THE FINANCIAL STATEMENT.

Oamaru Mail, Volume IV, Issue 1303, 10 June 1880, Page 2

THE FINANCIAL STATEMENT.

The following is the concluding portion of. the Financial Statement delivered by the Colonial Treasurer on Tuesday evening v" ; - ; ESTIMATED EXPENDITURE OF IHB CON- ; SOLID ATED FUND 1880-81. I now come, Mr. Seymour, to our proposals for the current year. Honorable members will kindly bear in mind that the land fund, by which I here mean the proceeds of land sales, and the charges against it, will be treated separately, and that it is therefore excluded from the estimates of expenditure and revenue which I am now about to submit for the consideration of the Committee. I need hardly say that although' treated'* separately, the land fund remains to all intents and purposes a part of the consolidated revenue, for the purpose of security to the New Zealand bondholders. The estimates, which will be in the hands of hon. members to-morrow, show a very large reduction of the charges upon the con? solidated fund as compared with last year, amounting in the gross to L 541,000 ; and but for the increase in expenditure over last year of L109,0Q0 for iriterest, L 23,000 for education, over which, of course, the Government had no control, the reduction would have been L 673,000. And if we deduct from this the sum of L 150,000 transferred as charges against the land sales, there would still have remained the very substantial reduction of L 523,000. But even after making provision for this increased expenditure of L 182,000 on interest and education, and allowing for the loss to the revenue of the proceeds of land sales L 200,000, there will be a net saving of expenditure from the consolidated fund of L341,Q0Q, and this without impairing the usefulness of the local bodies, the efficiency of the public service, or shifting burdens which should be borne upon revenue to loan or other funds. ■ The total proposed votes for the year, exclusive of liabilities, are L 3,473,709. But of this we cannot spend and bring into the accounts within the year more than L 3, This advantage will not recur, but fortunately corues to. our aid now, thus giving the revenue time to recover its normal condition, as we have every reason to hope it will next year. There are some items of expenditure to which I desire to call'the especial attention of the Committee, showing the reductions which have been effected, and the directions in which the Government think further reductions are possible and should be made. It will perhaps astonish hon. members to hear that we are now paying over L 1,000,000 a year in salaries, pay, and wages, and L 18,070 for pensions. This includes our railway employes and our ordinary complement of constabulary and police. Of this sum L 643,000 is for salaries, pay, and wages of L2OO a year and under. The Government, Sir, as must be evident to every one, have had no time to grapple with this enormous expenditure during the short recess just terminated, but they have made reductions wherever it was possible to do so without detrimentally affecting the machinery of Government. We have given the subject as careful consideration as the time at'our disposal would permit, but, as I have often before pointed out, effective and permanent reductions, as distinguished from spasmodic efforts at • economy, must be the work of time. Sir, the Government are of opinion that it will take the whole of next recess to deal with this matter, as it must be dealt with. To assist us ii} the accomplishment of' this object a Royal Commission has been appointed to inquire and report upon the whole organisation of the Civil Service. Its labors will, I feel sure, be of great value to the House and Government in dealing comprehensively with this difficulty. But, Sir, although time was necessary to dpal with thig subject comprehensively, and we had so little time at our disposal, we felt this could be no excuse for not at once making a beginning. Besides several minor reductions, my hon. friend the Minister for Public Works has reduced the expenditure of his department by L 36,000 without impairing in any way its efficiency. The Native Minister has succeeded in reducing the expenses of his department from L 49,944, which was last year's estimate, to L 24,262 this year, or after allowing transfers to other departments, to nearly 50 per cent. Salaries and contingencies were last year L 21,164; this year they are estimated at L 13,453. Nor is this all, for in the Land Purchase Department, which had grown into a serious excresence on the Native Office, he has reduced the salaries from HO,OOO to L6OOO a year, or about 40 per cent., and in both cases I venture to assert the

