THE FINANCIAL STATEMENT.

Otago Witness, Issue 1340, 4 August 1877, Page 9

THE FINANCIAL STATEMENT.

[By Telegraph.] Wellington, July 31st. At the evening sitting, The Colonial Treasurer (the Hon. Major Atkinson), made his Financial Statement. The hon. member said that it was true we had reached that point in the scheme of Public Works and Immigration, when THE BEVENDE WAS SUFFERING TO THE GBEATEST EXTENT POSSIBLE From the large unproductive expenditure upon railways in course of construction. It was also true that there existed a feeling of uneasiness, amounting in some quarters to anxiety, because of the belief that the services of the year could not be provided for except by increased taxation. Knowing the strong desire that therefore arose for early information, he had taken the first opportunity afforded by the rules of the Housa to state the financial policy of the Government. He meant in his Statement to direct attention to broad features only. The details would be fcund in the usual tables. He would first describe what had been done uader the Loan Act of laut session, which authorised THE RAISING OF ONE MILLION For defined purposes. When authority was asked for, he stated his belief that the money could be raised in the Colonies, and that if so the Government would gladly avoid going upon the London market for at least a year. That belief had been realised. His colleague, Mr M'Lean, had negotiated in Sydney with the Baukof New South Wales, for an advance of half a million, secured upon short dated debentures, bearing 5 per cent, interest, payable half-yearly in Wellington, and one half per cent, commission, principal repayable in London in three equal instalments at intervals of one month, the first instalment falling due on lsfc December, 1878. From the Bank of New Zealand they had obtained L 500,000, secured upon short dated debentures, bearing 5 per cent, interest, payable half-yearly in Wellington, principal repayable in London upon the 15th February, 1879. A further arrangement with the Bank of New Zealand had aLo been made, by wh«ch, under the Bank's agreement, an advance of L 400,000 could be obtained upon remittable securities, instead of L300,C00, making the total advance under that arrangement L 500,000, and fixing the 15th February, 1879, fdr the repayment of all such advances. The appropriations last session for IMMIGRATION AND PUBLIC WORKS Amounted to L 2,032,286. There had been expended up to June 30th, L 1,480,617, so that there had been a saving of L 551,688 during the

year on the amount voted. In asking for so large a sum, he pledged the Government to limit the expenditure as far as it was compatible with prudence, care being taken that injury should not be done to the Public Service, and though complaints might be made that some districts had been neglected, the Minister for Public Works could no doubt be able to satisfy the House, not only as to what had been done, but as to what had been left undone. The votes on which [THE LAEGEBT SAVINGS HAD BEEN HADE Were Railways, on which the expenditure had been L 333,000 less than the estimate ; water supply on Goldfields, L 61,000 less ; land pur chase, North Island, L 40,000 less, and roads, L 36,000 less; the other savings included L 22.000 on Immigration, and about the same amount on Public buildings; L 23,000 on Lighthouses, and L 12,000 on. Telegraph extension. Taking THE PUBLIC WOBKS ACOOUNT AS A WHOLE The ways and means had' been L 11,500,000 from loans, including L 750,000 out of the Loan of 1876, and L 340,620 from receipts in aid, including L 264.657 from stamp duties. Up to December last there was thus a total of L 11,840,620 of ways and means. The expenditure up to June 30 amounted to L 10,860,431, so that there was on that date a balance of L 98,189. The principal items of the expenditure had been — Railways, L 6,129,920; Immigration (including location), L 1,517,809; Roads, L 894.571; Land Purchases, North Island, L 533.500; Water Supply, on Goldfields, L 405.063. The charges of raising the loans had "amounted to ' L 498.532, anH interest and sinking fund represented L 218,500. Of the balance of L 980.189 there would be required L 645,957 for works under contract or about to be let. It was proposed TO ASK FOB APPBOPBIATIONS amounting to about L 1,274,676, and if this were granted, additional ways and means amounting to about L 990,443 would be required for this account during the year. Next as to PROVINCIAL LIABILITES. Treasury bills