacrifice tho future settlement of the country for the sake of temporary adjustment of finance, the deficit to which I have drawn attention would not, with our large area of unsold lands, be for some years to come of a permanent nature. So long, however, as we do so treat these receipts we cannot disguise from ourselves that in years of depression we shall be subject to large deficits, which it will bo difficult to provide for ivithout adding from time to time to our permanent indebtedness. In other wor.ls, we shall have au uncertain and therefore an unsatisfactory finance, and shall be continuing the objectionable practice of relying upon what is really capital for ordinary expenditure, instead of providing for Buch expenditure as ought to be done, out of our legitimate income. If on the other hand we should determine that the receipts from land sales are not income, an,i shall not in future be so treated, then it is clear that there is a permanent eleficit of from £SOO,OOO to £900,000 a-year upon our present expenditure and income. So much, then, sir, for the nature of tho deficiency with which wo have to deal. Before, however, I answer the question as to how the Government propose to meet the estimated , deficiency of this year an 1 to obviate deficiencies in the future, it will be convenient that I shoulel call tho attention of the committee to the state of our public debt and the condition of the public works account. PUBLIC DEBT. Our public elebt on the 30th June amounted to £23,222,311. Treating the guaranteed debentures as practically issued, and including Treasury bills outstanding, of which £442,000 mature on the Ist of March next in London, and will have to be reissued, the annual charge for iuteriist and sinking fund in respect of this debt waa £1,232,119. Since then we have issued de iicieucy bills to tho amouut of £000,000, and when the loan of £5,000,000 is raised our total gross debt will amount to £25,522,311, or, deducting the accumulated sinking funds, our net public debt wi1be£27,113,310. subject to an anuual charge of about £1,400,000 for : U h,.«i. « u a (». eiuking fund, making together £1,510,190, an annual burden requiring our most watchful attention, and one which can only be borne if our taxation is properly adjusted and our financial affairs managed with discretion. It may be gratifying to tho committee to learn, though the amount is small, that la->t year we redeemed out of accrued sinking funds debentures amounting to £71,000 Of these £55,000 represented the whole of the outstanding debentures issu-.d under tho Wellington Debts Act Amendment Act, IS7G, and £13,000 represented a portion of thos: issued under the Xorth Otago District Public Works Loun Act, 1572. PUBLIC WOItKS FUND. I showed in my speech on the 14th October last that we began tho year ending 30th June, 1879, with a credit balance of £2,050,940, including advances outstanding amounting to £140,200, and this year with a uomin.il credit balance of £50G,205, but that of this sum £295,543 consisted of advances outstanding, which as hon. members are aware, are in fact moneys spent but not yet brought to account, so that we really begin the year with only £207,GG2. This includes as cash on the credit side the whole of the loans (including the guaranteed <Vsbenturrs) authorised to date, except the £5,000 000 loan. I further showed that we had spent in the first quarter of the year, that i*, up to the 30th September last, some £504,733 of the £5,000,000 loan, and that wo had entered into contracts and engagements which would necessitate our fiudiug £733,553 more by 31at December next, aud £921,51S between that date and 33th June, ISSO ; in other words, that tho late Government had in various ways anticipated the new loan to thu extent of £220,104, including £140,0U0 for contingent defence, and £200,000 for purchase of native lands, but, exclu-ive of the cost of raising the loan, and that, in addition to this large sum, which is payable by the 30th of June next, there will be liabilities outstanding at that dato of a further sum of £957,177 for land purchise, and of £r28,515 for contracts entered into before the present Government took office. These figures were disputed at the time I spike by tho late Minister of Public Works, but I regret to say that, after a most oaruful reexamination of the whole subject, I find that the figures I then gave weru strictly accurate. My hon. colleague tho Hon. Minister of Public Works, in consultation with t'io Engineer-in-Chief, has been endeavouring to arrange au extension of the period during which these payments will havo to he made, and he will shortly inform this House of his succes in that direction, but he warns me that much practical relief is not likely to follow his exertions. The committee will, there/ore, see that unless ive can abandon some of our land purchase bargains, for I fear none of the other engagements can be got rid of, the new loan is an icipated to the extent of about £3,300,000, without including tho sum of £154,791 payable to Canterbury and Otago on account of impounded land revenue or making any provision for the redemption of tho guaranteed debentures, and also without taking into account the cost of raising tho loan. When we remember that the public works scheme of IS7S was to take five years to complote ; that the expenditure from loans was only to be at the rate of