THE FINANCIAL STATEMENT.

New Zealand Mail, Issue 1222, 2 August 1895, Page 25

THE FINANCIAL STATEMENT.

'the Colonial Treasurer the Hon J. G. Ward, itf Committee of Supply in the Houae of .Representatives on Tuesday night, read the Financial Statement, of which the following is a precis: —

It gives me pleasure to be again able to congratulate the House and the country upon the satisfactory results of the year's finance. When we bear in mind the great reduction in the spending power of the people, owing to the low prices obtained for our staple products, it is cheering to find that financially the Colony occupies a strong position. I have thought it prudent to make some changes in the form of the public accounts. I may say that the alteration? are made with the object of placing our position still more clearly before the public, and to assist in removing any excuse for the causeless adverse criticism which has unfortunately been so common in this country for many years, and which has undoubtedly tended to injure and discredit our Colony. I shall now proceed to place before you the position of the revenue account. REVENUE ACCOUNT 1894-5. It is extremely gratifying to me to be able to announce to hon members that, notwithstanding the restriction of trade, owing to the abnormally low prices already referred to, the actual receipts for the year just closed have exceeded the estimate I had the honour to place before the House in my last Budget. The estimate of revenue for the year I placed at 14,235,000, exclusive of L 117,800 to be received to provide for. the accretions of sinking funds payable during the y»ar. The actual receipts came to 14,281,995, or 146,995 in excess of my estimate. It is almost unnecessary to remind hon members that 1 was careful to warn them that, in preparing my estimates, we had to reckon with a falling revenue, owing to causes which were not only affecting New Zealand but Avero being felt over the larger portion of the commercial world. For this reason I reduced my estimate by L 133,533 below the actual receipts of the preceding year, and it is therefore very pleasing to be able to inform you that the revenue as a I Avhole exceeded my forecast to the extent of I L 86,563. As previoiisly stated, the actual receipts wore nearly L 47,000 more than my estimate, seven heads of revenue yielding an excess of L 94,561, while three items were less than the estimate by L 47,565. Two out of three items of decrease are —Customs duties, L 30,215 ; and railways, 117,251. I allowed for a deficiency in the Customs receipts of over L 55,000. This has, however, been exceeded by the ' amount I have just . arentionod. It became apparent, some few months before March last, that importers were narrowing l their orders to the smallest possible margin,' and the caution and hesitation exhibited by them were quite natural in the face of an adjustment of the tariff in the near future, to say nothing of the very low and unremunerative prices for produce which regulate business transactions in most parts of the Colony. Besides this, two of over largest drygoods firms closed up their businesses, and disposed of their duty-paid gooda at auction, thus supplying by forced sales large parcels of goods, the market for —hich it is not unieasonable to suppose would otherwise have, been replenished by importations duty-paid within the year. I find also a considerable shrinkage in the duties derived from the consumption of spirits and i wines, '"he reduction in receipts under this I head, however, is not a matter for regret, for it goes to prove that our people are progressively temperate in their habits. I also allowed for a fallhig-off in our railway receipts, but my estimate was not large enough, as I have already stated. The incidents of trade which affected our Customs duties also operated in the direction of diminished railway revenue.

It is much more pleasant to turn to tho items of revenue which show au increase over the amounts I had estimated. Tho largest iter.-:* are represented by revenue derived from sale of stamps, from tho land and income tax, and from the territorial revenue. She increase of L 39,225 over my estimate of stamp rovenue contains some largo sums for succession

duties; henco we must deplore the loss of some very worthy colonists from our midst. At the sam'o 1 time the ordinary receipts de rived from the «sis*al business of the country show an increase, thus proving that the Colony is not so commercially depressed as many pessimists would lead us to believe, Lrnid and income tax combined show an increase ol over 120,000—0 r 14000 for the land tax, and 110,000 for the income tax. Although the teiritoria? receipts show an increase pf 126,166 over the estimate, they are only 13107 over the previous! year's actual revenue. As long as such low prices obtain for our staple products, we must not hope for any increase of revenue under this head; indeed, 1 shall be surprised if the receipts under this head are maintained during tho current year. The other- items of revenue require no special comment. THE EXPENDITURE. I can now pass on to the results of the expenditure of last year, and I find that, as compared with my estimates, the amount underspent was 153.457. Of this sum 127,787 was not required for interest and sinking fund charges. On looking into this large sum I notice that of the* 150,000 set down for interest on Treasury bills only 138,985 was required. The diiEerence of nearly 111,000, I think, can be.fairry claimed as a saving, arising out of the fact that, in consequence of the earlier collection of the land tax, it became unnecessary to issue Treasury bills to the extent we* had^ originally contemplated. Over 111,000 of interest on the 3-| per cent, consolidated stock held by tho Agent-General was repaid to credit of the= interest account of that loan, and several other classes of security were not drawn upon to the extent originally contemplated, andi therefore interest was not required to be paid. The satisfactory results of the interest account show that hostile critics who professed to* know more than I did committed an error of judgment. On examining the annual appropriations, the largest items which call for explanation; are under tho respective heads of "Post-master-General " and the "Department of lands and Survey." Nearly 114,000 less than tho estimate Avas spent under the former, and 115,000 under the latter heading. On referring to the particulars of the balance of the Consolidated Fund at the endl of the year, it will be seen that the sura o£ 111,428 remained in the hands of the Post-master-General. This money was advanced! by the Treasury in order that the department might make the usual payments for the departmental services, but at the last moment it was found impossible to include a large sum for transit expenses of the San Francisco mails. The lands and Survey Department, were unable to carry out the contemplated! surveys of Native and other lands as rapidly as was originally contemplated. In the Treasury class there is a saving of over 19000 : the item provided for revision of assessments could not be used, afld a large saving was effected in the item provided for the payment of discount in londos om the drafts remitted to replenish the public; account.

There are two items amongst the permanent appronriations which call for remark. The first is in connection with 14592 over-ex-pended under " special Acts," owing to extra contributions to hospitals and charitable institutions. No fault can be found with this expenditure, as it resulted from the generosity and charity of our citizens, upon whose voluntary contributions the Government find a proportionate subsidy. The estimate of the amount to be paid over to local bodies out of territorial revenue was also exceeded by Lllls ; but hon members will recognise that; it is very difficult to form an accurate estimate of the amounts payable by way of " thirds " and "fourths," which are purely dependent upon the receipts. RESULTS OF THE TEAR 1894-95. On the 31st March, 1894, we closed our books with a net surplus of L 290,238, to which we add the receipts for the past year, amounting to L 4,406,515, making a total of L4,096',753 ; and, deducting therefrom the ordinary expenditure, amountingtoL4,2(36i729, there remains a balance of 1430,024, out of which the amount of L 250,000 was applied in aid of the public worts fund, leaving a net surplus of 1i180,024 at the close of the past financial year —a result which must be as gratifying to memoers as it is to myself, and must add materially to the general stability of the country. With regard to the issue of Treasury bills in anticipation of revenue, I am glad to inform members that I was able before the close of the year to pay off chose that had been issued during the year, and to reduce the amount outstanding by LIOOO. Hon members will find that the revenue account for the year, showing the receipts and expenditure, now appear in detail in the body of the Budget. On reference to the table it will be observed that the transactions of the year relating to the ordinary revenue and expenditure are clearly shown, while th? extraneous receipts and expenditure, which are simply entries ou both sides of the account, are set out separately. These have been eliminated from the revenue proper, and the result is that the receipts and payments relating to the revenue alone can be seen at a glance and easily followed. The balance at the end of the year, as shown in the account, represents the surplus, which I have already stated to be L 180,024. PUBLIC WORKS FUND. —PART I. As the money for expenditure out of this fund is now contributed by the Consolidated Fund, and as the loan-money which formed this fund has been exhausted, I have under consideration the question whether Part 1. of the Public Works Fund shall be retained as a separate account or not. Outside the L 250,000 transferred from the Consolidated Fund during las/t year, the receipts amounted to 163,049. The expenditure under the annual votes amounted to 1307,182, and 11000 was charged to complete the purchase of the Kaihu Valley Kail way. Entries for L 47,000 of the company's debentures taken over by the Government have also been passed through both sides of the account. Adding the receipts, L36'i,019, to the balance, 1263,658, at the commencement of the year, and deducting 1855,182 of expenditure, there remained a balance of 1285.525 on the 31st March last, against which 1229,07 Sot liabilities were outstanding. PART 11. The loan-money belonging to the North Island Main Trunk Railway line is steadily disappearing - . The balance to commence the year was L 79,197, to which was added a • small recovery of Ll2 belonging to the former year's expenditure. On the other siue there has been charged the sum of 152,(504, leaving a cash balance at the close of the year of 12(5,004, against which 114.017 of liabilities have been incurred. THE CONVERSION ACCOUNT. The, conversion operations of last year resulted in a further issue of 1757,2.5 S of 3-V per cent, inscribed stock, which towards the close

