FINANCIAL STATEMENT.

New Zealand Herald, Volume XLII, Issue 12928, 26 July 1905, Page 5

FINANCIAL STATEMENT.

A PROSPEROUS YEAR. SURPLUS OF. £711,295, INCREASED EDUCATION GRANT. MILLION LOAN TO BE RAISED. [by telegraph.—special correspondent.] Wellington, Tuesday. There were crowded galleries in the House of . Representatives to-night to hear the Budget read. Budget evening is usually one of the driest and dreariest of the session, and the curiosity of the public under the circumstances is • quite remarkable. The ladies' gallery was crowded, though probably very few of its occupants had the remotest idea, about the details and intricacies of colonial finance. Mr. . Seddon's Budget was fortunately not so much padded as usual, and so the ordeal was the sooner over. His time-worn references to providing roads for the back blocks settler, who is, notwithstanding all these promises, still struggling axle-deep in mud, were received with incredulous laughter, as was also, his comparison of his financial critics, whom he calls the pessimists, . to Californian thistles. His reference to a reduction of taxation also raised a smile, and onb • lion, member '. somewhat spoilt the effect by interjecting "on tobacco." THE BUDGET. The -Colonial Treasurer, on rising,' waa received with cheers. He said: Mr. Millar, I have now the honour to submit' my tenth Budget, which I hope will, prove satisfactory, for there is ever a natural l desire on the part of members to have the Statement dealing with the finances of the colony as early as possible, finance being of paramount importance, and the barometer by which the progress of- the colony may be accurately gauged. A very pleasing feature of the Statement arises from the fact that we have been able to provide for an increased grant for deserving aged;! for an ■' increase to the salaries of school teachers, and to largely increase otherwise the grant for educational purposes; to • provide also for the development of natural motive power in our lakes and rivers, for- irrigation and water supply, so essential to Central Otago and to our goldfields generally; and after doing. so, and making provision for Supplementary Estimates, there will still remain a substantial surplus. The transfer of £600,000 last year from the Consolidated Fund to the Public Works Fund marks an epoch well worthy, of note,' seeing that that sum at 4 'per cent, is equal to a saving in interest to the taxpayer of £24,000 per annum. Another matter for congratulation is that we had 1 to the credit of the Public Works Funds on' March 31 last, £861,000,' that' being the largest balance and amount available for many years past, notwithstanding the fact that the expenditure on public works amounted to £1,282,378 during the past year. It is felt that this should be satisfactory and pleasing to members generally. This sum, with the' aid of moneys intended to be raised and referred to later in the Budget, goes to ensure the extension of railways and the construction I of roads, especially those; in the • back blocks. ' " v - f '■' • I:.'";:'• THE INCREASING DEBT. y The increased public debt should not give concern, because, as will be seen from the table attached, a very large, amount of it is directly interest-producing; : that is, those borrowing the money from the. Government • pay the '■ interest. Thus, • the Advances to Settlers and for' Settlements, Departments, and other's, are self-support-ing. In addition to : this, real estate forms a "direct security for the loans referred to. As a matter of fact, the taxpayer during late years has had only to provide interest on about 50 per cent, of the amount of .the increased indebtedness. I v have not, however, the slightest hope that there will be any departure from what has ' in the past, namely, a demand for increased expenditure on public works, especially on railways, in given parts of the colony. ; Each member representing a district,; or member representing provincial districts,, will claim , that certain railways and particular roads should have preference, and because sufficiently ■ large increases have not been made, they will find fault with the Administration. Then, again, if sums are expended, they will proceed to de- : nounce the Government and its Administration for causing an increased indebtedness of the colony, ignoring the fact that they had used strenuous efforts to induce the Government so to do it. - In other, words, if nothing is done, the Government will be blamed. If, on the other hand, something is done, 'fault will still be found. The millennium may arrive some day when public works, roads, and bridges, 'will be removed from the arena of Parliament, and when the system of local government obtaining will obviate the necessity for roads, and ) bridges being referred to in , budgets, or made'the subject of debate' in the House. I'say, the sooner a change is made in this direction the better. In respect to railways,: so long as the State has the construction thereof, and the making of the connections to the several centres of population neces-, sary, for the development of the colony, the railways will necessarily come up for debate. When, however, .the Main Trunk lines are completed, it may . ho possible to fix the expenditure on district railways on somo assured and definite basis, and when this can be done, the accusation of favouriteism in respect to given districts will be a . thing of the past. " REVENUE. I shall now proceed to deal with the Budget, giving to members in as concise and explicit a maimer.as possible the particulars as to tho many transactions of the year; and how. wo stand at the present time, and how the balance is arrived at, together with the proposals for the immediate future." The ordinary revenue amounted to £7,282,870, and other receipts (including £63,200 for sinking fund accretions) to £64,327, making a total of £7,347,197. The revenue exceeded that of the previous year to the amount of £261,484, and was in excess of the Estimates to "the extent of £248,070. Compared with the revenue of the preceding year, stamp revenue yielded an increase of £80,835; railways, £49,775; income tax, . £32,583; Customs, £30,659 ; miscellaneous, £27,003; while land tax, registration, marine, and territorial also gave an increase, amounting in all to £41,143. Somo lion, members will, I have no doubt, be pleased to i learn that tho beer duty fell short by £511 ; of the amount collected the previous year, and, singularly enough, comparing the actual with the estimate, all heads of revenue were exceeded, saving that of beer duty, which fell short by the sum of £3790. The estimate of revenue was £7,034,800, and the actual revenue £7,282,870, a difference of £251,860 more, and £3790 less, or p; net total of £248,070. EXPENDITURE. The amount expended reached' the sum of £6,635 902, which exceeded that of the previous year to the extent of £201,621, of which the permanent ' charges " absorbed) £57,055, and the annual charges £144,566. Comparing the actual expenditure with the estimates, there was a saving of £21,683 in the permanent charges, and of £142,862 in tho annual appropriations, making a total saving for the year of £164,545. Referring again to the excess of expenditure on the , annual charges of the preceding year, I find ■ that the services provided by tho Postmas-ter-General, the expenditure upon education, the increased earning of the rai ! -vays : producing increased expenditure, and unforeseen expenditure of " unauthorised " amounts 1 are accountable for £118, of the excess, and if we add £11,977 in the Justice Department, £2211 for the lunacy unci rh-irit- • ablo institutions, and £3759 for the police,, \\-o reach «i further sum of £17,947, or, 111 I all, £136,517, undoubtedly representing in- ' creased expenditure consequent upon the increased requirements of our country which ■ follow prosperity and increased population. 'J The balance of ,£BOI9 in the excess of ex-