some £900,000 a-year ; and that, by a special provision of the Losu Act, 1579, no muney raised under it wa3 to be spent without the approbation of Parliament—wo shall, I fear, have to come to tho conclusion that Parliament has nut been treated with franknessi in thi-i inatt-r, and that its authority bus be u_ disregarded. The Government, eir, have reason to believe that not more than £3,000,000 of the £5,000,000 loan can be fioated this year, and that it will be twelve months before we can place the other £2,000,000, and that we cannot go upon tho London market f"r two years afterwards. These facts will render the exercise of the utmost pru'lenco necessary in the expenditure of tho balance of the loan yet available for appropriation by Parliament. This question will be fully treated by my hon. colleague the Minister of Public Works when he makes his public Statement, I need only say here 'hat I hope hon. mommembers on" both sides of the House will insist upon all expenditure being confined to neceseary and profitable works, and that the expenditure of tho balance of the loan shall be extended over a period of not less than three years. Sir.as I have many times pointed out, our only safety lies in limiting our expenditure from loans and upon public works to a

reasonable annual sum, till our whole railway system is completed, and certainly in my judgment £1,000,000 a-year is not a reasonable sum ; i'.is, in fact, about double what we ought to spend, orinde-d possibly can spen ?, considering our revenue, population, au I liabilities. PROPOSALS FOP. EQUALISING EXPENDITCP.H AN'D INCOME IN FOTTJBE. And this, sir, brings me to that part of mv Statement for which hon. members are ni. d'jiibt looking with some impatience. I hope however, I have succeeded so far in fixing in their minds what our financial position is, as up n that hangs all that I am abcut to propose. The first point for decision is, are recepts from the land sales to be retained in the consolidated fund, and spent as ordinary revenue ? Sir, the Government think that from the falling off in the land salee there ia a ver-y important lesson to be learnt, and that is, that the system of finance wh'ch we have been pursuing since the laud fund was generalised in 1577, namely, that of relying upon the receipts from the lat)d s=ale3 as one of the chief iteme of our consolidated revenue is thoroughly unsouud in principle, and should, sir, be abandoned at the earliest possible date, that date being not later than the end of March next Tho receipts from land sales should, in the opinion of the Government, be chargeable with the expenses of the land, and the balance scrupulously applied to public works, local and general, and to immigration. By this means it is clear that a real, and not au imaginary, fund would be created to aid in carrying on our public works, local and general, and we should get rid of that vicious habit into which we have fallen of late, of treating as revenue that which is really capital, and spending it upon the ordinary services of the State. It will be generally admitted when the lirge amount of our puMic debt is remembered, and the absolute nec!s< : ty of continuing to borrow meder-at-l\, until the public works are complete, is faken into account, that it is our duty not only to place our consolidated fund u;ion a sound footing, but also to show tho London capitalists unmistakably that we are not availing ourselves of the expenditure of borrowed money to sell our public lands, and at the same time, applying the proceeds to the maintenance of services properly eha r geable on actual income, I submit sir, that we have no more effective means of showing the roundness of our financial position, and of tho resources of the coloiy, than by resolutely setting asWe the rece : pts from our last sales for public works and immigration. The best raodo of dealing with this fund, should the House determine to create it, I do not now propose to consider; this will be one of the questions for decision next session. A great work will have been accomplished if it should be determined to create the fund. Sir, tho Government entirely disapprove of sacrificing the public estatn to make up either a temporary or a permanent d< ficiency in the revenue, or of selling land for any other purpose than for settlement and occupation. Proceeding, therefore, upon the assumption that land sales receipts are no longer to form part of the ordinary revenue or income of the colony, I eliminate them, retaining, however, the pastoral rents which are really revenue, and find that the estimated reveuue for tho year is £2.945,900. Deductingjfrom tin total estimated exDenditure of £4,013,078, the services included therein amounting to £247,509, which are properly chargeable against the revenue from land sales, viz., of administration and surveys, and the 20 per cent, of receipts, &c, payable to local bodies, we get £3,7G5,5G9 as tho estimated expenditure of the year; and if from the estimated expenditure we take the estimated revenue, we get £SI9,GG9 as the deficit for which we have to provide for the future. 