for LUO.OOO had been issued under the power given by the Appropriation Act of last year, and the proceeds had been applied in terms of that Act in making advances to the Provincial Districts of Auckland, Wellington, and West Coast. Out of the 1876 loan a quarter of a million waa appropriated to meet Provincial liabilities falling due between Ist January and 20th June., There had been transferred to the several Provincial liabilities accounts for that purpose L 237,500, leaving L12,5C0 to defray the appropriation of the cost of raising the loan, the balance being applicable to outstanding liablities., Taking tho PROVINCIAL LIABILITIES ACCOUNT " , as whole, the receipts up to June 30th had been L 620.951, and there was a balance of L 45,888 to be applied. The Government regarded the compensation paid to Provincial officers wnose services had been dispensed with as being properly Provincial liabilities,; ,the' amount so paid would, therefore, be included in a statement of unauthorised expenditure, which the House would be asked to cover by a vote. Before concluding this part of my subject (continued the Colonial Treasurer), 'the Committee will perhaps allow me to say a few words about OUB PUBLIC DEBT. > - The gross public debt of the Colony, General and provincial, including -Treasury bilis when the balances of all loan 3 now authorised are raised, will be L 20.895.311. As against tnis . debt, we have a balance of L 980,189 133 Id at credit of the Public Works Account on 30th June ; L 35.416 18s 9d at credit of the Defence Loan Account; and Accrued Sinking Fund, amounting to L 1,353,563 2s lOd. OUR TOTAL REVENUE LAST TEAR was L3, 061,591 10s 4d, and excluding land sales, L 2,171,059 13s ; that is, after setting apart that portion of our income derived from the sale of land which, in most colonies, is called revenue. Our net public debt is eight and a half times our revenue ; or, if we include our income from land sales, our public debt is equal to six times our revenue, while the public debt of, Great Britain is more than ten times the amount of her revenue. This seems to me a far fairer way of comparing our indebtedness than at so much per head of the population. ' It should, moreover, be remembered that the public debt of England has been incurred for war purposes, while that of New Zealand has mainly been incurred for reproductive works. It may perhaps be interesting to state the PURPOSES FOB WHICH THE SEVERAL LOANS, General and Provincial, which constitute our National Debt, have been raised, and the amount applied to each. I have ascertained by an examination of the several Loan Acts, that those purposes and amounts may be classified thus: — About L 8,300,000 has been spent upon railways, L 3,500,000 on immigration, L 4,400,000 on harbours, lighthouses, public buildings, roade, bridges, and other public works for opening up tha country ; LL3OO 000 in the purchase of Native lands, including' the payment of debt to the New Zaaland Company • L 2,000,000 in the suppression of the Native outbreak ; and the remaining L 500,000 on miscellaneous purposes. 1876—77. The expenditure for 1876-77, as authorised by Parliament, exclusive of that for railway, waa LI, 858,467, and there had been a savin* of L 194.084 from the votes. Of that amount L 73,323, under the head of Interest and Sinking Fund, was mainly due to a year's interest on L 1,250,000 having been provided for, and only a half-year's payment being necessary. Deducting this, there would still remain a saving of L 123,566 on the appropriations for the year. The amalgamation of the ARMED CONSTABULART WITH THB POLICE FORCB of the Colony had enabled a considerable reduction to be made in the cost of those services • but owing to the necessity of paying a bonus to the men discharged, the saving for the six months amounted only to about LIO,OOO. The Estimates of expenditure on railways, and the a year were necessarily contingent upon the progress of works, and therefore tho item had been omitted. In comparing actual expenditure with revenue under each head, there had been a diminution owing to certain extensions not beirg opened as early as was anticipated. He last session estimated a profit of L 84.000 the receipts being set down ar. L 345.000, and' the expenditure at L 260,778, but it was a fact upon which the Colony might well congratulate itaelf that ' THE PROFITS FROM RAILWAYS had been L 87.924 during the year, the receipts having been L 316.220, and the expenditure L 228,295. He would now refer to UUICur ? THE CONSOLIDATED REVENUE. His estimate was that the surplus with which to begin 1876-77 would be L 50.052, but it had proved to be L 61,027. The total receipts under this head were estimated at L 1,671,850 but they had reached L 1,614,583 only. The Customs revenue showed a deficiency of L 40.621, but, looking at the disturbance of trade throughout the world, and to the uncertainty of the wool market during the year the Government were prepared to find the de-