pond it ure wider votes is not worth comment. In addition to tlie ordinary expenditure transfers to the Public Works Fund to the amount of £600.000 were made during the year. ' THE BALANCE.

We commenced this year with a balance of £649.741. and transferred, as I have said, £600,000 to the Public Works Fund, leaving a. net balance of £49,741. The excess of receipts over the expenditure amounted to £711,295, thus producing a balance of £761,036 at the close of the year 1904-5. This gratifying result I have already announced to the public. PUBLIC WORKS FUND. Honourable members who are anxious to keep down the indebtedness per head of the population, and to save payment of interest in or outside the colony, will be deSighted to know that from the Consolidated Revenue there has been transferred to the Public Works Fund during the last fourteen years up to March 31 last, £4,355,000, on which, had the money been borrowed to provide for the same expenditure on public works, an additional interest charge at the rate of £143.800 per annum would have been made to our expenditure. Loan moneys paid to the fund amounted to £1,138,613; other receipts were £ll,6o3: and to these must lie added the £600,000 transferred from the Consolidated Fund and the total reached is £1,750,246. . The expenditure was £1.282,378, including a sum of £62,540 for acquiring the Point Elizabeth railway, the original expenditure on. this line haying been provided out of the State Coal Mines Account. Deducting the £1,282,378: of expenditure from the £1,750,246 of receipts, there remained a balance of £467,868, to which had to be added £393,802 brought forward from the previous year, and this left a balance of £861,670 at the credit of the Public Works Fund to commence the current year with. In addition to this, there Is a sum of £32,937 to be received in respect of loan instalments not paid at the time of the closing of our books. £750,000 worth of debentures belonging to this account fell due during the past year, of which £365,600 was paid off, and £384,400 was renewed.