1 will,.sir, now, with the permission of the committee, deal, in the first place, with the deficit of £SIP,CG9, leaving for the present tho question c,f deficiency to be provided for this year. Some exception may be taken to calling this a permanent deficit as it will be said, and said truly, that our receipts fr"m taxation, services rendered, and railways are increasing yearly, and this increase no doubt will afford relief to some extent, but I havo thought it prudent to put against this the increased interest we shall have to pay upon the new loan, and upon fresh borrowing, which mint certainly occur, and also the increise upon our ordinary expenditure, which is sure to take plae--. There is no reason to suppose, judging from present circumstances, that tho expenditure «.- ro-ro.it.t. -ill uialci tally uc-vt, year from that above stated. I shall, therefore, take sufßjiently accurate for all practical purposes, the above estimate of expenditnre and revenue, to show the probable effect of tho financial policy tho Government are proposing for adoption. I will first ask the committee to turn for a moment to the tab'e of the estimated expenditure (table E), which, upon oxami nation, will In se«n to contain one very largo item of £275,020 c or subsidies to local hodies. Many hon. members think this contribution in aid of rates wrong in principle. Many, more think that, considering onr present financial condition, payment of it should cease at the end of the year. I arc one ol those who think it fair and reasonable that the State, as tho State, should contribute towards the cost oE keeping open and improving the means of communication throughout the country, and that it is altogether a mistake to suppose that by striking this item out of the Estimates, the people of the col ny will be relieved to that extent from taxation. To all those who have given any attention to loeil subjects, it is well known thit an amount equal to this large sum must be raised for local works. Striking this item out of the Ketimates will, therefore, afford no real re lief to the country at large, nor will it leave more money in the pockets of the settlers. Hut the question as to the best and e isiest means by which, the necessary amount can be raised is no doubt open to discussion, and is well worthy of the serious attention of thia House. The Government, nowever, hare come to tho conclusion, after careful consideration, that a hotter means that the present of raising thie money can be devised, and they will therefore recommend that the subsidies next year should be discontinued. Should the House determine to continue th-m taxation will have to be proportionately increased. The important question of local finance is far too large to go into this session, therefore I will say no upon the subject now, except, sir, tlut the Government fully recognise the fact that it is their duty to submit to this House, upon its first meeting next session, a scheme which shall place local finance on a satisfactory aud something like a permanent basis; and by " satisfnetory " the Government understand placing local bodies in euch a positiou aa will enable them to obtain, us far as is possible, sufficient funds for all necessary works, while drawing a broad and distinct line between local and general finance, and such a scheme the Government will endeavour to mature before tho next meeting of Parliament. Hon. members will bear in mind that I am now speaking of what I may call the permanent deficit; that is, I am speaking of the proba'ile position we should find ourselves in nt the end of next year if the receipts from land sales and the expenditure upon land are eliminated from loth sides of the account, and I am not now mnking provision to meet tho estimated d> fic>ency of the current year. I therefore deduct the subsidies, £275,1)20 from the delicitof £520,5G9, already mentioned, and find that ihere remains to be provided for £544,949 ; and this, sir, the Government propose to meet by the imposition of a property tax, tho increase of the Customs and stamp duties, and the release of the sinking funds and interest, by bringing the Consolidated Stock Act into operation. That our difficulties might be tided over much more pleasantly for a few years by the sale of land, to make good tho deficiency of our ordinary reveuue—a course not altogether unknown in sorno parts of His colony in years gone by, is true; but, sir, the present Government, and all the members of it, are aud always havo been opposed to such a policy, aud feel confident that we shall rec> ive the hearty support of tbe House and of tho country in giviug effect to our proposals to sell land only for settlements, and to make our ordinary revenue equal our ordinary expenditure by the imposition of the necessary taxation alter all possible reductions havo been made in tho expenditure. PROPERTY TAX. Sir, no taxation is pleasant, aud a new tax is especially unpalatable, fine more so if direct in Hi form. But it will, I think, bo generally admitted that we have now reached a stage at which a property tax in somo shape is unavoidable. The principle of a land tax has already been affirmed by this House, and there is much to be said for tho policy of specially taxing unused land held for speculative purpoees. If it were practicable I should certainly advocate the special taxation of unused land, but in my opinion it" is not practi-