ficiency larger, and probably hon. members were similarly prepared. The Postal revenue appeared to have fallen L 9452 below the estimate, but sums amounting to L 15,923 had ta be received from the Imperial and Australian Governments, so that the seeming deficiency would be converted into an excess of more than L6OOO. In incidental receipts there was a deficiency of L 18.447, but receipts under this head can never be estimated with more than an approach to accuracy. To the L 1,614,582 received into the Consolidated Furd he added, first, the, profits on the railways (L 87 3 924), the LIC.OOO transferred from the State Forests Account, the two per cent, recovered from the Land Fund under the Financial Arrangements Act (amounting to L 71,997), the surplus at the beginning of the year (L 61.027), and the assets yet to be realised. These made, a total of L 1.882,249. The total revenue for the year as estimated amounted to L 2,146,902, or, exclusive of railways, to L 1,801,902, to which must be .added the estimated profit on the railways, L 84.244 making, as estimated RECEIPTS FOR THE TEAR, J4'™£' 144 ' while the actual receipts were L 1.882,249, being L 3895 less than the estithe estimate. The TRANSACTIONS OF THE TEAR might be summarised thus:— Actual expenditure, including liabilities, L 2,024,572; actual revenue, including realisable assets, L 2,172 89?« leaving a balance of L 248,220 as a surplus -with which to begin 1877-78. Comparing 1876-77 with 1875-76, the falling off in the Customs revenue was but small, and notwithstanding it the revenue of the Consolidated fund, including revenue assets of the year, showed an increase of L 238.276. The receipts from the Land Fund during the year (exclusive of gold duty) wera L 1,039,242, or L 419.000 more than the avtagS for the preceding seven years. Since the lstof January (said the Colonial Treasurer), when the financial Arrangements Act came -into force, the receipts have been L 544.454 ' The estimate was L 322.610, so that the estimate was exceeded by L 221,884; but I regret to say that, although there is a very large increase on the whole, the deficiency is larger than waa provided by the Financial Arrangements Act. lhe sales in Canterbury show an enormous excess, while those in Auckland, Taranaki, Hawkes Bay, Nelson, and Otago have proveo* to be less by L 83.080 than the sum estimated In consequence of this, the whole of the Treasury Bills authorised under the Financial Arrangements Act, amounting t0L13,000 have been issued, and an additional sum of L 53 005 has had to.be advanced from the Consolidated Fund in aid of the Land Fund. The business done by the POST OFFICE SAVINGS BANK hag been satisfactory/and the deposits remaining on June 30th were L 720,000. The year's transactions in the ANNUITY. ASSURANCE DEPARTMENT had been most satisfactory to all connected with the department; but as it was intended to bring in a Bill to establish a Board of Management, instead of leaViug: the direction in tha hands of a Commissioner, he would not trouble tne Committee with remarks or details. THE PROPOSED TOTAL EXPENDITURE for the year 1877-8 was L 3,109,754. The cost ef most of the departments had been reduced througa amalgamation and simplication, al« though the wort had in .many cases nearlydoubled. He regrettad that more had not been done in this direction, owing to, want of time, in consequence of the enormous amount of work which had fallen upon the Government through the _ constitutional change it had been their busine3s to inaugurate "during the recess. ' UeS&W'^Sr*™* the sum of HOSPITALS AND CHARITABLE AID. This was meant to provide the subsidies, which would probably be payable under the Charitable Institutions Account. Authority would be asked to deduct from the subsidies to Counties, Boroughs, and Road Board 3 a sufficient sum to maintain hospitals for the" charitable m districts which declined to adopt the Act, or in which it proved insufficient. The House had already been informed