FINANCE.

Otago Witness, Issue 2667, 26 April 1905, Page 15

FINANCE.

No political speech would be complete without reference to the finances of the colony. The subject was a technical one, and thus did not get the attention it deserved. Many people actually believed that the colony's indebtedness was being increased by more than a million pounds a year. They were mistaken. Its indebtedness was being increased (and had been for the last few years) at the rate of over two millions a year. On March 31, 1901, the debt was £48,557,000, and three years later, on March 31, 1904, it was £55,064,000, an increase of £6,507,000— that was to say, j practically six millions and a-half of an increase of debt in three years. But ihat was not the worst, which was that the debt had increased out of all proportion to the population, and the indebtedness per head of population was increasing. The indebtedness per head on March 31, 1904, was £65 12s Bd, and in 1895 it was £57 9s 9d per head, so that between 1895 and 1904 it had increased by £8 2s lid per head. Ihe public debt was increasing too rapidly altogether, and the time had almost arrived when they should have to ease off. He was not, however, opposed to reasonable bor rowing, snd he understood that they musi borrow to complete the public works of th< colony; but the difficulty was that the? were borrowing for a great many othe] purposes than for public wotfks. Thej borrowed for many purposes for whicl revenue and not borrowed money should b< used. They borrowed for land for settle ments, for advances to settlers ; they hac borrowed for the Government Insurant* Department, they borrowed for State coa mines, for the Tourist Department, for th< Health Department, for de-fence purposes for post and telegraph, and other purposes He believed their whole financial positioi was wrong. He would give them an in stance. Let them take public buildings, fo instance, and in the fiist place they bor rowed for public buildings. They crectei a public- building ; they did not insure it did not write off anything for depreciation In case that building got burned or dilapi dated, they simply erected another. H< could not give them a better illustration thai what happened last year in connection wit] the Railway Department, for exactly th bame thing was going on there. They had a the present time, or had last year, 37 engines on the colony's railway lines, an< according to experts the life of an engin was about 30 years, so, according to thai they should write off at least 12 of thes engines each year, and these should be re placed not out of borrowed money, but ou of revenue. But what did happen? Si new engines were provided for the Railwa Department, hvA were paid for i.ot out o re-venue but out of capital, borrowed monej except for £200 received for an old engin that was sold. As he had said, they boi rowed for contingent defence, they borrowe for rifles thai in a few years had becom obsolete and were thrown away, and the borrowed to purchase more. They borrowe for powder that was fired off, and borrowe to purchase more ; they borrowed for ova coats, tents, saddlery, and perishable, good: and when they were worn-out borrowed t purchase more : and so the thing went ' right through all the departments. Ho not going to c firry round with him a libra, of books, but they could look up for then selves page after page of items charge to the Public Works Fund, every item < which should bo charged to revenue. But they were charg-ed to revenue, what won' be. the effect? He did not say there won] be no surplus, because it ■nas his duty i admit that he believed that there was genuine surplus, but it was incr-easei swollen, md enlarged by the methc of bookkeeping adopted) in rcspe to the public accounts of the colon There was anothe- point : Many peop imagined that the colony had a sinking fun in connection with its public debt. 1 one time there was a sinking fund, and i present thei-e was a small amount to tl credit of conic of the old loans, but thei

was no sinking fund in the proper sense. The form was gone through of setting aside a certain amount with one hand, but it was taken away Avith the other hand. He believed, however, the time had come when the colony should have a sinking fund in connection with all its loans. — (Applause.) Canada had a sinking fund for its loans, and the States of Australia saw it would have been advisable for them to have had a— sinking 1 fund for their Joans. If New Zealand had a sinking fund its credit would be improved, and money would be obtained at a lower rate than what had to be paid *fc present. — (Applause.) Another objectionable feature in connection with the colony's finance had sprung up lately: ne referred to the issuing of short-dated debentures. This was a system that was intended only for temporary pixrposes, but it had gone on year after year until, the debentures falling due, provision had to be made not only for money to carry on the works of the "colony, but also for renewing or paying off these debentures. On that account the colony's finances were considerably hampered. At every post office and railway station throughout the colony there were notifications that the Government was a borrower of money, and was willing to pay 4- per cent, on money advanced to it on the security of these debentures, and it was because the Government had got all the available money at 4- per cent, that the rate of interest had been increased. The banks had been compelled to put up the rate of interest, and every man, whether m the city or in the country, who borrowed money for his business had to pay more than he- would hay« paid, say, two years ago.— (Applause.) The Government had taken credit for reducing the rate of interest in connection with the Advances to Settlers Department, and for himself he did not say it was not entitled to the credit ; but if it vras, it must also take the responsibility of increasing it.— (Applause.) Ifc was partly nn ar-rount of the existence of these shortdated debentures that the credit of the colony ■was not so good as it was at one time. Then, in raising loans, the Government had lesorted to some very objectionable methods. He would mention one. When the- return of the unauthorised expenditu-e was laid before Parliament last year it was noticed irith surnrise that the rolony had apparently invested £50,000 of its own money in its awn stock. Nobody could understand why it was done. He took the opportunity, when an Imprest Supply Bill was brought Torward of moving that the return should be referred to the Public Accounts Committee for investigation and report. Speaking from memory, he believed the Premier made it a want-of-confiden=e motion, and it was not carried. What was tha position i The loan not going- off well, £50.000 was -used to give the people in London a lead, -and arrangements were evidently made with someone in London to purchase the £nO,OOO on the understanding that the transaction would be advertised and an example set for others to follow. It was a practice, ho ■ believed, that at times was followed m London but it was not a creditable piactice, and' it was not creditable that in floating a loan the Government should have had to resort to practices that were deemed objecfcionablc by right-thinking and straight-going Beople.— (Apolause.) In connection witn tne

matter of audit, be wished to cay this : Many people thought all the accounts were audited by the Auditor and Controllergeneral and his staff. Nothing of the sort. The accounts of (he Customs Department, amounting to 2^ millions, those of the Railway Department, amounting to 2 millions, and those of the Land Department, amounting to 2£ millions, never came tinder the review of the Auditor and Controllergeneral. He did not say they were not audited, but he said this : they w-ere audited by the- officers of the deport-r^nts ■con-cerned-—by men who were not responsible to Parliament and who were only responsible to the Ministerial head of their department. That was not a satisfactory state of things. — (Applause.) The Auditor and Controller-general was a man who deserved the respect and confidence of rhe people of the colony, and the colony as a whole should not rest satisfied until «n amendment was made in the law and the revenue of those departments was placed under the control of that official.— (Applause.) There was another direction in whioh a change in finance was desired: he referred to the expenditure on public works, and particularly on roads and bridges. Between £300,000 and £400,000 was generally voted annually for roads and bridges, and the Premier had been telling the people it was his intention to set apart half a million for the purpose. Weil, that amount might be voted, but there would be some difficulty, he thought, about the expenditure. What actually happened? Many people imagined that when a member was anxious to get money for his district he had only to move that £200 or £500, as the oase might be, bo set apart for a particular work. It was nothing of the son. The private members of the House had practically no control over the expenditure. Certain forms had to bo gone through. Any proposal in connection with expenditure must come down by Governor's Message and must be moved by a Minister, and the House as a whole knew nothing of the expenditure on