cable ; and taking the ord : nary holdings of I improved lanrt, I am unslil-i to see upon ■whit principle of justice or exp.dincy it i 3 held that this is the <ny form of prop tty which should be tax- .!. Why, I wish :o kuiw, should the farui nt he lia'd-wooing pioneer settler, or tli.- front <ge ■ f the ftiui;gling city tradesman '."> tax..il, while bank shaies, ami otli.-r euirh propertyare allowed to go free? Aud I shall therefore a:k the House to imp se ;i property-tax upon the American model, excusing incomes, and thereby to affirm the principle that realised wealth, in whatever form, sha bear it 3 fair share of the burden of the State. The Government, after careful consideration, have come to the conclusion that an income tax is u it applicable under the existing circumstances of the colony. It is inqui.-itorial and unavoidably open to great inequalities. The machinery, too, for raising such a tax, must bo ehbirat; and expensive, and far out of proportion to revenue to be derived from it. For these reasons, and ma.iy others with which I will not trouble the oommittce, but which can be fully discussed upon the second reading of the property tax bill, the Goverum-nt hive, as I hive said, decided not t< iuclude income in the proposed tax. Sir, the Government will ask Parliament to merge thu land tax iu the property tax which we intend to introduce, thus including land in the same category as all other property, making it equally but not specially liable to general taxation. Parliament has already approved of'this principle by directing, in the case of intestate ostites, that real shall be treated aa personal property, for the purpose of succession, aud for taxation on succession. It would hardly be convenient that 1 should upon the present occasion, describe the policy of a land tax, but the committee will perhaps permit me to say a few words upon the subject, as it is one of great importance. The land lax was, I presume, imposed—first for the purpose of revenue ; and secondly, to check the growth of, large lauded estates ; aud thirdly, to prevent laud beiug held for speculative purposes ; or fourthly, for all these reasons together. With regard to the first, I would say thit as we have aome twenty million acres of land for sale, some five millions of which are classed as agricultural, and as the one object wbish we all desire in-ist is the settlement of people upon the land, it is surely unwise, and will ten! to def.at the object we have n view, if we impose special burdens for revenue parpooes upon capital invested in land. I would ask, upou the stcont and third reasons, what justice or wisdoin is there in specially taxing that class whose growth is essential to ths advancement of the colony, in order to prevent a partial abuse in the acquisitou of large quantities of land or unfair profits by a few individuals ; and in reply to the fourth reason, I would say such a combination is unjustifiable when it results in tho special taxation of classes possessing no privileges. Sir, I entirely disapprove of land being held for speculative purposes. I intirely disapprove of land being held in large blocks to the injury oi settlement. I desire to see the country in possession nf a population cultivating their own freeho'ds, aud the legislation proposed by the Government is conceived in this spirit. That there are some large estates which I should be glad to see occupied l>y small freeholders is true ; but, sir, I have satisfied myself that the tendency is towards disintegration ralher than accumulation of large properties, aud that speculation iu laud to an injurious exteut does not exist in such a form as to be removed by legislation, and most certainly will not be remedied by a laud tax ou all Jand. Sir, it is a very significant fact that in hardly auy country in tb.9 world is the proportion of properties to the population so great as in New Zealand. I may etato for instance, that iu France, which ia usually cited aa a favourable instance of the sub-division of l<nd, the proportion is 1 property to 7 1 people ; and in Belgium, where laud is probably more sub-divided thau in any other .European country, the proportion is 1 property to 4 71 people ; while iu New Zealand there is 1 property to 5 people ; aud when it is remembered that 90,000 persons out of a total population of 414,000 havo been brought out as assisted or free immigrants within tho last few years, our case appears much stronger. This, sir, is no reason for relaxing our endeavours to improve our land laws in the direction of eucouraglug settlements, but it should, 1 think, reassure those who think that the tendency of past legislation has been to favour ihe acquisition of large properties, i say, sir, it is a great satisfaction to know that so large a proportion of our population has a direct interest in the soil of the country, ami to tUlo fact may ia a great measure be attributed, I think, the rapid a.lvaucemeut of the colony and the general prosperity of tho people. The principle of the American property tax is to tax everya man possesses, including his income, after deducting all his outstanding liabilities The proposal of the Government is to tax all property, whether real or personal, that a man possesses, after deducting in each case his just debts, and also a sum of £300 as exempt from taxation, but, as 1 have said before, to exclude all incomes. It ia very difficult, with the data at my command, tu estimate very accurately what such a tax will produce. We know, however, the valuation under the Land Tax Aet gives £90,500,000 as the improved value of real prope-ty. It is estimated that the total personal property