FINANCIAL STATEMENT BY THE COLONIAL TREASURER.

New Zealand Times, Volume XXIX, Issue 4163, 24 July 1874, Page 1 (Supplement)

FINANCIAL STATEMENT BY THE COLONIAL TREASURER.

HOUSE OP REPRESENT ATI YES. Jclt 21, 187-1.

The House Trout into Committee of Ways and Means. Mr. VOGEL.—Mr. Seymour: the Committee will, I hare no doubt, bo pleased to learn that I hope to place before them at less length than usual the financial history of the past year, and the financial proposals for the ensuing year. This year’s financial statement will, I am glad to say, be not only unusually short, but it will bo unprecedented ns regards the prosperity of the colony which it will disclose. _lmahe.it also at an earlier’date after the expiration of the financial year than is usually found to bo possible. For this I am indebted to the officers of the Treasury Department, to whoso strenuous and untiring exertions in ascertaining the various figures and making up the accounts, I desire to bear the warmest testimony. I place before the Committee the various tables which during the last few years I have been in the habit of presenting on like occasions. the TEAK 1872-73. I will first explain the actual financial results of the year 1872-73, as compared with those which were anticipated when the budget was presented last year. It will bo remembered that I then estimated that there remained, after paying off all liabilities for the year 1872-73, a balance of £3,833 Is. 2d. with which to commence the year 1873 -74. The operations necessary to terminate the year’s accounts have shown that the assets were partly over-estimated and partly remain unrealized by £3,950 18s. 2d., and that the liabilities were under-estimated by £2,043 7s. Bd,. making together a difference of £3,994 ss. 10d,. and converting the estimated balance of £3,835 Is. 2d. with which to commence the year 1873-74, into a deficiency of £2,159 4s. Bd. It may be remembered that during the year 1872-73 we paid off £45,000 of treasury bills, and £IOO,OOO of deficiency bills. ROANS. The sale of £500,000 5 per cent, debentures at £2 10s. per cent, premium was announced to you last year during the session of Parliament. In January, the Loan Agents invited tenders for £300,000 of debentures upon different terms to those previously issued. I had for some time been corresponding with the Loan Agents upon the subject of altering the conditions. The adoption of a rate of 3 per cent, interest in connection with a drawing fund, though suitable whilst the debentures continued at a discount, was evidently unfavourable to lenders when the securities attained to a premium, since it involved the possible speedy loss of the premium paid. For example, the purchaser of a debenture at 5 per cent, premium in November, might find himself compelled in December to accept par for it. Besides, notoriously, premium loans command less high intrinsic rates than loans at a discount. The reason for this being SO, is not difficult to discern. Apart from tho margin for increased market value which discount loans offer, as the years pass and maturity is gradually approached, whilst the interest is punctually paid, the fact of many public companies and trustees being precluded from purchasing premium loans limits the demand for such loans. In view, therefore, of the continued requirements of the colony, it became desirable to decide on now terms of issue.

The Loan Agents wore favourable to tlio adoption of the rate of 41 per cent. I was more disposed to adopt 4 per cent.: First, because it was the rate the other colonies seemed determined to adopt, and, indeed, we had ourselves adopted it in regard to some debentures issued in this and the neighbouring colonics. Second, it seemed to me that the rate of discount at which we would sell 41 percent, debentures would he soon bridged over; the loan would then rapidly become s premium loan, and in a few years the necessity for again altering the interest would arise. On the other hand, the adoption of the rate of 4 per cent, would leave such a margin of discount aa would render it unnecessary to make a change for a long period. However, I left the Loan Agents to exercise their own discretion. They decided to adopt the 41 per cent, rate, but they largely met my second objection by adopting the condition of the colony exercising the right to redeem the debentures at par after the expiration of five years. This expedient, whilst it points to a reduction of the rate of interest after a short period, and consequently frees such reduction from the objections of an indecisive policy and of unexpected change, also presents the means of a profitable future conversion. It has, therefore, met with my concurrence. The advantages outweigh the disadvantages of dissimilarity from the rates adopted by the neighbouring colonies, and I have expressed to the Loan Agents my approval of the manner in which they exercised the discretion left to them.

The £500,000 negotiated at 4} per cent, realized £490,000 or £9B per cent., which, making allowance for redeeming the discount, is tantamount to borrowing at the rate of £4 12s. fid. per cent. Since then, we hate advices by cable that £1,500,000 additional of a similar loan has been negotiated. When the public works policy was initiated, it was calculated that the money required to carry it out might bo obtained at 5J per cent, interest. It is gratifying to know that the average rate of interest on the public works loans yet negotiated, including allowance for recovery of discount, amounts only to £4 14s. lid. per cent. It is right, however, to say that the market for colonial loans is not so favourable as it was last year, or as it seemed then to promise to bo. Tictoria had fixed par ns the minimum price of her 4 per cent, loan, and New South Wales hod fixed 95 for her loan of the same denomination. These limits are higher than the English money market is apparently prepared to accept, whilst in the neighbouring colonies the local demand for loan securities has died out. Wo have had, consequently, to exercise great discretion. It was desirable for many reasons not to place on the London market more than the one loan for public works. The realization of other securities authorized by Parliament bus, therefore, rendered necessary the careful watching of the local markets. Some of these securities now await sale in Sydney; and I am glad to be able to say that in the meanwhile all the requirements of the Treasury under the general purposes loan, the defence loan, and the Westland and North Otago loans, aro amply met. Honorable members should, however, bear in mind that they cannot now, as was seemingly the case last year, count on the unlimited powers of either the local or homo markets to absorb colonial loans. Less than two years ago, the value of debentures in Sydney was higher than in London, and money was so plentiful that it was largely remitted home for investment. A change has come about; and so long as it is not excessive, it is a change concerning which the colonies have reason to be satisfied. The spirit of enterprisehas so awakened, that the demand .for capital in the colonies has largely increased, and especially is this the case in New Zealand. In harmony with the colonizing policy which you have adopted, the colonists have shown themselves eager in every way to develop the colony’s resources, and from this they havp not been deterred by the increased coat of investments and the higher wages prevailing. The amount of the public debt of the colony, on the 30th Juno last, is set forth in Table A. The aggregate debt —colonial and provincial—is £13,411,736, or, deducting the amount of sinking funds accrued, £12,509,546. The annual charge for interest and sinking fund in respeet of this debt is £777,796 4a. 10d., divisible thus— Amount payable by the colony £554,097 15s. Od. Amount payable by the provinces £223,698 9s. 4d. 1 will state to the Committee the present position of the Immigration and Public Works, the Defence,and the General Purposes Loan Accounts ; and I refer honorable members for particulars of ho sums received and disbursed out of special unds_during the year, to tbo Tablo B (1) :

