FINANCIAL STATEMENT.

Poverty Bay Herald, Volume VII, Issue 1036, 9 June 1880, Page 2

FINANCIAL STATEMENT.

■ ■ . . .». [By Telegraph.] ''i^if'A ■ f . _..., WELLINGTON. ' ,*' '. ' Tuesday. is committee of ways and moans on Tuesday Bth, 1880. By the Colonial Treasurer the Hon. Major Atkinson. Mr. Seymour, — When on November last I .had, the honor to submit for the of this committee the Financial Statement, it was thought by persons not- unfriendly to the Government that in estimating the probable deficit for which it would be necessary I- to make provision, by the Ist April last, at £800,000, I had taken a far too gloomy view of our financial position. "'. I itegret to say that my anticipations in "this respect have been more than , £;jsealiaed, and that the financial results of the last nine months have proved even less satisfactory than I ventured to predict as probable. I, for one, have not the least doubt that the present f. check to prosperity, a check which has • j Jbeen felt at the same time throughout V. the civilized world, is a temporary one ; ' yet, bearing iv mind the effect this . check, and other causes which we might 1 . hive controlled, have had on our finances, and afso the amount of our public debt as compared with our population, the '. duty of economy and retrenchment has become clearer and more pressing. It ''"■ is therefore gratifying to know that the plain facts of our financial position which

I had the honor to submit to.Parliament laat session, have fully awakened attention to this vital subject, and have produced in the public mind a determination that the annual expenditure shall be brought within tl*> annual revenue, by reducing the one as far as is compatible with eficiency, and if necessary, increasing the other so far as may be needed. The Government propose, Sir, to ask Parliament to give practical effect to this determination. My task therefore this evening, considering the extravagant habits into which we have fallen of late years, is one of unusual difficulty, in the execution of which I venture for to hope at least as large a measure of consideration a 8 the committee have so kindly extended to me upon former occasions. Sir, in submitting the financial proposals of the Government in the last budget, I said it would be impossible to surmount our monetary difficulties, and escape the dangers of our position without something like a complete remodelling of our finance, both general and } local, without careful administration by Ministers, and without the exercise of much thrift and self-denial on the part of all classes of the community. In accordance with the opinions so expressed certain measures were introduced by the Government, and passed the House last session, modifying very considerably our financial system, but leaving untouched our system of local taxation and subsidies. Upon this subject I said if the important question of local finance is far too large to go into this session, therefore I will say no more upon the subject now, except, Sir, that the. Government fully recognise the fact that it is their duty to submit to this House upon its first meeting next session a scheme which shall place local finance on a satisfactory and something like a pe*» manent basis, and by satisfactory the Government understand placing local bodies in such a position as will enable them to obtain as far as is possible sufficient funds for all necessary works, while drawing a broad and distinct line between local and general finance, and such a scheme the Government will endeavour to mature before the next session of Parliament. To night, Sir, I shall endeavor to redeem this promise. I trust, however, the Committee will not expect too much The subject ia one be-set on etery Bide by difficulties, whichnothingbuta strong determination on the Parliament and of local bodies to rely more on their own resources, and less upon external hel p than hitherto, will render any satisfactory solution s£of this question impossible. But before submitting for the consideration of the Oommittee the proposals of the Government, it will be more convenient that I should place before them the results of the transactions for the last financial period, which, through the change in the financial year, comprises 9 instead of 12 months the year 1878---79. I will first explain the actual financial result of the year ended 30tb June, 1879. It will be remembered, 1 estimated that after payment of allliabilitiea outstanding at the close of the year, and taking credit for the assets of the year, there would be a deficit' of £131,824. The actual deficit on the transactions entered up to 31st March last, in respect of the period now being referred to, proved to be £69418. There remained unpaid, however, on that date, liabilities, to the amount of £70,193 