owned in the colony is not less than £18 700,000, making a gross total of taxable property of 118,200,000 ; deducting from this £5,009,000 on account of the £300 exemptions, we get £113,200,000 as the net taxabl-j amount, as far as it can now be estimated. I give this estimate with some diffidence, but I think I have rather uuder than overstated the sum which will be subject to taxatiou. Taking, thorefore, £113,200,000 to be the sum liable to tixation, this, at Id in the £1, tho amount the Government propose to ask for, will give £470,000, as the product of the property tax. Ihave eaid, sir, that the Government propose to raise additional : Customs duties. With respect to the encouragement of local industries, I have had many communications with gentlemen interested in the promotion of local manufacture, and a committee of this House has still the subject under its consideration. But the time at the disposal of the Governincut has been quite inadequate to deal, in a comprehensive manner, with so important a subjest, the Government, therefore, propose to appoint a Koyal Commission during the recess to examine and report upon the whole subject of tho best mode of fostering and promoting local industries. Iα the meantime the Government propose to admit njany articles duty free, so as to assist local manufacturers as much as possible. But, sir, before making any remarks wich respect to articles upou which new oriucreascd duty is to be charged, it will be better to say a few words upon a question which has beeu much discussed — the duties upon tea and sugar. Upon those articles we do not propose to re impose the duties remitted last year, but it may be necessary to re-impose them next year upon a general revision of taxation. TUE NEW DUTIES. The articles upon which we propose to increase or impose duties are almonds, nuts, chaff, corks, dried fruits, fish, fruits (other thau oranges an 1 lemon 1;), window-glass, grain aud Hour, malt, split pens, hops, iron fencing, tanks, mntches and vestas, preserved milk, nails, perfumery, patent inediciuc3, timber, salt, stearine, spirits, tobacco aud ciyars, wine, and all I goods at present charged with ml valorem duty. The particulars of the duties proposed to be U-vied on theao articles will be found in a t.iblo appended. The total amount estimatod to be produce 1 is about £300,000. Wo propose, as will be seen, to ] re-impose the duties ou timber aud grain. We think experience has shown tha* their repeal has very injuriously affectcl the local shipping trade, and also tho timber industry, which was a growing and important one, and which wo aro certainly not justified in seriously erupting without some compensative advantage to the State, but which we altogether fail to see has followed the repeal of these duties. We propose to increase the dutiis on j>p:ri ! s aud on tobacco. With regard to spirits we shall ask for au increased duty of 2s per gallon, grauting at tho same time an allowance for such as are under proof, the same as is now charged upou spirits over proof. This mode of levying the duty is, I believe, tho custom in almost every other country. To mako up the loss to the revenue which will result from this allowance for spirits under proof will require an addition of at least Cd a gallon so that the proposed increase is really only Is Gd per gallon, or in tho whole £47,000, giving a total on spirits, wine, etc., of £56,000. Wo propose to increase the tobacco duty by Is pur pound, to authorise its manufacture in bond, granting encouragement to its local manufacture by a bonus for the next two years of only 6d in tbe ptund upon the quantity of tobacco

manufaetared and duty paid in the oolony. The increase on this item is estimated at £50,000 From spirits, wines, etc., and tobacco, including cigare -and snuff, I hope then to obtain £100,000. I am aware that in increasing tbeie duties some risk is ran of inducing illicit distillation and smuggling. There is always, as everyone is aware, a danger and possibility of this when duties are increased, and the Government are by uo means certain that in consequence of increased duties the revenue may not be defrauded in the manner mentioned; but they do not think, thii will occur to any larga extent, and they b.-lieve, looking at our requirements, that upon no articles included in the tariff would Parliament appn.vo of increased duties so readily as upon spirits aud tobacco. Nothing but our own txperience can tell us when we have icacked the maximum which these articles will bear without loss of revenue. B.it before proofcling to state what further burdens it is necessary to impose, it will be convenient here to state what relief can be afforilc 1 in the way of REMISSIONS OF D :TIEf. It is proposed to remit tin duties on carriage-makers' aud sad ller^ , ironmonger}, c.irriage-ni'ikers' leather, buggy shafts, bent carriage timber, hiokory, hatters' material, line wire for brush-making, sheat zinc, plain galvanised and sheet iron, sulpljate of Bodn, almonds (such as are used in confectionery), phosphorus, aud oil of rhodium. The remissions amount to £15,000, and it is hoped that with these alterations and by aid ot" further reductions which arc in contemplation, local industries will bo plioed in a mire advantageous position than at present. The Government also propose to abolish all light dues for vessels empluyed in tho coasting