With respect to the land fund, a reference to Table C will show that receipts to the unprecedented amount of £1,038,797 13s. Bd. have been brought to account during the year. The following figures exhibit the comparative increase of receipts under this head, exclusive of gold revenue, during the past five years:— £ s. d. 1869- 209,623 3 G 1870- 208,091 5 0 1871- 336,311 0 G 1872- 889,643 14 1 1873- 1,038,797 13 8 Table C (1) shows the transactions of the year in the public Trust Fund Account. It will be seen that the Post Office Savings Bank deposits have increased by £137,900, and that the whole of those deposits now amount to £682,000. The 'interest received during the year on Trust Funds invested amounted to £29,585 19s. 6d. Out of this sura, the interest due to the interest-bearing accounts comprised in the fund has been fully paid, and the balance of £6,967 14s. lOd. has been transferred as usual to revenue. EETBKIXE OP THE TEAE 1873-74. I announce with great pleasure that the revenue has exceeded that of the preceding year by the sum of £300,814 Bs. 2d., and has exceeded the estimate I ventured to make by £239,716 17s. 3d. Those results are enormous, when the proportion

In only three cases, one of £1,500, another of £I,OOO, and the third of £2BO, has there been an over-estimate; whilst the increases in such items as the Customs, the Postal, and tho Telegraph, arc gratifying proofs of tho prosperous condition of tho colony. Some anxiety will no doubt bo felt to ascertain how much of the largo increase of tho Customs duties (£259,000 on tho actual revenue of the previous pear, and £211,000 on tho estimated revenue) is to bo accounted for by

Immigration and Peduo Works Loan.

they bear to tho whole revenue is taken into consideration. A comparison of tho revenue receipts during tho last four years is full of interest. Towards the close of the year 1870, the immigration and public works policy was adopted, and during the financial year 1870-71 steps were taken to give it effect, but, of course, much could not bo done during tho first few months. The ordinary revenue for tho four years stands thus : £ s. d. 1870- 936,188 5 10 1871- 1,031,082 18 7 1872- 1,139.904 3 4 1873- 1,420,216 17 3 Tho revenue of 1871-72 thus exceeded the revenue of tho previous year by 10T3 per cent. ; 1872-73 again showed an increase on its predecessor of B’o per cent., and tho year just passed showed an increase on tho previous one of 2G'B per cent.; tho aggregate result is, however, tho most striking. The revenue of 1873-74 exceeded tho revenue of 1870-71 by' 51'7 per cent. I give tho various heads of receipts, both estimated and actual, for tho year, and tho actual for tho year previous. Tho comparison cannot fail to bo satisfactory to honorable members when they look into the figures, but it would weary tho Committee were I to state here that which only personal study woidd bo calculated to impress on tho mind.

the change from measurement to ail valorem duties. The information on tlio subject I am able at present to give is not complete. The returns for the last quarter have not been received a sufficient lime to enable them to bo classified. It is evident, however, that, beyond the natural increase, the now duties have been more productive than the measurement duties. This was the subject of much controversy during the last session. It will bo remembered that all that the

Government were department-ally advised was, that the new duties wore a fair substitute for the old, and that the change certainly would not be productive of loss. The view of those who considered that the change would be productive of a considerable increase proves to be correct, and I am glad of it, both for the sake of the result realized, and for the testimony it bears to the honor and truthfulness of the commercial classes of the colony. I emphatically express the opinion that tho taxation has not harshly pressed on the bulk of tho people, and that tho duties are much more evenly distributed over articles of luxury than they wore formerly. Tho ordinary revenue of the year was £1,420,210 17s. 3d. ; to which has to bo added credits to votes, £13,137 (ss. 10th ; assets, £18,122 10s. lid. ; and transferred from General Purposes Loan Account, £73,000. for interest for works in course of construction : thus making £1,520,526 15s. as the total of receipts and assets; from which has to be deducted tho deficiency at tho commencement of the year, as already explained, of £2,159 4s. Bd., leaving a balance of £1,02-1,367 10s. -Id. In continuation of statements made in previous years (which statements, in order to facilitate comparison, I now repeat). I quote tho value of the imports of tho year 1873, consumable and anconsumable. The figures arc as follow;

