A FOREING VIEW OF AUSTRALASIAN FINANCE.

New Zealand Herald, Volume XXXIX, Issue 11987, 9 June 1902, Page 6

A FOREING VIEW OF AUSTRALASIAN FINANCE.

Mr. Harold Cox is contributing to the North American Review a remarkable series of papers on "The. National Debts of the World." In the March number, just to hand, he deals witk the public debt of Australasia, and offers a very condensed, bub cleat and suggestive, summary of Australasian finance, and one -which ought to interest all Australasian readers. It gives us our indebtedness as seen from the outside. When the Commonwealth was constituted, by an Act of the Imperial Parliament, which came into force on January 1, 1901, the Federal Government, says Mr. Cox, did not, as in the case of Canada, take over the debts of the constituent colonies, nor has it yet had time to incur any debt upon its own account, though a loan of a million sterling was announced last year. The' indebtedness of the Commonwealth is, therefore, only the aggregate of the debts of the separate States. The growth and present magnitude of these debts are shown in the following table : — Debt of the Separate States of the Commonwealth (in Millions Sterling). 1899State. 1861.1371.1881. 1891. 1900. New South Wales ... 4.0 10.6 16.9 53.0 65.3 Victoria 6.3 12.0 22.4 43.6 49.3 Queensland l 4.0 13.3 29.5 34.3 South Australia ... .9 2.2 11.2 20.3 26.1 West Australia ... — — .5 1.6 11.7 Tasmania — 1.3 2.0 7.1 8.4 Aggregate for Commonwealth ... 11.3 30.1 66.3 155.1 195.1 The increase of indebtedness' here displayed is enormous; and, unfortunately, the population has not increased at anything like the same rate. In the year 1861. the aggregate indebtedness of the colonies that now make up the Commonwealth worked out to £9 13s 8d per head of the population; in the year 1899-00 that figure had risen to £52 2s 2d. Even such an increase as this would not bo a matter for regret if the borrowed money had all been profitably invested. This is not the case. Some of the money that was so easily borrowed on the London market has certainly been spent with more regard to the demands of politicians than to the economic needs of the country. As Mr. Coghlan gently remarks: "The plethora of money has been harmful in many ways, the most apparent being the construction of not a. few branch railways in outlying and sparselysettled districts which do not pay even their working expenses." The construction of such lines lias been plausibly defended on the excuse that they help to develop the country, and render possible the settlement of a large population. That plea may have been reasonable in the early clays of colonial development, when it was so far the policy of the colonial governments to encourage immigration that they even borrowed money for this express purpose. But at present the policy of the Australian States is largely controlled by Labour leaders, who —in the supposed interests of the working classes—wish to keep that huge, andeveloped Continent barren of people. In those States where this policy prevails there is no immediate prospect of the so-called pioneer railways ever repaying the money snent upon them, lor the natural increase in the Australian population has now become extremely slow. HOW THE ACCOUNT STANDS. In round figures the account appears to stand as follows :— The gross annual charge for the interest and management of the Australian debt was, in 1899-00, £7,590,000. From this gross charge must be deducted the contribution towards interest charges obtained from the working of the railways, water supply, etc.namely, £4,540.000. Thus, the net charge on the Australian taxpayer for the Australian debt was just over £3.000.000. In the same year the revenue derived from taxation -was just over £10.000.000. In other words, 30 per cent, of The taxes raised in. Australia is spent in meeting the annual cost of a debt which was incurred—not to meet the expenses of great wars—but to const met works intended for the most part to be in themselves profitable. NEW ZEALAND. The indebtedness of the colony of New Zealand has increased even more rapidly than that of the colonies now federated in the Commonwealth of Australia. The figures are : — New Zealand's Debt. Year. p ei - Head. 1861 £601,000 ... £6 14 1871 8,901,000 ... 33 6 9 1831 ..: ... 29,659,000 ... 59 4 2 1391 38.845.000 ... 61 5 3 1899-1900 ... 47,874.000 ... 63 2 5 A considerate portion of the debt incurred is due to expenditure upon railways— namely, £17,000,000 out of £47,000,000. A further sum of nearly £5,000,000 has been expended upon other public works—namely, telegraphs, lighthouses, harbours, and water supply to the goldfields. The remaining £25.000,000 of the New Zealand debt is accounted for by revenue deficiencies in various years, and by the military expenditure incurred in the suppressing of the Maori risings. The gross annual charge for the New Zealand debt is £1,750,000. Deducting from this the contribution available from railway receipts and kindred sources, there remains a net charge of, roughly, £1,100.030. The tax revenue of New Zealand is £2,900,000; so that the annual cost of the New Zealand debt to the taxpayer is as much as 37 per cent, of the total tax revenue of the colony. In comparing this figure with that for the Commonwealth, it must be borne in mind that part of the Now Zealand debt was incurred in suppressing the Maori risings. [The New Zealand Year Book for 1901 states that " the gross public debt of the colony on March 31, 1901, was £49,591,245, an increase of £1,716,793 on the amount owing at the end of the preceding financial year. Since then we have borrowed £1.500,000, making our indebtedness £51.091,240. The Year Book states that the indebtedness per bead in 1901 was £62 16s lOd. It also says :—"The debt of the colony, as above stated, does not include the unpaid loans raised by the several local bodies, amounting at the end of March, 1900, to £7,057,350, of which sum £5,478,300 was raised outside the colony.'"] A PROPHECY THAT WENT WRONG. It is interesting, says Mr. Cox. to recall a forecast made by Sir Francis Dillon Bell in 1882. Speaking at- the Royal Colonial Institute, he then estimated that the population of Australia and is&w Zealand in 1900 would be 7.000,000 persons, and he added : -- It would require our debt to be £230,000,000 in the year 1900 to maintain the same proportion to population as it bears now, and it is, of course, quite needless for me to say that there is not the remotest chance of our adding 135 millions to our debt in the next 18 years, or anything like it. I am well within the mark in saying that 150 millions will be the outside we shall then owe; while, even if our progress should be no faster than during the last 10 vears, our revenue will not be far from 53 millions, and our commerce nearly 270 millions. li is dangerous to prophesy. The total debt of Australasia has increased by far more than the figure which Sir Francis Dillon 801 l regarded as impossible, and it now stands at £243,000,000, instead of his estimate of £150.000,000. The population is not 7,000.000, but 4.600,000. The total revenue is not £50.000,000, but £34.000.000; the total trade is not £270,000,000, but £161.000.000. These are contrasts over which Australasian politicians would do well to ponder.