The Otago Witness.

Otago Witness, Issue 2104, 21 June 1894, Page 3

The Otago Witness.

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[From the Otago Daily Times.] THE HON. J. ». WARD AT OAM kWD. The speech of the Colonial Treasurer at Oamaru on the 15th will be read with a great deal of care and attention by the general public, and also by the members of the General Assembly, since it is seldom that on the very eve of a session we have so definite an announcement concerning the figures of the finance of the colony presented to the public by a Treasurer. While naturally keeping to himself the programme which he will present to the House, the Treasurer has not been careful to exercise any considerable reticence as to the facts and figures of our money matters. Dealing, then, first with the subject of " Public Finances " and " Conversion Operations," Mr Ward put his position clearly enough when he said that the indebtedness of the colony was to be judged by the amount of interest we were paying. If the interest was j increasing then the debt was increasing. On the other hand, if the interest was decreasing then the debt was decreasing also. While this is not a strictly accurate statement of the position, it is probably not unfair to gauge the operation of conversion by its effect in saving interest. Now the effect of conversion of loans is not, we think, so generally understood as it should be. It may be thus illustrated : Supposing that " A " owes " B " £1000, at 5 per j cent, his annual payment is, of course, ! £50. If then he makes an arrangement with " B " to owe him £1200 and pay 3| per cent., his annual charge will only be £42, or a reduction of £8. During the currency of his indebtedness, however, "A " by arrangement has accumulated in the hands of i trustees a certain sum as a sinking fund towards the payment of his debt, and under his new 3| per cent, arrangement "A" is no longer obliged to set any such sum aside. Then it will happen that while "A " has two hundred more of debt on his shoulders, he is not merely at a less annual cost of £8 than he was before, but he has also the sinking fund accumulation to spend. Now this simple illustration of what the Government has been doing on a considerable scale may possibly enable those who are not financial experts to understand the condition of New Zealand finance better than they did. It is clear that conversion puts a Government in . possession of considerable sums of ready money, and Mr Ward frankly tells us what has been done with these windfalls, and defends the action. He said : "If it became a question whether it was a desirable thing or not to release the sinking funds for the purpose of carrying on the public works of this colony he certainly affirmed his individual belief that it was a very good thing indeed." Whether the conversion operations which we have illustrated above are rightly to be called borrowing or not is a question on which different opinions have been expressed. At any rate it is now freely admitted that the result of the last operation was

j to put £163,000 at the disposal of the Ministry of the day for the purpose of carrying on public works. We cannot say that the Treasurer was equally successful in explaining the dealings of the past year in Treasury bills. AVhile Treasury bills are a necessity no doubt everywhere, we fail to see how the increase in amount of £476,000 can be called anything but surreptitious borrowing. Mr Ward said : " £460,000 of these Treasury bills had been issued for the purpose of redeeming a like amount of Imperial guaranteed debentures which had been invested in the public works fund, as already explained." Now it must be admitted that whatever Government invested these Imperial debentures in the public works fund borrowed the amount. We should further like to know how it comes to pass that the Treasury bills are to the extent of £1,229,000 in the hands of those public bodies which hold trust funds. As far as we understand the arrangement, when the Government desires to make a loan or undertake a work requiring moneys, it gives the trust bodies so many Treasury notes, and makes the loan or undertakes the work. More ought to be known of how exactly this process goes on. With regard to the annual statement of the finances of the colony, we must generally admit, in common with most of those whose especial business it is to understand finance, that it is a matter of the utmost difficulty to make head or tail of the annual balance sheet. The methods, adopted in making the statement of accounts is so complex, so intricate, so incomprehensible without full and ample explanations, that we can hardly wonder at the Auckland branch of the National Association bringing out results totally different from those produced by Government although from the same figures. The difference between the results of the association's balance sheet and that of the Colonial Treasurer is over half a million of money, and that system must be bad and stupid which can allow two independent persons to arrive bona fide at such very different conclusions. We are told by Mr Ward that "it was a very common thing to hear people ask why the public accounts were not kept in some such form as commercial accounts were kept. He might explain that the way the accounts were kept was regulated by law. They could not be set forth in the way that a public company would set forth their accounts." No doubt Mr Ward is correct in saying that the law requires the accounts to be presented in their present form, but we would suggest to him that it is a duty he owes to the colony to get the law altered, and that there is no reason at all why the accounts of the colony should not be as plainly set out as those of any other commercial undertaking. We desire at the same time to note the fact that the Treasurer played a very strong card when he pointed out that the Controller-general certified to the correctness of the accounts. Mr Fitzgerald is quite beyond and above all political interference, and the Auckland branch of the National Association is really not to be listened to when it in effect disputes the accuracy and exactness of Mr Fitzgerald's figures. It is impossible to suppose that that gentleman put his signature to accounts as correct which were »really incorrect and inaccurate to the extent of £676,000 in one year. The very suggestion is preposterous, and condemns the whole report of the Auckland branch of the National Association. That it is possible to arrive at two such widely divergent results as those of the Treasurer and the National Association is, however, in itself condemnatory of the method in which the colonial accounts are set out. We have no doubt that there are men to be found who can devise a method by which the whole finances •of the colony might be put in a few columns so that even the merest tyro could understand them at a little more than a mere glance, and Mr Ward has an opportunity of solving the problem. We judge that on the whole the tale which the Colonial Treasurer will have to tell the House next month will be a satisfactory one. Although the low price of commodities has necessarily affected revenue, it seems that the industrial activity of the people has about filled up the gap. When we look at the other Australian colonies this result will appear all the more wonderful, since with the exception of Western Australia all the Australasian group are in financial perj>lexities of no small extent. Mr Ward's lines as Treasurer have fallen in pleasant places, and no doubt he is still reaping the results of the labours of others to some extent at any rate. It is only fair to him, however, to say that this

becomes less and less true as the years go on. At any rate the exact figiu'cs which he gave in his Oamaru speech will supply to members just that stable foundation for examination and criticism which is proper when the session is beginning.