of the provision meant & AnS, a £ e i°£ educati °n. The large increase of julu,»B^ nad been found necessary in the vote for MILITIA AND VOLUNTEERS, but it waa chiefly on account of stores and ammunition and capitation for an increased number of Volunteers. The saving effected by the amalgamation of THE POLICE AND ARMED CONSTABULARY was equal to L 33,000 a year. Referring next to , WATS AND MEANS FOR THE CURRENT TEAR, the Colonial Treasurer said: As I have first 'shown, we have to provide for an aggregate expenditure of L 3,109,754 Is 9d for the year. Of this, L 2,394,546 12 3 9d is chargeable upon the Consolidated Fund ; on the gold revenue. L 72,000, and L 643,208 upon the Land Fund, being such charges only as each fund should support. Now if all the charges placed upon the Land Fund of each district could be recovered, the Consolidated Fund would be in a position to bear its legitimate buvdens without difficulty. As a matter of fact, however, Ido not think that more than L 560.000 of that sum will be practically recoverable, the Land Fund in certain districts being insufficient to meet its liabilities. It will therefore be necessary either to supplement the Consolidated Revenue, or to relieve it of some of the charges I have proposed it shall bear. I dismiss, Sir, as altogether undesirable, the plan of charging such services as Police and Education upon the Land Fund of those districts which are able to. bear them — they are charges which, in the opinion of the Government, should be borne upon the Consolidated Fund, aided, if necessary, by local rates. If the Committee agree with me that it would be undesirable to charge against the Land Fund any of the services I have proposed to place upon the Consolidated Fund, itfolWs that the only course open •to us is to Increase that fund up to our requirements. I say that it follow* that for the present year thig is the only course open to us, because I have satisfied myself that it is impossible so to reduce departmental expenditure as to bring our expenditure within our income, unle33 we are prepared to relinquish some of the benefits we enjoy in the way of telegraph and postal services, and Resident Magistrates, which are spread broad-cast over the land, and which, as far as my experience goes, it is hopeless to attempt to reduce. I take it for grroited that we must, at any rate, temporarily aid the Consolidated Fund, and the question is, How is 'this to be done. I know, Sir, that many persons whose opinions are entitled to great weight from their position and their knowledge of the Colony aud its requirements, think that the time has arrived for levying a property and income tax, and if we were now in a position to deal with the question of the re-adjustment of taxation, much might be aaid in support of such a tax. For my own part, lam very loth to open the question of taxation at present. -Our liabilities being what they are, the subject of taxation 13 not lively to be touched,- It is one which requires the most careful thought, it must be considered as a whole, andit would be quite impossible to deal with it satisfactorily

during the present session. When our trunk railways are approaching completion, when we have had time to cousolidate and settle down, and are able to determine our real reqairements, then the whole incidence of taxation must be considered ; but to deal with it now in a fragmentary way would, I think, be a serious mistake, for the reasons firat stated, aud because we think our requirements for the year can be met in a way which will be far more satisfactory to the conntry, and which is fair and reasonable. I SHALL NOT PBOPOSE ADDITIONAL TAXATION this year, and I venture to hope that additional taxation may be altogether avoided if we obtain from our railways that income which seems now assnred, and if we are successful in the inscription of our stock. But here, Sir, it is necessary that I should recal the attention of the hon. members to two principles which have been clearly recognised as underlying all our legislation relating to waste lands and immigration and public works. These two principles are : First, thut the LAND FUND SHALL BE LOCALISED. Second, that the cost of immigration, roads, and railways is a proper charge against the Land Fund. These principles have been constantly recognised, and though it is true that they have not been continually acted upon, yet the recognition of them crops up in our legisla tion at almost every turn. By the