LAND FOR SETTLEMENT ACCOUNT. The transactions within this account continue to be large and numerous. The purchase money for estates, including expenses, reached a total of £'146,130. Charges under the votes amounted to £8945, and £134,703 was paid for interest on debentures issued. Charges and expenses of raising loans, amounting to £14,134, were also paid to the receipt side. The sum of £730,200, the proceeds of the sale of debentures issied to prorvide for purchases, was credited, and other receipts, amounting to £150,276, together with £12,875 for interest, were received. Debentures to the amount of £1,213,950 fell due during the year, and £1,222,550 of debentures were created and issued to provide for the same. The sum of £565,300 was paid off, and £648,650 was redeemed. The balance at , the close of the year amounted to £716.697.

LOANS TO LOCAL BODIES ACCOUNT.

Up till March 31 last the total amount of debentures created and issued and carried into this ; account was £2,412,100, and the total disbursements have • been: To local bodies, £1,943,443; to Lands and Survey Department, towards opening up blocks of land for settlement, £387,561; and to Public Works Fund, £89,800. In exchange for debentures under the Roads and Bridges Construction Act, 1882, the balance at credit of the Loans to Local Bodies Account on March 31, 1904, was £13,418. Debentures for £185,000 were created and issued during the past year, and refunds of unexpended balances of grants amounting to £1890 were received. Payments on accounts of loans were mad© during the year: To local bodies, £165,883; and towards opening up blocks of land for settlement, £28,895; leaving at the end of last year a balance of £5520 to the credit of the account. Of the.total amount- of debts inscribed to February 1 last, the following figures will show the proportion of the various rates at which the loans were made: Loans at 5 per cent, rate, £7033; loans at 4-£ per cent, rate, £1,038,066; loans" at 4 per cent., £63,729; loans at 3£ per cent, rate, £929,666: total, £2,038,494. On account of the continuation of the stringency of the money market, I have had to refuse "applications for loans totalling £180,012, principally applied for by borough councils, whose valuable resources it is considered would enable them to obtain loans outside the Government, and as there are still so many necessitous local authorities having large areas in the back blocks, and clamouring for loans from the Government, these claims must have my first consideration. The payments of the half-yearly instalments of interest to' the inscribed debts of the various local, authorities continue to be fully and punctually paid.

LAND AND INCOME TAX. The total receipts from these sources was £606,806. As the estimated amount collectable was £552,000, this department of the revenue therefore produced £54,806 more than was anticipated. ' This increase was made up of: Land, £22,854 (estimated £360,000, actually collected £352,854); income tax, £31,952 (estimated £222,000, actually collected £253,752). ' . ■. Despite the fact that the land tax has exceeded the estimates, we are not altogether satisfied with the result. • A further analysis of the figures shows that altogether flftc enhanced value of land in the colony has resulted in an increased revenue from the ordinaay land' tax. • The graduated tax (in which, of course, is included the tax paid by absentees) actually shows a decrease, as compared with 1903-4. This ordinary land tax in 1903-4 yielded £232,800, and in 1904-5 £254,727, an increase of £21,927. The graduated tats, including the aosenteo tax, yielded £192,190 in 1903-4, and £98,127 'in 1904-5,' a decrease of £4063.: Making ail allowances for the loss of revenue caused by the acquisition of properties under the Land for Settlements Act, this clearly demonstrates that the landowners of the colony are. evading the graduated tax. There can be no doubt that this has been done by means of family subdivisions by persons holding large estates. Sixty per cent, of this loss of revenue is attributable to this erosion.

This still continues to give satisfactory results, and is further proof of the steadilyincreasing prosperity of the colony. Coinpared with 1903-4 the figures are: 1904-5, £253,952; 1903-4, £221,369; increase, £32,583.

PROPERTY TAX V. LAND AND INCOME TAX.

The receipts for the last year of the property tax (1891-92) were £356,741, the receipts for the first year of the land and income to (1892-93), land tax, £297,181; income tax, £67,367; total, £364,548. The number of land tax payers has increased during the 10 years ending 1904, by 11,318, equal to tin increase of 90 per cent. The number of owners of land has increased by 24,212 during the 10 years ending 1903, equal to an increase of 26.5 per cent. There lias been an increase of land taxpayers of 81 per cent., and an increase of income tax payers of 133 per cent, in 10 years. The cost- of collection for 1904-5 was: Land tax, 4.28 per centum; income tax, 2.25 per centum.' • THE PUBLIC DEBT. The gross public debt has been increased during the year by the sum. of £2,389.785. and the net debt by £2,339,30-1, but when analysed it- will be found that nearly half the amount has been borrowed for purposes which return to the Government considerably more than is required per annum to provide for interest on the capital for the purchase of estates and closer settlement, £730,200 was raised to enable c; to make grants at a very low rate of interest to local bodies for making roads and bridges, so that our settlers may be able to bring their produce to suitable markets. We borrowed £185,000 for the purpose of developing the State coal mines, and we obtained £33,000 to , start our Fire Insurance Department. A small sum of £10,000 was borrowed to lend again through the Advances to Settlers Office, and £1458 was received for our consols inscription, and has been suitably invested. _ These remunerative self-earning borrowings amount to £961,658, and represent a very large portion of the increase in the public debt Sixty-three thousand two hundred pounds was passed for the purpose of providing for sinking fund payable during the year, and as a result of the conversion operations and renewals an increase in the capital amount of £24,659 took place. To