of the year began to sell at over par. The inscription of this stock enabled L 398,900 of various debentures to be converted, and L 283,300 of loans to be redeemed, leaving (after paying expenses) a balance of L 40.193, which will be used to complete the operations. -

The redemption of the loan of 1856 on Ist July, 1894, by the sale of inscribed stock issued for that purpose, resulted in the release of Sinking Fund amounting to L 59,935 ; of which amount L 5514 was used to redeem debentures issued under the Consolidated Stock Act, 1884, and L 54,421 was paid into the Public Works Fund, Part 1., in conformity with the provisions of the same Act. Two hundred thousand pounds of debentures, bearing 4| per cent, interest, issued as part purchase money for the Cheviot estate, were also paid off, and the amount is now carrying only a per cent. rate. In accordance with our new method of dealing with the annual drawings of the consolidated loan of 18S7, the sum of L 33,300 of bonds drawn by the public was paid out of the proceeds of stock issued for the purpose. Offers for conversion of the high-interest-bearing loans are still before the public ; but there is a natural reluctance to part with gilt-edged securities, and consequently the conversions are only slowly effected. THE LOANS TO LOCAL BODIES ACCOUNT. Up to 31st March last the amount raised for granting loans to local bodies was L 648,032, and for grants under the provisions of section 2 of the Government Loans to Local Bodies Act Amendment neb, 1891, the amount of L 116,918. These two amounts, together with the amount of L 89,800 which was created in respect of the debt of L 89.878 8s 9d due to the Public "Works Fund for debentures issued under the Eoads and Bridges Construction Act, 1882, and now inscribed ai debts of the local bodies under Part 11. of the Government Loans to Local Bodies Act, 1886, amount to a total of L 854,800 for debentures created and issued, and the proceeds of which have been carried into the loans to local bodies account. The disbursements to the same date have been L 647,792 to local bodies, L116,91S to Land and Survey Department, and L 89,500 transferred to Public Works Fund, leaving a cash balance of L 290 at the close of the year. • As showing the continued increase of the aggrpgate amount of grants made to local bodies, the crants made during 1892-93 amounted to L 74,440, in 1893-94 to L 8 7,151, whilst during the last year, 189-1-95, the amount of such grants was L 102,832. Experience has shown that, owing to absentees, to the indifference of ratepayers, and to other causes, the existing law exhibits defects and difficulties which should be removed: and during the present session an attempt will be made to conso'idate and amend the existing Acts. The principal feature of the proposal will be ihat the machinery to carry out all the ster-s required to obtain a lean will be found embodied iu the Bill. NEW ZEALAND CONSOLS ACCOUNT. There have been 20 deposits inscribed, amounting to the sum of L!58,025, of which L 155,000 has been invested in securities yielding a 4 per cent, late of interest Of this sum, L 150.000 was inscribed by the | Bank of r>'ew Zealand a;-, a special investment of a portion of the second guaranteed million. By arrangement with the Bank, in ' the event cf the public desiring to make deposits in excess of the limit fixed by law,

the arrangement provided that the L 150,000 referred to, or any portion thereof, should be transferred to the. investing public. At the time the investment was made the Bank of Now Zealand was desirous of finding suitable investments in New Zealand Government securities for the balance of the guaranteed million, in order that they might be held with coin as a reserve against liabilities in accordance with law.

I feel sure that it only requires to be more thoroughly understood that wo are offering a secure investment for 14 years at what may now be called a full rate of interest, to secure a satisfactory flow of deposits properly representing the thrift of our colonists. In connection with the consols account exception has been taken to our having deposited with the Colonial Bank the sum of LJ 50,000 at 4 percent. The deposit made was strictly in accordance with law, was business-like, and advantageous to the Colony. At the time the transaction took place the Colony owed the bank LIOO,OOO, the payment of which did not fall due until June, 1895. On maturity, this was renewed for 18 months at a rate of interest of 3| per cent. The bank thus pays the Colony 4 per cent, on L 150,000, and the Colony pays the bank 3} per cent, on LI 00,000. THE PHBLIC DEBT. During' the year there was advanced L 152,000 for loans to local bodies, L 234,000 for land improvement and the purchase of Native lands, and L 25,100 for the purchase of land for settlements, makina- a total of L 411,100. <! n the 31st March, 1894, the gross public debt stood at L 39,826.415, and on the 31st March last had been increased by L 560,549, making a total of L 40,386,964. Of the increase of L 560,549, the large sum of L 411,100 was advanced as I have before stated. At first sight this increase appears a large sum, but, upon mature consideration, it will be found reasonable enough if we are to carry on successfully the advancement of the country in the direction contemplated under the Acts providing for placing the people on the land and relating to settlement. The interest which the Treasury has to pay upon these loans is considerably exceeded by the receipts derived from the transactions leading to the l'aising of the loans. In addition to this, L 158,025 has been added on account of the liability for deposits inscribed under the New Zealand Consols Act of last session; and the investment of this money produces a profit over the amount of interest payable. Debentures amounting to LI ISO were issued to satisfy old soldiers' claims, and L1'17,800 for the annual accretions of sinking funds, as provided by the Consolidated Stock Act. 18S4. The Government, having acquired the Kaihu Valley Bailway, has become responsible for the debentures, amounting to L 47,000, which hud bean is?usd by the company. For the purposes of the conversion or redemption of existing bonds our loan agents issued further stock, amounting to L 787,255. 'ihe total issue of bonds and of inscribed stock was L1.522,3f>3. On the other side there were redeemed or converted debentures amounting in all to L96!,Bi'±, leaving, as 1 havo before stated, an increaso to the gross public debt of L 560.549.

The net public debt on 31st March, 1894, was L 33,874.493, while on the 31st March last it became 139.035,032 ; showing an increase of L7G0.541. This is accounted for by the increase to the gross debt of L55G,549, by L 331.295 cf released Sinking Fund appropriated according to law, less the natural accretions amounting to L 134,303.