EXPENDITURE FOR THE YEAR 1873-71. Tho expenditure during tho past year amounted to £117,758 Is. Bd. for ordinary purposes, and to £106,878 I3s. Gd. for permanent charges. Deducting £195,313 17s. 9d. recoverable from tho provinces, and adding £38,4-72 10s. lOd. for supplementary expenditure, the amount is £067,295 Bs. 3d. To this has to bo added—payments for provincial capitation, £219,319 13s, 3d.; treasury bills paid off, £15,000 ; payment to Public Works Account of £17,327 6s- 2d. tbe moiety of receipts from stamp duty, and £150,000 transferred Irom the Consolidated Fund to tho Public AYorks Account : making out of consolidated revenue a total payment of £1,128,912 7s. Bd. With respect to tho last item, I should explain that, noticing the largo sums which are paid in England on account of consolidated revenue, and which are not finally charged till tho arrival of the accounts in tho colony, I have thought it a fair and equitable arrangement to pay to tho Public Works account £150,000, to await the arrival from England of accounts authorized to be paid on behalf of tho consolidated revenue. Tho balance to the credit of the Consolidated Eund is thus reduced by £150,000 : tho public works fund holds it on account of liabilities against tho consolidated fund yet to he discharged. Tho total liabilities and amounts to be brought to account, of all kinds, outstanding at tho end of the 30th June, including interest payable in London up to the 15th July, and including the ResovvoFmid, amounts, as far as wo are aware, to £167,963 6s. 4d. To this must be added £20,000 to cover liabilities which may yet come in, making a total of £1,316,905 14s. This sum, deducted from the means available, consisting of revenue and assets as already explained, and amounting to £1,524,367 10s. 4d., loaves a balance of £207,461 16s. 4cl. with which to commence tho financial year 1874-75. I will also, as on previous occasions, show, by a comparison of assets and liabilities, that this surplus is real and actual, and to be relied on for tho services or purposes to which Parliament may decide to dedicate it. Ou closing the accounts on the 30th June, tho actual receipts and payments to that date left a balance of £377,302 ils. 9d. at credit of the Consolidated Fund Account; made up of cash in tho Public Account, £357,587 3s. 3d., and advances, £19,715 Bs. Cd. Add to those sums tho assets of tho year 1873-74 yet to bo realized, amounting to £18,122 10s. lid., and wo have a total of £395,425 2s. Bd.' Against this sum there are liabilities for interest and sinking fund duo in Loudon to 15th July, to tho amount of £128,300 15s. 3d., after allowing for the £150,000 already explained. There is the Reserve Account of £34,490 9s. 3d., particulars of which have already been laid ou tho table; the balance of capitation duo to tho provinces for tho month of June, £5,113 Is. lOd.; £SO for tho redemption of an outstanding debenture of “ The Debentures Act, 1864 and £20,000 for miscellaneous liabilities. Tho total of those liabilities is £187,063 6s. 4d.; and when deducted from tho total assets, amounting, ns already stated, to £395,425 2s. Bd., (ho balance of £207,461 16s. 4d. again presents itself. AYo commence, then, tho present financial year with ft surplus of £207,461 16s. 4d., and this is the result after discharging all tho liabilities of the year, as far as can bo ascertained, and with a margin of £20,000 to cover any undisclosed liabilities, and after paying off £45,000 of treasury hills. PUBLIC WORKS. Last year, I dwelt at considerable length on tho history of tho Public AYorks Department, and on the nature of its past and future operations. I indicated tho railways yet to bo authorized in order to complete the main trunk lines through each island,’ and I expressed the opinion of tho Government that land should bo given us security for further railways authorized. Subsequently', tho Government consented to the adoption of a different course. The representatives of tho Middle Island provinces, or some of them, objected to sotting apart their lauds as railway' reserves or as special securities ; they preferred adopting a course which would place tho provinces of tho North Island in possession of a landed estate. It. will bo remembered that tho Government made no disguise of tho difference between this proposal and tho one they submitted ; but they stated that they considered that so great and desirable a result would ho attained by' placing the provinces of this island in possession of an estate, from tho proceeds of which similarly happy results might bo achieved as had boon achieved in the Middle Island, that they accepted tho change, although it involved tho completion of tho railways out of borrowed money, in lieu of tho necessary amount being partly- supplied from tho proceeds of laud sales. Since last year, wo have had further experience of tho cliecls of tho immigration and public works policy, and tho results arc of an c|uinently gratifying nature. It has become so clear that tho . railways, when completed, will have been accompanied by such an increase of tiro means of tho country, and will themselves bo of so productive a nature, that all reason for doubt as to the wisdom of constructing them is at an end. More than this is apparent; it is evident that tho colony, as far ns its own arrangements are concerned, need not desire to devote tho land' revenue to tho construction of tho main trunk linos of railway. If it were necessary, tho Government would be prepared to oomo down at once with proposals to relievo the provinces of all risks and responsibilities in connncetion with tho payment of interest (as has already boon proposed in tho State Forests Rill in respect to the repayment of tho capital cost) on tho amounts expended and to bo expended on the construction of tho railways already authorized, and those which are necessary- to complete the trunk system. AVith pride, which I hope you will think pardonable, 1 dwell for a moment on (so splendid a result. AVith fear and trembling, I ventured four years ago to suggest to a startled House, that nothing could lift the colony' out of the stagnation into which it had fallen, chiotly arising from tho heavy burdens tho Native difficulties had occasioned, hut a bold and determined attempt to develop tho resources of tho colony, and to revive its old colonizing instincts. Railways and immigration wove tho two conspicuous features of tho work of revival suggested. It was thought to bo a very bold thing to propose them ; to have proposed that they should bo paid for otherwise than partly out of the waste lands and their proceeds, amt partly' by tho aid of a system of guarantees, would have been deemed rashness. I need not touch upon tho intervening history : but it is a happiness for mo now to bo ablo to express tho unqualified conviction — a conviction which tho logic of actual figures sustains that, that policy' of railways and immigration has proved self-sustaining ; that its responsibilities may fairly bo accepted by tho

country against the increased revenue of the colony and the certainty that the railways themselves will contribute, besides their working expenses, something at least towards, if not at first all, (ho interest on their cost and the cost of immigration. But this very success has carried in its wake two consequences ; the one, that in reply to, the urgent demand for the completion of these railways, and in response to the cogent argument that the sooner they are completed (he sooner will they return part of the burden of the interest on their cost, the Government arc now hastening on the works with more expedition than was originally intended ; and the other, that instead of the small amount of borrowed money originally contemplated, the balance to be obtained from the land, or by a yearly guarantee of minimum profits, or, as proposed last year, to come partly out of tbo laud, tbo whole work is being performed out of borrowed capital. So that wo have these three results : An augmented revenue ; a promise of successful working that makes the railways and the immigrants, so to say, a present to tho colony, without any strain on tho land revenue; but, on the contrary, with tbo addition of millions to tho value of the unsold lands ; and wo have also the third result of the whole of tho money procured by means of direct loans, and of its being wanted at a more rapid rate than was originally anticipated. Whatever may be our own conviction of tho success of our policy, wo must not forget tho wisdom of keeping our self-confidence within reasonable limits. We have asked, and are asking, largo sums to improve our resources from the hoarded capital of those who mostly have no other interest in the country ; and wo must uot, by unwarrantable demands, excite their alarm.