including £50,000 owing the Bank of N. Z. as the balance of an overdraft of the late Provincial Government of Otago; while on the other hand, further assets amounting to £5,821 have been realized since 31st March, so that the total deficit, including assets and liabilities on 30th June last,|was £133,790 instead of £131,824 as estimated. EXPDNDITUaE OF THE PERIOD ENDED 31st March, 1880. I now come to the expenditure of the last financial period in the statement, which I had the honor to make to the committee last session. I estimated that the expenditure would amount to £3,110,262, but this sum was increased to £3,139,539 by passing of the supplementary estimates. The actual expenditure to 31st March last, excluding advances in the hands of officers of the Government amounted to £277,276. It will be in the rocollection of hon. members that last session I proposed that in future the receipts within the year should be held to be the revenue of the year, and that expenditure made within- the year should be the expenditure of the year, which I shall state presently when I come to speak of the final results of the period ended 31st March. I shall ask the Committee to permit me to postpone giving effect to that proposal until dealing with the present year. In accordance with the provisions of " The Public Revenue Act, 1878, Amendment Act 1879" returns of the liabilities outstanding on 31st March certified by the several UnderSecretarys have been laid before Parliament. The liabilities amount to £342,966, from which, however, I deduct £70,193, already referred to as belonging to the period ended 30th June, 1879, leaving a sum of £272,773 introspect of the period we are now reviewing. Adding this sum to the actual expenditure to 31st March, amount as I have said to £277,276, we get a total expenditure of £3,045,049, as against £3,139,539, the estimated amount, there being thus an apparent saving of £94,490. A comparative return of the estimated and actual expenditure of each class with the liabilities added, has been prepared and will be appended to this statement. I desire, however, to point out to the Committee that I included in the apparent saving of £94,490 that there are 3everal items rising merely from an over estimate, and which cannot be reI garded as savings, such as interest and 20 per cent, of land fund payable to Counties. On the other hand, there are certain necessary payments for services not provided for, which reduce off course the amount of the total net savings for the period. Under the head of annual appropriation where alone savings can be really effected, the expenditure in 8 classes out of 11, after including outstanding liabilities, was £92,620 less than the estimated amount, including as we should. £13,100, for stores purchased for the railways, and unexpended the amount was £105,720. In the remaining* 3 classes the expenditure was £9036 over that estimated. Hon. members will recollect that six months of the nine had practically elapsed before Parliament rose, and the

Government therefore think they may congratulate themselves on accomplish^ ing so considerable a saving in so short a time. , i Revenue op tSe Period Ended 31st. March, 1880. I now come to the estimates of the Colony for 9 months ended 31st March, 1880. The total revenue received during the period amounting to £2,133,759 to which I add £50,000 receivable on Ist May from the Land i Tax, which the committee will remember was included in my estimate, making together £2,183,759, the estimated amount being £2,445,200. The revenue therefore fell short of my anticipations by the sum of £261,451. From the returns which will be applied to the financial statement when printed, Hon. members will be able to see the heads of revenue under which this deficiency has arisen. I should, however, refer to some of the leading items. The revenue from the Customs did not reach the estimated amount by £47,535. This, although I fear chiefly caused by the general depression prevailing throughout the Colony, has also been partly caused, as I believe, by the awakening of our population to the necessity of cultivating more thrifty habits and practising greater selfdenial. So far as it arises from these last-named causes, the committee will agree with me in thinking it a matter for rejoicing rather than regret, though it may result in a temporary inconvenience so far as the revenue is concerned. The stamp duties produced £32,921 less than the estimates, but this large amount does not represent an actual falling off to that extent in receipts. The revenue as hon. members know, is now stated minus the refunds made last year. The gross revenue from stamp duties during the 9 months ended 31st. March amounted to £111,057, and the refunds to £18,979, an altogether unusual amount, but an