To make our position in this matter perfectly plain, and so that all may at a glance understand it, I subjoin a table showing the particulars of the increase of the publio debt since the 31st March, 1801. This increase amounts to Ll t 556,G14, but of this slim no less than Ll 5 335,591 earns a rate of interest considerably in excess of the rate which the Treasury has to pay. With these few remarks, and with the assistance the table will afford to hon members, I feel sure that the accusations of "borrowing" —using such a term in its Ordinary seiise—must fall to tlib ' ground. Apart from the strictly remuneraI tive chai'actcr of these financial operations, it must be conceded that the primary object—--1 the advancement and settlement of our Colony—has been their sole object, and we should not be blamed for our endeavours to secure this result. In fact I have no hesitation in asserting that were a policy of inaction adopted in thia country it would result in widespread damage, not merely to any one class, but to all. In 1889 the annual charge for interest and Sinking Fund was L 1,866,588, while in 1h95 it 1 was Li,056,970. The net indebtedness per head in 1889 was L6O 12s 2d, and in 1895 it was L 57 9s 9d, a reduction of L 3 2s 5d per head. Considering the enormous amount of ' public works that have been carried on throughout the Colony during the past year, and the fact that our population has not so largely increased as could have been wished, such a marked reduction of indebtedness per head must give general satisfaction. INDUSTRIES AND COMMERCE. To assist the industries of the Colony, the Government have been making inquiries as to markets for our surplus products. Great Britain imports L18,001J,000 worth of timber. An exxjert was sent to London to push the timber trade, and by the reports received from the Agent-General there is no doubt that a considerable trade can be opened up in our New Zealand woods, for street-paving and for carriage-building, furniture-making and other uses. Trial shipments have been sent to London from Auckland and the West Coast of the bouth Island, and a shipment is now being despatched to the Cape of Good Hope. It is confidently expected that these may prove tho forerunners of large orders. By the courtesy of the Victorian Government copies of the report of the Commissioners sent by them to enquire into tho prospects of trade with India, China, Japan, &c, were obtained, and there are good grounds for believing that many of our products will find a market in those countries. The result of the visit of the Victorian Commissioners lias been that large orders have been received by that coleny for various articles, including scoured wool, butter, cheese, lard, bacon and hams, jams and jellies, canned fruits and preserved meats. All these can be exported in large quantities from New Zealand; and it only remains for negotiations to be opened up and transit a» a reasonable rate provided. When it is mentioned that the imports to New Zealand from India in 1893 amounted to over L 210,509, the question of obtaining return cargoes from that country does not seem a very difficult one to solve. LAND AND INCOME TAX. \ The revenue collected during the year was L 370,079, being L 20,079 in excess of the estimate. The amount of land tax outstanding on 31st March, 1895, was L 472, all of which was made up of sums for various reasons not . immediately recoverable. ! Considerable attention was given by the department during the year to the revision of the returns of income made since the tax came i into force. Very many of these returns were found to be wrong, and thoir correction has resulted in the addition to the revenue of the entire surplus over the estimate. The work of reviewing the land-values fixed in 1891 was undertaken soon after the Amendment Act of 1894 was passed. Some shrinkage in values was expected, but this has not been so great as was anticipated. Ihe exact figures are not yet available, but the reductions in values warrant mo in estimating that the combined taxes will not produce more this year than L 300,000. It has been the opinion of the Government for some time that Native landc occupied by European tenants should, in respect of the interest of the Maori owners, be subject to some contribution by way of land tax. seeing that these lands have benefited equally with the other lands of the Colony by the general progress of the country, and the expenditure of money, both public and private, within it. The Government therefore determined, as the lands were not exempted by law, to collect, of the larjje sum owing, the ordinary land tax for last year only from the tenants, leaving them to recover from the owners. A considerable sum has been collected, but several tenants have been advised erroneously, as I believe —that their power of recovery is not olear. I propose to remedy any possible defect by an amendment of the Act, which I shall shortly submit to the House.

Former Colonial Treasurers in past years collected taxes at dates to suit the requirements of the Colony, and this without the adverse and extraordinary criticism to which my action last year were subjected. However, as unexpected animadversions, calculated to seriously affect the financial position of the country, Were made against the alteration in the date of the collection of the land tax last year, I deem it essential to take steps to prevent the possibility of such adverse criticisms again being possible from similar causes. Under these circumstances I have deemed it advisable, in the best interests of the country, to prepare a measure to permanently fix the date for collecting this tax. The regulations issued in January last with regard to foreign traders and to shipping owned outside New Zealand have, I am informed, worked well except in one particular. As to this, I will consider whether the system of annual licenses adopted in many other colonies will not answer the purpose better than the present plan. DEPARTMENT OF AGRICULTURE.

This department still continues the good work commenced same three years ago. The past year has been most discouraging to those connected with agricultural and pastoral pursuits. The prices obtained for all products have been lower than anything experienced for many years. The dairy industry promised well at the beginning of the season, but towards the end prices fell. During last session a new Dairy Act was passed, and, in addition to incroased powers of inspection, authority was taken whereby the Governor by Order-in-Council could declare that all produce had to be put iu a cool store, and there graded and cooled prior to shipment. It was decided to deal with the butter only, and arrangements were made with the locaL freezing companies for the necessary storage. The grading has resulted in a very marked improvement in the quality of the later shipments ; and the wisdom of the appointment of competent and impartial men to inspect the produce prior to shipment is admitted by all who have thegeneral welfare of the industry at heart. To

encourage the industry, no charge was made for the first month's storage, cooling or grading. A number of new factories and creameries have been started; and there are now at work 218, an increase of forty". 'I he quantity of butter shipped Was 60jG56 cwt., valued at L 242.357. 'I his shows a decrease for the year of 1814 cwt in weight, and of L 23.572 in value. Of cheese, there was shipped 54,947 cwt, valued at L 109.157. or an increase of 17,584 cwt, valued at L 26,140. It is proposed during the off-season to start dairy schools, for the purpose of giving instruction in the management of milk and manufacture of »utter and cheese.