, service is being better performed than formerly. From this hon. members will r see that the hon. gentleman has more ' than fulfilled his promises of reduction made to this Committee last year. My hon. friend will no doubt explain what he has done more fully when the Native ? estimates are urjder discission. I have said, Sir, "that we are paying" oyer I 14,000,000 yearly for salaries, pay, and wages, and this upon estimates which have been apparently reduced to the ' lowest possible amount. The Government L " have had under consideration the question of the reduction of the salaries of 1 Ministers. They do not think Ministers 1 are over paid, and they are not prepared at present to recommend a .reduction of their salaries. The question will be care- | fully considered during the recess. But looking to the financial position of the Colony and the necessity for the reduction, which must be made in some 1 form, we propose that 20 per cent, should 3 be deducted from their salaries for the current year, beginning 011 the Ist of July 3 next. So far, Sir, a reduction is simple 3 enough. But how to deal with the Civil Service is a far more difficult question, as grpss and gruel injustice bp easily done to many deserving officers if large reductions are indiscriminately insisted s upon, and the efficiency of the public service may be seriously impaired. We have t among our Civil Servants not only a large number of willing and efficient officers, but we have men who would be a credit to ( any service. And while some of our de- . partments urgently require reform or re- ■ modelling, or even abolishing fry consoli- • datioo with others, same I am sure could hardly be touched without being injured ; and again, while some officers are no doubt overpaid, others, considering the value of their services and the difficulty of filling their places, deserve more than they get. We can therefore lay down no inflexible rule fpr retrenchment, But, Sir, an effort must be made in the interests of economy at once, .We • shall therefore propose to the House, notwithstanding the fact that the estimates have apparently been kept within the narrowest limits, that 5 per cent, or L 50,000 be struck off the votes for salaries, pay, and wages, and we shall then proceed in the manner I have , indicated to make this saving, 4- n $ if with the ai4 of the department? we are unable to make the necessary reduotions'to cover this amount, we shall issue a a scale of percentages showing the sum to be deducted for every of the Government, which together will make up the L 50,000. I hope, ' sir, the @om?riittee wtfl tfcwk this a eus- \ cient earnest of our intpntipn tp take the " subject seriously in hand. The task, gir, 1 is a very unpleasant and a very thankless 1 one, but it is a clear duty, and. must ' therefore be done. If, then, the Com- 1 mittee should agree to this reduction, the ! total expenditure within'the yeay I esti-. [mate will be L 8,198,709, for which pro* 1 vision has to be made. j ESTIMATED REVENUE OF THE CONSOLIDATED 1 FUND, 1880-81. J In estimating the revenue of the year a 1880-81, which I do at L 3,190,000 full ( particulars of which hon. members, will | find in Tnble^Ng.7attached : to this state- a

merit when printed, I regret to say that I am unable to take as hopeful a "view of the Customs receipts as I. did last session. It must be admitted that there is no known basis on which to found a trustworthy calculation as to the probable receipts from Customs duties in the Colony. The influences at work are so various and uncertain in their operation that it is impossible to form more than an approximate as to the receipts for any period of financial or commercial depression such as we are still* suffering under. There are, however, indications pointingto a gradual improvement, which I hope has begun, but which I think I am not justified, in relying upon to. a larger extent that i have done, in estimating the Customs at L 1,250,000 for the year. It is 'an ominous fact that there was a decrease of duty of L 107,684 paid at the Customs during the year 1879 as oompared with the year 1878, a,nd that a more than proportionate decrease has continued for the first quarter of 1880. Notwithstanding the large increase ' of duties imposed in November, 1879, the Customs receipts for the March quarter of 1880 were less by L 42,257 than for the corresponding quarter of 1879. The imports, too, were less in the former quarter than in the latter by L 978,734. And this difference was not caused by any large falling off in railway material or other articles imported for the Government, the total value of Government imports being for the March quarter, 1879, L 95,263, as against L 54,012 for the March quarter, 1880. Tobacco yielded an increase of L 7193 during the last quarter, but this was owing to the increased duty, 31.72Q lb, or 12| per cent., less being cleared than in the March quarter, I$7Q. But the greatest portion of the decrease may be traced to the fact that in the preceding quarter there had been withdrawals of tobacco from bond considerably in excess of the usual average, in expectation of the duty being increased. Drapery and spirits both show an actual falling off during the last quarter as compared with the corresponding quarter of 1879; the former of L63,340> and the latter of L74ffif. Drapery yielded for the first quarter of 1880 L 39,862, and spirits L 82,482. Hon. members will observe that the percentage! of loss upon drapery is nearly double that upon spirits, which I take as an indication that smuggling and illicit distillation not increased to any appreciable extent through the additional duty imposed upon spirits last session. Looking at all these faots, I do not think it would be wise to estimate the Customs for the year at more than I have done, namely, L 1,250,000. Hon. members will see there is a considerable increase in the estimated surplus of receipts over expenditure on the railway, namely, L 41,082. E|qt my honorable friend, the Minister- for Public Works, proposes, to slightly inorease the charges for freight and still further to reduce the expenditure. The remaining items of estimated revenue do not I think call for special remark, except that I should point out that the proceeds of land aalea are not included as revenvtg. I have said that the estimated expenditure to be made within the year is 15,108,709 and the estimated revenue is L 3,190,000, thus leaving a balance unprovided for of L 8,709; though I would again call the attention of the Committee to the fact that if we made up our accounts as we have done heretofore, there would be a still further amount to make good of L225,0Q0. But as I have said before, this will not become payable within th§ year, and therefore I do not propose to make provision for it. I hope hon. members will understand that, although this is in no sense putting off a payment which could be made during the year, yet that in future years the postponed liabilities at the end will be counterbalanced by the outstanding liabilities at the beginnitiw. Jn other words, through beginning this year free we have to pay less during the' year than in any succeed-, ing year by the amount of liabilities which will necessarily be outstanding at the end of this year. SCHB £AND FUND. I must, Sir, here say a few words about the land fund, the receipts of which, from all sources are estimated at L 335,000 ; of this L 200,000 is for land sales, and L 135,000 for pastoral rents. The pastoral rents being revenue have been included in the consolidated fund, but the L 200,000 estimated to be received from land sales has not been so included, but in accordance with our proposal of last session, repeated this evening, it hag been set apart to be separately dealt with. The charges, as honorable members will see upon reference to the estimates against this, amount to L 150,223, leaving a balance of L 49,777, which, if our scheme of local finance should meet with the approval of the House, will be handed over to the Local Public Works Board. We shall further propose that in every year when the proceeds of land sales are more than enough to pay charges and administration ancl the L 15,0,00,0 to the Board of Local Public Works, the balance shall be paid into the Public Works fund, PROPOSALS FOR THE FUTURE.