make a start towards the preservation of our magnificent scenery, and the acquiring of further beauty spots and places of historical importance, we raised £10,000; for public works purposes we raised £1,330,288, including £26,733 towards the completion of the Paeroa-Waihi railway; £45,000 towards the Hutt railway and road improvement . account, and £416,050, representing the balance of the million loan authorised in 1903. Under the authority of last year we borrowed £750,000 under Cue Aid to Public Works and Land Settlement Act, 1904, unci £92,500 authorised by Parliament under the Railways Improvement Authorisation Act, 1904. Taking the population on June . 30 to be, in round ! figures, 920,000, the indebtedness per head in respect of the public debt, exclusive, of reproductive loans, amounts to £31, and upon the balance of the debt, which is reproductive, the indebtedness per head amounts to £34. WITHDRAWAL OF BRITISH CAPITAL. It will be of interest.to members to know that New Zealand's wealth per head of population is £308, the highest in the world. Mr. T. A, Coghlan, Agent-General for New South Wales, speaking recently in London, pointed out that one of the . most notable facts connected with the progress of New Zealand during t hi; past 14 years, during which period the greater portion of the advanced legislation now in force was passed, was the very large decrease in the private capital employed in the colony owned by non-residents. Trustworthy estimates placed the investments of British capital on private account in New Zealand in the year 1891 at £20,500,000 sterling, and these investments had now fallen to £9,500,000, a reduction of £11,000,000 in twelve years. In ordinary circumstances this withdrawal of capital would be considered a very serious matter, and there were not wauling persons who pointed to it as a fulfilment of the prophecy that the social and industrial legislation of New Zealand would ultimately drive British capital out of the country. In the year 1891 the value of property in New Zealand.was 150 millions sterling, and of this 20 millions and a-half, or early 14 per cent., belonged to British investors. At the present time the valuation of property was 222 millions and .the amount of British investments only nine millions and a-half, or less than 4£ per cent. Here then they had the extraordinary position that during the short space of 12 years the New Zealand people had reduced their indebtedness to outside investors to such an extent that what remained of it was now an insagnificent portion of the accumulated wealth of the country, and' while that process of repayment had been going oil the value of property had risen by 72 millions, or 50 per cent., that is to say, from 150 millions to 222 millions. This achievement was a, notable one for a population whose numbers were still considerably short of a million.