trade. This, it is also hoped will give material assistance to that important branch of our industries, the local shipping trade. I hope, sir, tho time ia not far distant when we shall be able to extend remission still further in this direction. The loss to the revenue by this remission will be £5000. STAMP DUTIES. These might bo increased in several cases ; but looking at the fact that these duties are levied mainly on transfers of property, and that it is proposed to put a special tax on property, the Govern ment have, determined not to ask for Jiv.y increase of stamp duties except those upon succession. It 13 generally admitted that on the occasion of a succession to large property the State niiy demand, without any unfairness to anyone, a contribution having some relation to the amount of the estate. The principle of a graduated tax upon succession has been accepted as right, and the Government propose, therefore, to revise the existing dutits in the direction of making large accumulations cnntiibute to the public exchequer in greater proportion than they have hitherto done. It is estimated that these additional duties will produce £16,000 at present, aud ivill be constantly increasing. CONSOLIDATED STOCK. It is, sir, a matter for >>reat regret, looking at our financial position, that no real effort has bc j n marlo to bring the Consoli dated Stock Act of 1577 into practicable operatioo. We are now paying £110,170 per annum, as sinking fund proper ou our loans. We shall also pay this year interest amounting £43,065 on bonds of the consoli dated loan, drawn and cancelled; iuterest which increases in amount every year, aud is being applied aunually to the further redemtion aud cancellation of bonds, aud is, in reality, a sinking fund. Then, we iuve t the accretions of the sinking funds of other loans in our own bonds and interest. We are now paying ou those latter bonds the amount of £40,011 per annum, so .that in the present year we shall actually pay no less a sum than £199,332 toward the redemption of our public debt. By this it will be seen that we, ou the one hand, are repaying our debt at the rate of nearly £200,000 per annum out of revenues ; while, on the other, we are borrowing largely to complete our railway system. This, upon the face of it, does not appear a very wise arrangement, and I netd hardly say that the Government will liose no time in giving effect to the will of Parliament in this matter, expressed by an Act more than two years ago. Sir, the operation of consolidation is necessarily a work of time, but I trust, under the management of persons desirous of giving effect to the Act of 1577, considerable relief will be afforded to our reveuue, if not next year at any rate the year after. The anuual amouut of sinking fund, and interest thereon, to be released by consolidation, being dependent on the success whioli may attend tho operations of agents appointed under the Act, we cannot rely on obtaining much relief for this current year. I niuao, However, bsk tne committee to bear this in mind as a certain means of diminishing our expenditure in the near future, and to consider whether it may not be advisable to make some temporary provision, if necessary, UDtil this relief is obtained. With regard to the general question of the expediency of a sinking fund, I think it very unwise in us with our railways incomplete, to attempt to maintain me, especially when it ia remembered that in no case do we capitalise the interest upon these works as is done in the case of railway coinpauys until the works are complete, but that the whole interest on money used upon works in course of construction as well as that spent in completed works U charge! upon and paid out of consolidated revenue. SUMMARY OF PIIOrOSALS. Summarizing then my proposals they will stand thus :—To be raised by property tax, £470,000 ; by Cuitoin<.,£3oo,ooo ; by stamps, £10,000 : making a gross increase to the revenue of £756,000, from which, however, must be deducted the remissions state 1 above amounting to £20,000, together with the land tax, £147,300 » whicli is proposed to merge into the general property tax next year, thus giving a net iucrease of £018,700. Honorable members will observe that I have not taken credit for any saving for interest or sinking fund, which may be released by the description of stock. We may obtain some relief from this source next year, but the uncertainty of this is so great that it would not be prudent to calculate upon it. I hope, however, when such relief comes, we shall be enabled to considerably reduce taxation, and, as I have said before, I think we may look for this relief at an early date. It is proposed then by these means to raise £G15,700 additional revenue. If this be added to the revenue from present sources, estimated to amount (exclusive of land sales) to £2,945,900, we get £3,564,000 as the total revonue for the year. The estimated expenditure I have taken as probably £3,459,949, and if we deduct this sum from the revenue we arrive at an estimated surplus of £74,651. From these figures I think hon. members will see that the proposals of the Government, if they shouM meet with the approval of the House, will without any reasonable doubt equalise our expenditure and income. HOW DEFICIENCY FOR CURREKT YIiEAR IS TC BE MbT. Sir, it now only remains for me to deal with the deficiency for the current