Provincial Governments and Legislatures which have hitherto had the practical control of the land revenue, tbe second of these principles has always been acted upon. But in this House expenditure upon immigration, roads, and railways has been from lime to time charged against the Consolidated Fund, as that fund has been fourd able to bear it But these two important principles have never been abandoned or lost sight of by Parliament or the conntry. With reference to the localisation of the Land Fund, it is necessary that we should distinctly define in our own minds the meaning of the term. The meaning which I attach to the term localisation of Land Fund is that the money received from the sale of the Crown lands within a district should be spent in opening up and peopling that district I am, Sir, not now goinz into the question of what iz a district ? That would open up far too wide a field altogether. For the purpose of my argument, I shall accept the districts as they are, although it should be noted, that Parliament has always claimed and exercised the right of altering the boundaries of these districts from time to time. Moat honourable members will go with me so far— at any rate, those will who, like myself, think that the proceeds of the land should be applied to the end that those who pay the most receive the greatest facilities for occupation, and that to treat the Land Fund as ordinary revenue is thoroughly bad in principle. Some few will probably desire to go even further. But, Sir, farther than this in localisation I' am not prepared to go, for when the money has been spent in opening and peopling the district, the object of localisation is accomplished. Our duty to the l&ad is fulfilled, and therefore; my opinion of localisation ends. Holding, then, as I do, the opinion that with the proceeds of > the land it is the duty of the State to open .and Bettle the land, it seems to me not only no violation of the principle of localisation, but merely an extension of it, to say that if the State finds the money beforehand for that purpose, such an expenditure should be made a charge against the Land Fund, and that it is in accordance with the principle of localisation to charge against the Land Fund of each district any sum not exceeding the amount expended within that district, in any way which Parliament may determine is the most convenient Now there has been raised for railways and immigration, a sum in round numbers of L 9,500,000, the whole of which is fairly A LIABILITY OF THE LAND FOND. The annual charge on this sum for interest and sinking fund is about L 485.000. Out of this sum there had been expended up to the 31st December, 1876, the day on which the account* of the late Provinces were closed, a net sum of L 7,188,245. The Colony had paid interest thereon to the amount of L 825,482, but has only recovered from the Provinces L 60,443, so that on account of Land Fund the Consolidated Fund has actually paid L 655,139. The Colonial Treasurer stated the results of tables showing how each district land fund had been benefited" and he then proceeded as follows: — I have shown the extent to which the Consolidated Fund has been burdened by the payment of interest and sinking fund on moneys expended in. performing the work for which the Land Fund was localised, viz., the opening up and settlemsnt ot the country, and applying the arguments I have just used, I shall aak the House to reaffirm the principle, that moneys expended on these purposes are properly chargeable upon the Land Fund. We recognise that, at the present moment, the refund of these charges is beyond the in mediate power of the less wealthy districts, but as respects the Provincial districts of Canterbury and Otago, no such argument can be urged, and we propose TO CHARGE THE LAND FUND OF CANTERBURY with a suju of L 58,000, and

THAT 07 OTAGO with a sum of L 109,000, being in each case one moiety of the amount by which the land fund of those districts has been aided. With the exception of a small permanent charge, the charge of 2 percent, for railways, the subsidies payable to Counties and Road Boards, and the cost of surveys and administration, the land revenue of Canterbury is absolutely free, snd in view of the fact that a sum of L2n0,000 of surplus land fund has been distributed within the district during the past six months, and that a furiher sum of LIOO.OOO is now ready for distribution, we propose to deduct her contribution from the sum in hand.