The fruit and dairy experts have been busily engaged, and their efforts to impart instruction have been highly appreciated. The other branches of agriculture have not been neglected, and numerous leaflets on different subjects have been issued from time to time. In addition to Giir exports of meat in a frozen state, the feasibility of shipping livestock and chilled meat has now been successfully demonstrated, and this will to a great extent remove the objections formerly urged against our frozen meat. The stock throughout the Colony are generally in healthy condition. POST OFFICE SAVINGS BANK'S. The deposits during the year 1894 were JL2,252,862 (3s lid, and the withdrawals L 2.268.624 8s 4d. The withdrawals exceeded the deposits by L 15,762 Is sd. For the previous year the deposits were L2.386,08a 10s 7d, or L 133,227 3s 8d more than in 1894; while the withdrawals amounted to L 2.122,521 16s Bd. or L 146.102 lis 8d less than the amount withdrawn last year. During the first two quarters of 1894 the withdrawals were during the last two quarters of the year the deposits exceeded the withdrawals by L 73,173 16s sd. There was an abnormal increase of deposits during the first quarter of 1895, the total sum deposited amounting to L 725,273 13s. The withdrawals were 1568,448 3s 6d, so that there was an excess of deposits of no less than L 156,825 9s 6d for the quarter —a result believed to be largely due to the reduction of the rate of interest on fixed deposits by the banks and other financial institutions. GOVERNMENT LIFE INSURANCE DEPARTMENT. The condition of the 'Government Life Insurance Department continues to afford every satisfaction. The funds at the close of last year amounted to considerably over two and a quarter millions sterling, and at the present date exceed £2,300,000. The sums assured, with bonus additions, amounted at the end of the year to nearly nine and a quarter millions. The commercial depression of the past twelve months, due to the low prices ruling in the Home markets for the Colony's chief staples, did not appreciably affect tho volume of new business secured, the policies for the year bavin," - amounted to £729.013, as compared with £740,428 for 1893. The Act which was passed last session extending the department's powers as regards investments on mortgage is proving an advantageous measure, and desirable securities at satisfactory rates are now being freely Offered. PUBLIC TRUST OFFICE. By the Public Trust Office Consolidation Act of last session the functions of this important office are so clearly defined and the powers of the Public Trustee so enlarged as to render the office capable of affording services of a wider scope, and of being more attractive for the purpose for which it is mainly designed —of affording to the estates of deceased persons the guarantee of the Colony for a faithful administration, and for the security of the invested funds. The business of the office continues to increase, and at the close of tho financial year the total number of estates in the office of all classes was 2086, of the total estimated capital value of L 1,562,268. The best index to the public confidence in the office is in the increase in the number and value of the estates placed in tho office by wills or instruments of trust, and these properties, at the close of tho financial year, had increased in number from 371 to 392, and in value from 1543,238 to L 586.813 In this year's Estimates I propose to ask the committee for a sum of L 1272 to meet the deficiency whieh has resulted during the year from the realisation of bad and doubtful securities on which the capital funds of the office had been invested. This deficiency will bring the total amount up to Ls3<o of all such deficiencies proved by realisation, and will be met as formerly out of the profits of the office. The administration by the Public Trustee of the reserves subject to the West Coast Settlement Reserves Act, 1892, is _ regarded generally with increasing satisfaction by the Native owners, and is promoting settlement with satisfaction to both races. An area of 33,389 acres of these reserves, formerly unoccupied, has, since the passing of the Act, been leased in sections of an average area of 172 acres. The income of the Native owners has already risen to L 15,470, and will continue to increase, for tenders ar3 now invited for leases of an area of upwards of 16,000 acres more of the lauds which the Natives cannot themselves occupy, and could not more profitably employ than by letting them to our settlers. Of the Native reserves vested, subject to other Acts, in the Public Trustee, the income from lessees amounts to L 7788. ADVANCES TO SETTLERS. The Government Advances to Settlers Office was established by the Act of last session for the purpose of relieving the settlers to whom the high rates of interest for loans on the mortgage of land, with the heavy incidental expenses, had become burdensome, and of thus removing an obstruction to the progress of tho Colony. And such has been thefall by which the passage of the Act has been followed in the rates of interest on private mortgages generally, that this result alone may be said to have more than justified the measure. A low rate of interest encourages, improvements, fosters industries, and increases the avenues for employment. The total applications to the 30th June, dealt with by the Board, were 1552, for L 559,855 ; and, of these, 965 were granted for loans amounting to L 354,907. 'J he advances have, it is believed, been authorised with prudence, and a due regard ior the public safety. At the same time, it must be apparent that amongst the many hundred applicants for loans there will be found some who consider themselves aggrieved. _ Such complaints as these are sure to arise in dealing with a large business of the character which the Colony has now undertaken ; but I am convinced that time will prove the wisdom of the course pursued by the board. In the early stages of the administration of this measure—the first of its kind in this country—there were delays inseparable from that period of necessarily careful consideration as to the steps whieh should be taken in an untrodden course. But the difficulties have been overcome, and now, as soon as the applications are received with the required

valuation fees, and are found] to be in order, every effort is made to have the valuation* effected and the applications considered with the least possible delay. For the consideration of the application for advances, the values of the relative securities are estimated by trustworthy men, and thew? estimates are reviewed by chief valuers specially appointed for the purpo3e. ifWiwa INDUSTRY. The outlook on the goldfields of ihe Colony is very promising indeed. A very large amount of foreign capital has heen invested in the mines on the Northern fields, and tfeis is extending to the quartz mines on the Wes& Coast. The dredging operations in the rivers in oiasro have proved very profitable. Generally tho progress of the mining industry audi the numerous inquiries now being made for auriferous areas throughout the Colony, together wiih the largo capital already invested in the industry, demand that greater facilities than at present exist should be afforded towards prospecting. With the view, accordingly, of affording encouragement for the expenditure of capital on mining in outlying districts, it is proposed to introduce a Bill to provide for granting areas for a limited time to persons with sufficient capital to enable them to carry on prospecting operations on a largo scale. It is also proposed to increase the subsidy payable to individual prospectors under the existing regulations, in order to encourage mining associations and local bodies to send out prospecting parties in their respective districts. OAving to the provision made last session for prospecting deep levels, there are reasonable expectations that rich auriferous lodes will shortly be found at greater depths than have hitherto been worked in this Colony. LAND SETTLEMENT. During the 12 months ending the 31st March last, land settlement moved steadily forward. The number of selectors and parchasers of Crown lands during that period was 2631; but as the conditions on which a portion of the lands were disposed of do not necessarily imply occupation —such as pastoral runs, town sections and miscellaneous leases —we may deduct these and still get 1984 selectors who may be said to have taken up lan<!s for permanent settlement. The same figures for the previous year were 2281. This shows a decrease of 297 selectors. Taking into consideration the fact that land suitable for settlement are becoming more and more difficult of access each year, the result of the year's transactions must be looked on aa satisfactory. In addition to the above 10 associations had selected blocks, but, as thß ballots for individual sections had not taken place on the 31st March, they are not included . 1 hey number 491 members. For the same reason 86 selectors under the improved farm system are not included, the preliminary arrangements only having been made. If all these figures are added we shall find that up to that date arrangements were practically complete for settling 2561 settlers on the land. The greater number of these settlers hold their lands under the lease in perpetuity, by the conditions of which improvement and residence are compulsory. The number of selectors for cash has gradually been decreasing for some years. In cases were lands are thrown open for optional selection, however, it is found that there is a slight preponderance in favour of the lease with a purchasing clause over that of the lease in perpetuity. The total territorial revenue for the year on current and new transactions was L316,1C6 lis 9d, an increase on that for the previous year of L 3107 4s lOd. As against this there is an increase in the arrears due to the Crown of t. 3788 5s lid, which is due no doubt to tho low prices for stock and produce which have prevailed during the past year._ During the coming year tho Government will offer for selection some very good lands in the Awarua Block, and others in other parts of the Colony, for which many people are waiting. It is expected that some of the recent acquisitions in what is known as the King Country will be sufficiently advanced as to survey and roading to be thrown open. IMPROVFD FARM SETTLEMENTS.

A new system of improved farm settlements was authorised by the Lands Improvement and Native Lands Acquisition Act, 1894, which is intended to meet tho difficulty of providiug work for the unemployed, and at the same time make them useful and permanent settlers on the land. Under the provisions of this Act blocks are set aside in suitable localities, to be occupied by men selected by the Commissioners of Crown Lands, in areas varying from 10 to 200 acres, and assistance is given by the State by way of advances to cover the cost of clearing, house-building, and grass-seed, if required, the clearing, &c, being limited to 100 acres. The lands are burdened with the amounts advanced by the Government, on which the settlers pay 4 per cent, interesi, in addition to the rental of the land. Up to the present date 18 settlements have been formed, the area set aside being 21,202 acres, which will be allotted to 193 settlers, but up to the 31*t March the actual allotment of 9730 acres to 107 settlers only had been completed. The area already felled is 4048 acres, and the area grassed is 1469 acres. The amount advanced to settlers up to the 31st March was L 5698 4s lid, and the value of the improvements on the land, including the Government advances, was L 6964 19s 3d. It is intended to introduce the half-time system into all these settlements so soon as it can be arranged—several are already under it—and it is hoped by this means to find sufficient employment for the settlers to keep them going, whilst at the same time to allow them time to improve their farms. It is believed that the system just started will offer to those who are not in a position to secure lands otherwise a chance of obtaining a home, and at the same time relieve the labour-market frcm congestion. LAND FOR SETTLEMENTS ACT. Details under the operations of the above Act have already been furnished to Parliament, and the following summarises them: — Up to the 31st March, 1895, there had been actually purchased eight estates, containing 15,104 acres 1 rood 15 perches, at a cost for purchase, roading, and other expenses of L 65,257 2s 4d. Arrangements have also been completed for the purchase of ten other estates, containing 36,597 acres, at a cost of L 130,304. .In the estates which had been offered to the public prior to the 31st March a large amount of successful settlement had taken place, and since that dale two other estates have been offered for selection, the whole area of which was taken up at once, and for which there were many more applicants than the land would satisfy. On only one of the estates offered for selection up to date was there a resident at the time of purchase by the Crown, but there are now 120 lessees holding these lands, of whom —ati 31st March —61 were resident. The rental of the lands leased up to 31st March showed a return of 4T4 per cent, on the capital invested.