The Government, Sir, had hoped to do without proposing any alteration or increase of taxation this year, and would not have made any such proposal if on the one hand the taxes imposed last session had been generally accepted with only that amount of reluctance which is perhaps the natural attitude towards all direct taxation, and if upon the other hand the proceeds of the taxation had amounted to what might reasonably have been expected. But I have I shown that in the Customs duties the increased rate has not been sufficient to prevent a depr.ease in the amount collected, while from charters _ we have received strong representations that one feature of the' property tax is extremely distasteful to a large seotion of the people. The disoontent has, I believe, largely arisen through a misapprehension of the Act, which does not, as commonly supposed, empower any officer of the Govern mei}t to enter a man's house to hig goods. But, as I say, the discontent exists, and whether baseless or not should, as far as passible, be remo.ved. The removal of this obnoxious feature of the property tax is fortunately rendered more easy from the faot that it is generally admitted that this oannot be done without the substitution of some other tax which will produce at least an equal amount to that abandoned. The Government, therefore, in accordance with what they believe to be the desire of the taxpayers, will ask the House to exempt personal effects, furniture, books, &c., from assessment under the Aot, By this concession it is estimated that the revenue will lose L 40,000 a year. This, together with the deficit of L 8709 to be made good, necessitates the question of how it can be done in the most effective and least objectionable manner. X fear, Sir, that there are only two praotioable courses open to us : that we may impose the tea and sugar duties, or we may tax beer. The Government, Sir, have carefully considered which of these courses to follow, and have determined to ask Parliament to ijnpose a tax upon colonial heer of 6d per gallon. It is w}th great regret that I make this proposal, . When Colonial Treasurer some time ago my colleagues and J carefully considered the subject, and we ultimately decided thai we would not propose thfe tax, and when in opposition two years ago 1 helped to throw it out when introduced by .the late Goverment, upon the ground that it was practically the beginning of the system of excise taxes, which I was very loath to see introduced into New Zealand, so long as it oould be avoided. But the financial position of the Colony is such as to compel us to resort to saxes which in more, fayorable times we should-have supported We also £ro-