estate which paid £18,405 duty in the year 1878-79 was declared by the Supreme Court not chargeable, and that sum therefore had to be refunded in February last, and is included in the refunds above mentioned. The stamp revenue butforthisunexpected occurrence, would have realised £14,516 less than the estimate instead of this £32,921. The falling off in this instance is, I ! think, due to the general depression, but this branch of the revenue will, without doubt, recover with returning prosperity. The receipts from the railways fell short of the estimates by £113,072. But this loss is counter-balanced to some extent by the not inconsiderable saving of £43,242 effected in the expenditure of my hon." friend the Minister of Public Works. The laud revenue, too, I regret to say, produced only £155,108 instead of £246,700. The postal revenue, however, exceeded the estimates by £12,961 ; but of this sum £6,982 was profited of the Post Office Saving's Account, which has heretofore been treated as incidental revenue. There were also small excesses derived from several minor services of revenue, to which I need not particularly refer. Financial Results of the Period Ended 31st Makch, 1880. In my last financial statement I estimated that the deficit for the period ended 31st March, 1880, would amount to £796,886. which sum was increased to £826,103. By the supplementary estimates, hon. members will recollect that Parliament made special provision to meet this deficiency bypassing "The Treasury Bills Act, 1879," authorising the issue of Treasury Bills to the amount of £800,000, with the intention of adding that amount to the permanent debt of the Coloay and of thus starting clear of floating debt from the 31st of March, 1880, measures being taken to secure equilibrium betwween revenue and expenditure from date. In consequence, however, of the revenue of the last financial period not realising the amount estimated by £261,441, it became necessary to fall back upon the contingent authority to issue deficiency Bills granted by " The Public Revenues Act, 1878 " and Bills to the amount of £200,000 were accordingly issued, making total issue of £1,000,000 of treasury and deficiency Bills during the 9, months. The Government propose to deal with this additional sum of £20,000 in the same manner as with the £800, 000 to which I have referred and Parliament will be asked to sanction a Bill to enable them to do so. The necessity for the adoption of this coarse will, I think, be obvious to hon. members, and it explains why, for the period to which I am now referring, effect caunot be given to the proposal indicated in my last financial statement, that in future receipts and expenditure for the year if it were at all probabte that the revenue of the current financial year would be able to be the charge of the liabilities outstanding on 31st March. It will now, sir, be for the convenience of the Committeo to summarise the results at which I have arrived. The. deficit of 1878-79 has been shown to be £133,790 ; the expenditure for the nine months ended 31st March laat, £277,227 ; and the liabilities on the same date, £272,774; making a total of £3,178,840. The receipts for the period ended 31st March were £2,133, 758 ; land tax due, Ist April, £50,000 ; assets, £50,000; total, £2.188,758. Taking therefore the total revenue from the total expenditure, we arrive at a deficit of £990,081 for the period ended 31st March, 1880, to meet which, aa I have already stated, Treasury and Deficiency Bills have been issued to next financial period. The Public Debt. It is perhaps convenient that I should say a few words about the public debt of the Colony, amounting to £33, 222,311. On the 31st March, 1880, it was £27,422,611, or deducting the accrued sinking funds, £1,805,498, the net public debt was £25,617,113. This amount is exclusive of Treasury and deficiency Bills for £992,000 held by the Public Works Fund, and the £800,000 unsold debentures for the loan of 1870, guaranteed by the Imperial Government. Since the 30th of June, 1879, the loan of £5,000,000 authorised last year has been raised. On the Ist March last, Treasury Bills to the amount of £442,000, forming part of the public debt, on the 30th June, 1879, matured, and were temporarily redeemed out of the Public Works Fund, provision hav-