yeir. The questiou of the advisability of changing the time when the linancial year shall en.l has been raised from time to time in Parliament, but for vaiious reasons has never been favourably entertained. The Government, sir, have come to the conclusion that the change might now be off ct;d with advantage to tho public service aud with tho general approval of hon. members. I shall, therefore, propose lhat the financial year shall, in future, cad ou the 31st March. The first and obvious advantage which will follow this change is, that it will shorten the period during which our present estimated disparity between income aud expenditure will run, and will enable us to begin a new rinauciil year by the time our increased taxation has come fairly into force. The period of the year, too, when Parliament will meet, namely, about the middle of May, will, I have reason to believe, better suit the convenience of hou. members than the time at which the House now sits. .Sir, 1 have already said that tho deficiency for the year will pr.bably amount to £951,002, but should the House sanction tho proposed change in the financial year our current financial pciiod will termiuate «n the 31flt of March next, and the deficit to be immediately provided against will be proportionate!}'diminished. I estimate that the expenditure f. r the nine months for the same period, including the receipts from the iiuw taxation, will be £2,445,200, leaving a deficit of £665,002 to whicli I add the deficit of £131,824 at the close of the last year, and arrive at £79G,SSG as the amount of deficiency to be provided. Sir, it is now the middle of November; five months, therefore, of the financial year have practically gone, and we have already issued and absorbed a deficiency bill to the amount of £600,000. It is not, in the opinion of tho Government, either possible or wise toattempt, under present circuuistancos, wholly to meet this difficulty by taxation. We are, I hope, about to take a new dorarture in finance. The proposals of the Government, if given effect to, ensuring

in the future an; equilibrium between expenditure and income; bnt to secure this result, taxation of a very onerous character will have: to be imposed, and the committee will, I think, agree with me ia the opinion that to impose special taxation for tho purpoeo of current period would be impossible. The Government will, therefore, ask authority to provide by loans for such deficiency as miy be found to exist on 31st March next. It will include, of course, the deficiency bills already issued to redeem thtse, and to cover the balance I shall ask the House for authority to issue Treasury bills. Thesa latter the Government propose to have inscribed as soon as possible, under the authority of the Consolidated Stock Act, 1577 1 make thie proposition with great regret, but I think it will be admitted on all tides that it is impossible now this year, and that to hamper ourselves continuously with a floating debt of that amount, would be impolitic and unwise. I have said by endiug the financial year on 3lst March, it will enable the House tomeet about the middle of May, which, I think, is t.ie earliest in'intb. that will suit the general convenience of hon. members. I should, Sir, have projio-ed to terminate the finanuial year in Aj-ril as more generally convenient, but d.iiug this would have broken up the (juirters as well as the year, thereby rendering comparisons with former years almost impossible. Ry retaining the quart rs unbroken, comparisons can be made without much difficulty. 1 hope the rouimittw will a 3 reo with me in taking this as asuthcieut reason for ending the financial year m March iustead of April. Should the House agree to the propped change, I shall ask, sir, authority to continue the expenditure duriug the June quarter, upon the scale of tne Estimates voted for this year. This seems to me a better plan than carrying on the Government by means of unauthorised expenditure aud Imprest Supply Bilh upon I'jtimates which have never been seen by the House. The plan will operate in this way : the financial year endiag on the 31st March the Treasury will have plenty of time to get tho Estimates and Finaucial Statement, and the accounts of the year, in as much detail as may be desired rea Iy before the House meets. Immediately upon the Houses meeting votis for the several classes could bo taken on account, as in England, and the House would thtn know for what purposes their money was voted, aud the proposed scale of expenditure for the year. I shall also propose that in future the cash received within the year- shall be the receipts of the year, and the expenditure made with the year. The only objection that I know to this proposal is, that a Government may hold back payments for political purposes, and so mike the expenditure app.