Now tliat I have said tbo colony is prepared to accept tho responsibilities of tho railways and immigration, I must define the extent of tho responsibilities. With regard to immigration, tho limit I sot is tho limit of tho number of people who can meet in tho colony a cordial welcome as fellow-colonists, to aid in promoting its welfare. Wo propose to continue ample provision for immigration. The details of that provision, and tho various considerations incidental to immigration, may more suitably bo made the subject of a separate discussion. But the limit of railways needs precise definition.- I allude to tho railways already authorized, and those necessary to complete tho gaps in tho North Island system which stand in tho way of through railways between tho Kaipara, Auckland, New Plymouth, Napier, and Wellington, as well ns those necessary to complete the gaps of through communication between Pioton, Nelson, and Hokitika, North Canterbury, and tho West Coast. A condition precedent to the completion of the trunk syotem and tho assumption of its responsibilities by the colonj', is tho acquirement of two fragments of the system—tho railways from tho Bluff to within a few. miles of Winton, and from Lyttelton to Solwyn, owned respectively by the Governments of Otago and Canterbury. .It is only the fact that those ai'o not in tho possession of the Colonial Government that prevents my proposing at once the relief of (he provinces of all liabilities on account of the railways already authorized, and of (hose which, ns I have indicated, remain to be authorized. The Provincial Council of Otago has, by resolution, invited the Colonial Government to purchase the Bluff-Wiu-ton fragment; and before I conclude I shall have something, to submit on the subject. Tho original proposal made in 1870 contemplated that the trunk lines would cost £7,500,000, besides 2,500,000 acres of land as a supplementary payment. Several railways, such as coal railways, have in the meantime been authorized, which were not originally proposed. Still, the cost lias been under the amount for which margin was left; and lam justified in saying that, even including tbo cost of tbo Bluff-Winlon and Lyt-telton-Selwyu fragments, and the filling-up of all the gaps to which I have alluded, the total cost will bo within £10,000,000 sterling. Tbo completion of this sysetm, although all desirable promptitude is exorcised, must still take several years. When completed, supposing the rate of interest to average 4f per cent., it will moan a total charge of £'l-73,000 annually, less tbo revenue from the railways in excess of working expenses. There can be no fear whatever in accepting this responsibility, for with only a fourth of the expenditure, and but very few miles yet completed, tbo consolidated revenue of tbo colony during the last two years shows an increase of £412,000, or within a few thousand pounds of tho annual charge tho railways will occasion. When wo consider what tho country will bo when the railways are completed, when we think of tbo progress that will accompany the progress of the works, and of the revenue the linos will themselves yield, wo need have no hesitation in accepting tho railways as a colonial responsibility. But the railways have to be completed. That is a hard prosaic fact, requiring tho prosaic consideration of tho moans t o be procured. Wo must ask this session for further authority to borrow for railway and immigration purposes ; and this brings us to the consideration of borrowing in all its aspects, including a reference to tho action of last session. PROVINCIAL PUBLIC WORKS. Tho Government proposed last session to give tho Provincial Councils power to borrow upon terms which it was considered would relieve the colony of all liability. No exertion the Government could make was spared to procure the consent of Hie Legislature to this proposal. lam not going to x-onew those proposals this year. Many reasons have led to this conclusion. Amongst (hem, I may mention that the Government do not consider it desirable to encourage 100 largely the commencement of other works, until provision is made for the through lines of railway. Tho haste with which these arc being constructed, points to the desirability, iu order to avoid too rude a shock to tho labour market, of other works following the construction of tho great trunk lines. Again, oven amongst those who supported tho provincial loan measures of last session, there was a general desire that the colony 'should rather borrow for the provinces than enable the provinces to borrow for themselves. And more cogent than any other reason is that to which I have already made reference —tho diminished demand for colonial securities, and the imperative necessity for taking care that tho colonial requirements have precedence of nil others. Wo hear a groat deal of combinations to force the Government to obtain for the provinces tho loans they require. That those whoso only desire is to (urn out tho Government should eagerly endeavour to convert tho general desire for public works into a ground for dissatisfaction with tho limits which prudence dictates, is natural enough, and wc have no rigid to bo surprised at the attempt to join in friendly union those who have opposed to tho utmost tbo public works policy, and those who would almost caricature it by their excessive estimate of the borrowing powers of the colony. But, Mr. Seymour, I cannot suppose that any considerable number of members of this House are blind to the fact that tbc administrative duty of carrying out the public works belongs to tbo Government. Parliament lias adopted tho policy ; and -if it failed, the failure would belong to the Parliament that accepted, not tho Government which devised it. But Parliament holds the Government liable for tbo administrative duty of carrying it out; and can any honorable members bo so unfair and so rash as to bring pressure to bear on tho Government to increase tho responsibilities by tho minutest fraction beyond the extent which Ministers are prepared to declare is safe and wise ? Parliament cannot perform (ha task of administration. Tbo Government,' on whom that duty devolves, have much knowledge and much responsibility that cannot in detail become the subject of popular discussion. You may choose another Government. but with that Government you must leave the discretion of determining the extent to which, in justice to tbo policy, not. theirs only, but. yours—yours by adoption, by ratification, and by the support of tbo people you represent —they see their way safely to allow oilier objects to traverse it. I am dealing now with tho conditions of tbo present year—l am not prepared to say what change next year may bring, as tbo one just past has already brought. I do not ignore tho fact that many of tho public works proposed throughout tho country, and tho objects for which money is sought, are eminently calculated to promote the settlement which is tho life of the public works and immigration policy. I claim only to set I,lie limits which, consistently with tbc responsibilities already assumed, tho Government think that Parliament should refuse to allow to bo exceeded.