ing been under " The Treasury Bills Act, 1879," for renewing them to 31st December, 1882, and exchanging them at that date for debentures, with a currency of three years. During the 9 : months ended 31st March last, additional Treasury and Deficiency Bills to the amount of £1,000,000 have beon issued in aid of the revenue. Of this, however, bills for £550,000 have also been taken up temporarily by the Public Works Fund, so that the actual addition to the public debt by the new loan and these bills amount to £5,008,000. On the other hand, the guaranteed debentures, amounting to £800,000, have | been redeemed, and the debentures of the North Otago District Public Works loan deducted from £5,008,000, leaves a net increase to the public debt of £4,200,300. When, however, the laiperial guarantee debentures for £800, 000 are sold, and the whole of the Treasury and Deficiency Bills now held by the Public Works Fund, and representing advances to the Consolidated Fund to the extent of £902,000, are issued to the public, the gross debt will amount to £29,214,611, or deducting the accumulated sinking fund, £1,805, 498, the debt will be £27,409,113, subject to an annual charge of about £1,535,000. In this statement of the public debt, the last loan of £5,000,000 is treated as inscribed. Should the whole of the debentures be converted on the terms offered to the public, the debt will be increased by £1,000,000, but the interest Avill be reduced by £10,000 per annum. Parliament will be asked during the present session to make provision for extending to 31st December, 1883, the currency of certain Treasury Bills, amounting to £390,000, partly falling due with the current year, and grant authority for exchanging them at that date for debenture with a currency of 3 three years as in the case of the bills for £452,000, provided for by the Act of 1879. Similar provision, as I have already stated will also be required with respect to deficiency Bills for £200,000 issued under " The public Revenues Act, 1878 " forming part of Bills amounting to £100,000 issued during the past financial period. Before leaving the question of public debt, the committee will naturally expect some account of the raising of £5,000,000 loan. In last year's budget I said the I Government had reasons to believe from advices from London, that more than £3,000,000 of the five miliion could be successfully floated. When, however, the time arrived for placing the loan on the market, the loan agents considered it would be safe to ask for the whole amount at once, and the result proved right. Had they succeeded in floating £3,000,000 only* instead of the whole amount, our position at this moment would have been of rave embarrassment. The committee will understand this when I tell them it has been necessary up to the present time to use the loan to the extent of upwards of £3,600,000 of which £1,811,000 for expenditure and £1,242.300 far advances to the consolidated fund on treasury ' and deficiency Bills. Nor that these facts are before them, hon. members will easily appreoiate the anxiety of the Government last session when it was considered that more than £3,000,000 of the loan could be raised at once, and the remainder not for a year at least thereafter, they will understand how necessary it was that our agents should offer the loan at such a price as would insure its sale. There is no doubt that the price obtained was low at the terms of conversion, but hon. members who are disposed to think the termfli'too favourable must bear in mind on the one hand that investors would naturally look on the large amount and extent of our public debt, and the unusually large sum asked for ; whilst, on the other hand, our agents had to consider the serious complication which would have arisen had they failed to obtain the loan. It is an un- ' pleasent rule, but one which we shall do well to recognise in regulating our expenditure for the future, that our financial agents in London felt themselves compelled to offer our 5 per cent loan at 87f, an(^ *° insure sale even at that price to leave it optional with the purchasers to exchange it for a 4 per cent loan at Bl£ and (using an authority given them in case of need), to undertake that the colony would not for the j next 3 years again enter the London money market. In the absence of the loan agents' accounts, which have not yet been received in the colony, I am unable to state the price realised for the loan, but after allowing for discount, commission, and accrued interest on the Bonds, the price was about 95£ for the five per cent debentures and 79£ for those converted into four per cents. Public Works Fund. At the cloße of the year 1878-79 the balance at credit of the Public Works Fund amounted to £506,205, of which £ 298---543 represented advances in the hands of officers of the Government The cash balance in the public account, after providing for outstanding orders on the bank, haa in the colony and London together £862,410, and the advances in the hands of the officers of the Government amounted to £'315,763, making together £1,178,173. We had thus issued during the nine months ended March Slutlast £3,590,881, as follows :— On public works, immigration, and other^ services, £1,750,881 ; redemption of guaranteed debontures of the loan