, THE MILLION LOAN OF 1904. The money market having first been sounded as to the possibility of floating a 3£ per cent, loan, it was ascertained that owing to the war .in the East the market could not be approached at a. higher price than £95 10s, with the certainty that we should not.net more than £92 10s, and that the public subscriptions would be smail. I judged it ould be more prudent to arrange for the issue of a 4 per cent, loan that would yield us a fair percentage"of cash, in. view of contemplated action in another colony, which was arranging also for a loan issue. There was no time to lose, and therefore early in Decern arrangements were completed, and the Bank of England announced the issue of a million 4 per cent, loan at par, payable March 1, 1912, the list to be Closed within six days. . Deposits and, instalments were payable: £5 per ccnt. on deposit of application, £20 per cent, on December 16, 1904, £25 per cent, on January 24, £25 per cent, on February 21, and £25 per cent, on March 21, 1905, with a discount of £3 per cent, per annum on instalments paid in full on or after December 16, 1904, a. full half-year's interest being payable on January 1, 1905. The public were also offered an option to convert into 3£ per cent, inscribed stock. If 'availed of by December 31, 1906, they would get £103 of stock for every £100 of the debentures, or up to December 31,1908, they would get £101 of stock, after which conversion would be at par. The arrangements made by the loan agents were excellent, and it is ' most gratifying, to be able to say the response to the loan issue was larger than' the most sanguine would have anticipated. . Indeed, nearly three days before 1 the advertised time the applications had reached such a huge figure that our agents, the Bank of England; advised that the list should at once be closed.' which was accordingly done. The sum of £2,526,300 was applied for by 1612 applicants, and it is gratifying to state, that no less than 1349 of this number were for sums of £1000 and under. Hon. members will join with me in the opinion that, considering the very unsettled state of the money -market, a subscription for. our loans of more than two and a-half times the amount required was a splendid result, and clearly demonstrated that our credit in London's financial circles is as high as ever, notwithstanding the attempt by detractors to belittle it from time to time. It is also right to mention that the success of the flotation was fully recognised in London, and was made the subject of general congratulations, as the most successful issue by a self-governing colony for many years past. • .Comparing the result of our loan issue with those of other colonies about the same time, I find that a 10 years' 4 per cent, loan of two millions was issued at £99 10s 4d; and that a 3£ per cent, two million loan issued at ; £96 gave a net return, of something under £92,. only half of the amount being taken up by the public. I have not yet been advised of the cost of raising-our loan, but it is not likely to exceed £25,000. • FINANCE FOR ' 1905-6. = Expenditure: Hon members cannot reasonably, expect any diminution in our estimated expenditure as . long as the population is augmented and the tide of prosperity flows on. The volume •of our produce trade and commerce increases, and as a consequence the Government is importuned on all sides to provide greater conveniences in its postal and telegraphic arrangements, a greater number of teachers in our schools, increased facilities on railways, and a larger expenditure on surveys, so as to get our people placed upon the land as rapidly as possible. Added to this we have to make provision for an increased pension to our deserving aged, for the more complete educational equipment of our children, for the cheapest motive power which will enable our industries to encounter more successfully the keen competition of the day, ! and for interest on our loans augmented from year to year, mainly for remunerative purposes. These are good and sufficient reasons, I maintain, for asking Parliament to sanction, an increased expenditure. 1 propose very briefly to' give an outline oft our estimates of expenditure for the cur- 1 rent year: . The House will be asked to appropriate a total sum of £6,960,713. Although this is in excess, of the amount provided last year, it must bo borne in mind that with an increased population and with increased commerce, the excess is indispensable. The permanent charges absorb £180,325; interest and sinking fund is responsible for £83,017; and £96,567 under appropriating Acts- Turning ■to the annual . votes, the excesses amount to £183,238, being the estimated expenditure over the actual amount disbursed last year, and, as I have already stated, 'members ■ will find that the larger items - arise' in the' Departments of Post 'and Telegraph, Education, Working Railways; and Lands and Survey. These Departments- are responsible for £149,185. Unfortunately, with the growth of our population, additional demands for support of our mental hospitals and Charitable Aid Department are made, which run into some £9000. As our Customs icvenue expands we must expect increased expenditure, and this is set down at £6315. The expense of the general election this year I estimate at £26,000, which will be non-returning, I hope, fdi sonic' three years hence. In the Mines Department we require to provide £1325 au' ii' Colonial Analysis Department, and £455 for the Geological Survey Department to assist in the discovery of fresh fields of mineral wealth, and the development of mineral areas already known. The items I have just mentioned more .than absorb the increased estimated expenditure on annual votes, and I am convinced that members, upon reflection, will find no fault with the figures I submit, which are the result of very careful consideration, after making ; due allowance for the absolute requirements ] of our colony arising from increased popula- i lion and prosperity.