At the present time there are several desirable estates under offer, with which the

L&ad Purchase Boards "will very soon proceed to deal. KKSCdIFTION 04? RAILWAY CONTBOL BY THE GOVERNMENT. Pursuant to an Act of the General Assembly passed last session, the management of tbe railways reverted to the Government on. the Ist January. 1895. 'Considerable reductions have already been Mude in rates and charges for colonial products, and in some cases there are already indications of an increased volume of traffic. This makes it imperative that steps should immediately be taken to make provision for a corresponding increaso of rolling stock. We have also endeavourod to further the cause of education, and at the same time to popularise the railways by conveying school children and their parents at nominal rates to both town and country. In this way a more extended knowledge of the country and its resources has been made known to those who otherwise would have had no such opEortunity. Very general satisfaction has een expressed with the arrangements made for this purpose. Owing to the diminished yield of wheat the railway revenue has suffered to a considerable extent; but the recent rise in the price •of grain has been an incentive to farmers to ♦sew much larger areas this year than hitherto. The opening of the Kotorua line is an historic event long lookpd forward to, and likely to lead to a great development of our tourist business* Already much larger numbers than heretofore have visited the thermal wonderland, and the resources of the district have been taxed to the utmost. Large ad-» ditions are being made for the accommodation of tourists and excursionists, who are certain to take advantage of the through railway communication during the coming season. Sly colleague tho Minister for E ail ways xvill place more fully before the House the intentions of the Government as to its policy for the future working of tho New Zealand railways. OUR TELEGRAPH CABLES. A new cable across Cook Strait, from Oterangi "Bay to White's Bay, 31 knots hi length, was laid on the 7th May last by the Terranora. This cable was ordered last year in anticipation of the breakdown of the old three-core, originally laid in 1866. With the new single conductor, operated by the Wheatstone automatic instruments which have been introduced since my last Statement, it has been practicable to cope with the telegraph traffic between the North and South Islands, notwithstanding the loss of the Old three-core cable, which has been abandoned. Another single-core cable has been ordered from England, and is expected here in time to be laid in December. The Wanganui to Wakapuaka cable has been permanently duplexed, materially assisting in overtaking the telegraph work between the two islands, as well as that between the North Island and Australia. It is deserving of note .that the cost of the cable-steamer Terranora, including the expenses of purchase of new cables and repair- • ing of old cables, amounts at the present time to L 825 3; but had the Government adopted during the last year the former system ot employing a steamer from outside the Colony to do the work which the Terranora has done the actual cost would have been L 16.000, so that by utilising the Terranora the Government has not only saved the cost of the new cables that have been laid, but also the cost of the steamer itself. Then, in addition to this, there was LBOOO to the £ood over and above what the expenditure would have been. This is extremely satisfactory. The time has now arrived, however, when the Terranora should be replaced by a new steamer. POST AND TELEGRAPH CONFERENCE. The Conference met at Hobart in February last, and was attended by Ministerial representatives from all the colonies. The meeting was to have taken place in Melbourne,' but, at my instance, the other colonies agreed to meet at Hobart, and on a date earlier than that originally fixed, in order that I might, on my way to London, be able to attend—a consideration for my convenience of which I fannot sufficiently express my appreciation. The principal business transacted at the Conference affecting New Zealand was that relating to ocean mail and telegraph cable services. The Conference, on a motion submitted by me, reaffirmed the desirableness of establishing a four-weekly mail service between Australia,' New Zealand and Vancouver, alternating witxi the present San Francisco mail steamers, so as to provide a fortnightly Pacific service.

Besides reaffirming the desirableness of the construction of the Pacific cable, it is gratifying to be able to sbate that the Conference adapted another motion of mine, under which the amounts hitherto guaranteed bjjr the colonies in respect to the New Zea-land-Sydney and Eastern cables were materially reduced, thereby affecting a considerable annual saving to this Colony. Not bnly did the motion secure the continued adhesion of Victoria to the cable guarantee agreements, but the reduction of the colonies' liabilities was obtained without increasing the press rates over the New Zealand-Sydney cable, which at one time seemed inevitable.

Uniform ocean penny postage was also discussed, but the time was regarded as inopportune for making any alteration in the existing rate.

CONCESSION ON COST OP MANAGEMENT OF OUR INSCRIBED STOCK.

Upon assuming the position"l have now the honour to hold, my attention was called to the charges made by the Bank of England in connection with the management of our inscribed stock. These charges were originally L6OO per million, but after ten millions had been reached the Bank lowered the rate to L 550 on the succeeding millions up to fifteen millions, and a further concession was made of LSO per million on the remainder of the amount inscribed in the bank books. I am aware tbat this matter had not been lost sight of by my predecessors, and our present Agent-General with the Agents General of the other colonies had already made strong representations to the Bank authorities to have the charges reduced, but without success. Upon my arrival in London I determined that further efforts should be made to reduce the existing charge, then amounting to over LIB.OOO per annum, and, accompanied by the Agent-General, I was favoured with ■ an interview with the Governor and the Deputy-Governor, who then promised to reconsider the whole question. At a subsequent meeting, the Governor informed me that the Bank had decided to make a reduction of LIOO per million'per annum.. This reduction, dating from the Ist May, 1895, upon a total of upwards of ' 36 millions of inscribed stock, represents a saving of L 3600 per annum—a valuable concession, you will admit; but I am strongly of opinion that the rate is still too high. It is right, also to mention that the' Bank has waived its special charge in connection with

the conversion of outstanding Government debentures into inscribed stock, and is prepared to make any further inscriptions of a similar nature free of charge, out-of-pocket expenses excepted. THE MILLION AND A HALE LOAN.