-ar less in one year and more in auotlier, I should propose to obviate this by causing each department to seud to tho Audit Office returns showing its outstanding liabilities on tho 31st March, within forty days of the end of the year, duly certified by the Under - Secretary of each department ; aud the Audit Office should place the returns before Parliament within ten days of its opening, if it opened after tho 10th day of May, and if before that time, then within lifty days from *~ 31st March. Sir, my task is nearly done, I havo to thank the committee for the kind and patient hearing it has given mo, aud to say in conclusion that I am fully sensible of Vie grave responsibility resting npon the Government and the House at the present time. The Government, sir, have endeavoured to grasp the financial position of the colony as a whole, and oui- present proposals arc submitted a.l part of a general scheme. Wo feel, sir, that wo should be utterly unworthy of the trust reposed iu us if we had only resorted to temporary expedients at such a crisis. The time, sir, for temporary measures Ins passed away. We have endeavoured to go to the root of the matter, aud at once, by a resort to fresh, taxation and other important reforms, to place our finances o i what we bo!icve to be asouud and enduring basii. Sir, the imposition of fresh taxation to such an extent as I havo proposed to night, and at such a time as this, can only be justified by the necessities of the case. The position is one which admits of no hesitation. We might att3inpt to extricate ourselves from the present difficulty by forcing the sale of land at a price aud upon terms which would involve large sacrifices in the future settlement of the colony. Both our credits and our capital would ultimately suffer by such a course, even if it were temporarily euccessful. On the other hand, by the adoption of our proposals for increased taxation, for placing the bulk of that taxation upon thoao mnst able to bear it, and for entering on a course of carertu nuiuuiatrauwu, wS shall permanently strengthen the one and conserve the other. We make these proposals with a firm belief in the ample resource* and rallying powers of the colony, and in entire confidence that the good eenso of the colonists will prefer present self-denial to any sacrifice of the permanent interests of the country. Sir, in whichever way one's plans may be dealt with, this, at any rate, is certain, that the c )untry will be satisfied with no temporary expedients, will submit to no :xakc-shift, but will insist upon our finances being placed upon a well-defiued, solid, aud lasting foundation. Tho Colonial Treasurer concluded by moving the following resolutions :—(lst) " That in lieu of the Customs now charged upon the undermentioned articles, the following duties ef Customs shall, on and after the 18:h day of November, 1579, be charged thereon on importation into New" Zealand, or on bsing cleared from any warehouse for home consumption — namely, almonds (in the shell) and nuts of all kinds, except cocoanuts, 2 J per lb.; chaff, 10s per ton; corks (bottling), 15 per cent, ad valorem; fruits (dried), 2d per lb.; fruits (fresh) other than oranges, lemons, bananas, and pine apples, 15 per cent, ad valorem ; glass (crown, sheet, and common window), 2i per 100 feet (superficial) ; grain and pulse of every kind not otherwise enumerated, 9 J per lOOlhs.; grain, when ground, or in any wf.y manufactured, Is per 1001b3.; malt, 2jperbußhel; peas, split, Is per owt.; hops, 6d per lb.; iron, fencing wire, etaplcs, and standards, 20a per ton ; iron galvanised corrugated| sheets, guttering, ridging, and spouting, washers, screws, nails, aud wire netting, 40s per ton ; iron tanks, ss; matches of all kinds, 25 per cent, ad valorem ; milk, preserved, 15 per cent, ad valorem; nails, 3s per cwt.; perfumery and tDilct preparations, not otherwise enumerated, 25 per cent, ad valorem; proprietary medicines, commonly called patent medicine, or any mediciae or preparation of which the recipe is kept secret, recommended By advertisement, bill, or label for the relief of any disorder or ailment, 25 per cent, o<2 valorem; timber, eawn rough, 2s per 100 feet superficial ; timber, sawn dressed, 43 per 100 feet superficial; timber, shingles and laths, 2s per 1000; timber, palings, 2a per 100 ; timber, posts, Ss per 100; timber, rails, 4s pjr 100 ; salt, 20s per ton; spirits or strong waters, not being sweetened or mixed with any article, so that degrees of strength thereof cannot be ascertained by Sykes's hydrometer. For every gallon of the strength of proof by such hydrometer, and so iu proportion for any greater or less strength than the strength of proof, and for any greater or less quantity than a gallon, 14s per proof gallon. Other spirits, being sweetened or mixed, the degree of strength of which cannot be ascertained as aforesaid, 14s per gallon. Spirits, liquors, j and cordials, 14s per gallon; perfumed spirits and cologne, 21s per gallon ; stearine, Id per lb.; tobacco, 3s Gd per lb.; cigars and cigarettes, 6a per lb.; wine, other than sparkling and Australian, 5s per gallon. All articles not otherwise enumerated, which are now chargeable with duty at 10 per cent, ad valorem, 15 per cent. ail valorem ; and that the duties of Customs chargeable upon the goods, wares, and merchandise hereinafter mentioned, imported. into New Zealand, shall cease and determine—viz., almonds (barbary, bitter, and other) for confectionery; bolts and nuts, carriage bolts and nuts, firebolts, shackles, holders, and other iron Gttings for carriages, morocco, roau, japanned, enamelled leather, and tanned and dressed sealskins and goat skins, buggy shafts, bentwheelrims and other bent carnage timber, hickory (unirrougnt;, hatters' gilloons, and hatters' oahcos fine iron brass and copper wire for use inrushmaking, phosphorous, »"J d ?; ronmoDgery su phato of "beet galvanized griudery, sheet zinc, piai" =" °