REVENUE. • I have been optimistic in my views of the prosperity of this country during a number of years, and fortunately my impressions and forecasts have been fully verified, and I am still confident that the outlook is most promising as regards our revenue during the current year. Such, being the case I feel justified in submitting an estimate of £8,467,600, which is £121,530 in excess of the actual amount of revenue received last year. I have carefully considered each, head of revenue, and feel satisfied that I am not over sanguine as to the several amounts I have estimated will be received. Our pastoral, agricultural, and commercial business is just as sound as ever. 1 see no reason why there should be any falling off of revenue in connection with any of these pursuits. As population increases and the wealth and resources of our colonists are improved, I am justified in concluding that receipt from customs, railways, stamps, and other heads of revenue, will be increased, and I have therefore added reasonable sums. "Miscellaneous" is increased by £29,622, of which the principal item is £25,000.' derived from the 5 per cent, dividend paid by the Bank of New Zealand upon the half-million preference shares held by the Government on behalf of the colony. It gives me much picas to note that the bank has been doing good and sound business, and has obtained in large measure of success, derived undoubtedly from the general prosperity of the colony, aided by careful and skilful man, agement. I have now placed before you our estimates of expenditure and of revenue, and will proceed to set down the estimated results at lie close of the current year. Our estimated expenditure is £6,960,713, our estimated' revenue £7,467,600, excess of revenue over expenditure £506,887, and balance at dose of year £761,036, estimated balance £1,267,923. For transfer to Public Works Fund, say, £500,000; school building, salaries, etc., £150,000; development of natural motive power, £50,000irrigation water supply, £50,000; total, £750,000; balance, £517,923,. This balance will be, of course, diminished ( by the amount appropriated in the Supplementary Estimates, and for subsequent assistance to the ways and means of the Public Works Fund. The following figures will be read with interest, showing as they do results of a most gratifying nature, i.e., reduced Customs taxation, remissions on railway charges, decreased interest charges, reduction of public debt; and demonstrating our ability to give comfort to the deserving aged, and at the same time having credit balances, and beyond question prove the prosperous times we have had and are enjoying: —(1) Showing the amount transferred from the Consolidated Fund to the Public ,Works Fund, £4,355,000. (2) Raising to the colony of annual interest. thereon, £839,700. (3) Amount paid for old age pensions up to March 31, 1905, £1,174,005. (4) Amount paid in reduction of. the public de'bt, £100,000. (5) Reduction of indirect taxation through the Customs, 1895, £715,605. (6) Hip same through, the customs, 1900, £1,070,361. (7) Remissions of revenues in railway freights, etc,, £680,000. Total, £8,934,671. ... ' .

MILLION TO BE BORROWED. The balance at credit of the Public Works Fund on March 31 last was £861,670, to be augmented by the balance of the 1904 loan not paid in, amounting to £32,937, and it is likely we shall be able to supplement this-by .transferring during the current year, say, £500,000 of our Consolidated Fund • balance. This would produce ways .and means to the amount of £1,394,607. It is quite evident to the Government that there is a general 'consensus of. opinion that -more rapid progress must be made in the construction of our railways, and to that end, and also to enable bridges' to be erected and a greater mileage to be undertaken and completed of roads in our back blocks, the Government have decided to ask the House to provide authority for'the raising of £1,000,000 during the current year, full details concerning which' will be submitted by my colleague, the Minister ..for. Public Works. Having now placed the finance of the colony before hon. members,' it , would be anticipating the impossible for me to'expect that every member would be satisfied, or that fault will not be found therewith. The really sound and , strong position of our finance is a matter for -sincere congratulation, and adverse - criticism under the circumstances would give ground for the,conclusion that there are those in politics whom it is impossible to please. Should the existing prosperity continue, I have every hope in the next Budget of submitting proposals for a reduction of taxation.

AN IMPORTANT DEPARTURE. Ah important departure will be found to liavo been made in' this Statement, finance alone being dealt with, the ' usual reference to the-several State Departments being omitted. This change' will, I hope, commend itself -to .members, seeing the fullest information concerning the Departments will be found fully 'set out in the Departmental reports submitted to the' House. Members will,. I. trust, strictly adhere to" what is contained in the Statement, and confine' their remarks entirely to finance. By the Statement' submitted, and supported in every detail by figures showing the receipts and expenditure, I trust I may have dispelled once and for ever, the conclusion hastily formed and thoughtlessly stated by many who ought to know better, that the * credit balance, or . what is commonly known as a surplus, was simply a question of . book-keeping. 1' have , said "thoughtlessly" with a desire of being generous to those who have from time to time made the statement, in my innocence believing that they would not wilfully cast a reflection .upon those deserving Government officers who arc entrusted with the pi'oper keeping' 'of the ' accounts of the colony, and upon the Controller and Audi-tor-General, .who certifies to their correct-

ness. The system of keeping the accounts is the same to-day as 'it . was many years ago. Virtually the same officers keep the accounts, and they in years gone by could not make the accounts balance, deficits being shown from time to time, to meet which' increased: taxation had to be im-

posed.-'These same officers now show, notwithstanding a reduction'in Customs taxation and a remission in railway charges amounting during the last ten years in the aggregate .to over, £2,300,000, that, as previouslv stated on March 31 last, there was u.