Somewhat lengthy reference is made to the floating of this loan under the Advances to Settlers Act, 1894. After mentioning that the tenders for the loan totalled L5,9(50,400, that the average price realised Was L 94 8s 9d, ar.d the amount payable to the Colony Ll,41(»,601 2s, the Treasurer goes on to state t ■ —Now, hon gentlemen may think that, as the raising of this loan was attended with so much success, the operation itself Was of a simple character ; but I can assure you that such Was by no means the case. In the first place, the determination to fix a lower rate of interest for our new loan caused, as you may imagine, great anxiety, and was onhy decided upon after the' mast careful consideration ; and I shall not, I hope, be accused of divulging matter of a confidential nature when I assure the House that some of the highest financial authorities in London were of opinion that a 3 per cent, loan would not be likely to prove successful. It is my pleasurable duty to state that our loan agents were indefatigable and untiring in their exertions to insure the spccess of the loan, after Ave had decided upon the rate and the minimum price of issue, and iir connection with the splendid result I am not dosirous of taking to myself any credit which properly belongs to them. I have also to thank the Governor of the Bank of England for his valuable advice and assistance. To the general manager of the Bank of New Zealand, then in London, and to the local manager, I am also imdebted for the courtesy and information they so willingly extended to me. The Queensland and Western Australian Governments came out with 3j per cent, loans immediately before our own 3 per cent, loan was announced; and I have had some calculations made comparing the results of the average prices of their loans with our own. I may here mention that the Western Australian loan w r as issued with an alternative curency, namely, 20 or 40 years ; while the Queensland and our own earry a 50 years' currency. The average annual charge per LIOO of stock on each of these loans (of course leaving out of consideration the expenses of floating), is as follows :—Queensland loan, which averaged LlOl 12s 7d, gives an annual charge of L 3 8s 7d per cent. Xhe Western Australian loan, which averaged LlO3 Is 4d, gives an annual charge of L 3 7s 2d per cent, for 40 years' currency; L 3 5s lOd for a2O years' currency; and L37s 4d for aSO years' currency. New Zealand 3 per cents., which averaged L 94 8s 9d, gives an annual charge of L 3 4s (3d per cent. And now, applying these figures to the one million and a half loan, I find that, notwithstanding the prices over par obtained by the 3J- per cent, loans of Queensland and Western Australia, the price our own loan realised, although under par, effects a saving to our taxpayers, as compared with Queensland, of L 3062 10s per annum, or L 153,125 for the full period of 50 years. And, compared with Western Australia, there is an annual saving of L2OOO on the 40 years' currency, or LBO,OOO for the full term, or a I saving- of LIOOO on the 20 years' currency, or L 20,000 for the full term. But supposii g the Western Australian loan had a 50 years' currency, then the comparison would show an annual saving of L 2125, or L 106,250 for the full term. These figures speak for them-, selves, but I will take one more illustration of the advantage derived from a 3 per cent, loan over a 3|- per cent, loan, both having a currency of 50 years. Taking the 3g- per cent, loan at par and the 3 per cent, loan at L 94 8s 9d, the annual saving effected on a million and a half loan would be L 4125, which represents a saving of L 206,250 for the full period of 50 years. Furthermore I can assure you that in the annual charge I havo takeninto co" sideration the amount rcquiredto restore the full capital charge by the time the loan falls due. This Saving of the taxpayers' money may be stated in another and even more forcible way. Take, for instance, the L 4125 just referred to. Now, this amount, if invested' at 3 per cent, compound interest, would, by the time our loan expires, reach in round figures the large sum of L461>,000, or if compounded at 34- per cent, rate, it would produce over L 500.000 during the same period. With these figures before you, I am justified in feeling a profound sense of satisfaction at having been, in my humble way, the associate in carrying to a successful result what, in my opinion, must be termed a splendid operation—an operation which, in addition to the enormous advantages gained by bringing money down to a level that admits of its being profitably employed by those who require it to develop the industries and commerce of the country, again enables New Zealand to lead the van of new and beneficial undertakings amongst her continental neighbours

THE COMMERCIAL POSITION OP THE COUNTRY.

One has become so accustomed to hear pessimists decrying ihe commercial position of the country that it would seem almost a hopeless task to attempt to convince these detractors of New Zealand of their folly. This pessimism has, in truth, become with some an incurable disease. The great difficulty which has in recent years confronted all producing countries has been the steady decrease in the prices of the natural products of the soil. There are many causes assigned for the downward tendency which has taken place in values. Some attribute it to monometallism, others to over-pro-duction ; and again, are to be found those who believe that the system of assured and rapid transit has so developed all over the world in our own times that the former position of values, which had been maintained for a continued period at a high level, Las for ever disappeared. Whatever may be the causes, it is beyond question that a marvellous transformation has taken place, and that the duty is forced upon statesmen to assist in the solution of what is recognised to be a great and intricate problem. In this matter New Zealand has not lagged behind. The Government have endeavoured to apply common sense to lengthen the reach of commercial activity; and I take it that it will not be disputed that one*,of. t the first essentials for a producing country is* not only to create an increased output of its products, but to have new markets to which to send those products. The more outside markets to which we can get access the greater will be the competition for the purchase of our goods. The Govern- i ment, believing that the true policv for this ! country is to assist the settlers to find fresh markets, have, subject to ratification by j Parliament, entered into reciprocal tariffs i with South Australia and Canada, by which ' interchange can be effected with them of \ some of our products. BANK ASSETS COMPANY. I deem it my duty to state that in my opinion the present position of the Bank of New Zealand Estates Company is far from '

satisfactory. Hon members are aware that this company owns largeareas of land, which, whilst in many cases suitable for olosor settlement, are not now worked to the best advantage. Attached as the company is to the Bank of New Zealand, I am convinced that it will be advisable at an early date to seriously consider in what manner this intimate relation can be modified. At the same time I may say that no hasty treatment of this important matter should bo entertained. In my opinion the subject is sufficiently important to warrant the special consideration of a select committee of both Houses. RECIPROCITY WITH BOXTTH AUSTRALIA. I will first deal with the tariff treaty between South Australia and New Zealand. Since this tariff treaty has been published some of the highlyprotective colonies of Australia have taken exception to it, and have gone out of their way to endeavour to prevent New Zealand from sharing in the benefits of intercolonial trade. It does not require much thought to see that the very strength of the position is to insure that there should be special concessions for Is'ew Zealand, because, if the treaty I have referred to had general application, there would be no advantage in having a treaty at all. But it must be borne in mind that the treaty with South Australia does not prevent us entering into similar arrangements with other colonies upon such articles as may be agreed upon, In other words, we can send to any other colony every article we are agreeing under this treaty to send to South Australia, and South Australia can do likewise. Our concessions apply to the articles we each receive. If Victoria has anything outside the four articles we have agreed to accept from South Australia in exchange for goods from this Colony, we should be delighted to consider a proposal from them, and I have no doubt that South Australia would be equally pleased to treat with them. For Sou£h Australia or New Zealand to adopt the policy of standing by and letting the highly-protective colonies exclude them from the benefits of Australasian trade would, in my opinion, be suicidal. In considering the reciprocity treaty with South Australia, I would ask lion members to recognise that this is but the thin end of the wedge, and what is now being proposed to be done may lead the way to further desirable concessions between the other Australasian colonies. This should assist rather than retard, as alleged by some of the colonies, the Federation movement. It is not easy to calculate what trade will be created under the reciprocal tariff with Pouth Australia. A year or two's experience will be necessary to enable a fair comparison to be made. I have had a careful estimate prepared of the probable loss of revenue to this Colony during the first year's operations of the treaty, and I think I am within the mark when I state that it will not exceed L6OOO, an amount I have provided for in the estimate for the year, and have left a considerable margin to spare in case my judgment should be at fault!