THE CASE OP OTAGO is somewhat different. The district has a very large estate, though it is burdened now with leases just expiring, and which it would be a waste of public money to cancel. We propose, therefore, to raise the amount required to meet its contribution, together with the sum of L 36,000 advanced last year in aid of the district Land Fund, treating the debt as Provincial LabiUty, and making the interest and sinking fund a permanent charge upon its future Land Fund. The whole Land Fund of the Ota«o district for the year will then be free, excepting only (he two per cent under the Financial Arrangements Act, the interest on its Provincial debentures, the cost of surveys, and land administration. The relief to the Land Fund under the proposals of the Government is very considerable. IN THE SOUTHERN PROVINCES, EDUCATION was almost entirely borne upon the Land Fund under the Provincial system, and considering that the whole cost of building and maintenance of schools, of Police, of Gaols, of Lunatic Asylums is now borne upon the Consolidated Fund I do not think that the inhabitants of Canterbury and Otago will consider the proposition I have made unreasonable. It must further be borne in mind that when the Colony has incurred a large expenditure for Public Works ana Immigration, which is yearly imPTOTinji the public estate at a time when the pnrdenox the expenditure on non-completed

works if> most severely felt, the only possible means of maintaining the broad principle of localising the Land Fund is by taking care that all rightful charges upon it are fairly and justly met. The estimated total revenue of the Colony for 1877-78 was L 3,392,685. This total comprised L 2,263,160 of consolidated tevenue, L 167.000 of refunds from Canterbury and Otago land funds, L 72.000 goldfields revenue and gold duty, and L 890.525 from land sales, licenses, rents; and the Customs revenue was put down at the amount yielded last year, and on other items there was a slight increase. Railway receipts were estimated at L 604,000, and the year's profit on the work done by the railways was set down, after very careful consideration, at L 170,000. Adding to the estimated revenue the surplus with which the year •was begun, L 148.220, there would be a total of L 3,540,905. Deducting, then, the estimated expenditure, there appeared a surplus of L43L150. Of that sum, L 329.369 was distributed amongst the Counties as surplus land fund, and there would remain a balance of L 101.781 available to meet possible deficiencies of the land fund in certain districts. It had been found impossible to carry out a promise made last year to submit this session J ESTIMATES FOB THE COMPLETION OP THE RAILWAY SYSTEM, j and it had [been considered that delay was preferrable to an incomplete estimate for the purpose. Therefore, the Government would only ask this session for a sum sufficient to unite I the already completed sections of the -trunk line of 500 miles from Ambetley to Kingston, and for extensions of the main lines in other parts of the Colony. These works would be described in the Public Works statement, and should the House approve of the recommendations that would then be made additional ways and means to the amount of L 940,443 would be required. Tht> TOTAL PROPOSED EXPENDITDBE FOB THE YEAB on Public Works -would be 341,796,451. Immigration services were estimated to require L 124,182, and there -yere Provincial liabilities to be met, amounting to L 259,556. These sians made a total of L 2,180,189, and after allowing for the balance to credit of the Public Works account, L 1,200,000 would remain for which ways and means would hare to be provided. % THE LBOO.OOO OF GUARANTEED DEBENTURES had, in estimating ways and means, been treated as cash applicable to public works. But the Governmtnt were of opinion that these debentures should be freed, and should continue to be held as an available security againßt which advances could be obtained at a low rate of interest. If these proposals were approved, authority to raise a loan of L 2,000,000 would have to be asked tor. The Government could not recommend that any of the works which would be included in the Public Works Statement should be delayed, but if the House should resolve to reduce the expenditure upon public works by, say, one half, then the agreeraent with the Bank of New Zealand would probably avoid the necessity for going upon the London market for another 18 months, and next session a complete scheme of works could no doubt be submitted. But this, he repeated, was a course which the Government could not recommend the House to adopt The Colonial Treasurer, in his peroration, explained why the Government thought it most desirable the country should have TIME AND BEST for the complete development of the Public Works system, and should not at" present be troubled by proposals for increased taxation, or by questions of Constitutional changes, or the incidence of existing taxation. The proposals of the Government would secure this state of things, and he asked for their early and most careful consideration. The House adjourned about 20 minutes after nine