credit balance of £761,036. If the statement is repeated through the course of the debates, 1 think I am within my rights, and it would not be unreasonable to ask ail those who challenge l the present system of keeping accounts to show where and how an im-

provement could-bo made, and, above all, I challenge- them to - demonstrate how they could so juggle with figures as to' prove a deficiency, instead of a credit balanco of £761,036. ■ It will, not be .questioned that £600,000 was transferred from the Consolidated Fund to' the Public Works Fund. The . total, expenditure out of the Public Works Fund last year was £1,282,378. Nearly half that amount was from revenue, and if the balance expended on public works was subtracted from the credit balance of £701,036, there would still be a handsome

surplus left. .It is frequently written and stated' by ignorant persons that non-ex-penditure of moneys on public works helps to swell the credit balance of the Consolidated Fund. There is no connection whatever between the two. There may be a million unexpended in the Public Works Fund, yet it would not increase the surplus in. the Consolidated Fund by one- pennypiece. . INCREASED INDEBTEDNESS. ' Now, unthinkingly, a very large number of persons, including, some members of Parliament, from time to time state that the increased - indebtedness of the colony is. much greater than the colony can bear, or than the- ability of the taxpayer to meet the interest and charges entailed. By the reiteration of this statement, the credit of' our colony is not improved. Nay, more, an injustice is done to it. ' ■

. FIFTY YEARS' PROGRESS. . . In the year 1855, 50 years ago, our population, exclusive of Maoris, was 37,192, of which number 1400 represented births for the year. In 1904 the population of the colony has - increased to 857,539,' the births for ■ that year being 22,756. In 1858 the live, stock, namely, horses, cattle, and sheep, totalled 1,675,440, whilst in 1904 they had increased to 20,331,978. .In 1858 the area of land included in sown

grass and under cultivation was 141,007 _ acres, • whilst in 1904 land under similar cultivation amounted to 13 J B68 J 074 acres. In 1855 exports of the

produce of the colony were £365,867, whilst in 1904 they had increased to £14,601,787. In 1855 the imports were £813,460, whilst in 1904 they were £13,291,694. The total trade in 1855 was £1,179,327, and in 1904 it was £27,893,481. The shipping in 1855 was: Inwards, 88,614 tons; and outwards, 79,825 tons. In 1904 the .inward shipping was 1,154,569 tons, and outwards 1,144,264 tons. The above gives only a bird's-eye view of the progress which has already been made, and which will be eclipscd during the next 50 years. . We have a country which by nature has been lavishly endowed. The area of the colony of New Zealand is about one-seventh less than the area of Great Britain and Ireland, the Middle Island of New Zealand alone being'a little larger than the combined areas of "England and Wales. The population of Great Britain is 40,000,000, whilst the population of our colony, including Maoris, is less than '1,000,000. We have in a small degree laid the foundation of what is destined to be a great' nation.'. We must proceed with the superstructure cautiously, and .the same time energetically. The estimated population of the colony on March 31, 1905 amounted tc 908,114 persons. The gross public debt at that date was £59,912,000 and the net debt was £57,403,632. The gross debt per head was £65 19s 6d, and the net debt was £63 4s 3d. In addition to the natural increase of the colony, the excess of arrivals over departures for the year ending December 31,1904,. was 10,355. ASSISTED IMMIGRATION. Between March 24, 1904 and March 23, 1905, the number of persons who arrived in the colony under the reduced passage' scheme was 1751, and they brought with them capital amounting to £94,711, in addition to which they had a declared annual income of £3396. Capitalising the annual income on a 5 per cent, basis, the total sum of declared capital taken out by these persons was £172,631, and there, can be no doubt that many of them brought out a larger amount of capital than they named ill their applications, so that it may be reasonably assumed that the actual, amount of capital brought into the colony under the assisted immigration scheme exceeds £200,000. I may further add. that under previous conditions extending over a period of 11 years, 3391 persons came to the colony, bringing with them capital and income equal ■ to £623,450, being an average per annum of 281 persons and £56,677. The ascertained wealth of the United Kingdom per head of population is £302, that of France £252, that of United States of America £234, and Germany £156, whilst in New Zealand it is £308 per head of population.