I can only say that I trust that honourable members wjll view impartially the proposed trade arrangements with toouth Australia. That such arrangements are certain to become the forerunner of other treaties, which in the ordinary course must add materially to the wealth of this country, I am firmly persuaded. RECIPROCITY WITH CANADA. I feel sure that it will be gratifying to all in this country to know that a tariff treaty has been arranged (subject to the approval of the Legislatures of both countries) between Canada and New Zealand. The main features of the treaty are that some of our great staple products will be admitted into Canada free. Under the proposals a considerable expansion of trade may.be looked for in the products brought forth by country settlers, as well as of trade generally, in the Colony. A s soon as the. necessary preliminaries to confirm_ the proposal have been completed, there will be a free market between Canada and New Zealand for wool and woollen manufactures, blankets, flannels, tweeds, rugs, live stock, frozen and fresh meat, bacon and hams, fish, hides, condensed or preserved milk, flax, barley, oats, wheat, wheat-flour, seeds, binder-twin©, coal, kerosene oil, safes, organs and pianofortes, tallow, lumber and timber. In addition to the articles on (the free list named above, concessions in favour of the following articles are made : Should a duty be placed in New Zealand upon agricultural implements, they are to be admitted free from ! Canada, and a concession of 2k per cent, below the general tariff rates is also provided upon twine of all kinds, ropes, cordage. As Canada is a large, manufacturer and exporter I of binder-twine, ropes and cordage, the competition which will ensue in this country in that industry will remove any friction that may have existed, and insure at least a fair value upon this article. There will also be a deductiou equal to 10 per cent, off the Customs tariff upon leather, and 5 per cent, upon boots and shoes, harness and saddlery as between the two countries. This latter proposal will, I trust, meet with the approval of the people of this country, inasmuch as under ordinary conditions it should enable our own manufacturers to gain a portion of the trade in Canada, and to export a considerable i quantity of these articles from New Zealand. ! They will at least fully hold their own with the Canadian article. There will also bo a concession, of 5 per cent, below the tariff rates allowed upon Canadian-manufactured furniture, and a similar concession is to be made upon New Zealand furniture introduced into Canada. • i

Upon careful scrutiny it will be seen that the possibilities of trado with Canada under this tariff treaty are very great. The Canadian Dominion is within 21) days' steam of New Zealand. In considering the proposal as submitted by me. I would ask lion members to recognise that the country with which we propose to enter into this tariff treaty has a population of some five millions ; and-as years go on the two countries must, aa the result of this friendly interchange of trade, reap mutual and lasting benefits. With our land settlement, and with our increasing productive powers going on apace, it is absolutely essential, to enable our country to prosper, that fresh markets should be found in other countries for our products. We propose now to begin with two great British dependencies ; and 1 sincerely hope the movement will be supported with spirit and enterprise by our fellow-colonists in all parts of the country. I am of opinion that at first the growth of trade between New Zealand and Canada will be slow, from the fact that new connections will have to be opened up by commercial houses in both countries, which would probably entail visits to the respective countries by representatives of those houses, and necessarily there would be some delay at the inception of the proposed interchange of trade. I should not, however, expect to have to provide more than LSOOO during the first year as the result of concessions upon the articles nairied which will be imported from Canada.

fc J CANADIAN PACIFIC MAIL-SERVICE. > I To enable the trade between Canada and ■ ; New Zealand to be successfully carried on, it ■ ( is advisable that regular steam communica--3 I tion between the two countries should be "' established. With this view an agreement r I between the Canadian Pacific Steamship Com- : j pany and the Government will be submitted - j to the House for approval. The line of " steamers at present running between Canada j and Australia is subsidised for a period of ' , about eight years by the Canadian Govern- ' ment, and also for a shorter period by the New South Wales Government. It is proposed that the line of steamers should run to either Auckland or Wellington, and, in . return for a monthly service, to be eonI ducted with a view to necessary expedi- , tion and accommodation, touching at Fiji and , ' Honolulu, to give to the company a subsidy of L 20,000 per annum for a period of years to be fixed. I believe that the advantage, , direct and indirect, which will be gained by : the Colony if this proposal is given effect to, j will more than warrant this outlay. The j whole sum of L 20,000 cannot in any case be a i direct loss to the Colony, inasmuch as the line of steamers so subsidised will carry mail matter, upon which, under ordinary circumstances, wo would have to pay a poundage. The advantages of such a service in developing our tourist traffic cannot be over-estimated. With the establishment of tbis service it is not intended to abandon or weaken our support to the San Francisco line, which gives _ us an important connection with America. Our policy is to have a fortnightly connection from New Zealand by the two lines to America and Canada respectively. DEATH DUTIES. In order to prevent the concessions upon the duties between the two countries and the proposed subsidy to the line of steamers between Canada and New Zealand being provided for out of our present revenue, I propose to make up from LIO,OOO to L 20,000 per annum by a readjustment of the deathjduties. / So far as I can learn New Zealand is the only colony where property devolving upon a widow or widower is exempt from succession duty, and I believe there is no such exemption in England at the present day. As the law here now stands all property devolving upon a widow or widower is absolutely exempt, and where either take a life estate in property yielding a yearly income of less than LSOO the duty is postponed until the death of the life tenant. In comparison with other countries this appears to me to be much too liberal, and I propose—(l) To exempt all estates _ under L 300; (2) subject to such exemption, to abolish the exemption on all property davolving upon a wife or husband absolutely ; (3) and. in order to determine the rate of duty, that all property disposed of by will, settlement, gift or family arrangement be aggregated as in England. PACIFIC CABLE. The important question of establishing a Pacific cable by an all-British route to Canada and England has engaged the attention of the Government during the recess. The matter proceeds somewhat slowly, owing to the fact that several countries are interested with New Zealand in the establishment of this link via the Pacific, and joint action is necessarily required. The matter is one of much importance to New Zealand. At the present time, as hon members are aware, our i cable connection crosses a number of territories outside the British Empire ; and in the event of war the maintenance of communication through so many countries would be greatly imperilled. It is proposed to ask the House to assent to the necessary legislation to give the Government power to co-operate with Canada and other countries interested in pushing forward this project. It would not involve any heavy contribution or responsibility on the part of New Zealand. CONVERSION OPERATIONS. While in London 1 took the opportunity of making full enquiries as to the" pi'ospects of converting our future stock into 3 per cents. As the result of careful and extended enquiries I am -of opinion that this can be done with much advantage to the country, in the way of J further large saving of our annual interest charges. •"• • ~ It has occurred to me, as a matter for careful consideration, whether a scheme could not be formulated whereby the addition to our debt, arising from further conversion operations, could not be so provided for as to prevent such increase becoming a permanent addition to the public debt. In my opinion a portion of the interest charge which would be saved to the country by a successful conversion operation could bo fairly utilised as a sinking fund, to provide for the extinguishment of the additional debt created by the conversion. I am convinced a very large saving of the annual interest charge can be effected, and, if debt can be provided for at maturity, it is easy to see that the country will be a great gainer by the ideas I am now placing before you if they are carried to a practical and successful issue. i EXTINGUISHMENT OF OJR PUBLIC DEET. j The question of the extinction of our loans I has given me much concern. The time is ap- I proaching when, in my opinion, it would add to the stability of the Colony, and place it in I the forefront of any country in the world, if I wo would resolve to make a moderate saeriI tico in providing with our annual interest a small payment to enable the loan to be extin- ,' guished within a reasonable period upon a , system somewhat similar to that which is now applied to our loans to local bodies. If we realise to the full the advantages that would follow a general conversion of our stock into 3 per cent., and utilise the largo annual saving in interest thus obtained to repay our indebtedness, the ability of the tax- I pa) ers to provide the redemption fund would not be taxed beyond present limits. I fully recognise tho fact that financial authorities urge that a borrowing country should not provide a sinking fund until it has ceased io borrow. Circumstances alter cases, and I say that, with the novel prospects of obtaining money at such a low rate is would enable us to provide for the gradual reduction and extinction of our debt without adding to our annual burdens, the provision of a sinking fund is a course that much to commend it. local bodies' lo.vn t B. Tho general lowering of the values of money has necessarily brought before me tho question of the rates of interest which are being paid by local bodies for the moneys they require for carrying on their public works. It seems to me desirable that the rates which are now being [paid to investors in securities of local bodies should be lowered, so as to -be in keeping with those we are paying for our borrowed moneys. I propose, after due notice has been given, to readjust the lending rates of Government departments, and to take the necessary steps to relieve such local bodies as have funds' provided from these institutions for carrying on their finances. In connection with' this, I desire, however, to point out that, unless other