My colleague, the Minister for Public "Works, in bis annual statement, which will he made in tlie course of two or throe days, will describe to you (lie steps proposed to be taken to complete the groat work t he country is already pledged to — the trunk system of railways. 1 bare to look more to the financial aspect: and here I may say (hat the whole scope of the present budget is unprecedented in New Zealand. For years past, the tendency of the Governments of this country has been to encroach upon loans for revenue purposes, and Parliament has provided elaborate machinery to check anything of the kind. But the direction of my proposals this evening will be, to release loans as much as possible at the expense of the ordinary revenue. You will bo asked to let revenue aid loans, instead of loans aid revenue. I mention this now, iu order that you may realize (hat it is in no idle spirit tho Government have come to the conclusion to ask the Assembly to remember tho liabilities and the responsibilities it lias already accepted and undertaken. I will proceed to describe the assistance which tho Government deem they are justified in asking tlie Assembly to sanction in the direction of ordinary local works. With one class of works, tlie Government strongly recommend tlie Assembly not to allow either the colony or tho provinces at present to be identified as borrowers. I repeat that lam dealing witli the present time; and wo cannot now advise that the colony or the provinces should borrow on the security of colonial or provincial revenues for harbour works. Wo do not object to the constitution ofLocal Boards, and to their having power to mortgage their endowments or any dues or rates to which they are entitled. In Auckland, such a power has been given, as also in Otago, and it can be given either by the Assembly or by a Provincial Council. Indeed, tho law so expressly sanctions it, that it would bo unconstitutional for the Government, with the law unaltered, to refuse to allow tbo exorcise of tbo powers winch tho Provincial Councils possess. On one point we shall ask for a modification of the law. Recognizing that the harbours are in a sense the property of tho colony, we shall seek to obtain from the Assembly the provision that the approval of tho Governor in Council shall bo necessary before any now plan of harbour works is adopted. There are so many other works proposed, that it is impossible to rigorously classify them ; but, generally, I may say that tho works which the Government will be inclined to assist will be those which have for their object the promotion of settlement. We propose that this assistance shall bo given partly out of the moneys available for the settlement of immigrants, and partly out of the consolidated revenue, with a power, to be used only in case ,of need, to issue treasury bills iu aid. We propose to require specific security for repayment, so that it will bo for the future to decide whether to give to the assistance rendered the shape of more or less permanent loans, or, as wo think feasible, to bear it on the consolidated revenue for a short term, pending relief from the specific securities. First, iu regard to Auckland,, the Government during the recess undertook to ask Parliament to allow the Province to raise £50,000 to bo advanced from time to time, extending over a period of about three years, for works upon tbo Thames gold fields. The security in this case, besides that of the province, is of a specific and large nature, and the importance of the object to be gained is not to bo denied. The Government besides agreed, subject to the approval of Parliament, to advance to Auckland, on the security of one-half of its land revenue, to be impounded for the purposS. £40,000 in sums of £6,000 every three mouths. The Government intend to ask Parliament to carry out these arrangements.- Wo do not (propose to ask for Auckland any further loan, beyond tho power to devote some part of the immigration funds to objects directly promo tire of the settlement of immigrants. Taranaki, with its splendid lands, offers a field for the location of immigrants second to none in tho colony, and wc shall ask for power to advance money to aid so essential a work. Similarly, wo propose to 'devote some funds to Westland and to Nelson. With respect to those four provinces, it is to be remembered that they have not as yet enjoyed so much of direct benefit from the expenditure on immigration as they might bo supposed to have the right to claim. Still, for money expended on works we propose conditions for repayment. I may add, that whilst we shall require tho approval of the Provincial Governments to any work undertaken, we propose that the works shall be cai’ried out under the control or with the approval of the Public Works Department. What I have said of these other provinces with respect to immigration, applies equally to Marlborough. We shall pro- ( pose, for works in connection with tbo location of immigrants, advances extending over two years, besides a loan of £4,000 to bridge tho Clarence River.

With regard to Wellington, honorable members will no doubt have observed, from the correspondence laid on the table, that the Government during the recess endeavoured to induce the Provincial Government to diminish the amount of borrowed money they desired. Wo agreed to submit for the approval of the Assembly, a proposition to allow Wellington to obtain au advance of £66,000 on 80,000 acres of land to be opened to the free selection of small settlers. We shall ask that this plan bo carried onb. I may also mention, incidentally, that we propose to ask authority to construct proper Government Buildings in Wellington. Nelson’s case is the most difficult to deal with. That province has long lagged behind other provinces. It requires useful works, of which it is singularly destitute; and we propose to lend to it, on specific security £50,000, for works which the Public Works Department approves. Prom Otago, also, the cry for borrowed money has come. Wo cannot see our way at present to sanction the largo sum that province asks for, unless by way of purchase of the Wintou and Bluff lino. If the Provincial Government are willing, wo will bo prepared to propose to the Assembly to purchase that railway at a valuation, the payment to be made in four equal instalments, on the Ist February next, and the Ist February of the three following years, the money to be devoted to the construction of branch railways. Otherwise, with respect to Otago, and with respect to Canterbury and Hawke’s Bay, I have only to say we propose to continue their trunk railways, and to aid them in locating the immigrants they so wonderfully absorb. In these proposals, wc have been strictly guided by the consideration of what the colony can afford, and of what it is for the benefit of the colony shall bo done. Wo have no feelings of partiality for any province or provinces. We look round the colony and see what is required, and endeavour to meet the wants which, if met, will enable the provinces assisted to put forth their strength to settle population, and to increase the general revenue. GOTO PIELD3 WORKS AND NORTH ISLAND ROADS. The Government do not propose at present to ask for further moans for gold fields undertakings, except with regard to the advance for tho Thames works, to which I have referred. Wo think it desirable to await tho completion of some of tho waterworks already in course of construction before proposing more of tho same character. Tho provision for North Island roads is fully absorbed. No expenditure has been more efficient or useful, and wo are strongly of opinion that move work remains to bo done. I shall leave my colleague tho Minister for Public Works to state the details. Suffice it now, that wc intend to ask for a provision of £60,000 this year. We propose to continue the plan of allocating to the Middle Island provinces, proportionately to their population, an equivalent amount. In respect, however, of Canterbury and Westland, we shall ask that out of the amount they are entitled to, provision shall bo made for putting in good order, and for the present maintenance of, the road between Christchurch and Hokitika. In thus submitting proposals affecting all the provinces, the Government feel they are adopting tho course which promotes the views of a largo number of members of this House, which is calculated to secure the assent of both branches of the Legislature, ami which, above all, is suited to colonial requirements. As X have previously said, many of those who supported the Provincial Borrowing Bills of last year would have preferred the colon}' undertaking tho responsibility and exorcising some control or supervision. THE PROVINCES. The case of tho provinces is not, however, dealt with by merely exceptional advances for public works. There are three provinces which labour under tho great disadvantage of contributing largely to tho colonial revenue without enjoying