INDICATIONS OF PROSPERITY. The ability to meet our engagements has never been questioned. This has been demonstrated by increased returns from railways, from .income tax, unci especially by the large amount of voluntary taxation subscribed in the purchase of luxuries under the head of Customs and excise duties. In the years 1893-4 it will bo found that 3620 persons paid income tax amounting to £75,237, equalling £20 15s 8d per taxpayer, In 1904-5 the number of persons paying income tax increased to 8934, and the amount increased to £253,951, which equals £28 8s 6d per taxpayer. The people of our colony are envied of the nations, and yet there are amongst us those who are ever railing and prophesying depression and disaster Luckily little or no attention is paid to them or their pessimistic forebodings. Solid facts and improved economic conditions are against the detractors of the' colony. The colony has prospered, is prospering, and will go on prospering, in spite of them, The pessimists are like the seeds of the thistle, blown hither and thither. They settle down and germinate, only to be. eradicated as noxious political weeds. It is a tree country, and their absence from the country, of which they have such a pessimistic idea, would be to its lasting advantage. LESSONS FROM THE PAST. We must not omit to take lessons from the past, - and be warned by the unfortunate conditions obtaining in older countries, especially by the evils arising from the unequal distribution of material wealth, the holding of the land by the! privileged few, aiud the massing of the j people.in the largo centres of population. In this new country care must be taken to avoid overcrowding the cities so common in the Old World. The poverty, vice, degradation, and death engendered there must be to us as buoys to a mariner showing sunken rocks imperilling the ship of State. .

CONCLUSION. ft will be pleasing to members to know that" our population is rapidly increasing, that the volume of trade,lias greatly expanded, that the staple' industries flourish, that capital finds satisfactory investment, and that there is.no dearth of employment; that the' condition of school teachers and educational matters generally is in a much improved position,, that it is open to all our youths to go. from primary schools to the University, and there to be fittingly equipped for the battle of life; and that the colony still proves .. attractive to large' numbers of tourists, who much admire our varied, unique, and! beautiful scenery, and enjoy the sport our rivers and mountains provide. Whilst placing before members the position of the colony in a well-merited, rosy hue, I would warn you that it must not bo led on to extravagance. We must ever be careful and thrifty, leaving nothing to chance, nor doing anything which would lead our colony and its people into on embarrassed position. In other words, the keynote of our safety is sound finance; wo must be economical, .and keep expenditure within reasonable limits. If wo do so, the time will shortly arrive when we shall be able ,to make further remissions of taxation, We must give to the people increased 1 comfort, and something brighter to look forward to, and hope for. Happily, our experiments have so far proved successful, and have been largely copied "by other countries, and to-day even some of those who strenuously opposed, them are willing to concede that what was done was - in the best interests of the people of our colony', and to the good of the Umpire to which we are proud to belong. New Zealand is a fair country, inhabited by a contented and happy people. Material wealth is fairly distributed', and opportunities for advancement are within the reach of all. We enjoy the confidence and respect, of our kindred, and the progressive legislation and improved conditions under which we live, command universal admiration and respect. I am sure it will be the duty, as well as the pleasure, of members to assist in maintaining our colony in its present proud and satisfactory condition.

' A SHORT DISCUSSION. When the end of the Budget had been reached, Mr. Massey asked for tlic production of necessary reports and returns, so that members might give proper consideration to the Treasurer's Statement. Ho specially mentioned the reports of the Railway Department and of the Lands Department.

: Mr. Seddon mentioned some returns that he intended to give the . House, but lie evaded the question as regards the Lauds and Railways reports.

Mr. Massey, during some further brief debate, said there was electioneering in every line of the Budget. He asked that members be given till Tuesday before taking the debate on it. Mi-. Seddon suggested Friday. Mr. Massey said that would only give members two clear days, which was not enough. He drew Mr. Seddon's attention to the fact that he had forgotten his question about the Lands and Railways statements.

Mr. Seddon said Sir Joseph Ward informed him that the Railways statement | was in an advanced stage. (I may men- } tion that it was in print ten days ago, Sir Joseph Ward having produced a final " revise'' of it on the'occasion of a visit from a Napier deputation.) * Mr. Massey pointed out that our finance depended to a great extent upon the revenue of the Railway Department, and to a less extent upon' the revenue of the Lands Department. Therefore, it was necessary that they should have these two reports before discussing tho Budget. Mr. Herdman, asked if Mr. Seddon was going to comply with the law by laying the balance-sheet of the State coal mines on the table of the' House.

Mr. Seddon gave an evasive reply. Some papers were then presented, and the House adjourned at twenty-four minutes past nine p.m.