* " J? ■> [ pose to increase the duty upon imported f beer by 6d a gallon. I hope to obtain from the beer tax during the current year LBO,OOO, or at the ;rato of LIOO,OOO per annum. It will, be'wi thin the recollection of hon. members that I proposed last year to introduce a Bill to inctease the succession duties, but that through Vant of time the Bill was never circulated. I propose to proceed with that Bill, and Bhould it f become law, it will increase the stamp i revenue this year- by about LIO,OOO. s Summarising then, Sir, my proposals for i the convenience of. the Committee, they i amount to this : The deficit as shown by • - the difference b6tween the "estimated ext penditure and revenue is L 8709, to which • I add the L 40,000 loss by the exemption i proposed in the property tax, making & E .total of L 48,709. The estimated pros duce of the beer tax is LBO,OOO, to> i which I add the LIO,OOO for increase ■ of stamp duties, and obtain L 90,000, i thus showing, if our expectations prove f correct a credit balance of L 41,291 with i which to end the year, a margin, as the ■ Committee will agree, none too wide. In ) conclusion, Sir, if the Committee will per- ■ mit me to recall to their minds the main ) facts of our position, aud to sum up ) shortly our proposals, I would first call ; attention to one fact of cardinal imporl tance, which more than any other has I embarassed the finanoes for some time c past, namely, the fatal mistake (as peri nicious in practice as it has been in theory) ! of treating the proceeds of land sales aa > ordinary revenue. This and our unexs ampled prosperity for some years led ua s greatly to over-estimate our resources* > and so completely to misunderstand our i financial position; and to such a length > had this gone that the House was content t in 1878-79 to vote one million of the prol ceeds of land sales as revenue of the year, I and adopt a scheme of public works rej quiring a yearly receipt from land sales of ■ L 750,000 more. When, therefore, the 1 land sales suddenly fell to less than - L 200,000 a year, our difficulties became f great,and pressing; for it was manifestly J impossible to stop immediately the enorJ mous expenditure then in full progress, s which was based upon the assumption 5 that the land fund would reach sotne- ' thing like two millions a year. The i Government, Sir, of which I have I the honor to be a member, have been - blamed both in the House and throughout 1 the country for stopping the expenditure 3 too suddenly, and thereby intensifying [ the depression under which we are suffer--3 ing ; but when I tell the Committee that [ during the nine months ending Slst • March last, we actually spent on ordinary 2 services of the Government and public f works in hard cash, notwithstanding our j strenuous endeavors to retrench no less a 3 sum than L 4,523,257, of which L8,741,963i } was borrowed money, they will fully s appreciate what I have said as to the 3 difficulty of bringing the expenditure f within reasonable limits, founded as it r was upon an exaggerated assumption of t our means, and will, I think, fully acquit t the Government of undue parsimony, To 3 meet the serious difficulty and retrieve 1 our position, the Government at once set 1 to work to reduce the expenditure in a every direction, but this must necessarily be a work of time, our commitments e both by habit and engagement being so P large. We propose to separate land j sale receipts from revenue, and impose 0 additional taxation to raise a sufficient e sum to meet our necessary expends e ture ; but although all this, so far aa t could be done, was done it e was impossible to bring it into* effective - operation during the last finanoial period, a the timq being far too short. And, as a e consequence of the want of forethought 3 through our years of prosperity, we have - now to add one million to our funded t debt, that is, a permanent charge of h L 50,000 a year, as the result of the deficit y outstanding against the consolidated fund on the 31at March last. Of the necessity h of funding this, no one who considers qui? 1 engagements and our heavy taxation will, I think, entertain a doubt, and if only vyq have learnt the lesson of economy and I thrift which our difficulties should teach, n we shall not have, passed through our f troubles in vain. If, however, we are to j come successfully through the present 1 crisis, we must make up our minds to three things : A greatly reduced eajpendi* 0 ture on public works, and this from s the consoidated fund j to a oompleta separation of our local from general finance!; and to submit to increased taxa--1 tion for years to come. And I also would e emphatically point out that we ought e to connect far more closely than wq t have ever done the idea of additional tasja-i tion with further borrowing, as it e be actually realised by the people of the B Colony, not only that each new loan haa| j to be repaid, but that until it is repaid it imposes a yearly wfyioh must he ' met, if not by an increase of a, ta:s«paying e population, then by an increase of taxation j itself. As soon aa this is fully realised I e say that fresh loans will be much seldomec 3 called for and muoh more carefully snept, q That some further borrowing will be necessary is evident, but I t?uat that it, will be only very moderate, r Jfh,e tjjm,e i% not far distant when through, tfoe restore tion of real economy in our finance we - shall see our way to addressing ourselves • seriously to the task of reducing the large } publio debt, and I trust that the fc of the Government, in part slrea,dy san<j-. 1 tioned by Parliament, will »t least tend 3 towards making suql\ course possible. I 1 sincerely thank t\ie Gommittee for the* p kind attention with which it has listened ' to my statement, and would only add be- ! fore resuming niy sea,t that J hav§ net t doubt of the thorpugh soundness of the ! Colony and Oif the great future before ua, 1 now that the people have awakened to the i real facts of our financial position and thq 1 responsibilities it involves.