an adequate provincial revenue for local purposes The provinces which enjoy largo revenues feel no difficulty in contributing to the colonial revenue; for whilst they make the contributions, they enjoy local expenditure out of their own revenue, lint the case of some provinces is simply constant contribution—a constant disheartening tendency to the result so familiarly explained by the slaughter of the bird which lays the golden eggs. As a mere matter of policy, it is wise, in the midst of the immense increase of the colonial revenue, to specially remember some of the provinces which contribute it, and which are at present at a great disadvantage as compared with others. It is not wise to let parts of the colony languish under a sense of wrong —to allow them to feel they arc still becalmed whilst the favouring breeze removes from their sight the vessels originally becalmed with them. The condition of the three provinces of Auckland, Westland, and Nelson, as compared with tho other provinces, is lamentable, and requires assistance from the surplus of the consolidated revenue- Auckland's case is by far the worst. It will take that province some years to work itself round, and to enjoy tho future which I firmly believe is still before it. Westland deserves much sympathy. Weighted with a great public debt, its Government, eagerly anxious to develop it, find themselves hampered in every direction. Westland has proved a mine of wealth to tho colony. It is folly to desert it. Tho west coast of Nelson is somewhat similarly placed : Nelson will, however, now have the means, as it appears its rulers have tho inclination to uso those means, to become a prosperous province. These considerations impel us to recommend that out of ’ tho year’s surplus a special allowance, in addition to that already provided by the scale of capitation allowances, bo made to Auckland, Westland, and Nelson, of £25,000 to the first, £IO,OOO to tho second, and £5,000 to tho third. When honorable members study the whole of the circumstances, they will not, X think, grudge tho proposed aid. EXPENDITURE FOR 1874-75. The proposed expenditure for the current, year, for permanent charges and ordinary services, is £1,315,293 12s. Id. From this way be deducted £213,486, recoverable from the provinces for interest and sinking fund payable on their account. This ’will leave, as the nett cost for permanent charges and ordinary services for the year, an amount of £1,101,807 12s. Id.; and in passing, I may remark that it includes £220,000 as the nett payment out of the Consolidated S'und for interest and sinking fund on the public works and immigration loans. Although tho Assembly has made provision for otherwise charging interest on works in course of construction, I do not propose to take advantage of it this year, but to leave the consolidated revenue to bear the burden. I produce the statement of the estimated cost of each of the ordinary services :

Probably it will be better to abstain from commenting on these services until the estimates are considered. On the whole, honorable members will observe that they show an increase upon previous estimates. This may be generally explained to arise from the very natural fact that the much larger duties which have to be performed have entailed the necessity of additional assistance. It cannot be supposed that, as the work of the country increases in the shape of extra post offices and telegraph offices —a larger amount of Customs duties to bo collected, and a larger amount of work to be performed by the ordinary departments —there will not necessarily bo increased expenditure. The estimates also include the usual increases in the salaries of officers. I shall have a few words to say upon the question of the civil service presently. Meanwhile, I may observe, with respect to the general character of the estimates, that the Postal and Telegraphic eaoli show a lar-ge increase of expenditure; but that a corresponding increase of revenue is also estimated. The Postal estimates include all expenditure; whilst the estimate of Postal revenue will include some £B,OOO which it is anticipated will be received from the Imperial Government on account of tbe postal receipts wbicii they now pay to tho colonies, in lieu of a direct contribution towards the cost of English mail services. It is better to adopt this plan, although it would be quite reasonable to look upon this contribution as so much deduction from the cost of the services. I will now proceed to deal with the other items of expenditure which we propose out of the large surplus which still remains. The contribution to tho capitation grant, on the same scale as last year, will amount to £241,191 2s. 6d., in addition to which there will bo the special contribution of £40,000 I have already mentioned—making, for capitation grant and provincial allowances, a total of £281,191 2s. 6d. There will bo one-half of 'the stamp Duties to be paid over, in accordance with the requirements of the Act; and as we estimate those duties to yield £IOO,OOO, the amount to be paid over may be taken at £30,000. I propose to ask your sanction to tho extinguishment of £IOO,OOO of outstanding treasury bills. I have before expressed the opinion that we should endeavour not to make these treasury bills a permanent debt, but should gradually extinguish them. It cannot be said that we have been negligent as to this matter during tho last few years ; for whereas in 1872 tho total amount of treasury bills outstanding, including £IOO,OOO deficiency bills, was £710,000, it is now reduced to £500,000. We propose during the current year.

The revenue for the current year has been estimated with great care. I have not anticipated a large increase in Customs revenue, because it is very likely that the tendency of the ad valorem duties, which you provided last year, will bo to reduce shipments of articles that can bo produced in the colony, and thus, to some extent, to counteract the revenue effects of the natural increase of consumption. The other increases shown have been estimated after due consideration ; and I think that, on the whole, if there is nothing to disturb the prosperity of the country, wo may safely anticipate receiving at least the amount of revenue I have estimated. I have to add to this revenue, £207,<161 16s. 4d., the surplus with which, as X have said, wo commence tho year, making a total of £1,704,061 10s. <ld. Deducting from this tho expenditure already stated, £1,637,908 Us. 7d., there will bo a surplus of £66,063 Is. 9d. at the close of tho year. This, however, it must bo remembered, is liable to bo trenched upon by supplementary estimates, which, whatever tho caro exercised in framing tho main estimates, always mountup to a considerable sum. I express tho hope, Mr. Seymour, that tho Committee may bo satisfied equally with tho facts I have related and tho policy I have proposed. From tho results of tho past year, wo may gather satisfactory proofs of the wisdom of the provision which Parliament has made for immigration and public works. Tho difference between Now Zealand three or four years since-labouring