financial institutions of the country are agreeable to conform to the system which has been initiated by the Government, we will not stand by and allow any undue advantage to be gained by them to the detriment of the Government institutions from the Colony's action in lowering interest rates. LOCAL GOVERNMENT. The Honourable the Premier will, at an early date, submit, for the consideration of the House, important proposals for tho improvement of local government in this Colony. The money provided in the estimates under the head of '" Permanent Charges" amounts to the same as was there last year. This however, i 3 only approximate, and, in addi tion, under the Public Works Fund, other moneys will be available for main roads which up to the present time have been maintained by the local authorities. FINANCE of 1895-96. Having now recounted the past, I will turn to our proposals for the current year ; and I may at once inform honourable members that I do not share in the gloomy forebodings of the prophets of evil who afflict our public life. In view of the recognised fact that our Customs and railway revenues had fallen somewhat during last year, it has become more than ever necessary to exercise the most rigid-scrutiny over our proposed expenditure of the current year; and I can assure you that the figures I am about to quote have been most carefully considered, so as to bring them down to the lowest possible amount consistent with the efficient administration of our public services. PROPOSED EXPENDITURE. It must be remembered that there are several services tho expenditure on which, as the Colony advances in settlement and increases in population, requires to be augmented from year to year, notably the Post and Telegraph services, and the expenditure on free education. These services show an increase of L3G,251 and L 20,580 severally. Then, again, as extra mileage on our railways is thrown open the expenditure on that service must necessarily increase, and this accounts for the extra L 13.685 shown under this head. The other departmental increases are small, and do not call for any special comment. I have been able to make a material reduction over the amount paid last year for our interest charges, amounting in all to L 22,284. The total estimated expenditure is set down at L 4.331,843, which is L 65,131 in excess of last year's actual payments, but L 18,357 less than my last year's estimate. THE ESTIMATED REVENUE. Excluding the aid to revenue from the proceeds of debentures issued as a set-off against sinking fund accretions, I have estimated the revenue at L 4,195,800, which is L 86,196 less than the actual receipts of !ast year? The Customs revenue is set down at L 9784 less ; the revenue from stamps at L 32,925 loss. The latter item is large ; but the receipts from death duties are an element the amount of w*uch cannot be foreseen, and last year increased our revenue by upwards of L 35,000. With regard to the land and income tax, I have not considered it safe to estimate our receipts from this source at more than L 350,000, the same sum which I placed in my last Budget. The railway revenue has fallen, owing to causes which I have already mentioned, and, although I desire my estimate to be on the safe side, I shall be disappointed if the actual results do not exceed my present figures. The receipts under the head of "Territorial Kevenue" are retained at the samo figures I submitted last year, and you will recognise that the extremely low price of our staple products, and the losses sustained by our flock-owners in the South Island by the unprecedented fall of snow, do not warrant an increase of this item. RESULTS AT 31ST MARCH, 1896, I am not able on this occasion to prognosticate such a favourable balance at the close of the year as I have been able to predict on former occasions; still, I am able to show that our revenue will be more than sufficient to meet our expenditure requirements for the year, thus: — Estimated revenue .£4,341,200 Estimated expenditure ... 4,331,843 Excess of revenue over expenditure 9,357 Balance to begin the year with 180,024 Total gross surplus afc end of year .£189.381 From this amount we intend to deduct L 150,000 as a contribution to the Publio Works Fund in aid of the settlement of the country by road-making and other public works, leaving a balance of L 39,351, out of which the usual supplementary estimates will be provided for. THE CUSTOMS TARIFF. The present tariff is influenced by several considerations Protection, remissions in favour of manufacturers, remissions in favour of the working classes, revenue, and extra taxation of luxuries. Ifc will bo seen that there are here the elements of a complicated tariff, in which anomalies cannot be avoided: and I see no prospect of constructing a simple or comprehensive tariff so long as it is deemed expedient to allow the question to be influenced by these considerations. For instance, it would bo a very easy matter to strike a medium rate over all the items embraced under " soft goods," but the requirements of revenue only would be served, and lncal industries and the interests of the working classes would be sacrificed.

Manufactures may be aided in two ways— By imposing a heavy duty on the complete imported article; by imposing a moderate duty on the complete article, but remitting duty on the materials used in the local manufacture. The latter is the course followed in the proposed tariff, and it is the one most beneficial to the consumer; but it is the course in pursuance of which it is vain to expect a simple and comprehensive tariff. In submitting proposals for a readjustment of the Customs tariff, I desire to acknowledge the vakiable assistance which has been rendered by the Tariff Commission. IS'o alteration has been made in the tariff since ISBS, and adjustment is now necessary. Some articles have since then come into'existence that then were unknown. There are many anomalies to be removed. While I have not been able to see my way to adopt the whole of the recommendations of the Tariff Commission, yet their investigation has bean of very considerable help to me in dealing with

this important question. I need hardly say | that it was my duty to very carefully read and weigh the important recommendations made by the Commission. I need, however, scarcely point out that there are connected with it many important considerations —outBide the particular duties of the Commission —which I have had to keep in view. In the readjustment of the tariff my objecb has been to give reasonable assistance to local industries without increasing the burden of the industrial classes of the country. It is of the first importance that the revenue should be maintained, and were too high a duty to be placed upon a particular article it would in some cases have the effect of greatly diminishing the revenue. The exemptions have been added to with the view of the further aid of local industry and production and the removal of anomalies. Among other remissions it will be found that duty has been removed from woolpacks, butter-paper, tubular woven cloth used for meat-wraps, ce-tain drugs used in manufactures, papers used for malting stationery, and wooden handles for tools. I shall presently move a resolution to give effect to the proposed alterations; in the

meantime I may mention tha L i by remissions and concessions we shall lose about 145,000 of revenue, while, on the other hand, increased rates and new impositions will bring us in some .£55,000, leaving a net increase to the revenue of LIO,OOO. At present iho law allows licenses to be issued to persons authorising them to act as agents for the transaction cf business at the Customhouse, and such agents are reqiiired to give bond for the faithful discharge of their duties both in respect of the persons employing them and of the interests of the revenue. It has been considered expedient to require the payment of an annual fee for these licenses, and provision will be made for this during the present session. conclusion-. I have endeavoured to place before members such matters as are of interest to the country, and I trust that the proposals of the Government, should they bcadopted, will prove to be of advantage to New Zealand. There are. I am glad to say, evident signs of better prices for our chief products, and the future in this respect looks more hopeful for our settlers. While this is so, it is a matter for most sincere regret that in portions of the South Island the unprecedented fall of snow has wrought such havoc with the flocks of some of our farmers and runholders. In expressing my sympathy with them, I feel sure 'it finds a responsive chord of general regret throughout the country, and I can but express the hope that the results may prove less severe than was first feared. Surveying the general conditions of other I countries, I am of opinion that New Zealand comes well out of the comparison. It is not to be expected in the difficult task of fighting the battle of life that all can be satisfied ; but the evidences of thrift, enterprise and energy which are observable in all parts of this country augur well for its future ; and though I foresee a somewhat difficult period ahead, I look forward with confidence and hope, relying upon the grit and pluck of our fellow-colonists to overcome any temporary difficulties that may arise.