as I have said, to further reduce tho total hy £IOO,OOO. Tho amount paid olf during each of tho last two years was £45,000; besides that, during the past year, £20,000 of treasury bills, outstanding on Confiscated Lands Account, were discharged. I have still two items to speak of. I have already said that the principle of this year’s budget is to endeavour to relievo, as far as possible, loan charges, and I have also explained that I leave the consolidated revenue to bear tho burden of tbo interest on works in course of construction, although Parliament has made special provision for otherwise providing this interest. Besides tho relief that this will giro to loan charges, I propose that ordinary revenue shall boar one-half the cost of defence for tho current year, and also one-half tho subsidy to Road Boards. Honorable members are aware that provision is made by loan, by which, daring this year, £130,000 will bo available for defence, and £30,000 for Road Boards. lam glad to say that tho defence estimates show a total expenditure for the year of £130,000 only. I propose to take out of consolidated revenue £65,000 towards defence expenditure, and £25,000 in aid of the payment of subsidy to Road Boards. This will have a twofold effect : it will relievo us from the necessity of obtaining an equivalent amount of borrowed money this year; and it will also enable us to extend over a longer period the provision which has been already made for defence purposes, and for subsidizing Road Boards. I hope that honorable members will concur in this policy : it is ono which tho position of tho revenue makes expedient. It may be urged that it is fairly desirable to consider tho question of reducing taxation. Whilst I admit that that is a question upon which honorable members have the right to form their own opinions, I have to say that, considering the prospective requirements of tho country, and tho attendant circumstances, I do not think it desirable wo should regard tho present condition of the revenue as an indication that there will be, permanently, a larger revenue than will be required for the service of the colony. On the contrary, I think it will be tho better course to maintain taxation which has clearly proved to bo not inconsistent with tho prosperity of the country; and to prudently use, for a while, any surplus we may have, in reducing tho necessity for reresorting to loans. I must now direct attention to another item, which I hope will not much startle honorable members. It is an item which the Government —although they are perfectly aware it will not bo a popular* one—deem themselves bound to propose, in the interests of justice and expediency. The position of tho officers of tho civil service is one which entails great anxiety upon the Government. The extra cost of living, consequent upon the increased prosperity, of tho country, and the larger demand for really able men, have had the effect of already withdrawing many officers from the civil service, as well as of making it difficult to replace them. This opens up prospects of serious inconvenience, from farther reductions in the ranks ofjthe service. Not long ago every mail brought to members of the Government applications for employment; one could hardly go outside these buildings without being met with like importunities. But a great change has taken place in this respect. Tho number of applications for employment is very much loss, whilst the number of officers who find that they can improve their prospects by leaving tho service is constantly on the increase. As a matter of expediency, therefore, in the interests of the colony—which, after all, cannot be well governed unless with the assistance of an able civil service—wo are of opinion that some special recognition should be made. Those who are in receipt of the lowest salaries are the greatest sufferers from the present high cost of living. We propose, therefore, that, for this year, a special allowance of 10 per cent, upon all salaries up to and including £l5O, shall be given; that 74 per cent, shall bo given upon all °salaries exceeding £l5O, and not exceeding £300; that upon salaries exceeding £3OO and up to £SOO, the amount shall be 5 per cent.; and that nothing shall bo given to those officers who are in receipt of salaries exceeding £SOO. In estimating salaries, wo propose to include all payments for all services. These proposals will absorb £15,000 of the surplus. Tho various amounts I have named will bring the expenditure to a total of £1,637,998 14s. 7d. I will ask you to remember tho extent to which this expenditure extinguishes loans and relieves loans of charges which might during the year, under existing authorities, he defrayed out of borrowed money. These are tho items : Treasury bills redeemed ... £IOO,OOO Defence expenditure ... ... 65,000 Road Board subsidies ... ... 25,000 Interest on works in course of construction, authorized to bo paid out of General Purposes loan, to be paid out of consolidated revenue ... ... ... 81,500 £271,500 Making a sum of £271,500 borne on the consolidated revenue, but which, without any extra authority, could be left or cast on loans. Am I not justified in saying that the distinguishing feature of tho budget is the extent to which it proposes that ordinary revenue should bo employed in substitution of borrowed money ? In continuation, however, of the loans for railways and immigration, I shall have to ask for further authority to borrow. The estimated cost of the railways already authorized considerably exceeds tho loans provided for their construction; and, practically, the £BOO,OOO of guaranteed debentures which we keep as a reserve in tho Bank of England, aro locked up from immediate use. Tho amount for which wc shall ask authority to borrow, I will expain in connection with the statement I will make on immigration. REVENUE OE THE TEAR 1874-75. I place before you a statement of the estimated and tho actual revenue for 1873—74, and tho estimated revenue for 1874-75

under a feeling of profound depression, enterprise within it dormant, its landed estate unsaleable—and tho Now Zealand of this day, instinct with life and enterprise, tho value of its property immeasurably increased, and its revenue so bountiful that its rulers have difficulty in deciding how to dispose of tho largo surplus, is too patent to allow of any doubt as to its significance. Put if in tho hour of need a bold policy was required, let us none the loss determine to shape that policy with prudence. We have set ourselves to tho task of making Now Zealand tho home of millions of human beings sooner than, in natural course, that result would have been arrived at. There must be no suspension of tho policy of progress. Wo must continue to enlarge tho capabilities of tho country as wo continue to add to its population. Put wo do not fail to see this necessity, and to bo true to ourselves, because wo seize tho opportunity to economize our resources. To borrow only so much as is required, is not inconsistent with tho principle that it is perfectly legitimate to improve our estate by tho expenditure of borrowed money upon purposes of a reproductive nature. In husbanding our strength this year, wo show that success docs not unduly elate us, and wo make ourselves more prepared for fulfilling tho duties demanded by tho great destiny before us. Tho House adjourned at a quarter past nine o’clock p.m.

Yeah. Amount Raised, &c. Amount Extended. Available tor Expenditure. Sale of Debentures: — 18721873- ... Moiety of Stamp Duties : — 18721873- £ s. d. 750.000 O 0 850.000 0 0 423,900 0 0 1,548,200 0 0 £ s. d. 99,953 19 3 611,564 9 7 1,193,844 4 9 1,652,669 16 5 £ s. d. | 14,067 10 0 j 103,975 11 4 3,572,100 0 0 3,558,032 10 0 37,202 10 3 39,683 16 0 47,276 17 10 20,137 12 8 124,163 4 0 From Consolidated Fund for Interest ' and Sinking Fund to bo paid in London 118,043 1 4 150,000 0 0 Balance (see Table Q) : — Cash in the Public Account Advances —In the Colony In London £ s. d. 144, 40,564 7 10 83,173 18 O £ s. d. £ s. d. 301 15 6 738 5 10 £268,043 1 4 This does not include the proceeds of the £1,500,000 of debentures (of the negotiation of ■which news by telegraph has been received), Defence and Othe excepting £400,000, the amount of outstanding bills drawn on the Loan Agents against those proceeds. k Purposes Loan. Year. Amount Raised. , Amount to be Expended. Amount Expended. Balance. 1873Unapplied Balance of sums authorized to bo expended up to 30 June, 1874 Balance of amount raised in excess of expenditure authorized to 30 June, 1874, available for the service of the year 1874-75 £ s. d.' 450,000 0 0 185,600 0 0 87,900 0 0 84,500 0 0 £ s. d. 343,500 0 0 160,000 0 0 150,000 0 0 150,000 0 0 £ s. d. 279,221 0 10 198,131 13 10 142,415 1 7 143,385 17 10 £ s. d. 40,346 5 11 4,500 0 0 808,000 0 O 4,500 0 0 803,500 0 0 763,153 14 1 40,346 5 11 803,500 0 0 803,500 0 0 803,500 0 0 Balance (see Table Gt): — Cash in the Public Account ... Advances unaccounted for, — Colonial Foreign £ s. d. 3,484 17 0 96 6 9 £ s. d. 41,265 2 2 3,581 3 9 £44,846 5 11 General Purposes Loan. Amount raised . ... ... Amount expended Balance (see Table G.): — Cash in the Public Account ... ... ••• Advances unaccounted for ... ... £ s. d. 22,125 4 3 4,468 13 4 £ s. d. 218,600 0 0 192,006 2 5 £26,593 17 7

Differences. Revenue Revenue Heads os Receipt. of the Yeah of the Year, 1873-74. 1872-73. Increase. Decrease. Customs — £ s. d. £ s. d. £ s. d. £ s. d. Duties, Rents, Seizures, &c. ... 1,1X1,942 9 8 4,285 17 2 852,144 12 4 259,797 17 4 Bonded Stores ... 4,108 3 5 177 13 9 Rees, Marino Act, including Light Dues 8,877 3 2 6,824 4 7 2,052 18 7 Dees, Arms Act 2,039 19 0 1,669 6 6 370 12 6 „ Sundry Acts ... 2,337 12 3 2,071 8 5 286 3 10 Stump Duties 94,656 0 5 79,417 17 3 15,238 3 2 Postal 60,535 18 2 50,586 6 4 9,949 11 10 Telegraphic ... Judicial, Decs and Dines 51,082 18 9 41,450 5 7 9,632 13 2 28,459 17 3 28,568 0 7,118 13 9 103 3 6 Registration of Land ... 9,625 X 1 6 2,506 7 7 „ Deeds 15,091 0 6 13,458 2 6 1,632 18 0 „ Births,Doaths,and Marriages 3,719 17 0 3,043 0 6 676 16 6 Dees on Issue of Crown Grants... 4,988 1 10 5,288 6 7 300 49 „ Miscellaneous ... 1,219 14 3 1,242 2 8 22 8 5 Incidental Receipts ... 21,335 6 9 22,411 18 2 1,076 11 5 Totals 1,420,216 17 3 1,119,402 9 1 302,321 16 3 1,507 8 i Deduct Decrease 1,507 8 1 Net Increase 300,814 8 2 Differences. Revenue Revenue Heads op Receipt. OF AND Y EAR AS 1873-74. Estimated. In lixccss of Less tli an Estimate Estimate. Customs— £ s. d. £ S. d. £ s. d. £ B, d. Duties, Rents, Seizures, Sec. ... 1,111,942 9 8 900,000 0 0 211,042 9 8 Bonded Stores 4,285 17 2 4,000 0 0 285 17 2 Dees, Marino Act, including Light Dues „ Arms Act £ 13,274 14 10,500 0 0 2,774 14 ■ Sundry Acts ; Stamp Duties ... ... 94,656 0 - 85,000 0 0 9,656 0 Postal 60,535 18 53,000 0 0 7,535 18 Telegraphic ... 51,082 18 9 45,000 0 0 6,082 18 0 Judicial; Decs and Dines 28,459 17 ! 30,000 0 0 1,540 2 9 Registration of Land ... 9,625 1 8,500 0 0 1,125 1 „ Deeds... 15,091 0 13,500 0 0 1,591 0 6 „ Births, Deaths, and Marriages ,,, ... 3,719 17 0 3,500 0 0 219 17 Dees on Issue of Crown Grants... 4,988 X 10 6,000 0 0 1,011 18 „ Miscellaneous 1,219 14 3 1,500 0 0 280 5 9 Incidental Receipts ... 21,335 6 9 20,000 0 0 1,335 6 Totals 1,420,216 17 3 1,180,500 0 0 242,549 3 11 2,832 6 8 Deduct Decrease ... 2,832 6 8 Hot Increase 239,716 17 3

Total, Value ov Imports. Value of Consumable Articles. Value of nonCONSUMABLK Articles. isor £ 6,344,007 £ 4.178,515 £ 1,100,002 1803 4,085.748 3.719,(MS 1,200,100 1SG9 4,070,12(1 3,901,378 1,074,743 1870 4,039,015 4,078,193 3,479,805 1,150,210 1871 3.081,525 990,003 1S72 5,142,957 0,404,087 8,701,070 1,441,280 1873 4,339,529 2,125,158

£ s. d. Class I.—Public Departments 63,043 3 0 Class II.—Law and Justice ... 61,814 2 0 Class III.—Postal and Telegraph 172,241 10 0 Class •IT. —Customs ... 51,982 17 2 Class V.—Miscellaneous 36,780 0 0 Class VI.—Native 31,546 5 0 Class VII.—Militia and Volunteers 24,003 7 6 Class Till. —Public Domains and Buildings 15,691 4 0 £457,100 8 8

— Revenue 1873-7‘h Estimated Revenue 1874-75. Estimated. Actual. £ B. d. £ H. d. £ . d. Customs —Duties, Kents, Seizures, &c. 900,000 0 0 1,111,942 9 8 1,150,000 0 0 „ Bonded Stores 1,000 0 0 4,285 17 2 4,400 0 0 „ Bees, Marine Act, inc. light dues ) „ „ Anns Act {• 10,500 0 0 13,274 14 5 12,500 0 0 „ „ Sundry Acts ... ) Stamp Duties ... 85,000 0 0 94,056 0 i) 100,000 0 0 Postal 53,000 0 0 60,535 18 2 74,000 0 0 Telegraphic 45,000 0 0 51,082 18 9 55,000 0 0 Judicial, Pees and Pines 30,000 0 0 28,459 17 3 28,000 0 0 Registration of Land ... 8,500 0 0 9,025 1 1 12,000 0 0 „ Deeds... 13,500 0 0 15,091 0 G 15,000 0 0 „ Births, Deaths, and Maniages 3,500 0 0 3,719 17 0 4,000 0 0 Pees on Issue of Crown Grants 0,000 0 0 4,988 1 10 5,500 0 0 ,. Miscellaneous 1,500 0 0 1,219 14 3 1,200 0 0 Incidental Receipts 20,000 0 0 21,335 G 9 35,000 0 0 Totals 1,180,500 0 0 1,420,210 17 S 1,496,600 0 0