of 1870, which are of course available for re-issue, £800,000 ; temporary advances to the consolidated fund on treasury and deficiency bills, £992,000; temporary advances on debentures of Waimea Plains Railway Company, £40,000 ; *Wanganui Harbor Board, £17,000; total, £3,599,881. I have had prepared the usual statement of the ways and means of the Public Works fund, and the total nett expenditure to 31st March last from the beginning of the Public Works policy. It will be seen when that statement is laid on the table, that since the beginning of that policy in the year 1870, we had borrowed for public works to the extent of £18,700,000, which amount has been supplemented to the extent of £364,794 by stamp duties and other receipts, making a total of £19,064,794. Our nett expenditnre | during the same period on services permanently charged against the fund has amounted to £15,286,621. To this sum 1 add the advances in the hands of the officers of the Government on 31st March 1a5t— £315,763, and an estimated sum of £200,000 for discount and charges of raising the last loan, making together £16,802,384, which being deducted from £19,064,794— the total

ways and means — leaves a balance on 31st March of £3,262,410, consisting of cash in the public account in the colony and in London, £862,410; balance of fiye million loan to be received (estimated)"^sl,ooo; guaranteed debentures unsold, £800,000; temporary advances at interest, £57,000; tempo-, rary advances to consolidated fund, £992,000; total, £3,262,410. With regard to the treasury and deficiency bills of the consolidated fund to the amount of £9,920,000, taken up under the authority of the Public Revenues Act, 1878, and Treasury Bills Act, 1879, out of the monies at the credit of the Public Works fund, I regret to inform the committee that since the 31st March it has become necessary to take up out of the same fund a further sum of £350,000 ; of which £20,000 represents aid to the consolidated revenue, and £150,000 the redemption of bills issued in February last. Thus the extent to which, at the present date, the Public Works fund has been applied in aid of revenue amounts to £1,342,000. Tliis will, of course, be apparent to hon. members that until we can recoup the monies so applied, the funds available for expenditure on public works and other services are diminished to that i extent. It is highly important that this fact should be kept in view. Deducting, then, the sum of £1,342,000 from £3,262,410, the balance of ways and means on 31st March last, we have left a sum of £1,920,410 available for our public works and other requirements until we can sell the treasury and deficiency bills referred to. Having stated the amount of ways and means available, I shall now inform the Committee what are the liabilities, to meet for which funds must be set aside before the question of entering upon any new works can be entertained. According to the returna certified by Undersecretaries of the several departments, the liabilities of the Public Works Fund on the 3lst March last amounted to £2,455,313, made up as follows : — Immigration, £10,000 ; Public Works Department, £653 ; Railways, £910,506 ; Surveys of New Lines, £1,600 ; Roads, £180,696 ; Land Purchases, £1,061,486 ; Water Works on Goldfields, £10,704 ; Telegraph Extension, £1,034 ; Public Buildings, £205,314 ; Light - houses, £120 ; Miscellaneous Public Works, £73,300 ; total, £2,455,313. To this sum I add further liabilities incurred by the Public Works Department since 31st March, 110,000, and a contribution for the current year towards the cost of the defence force on the same scale as for the past nine months, £140,000. These sums amount to £2,705,313, from which I deduct the advances in the hands of officers of the Government on the 31st March, £315,762, leaving £2,389,551 as the sum required to be set aside out of the ways and means at credit of the fund on the 31st March amounting as I have informed the Committee £3,262,410. Honorable members will however bear in mind that of the sum of £3,262,410, £1,342,000 is represented by Treasury and Deficiency Bilk issued in aid of the Consolidated Fund. It will be seen that the large amount of liabilities to which I have referred will absorb the whole of the cash at credit of the Public Works Fund, and will necessitate the sale of £369,000 of the Treasury and Deficiency Bills hypothecated to that fund. The means available for new works and services will therefore be represented by £873,000 in Treasury and Deficiency Bills being the balance of the £1,342,000 now held by the Public Works account scheme of local finance. So much, then Sir, for the history of the past, I will now submit for the consideration, and I hope, approval of the Committee, our scheme of local finance and our proposals for the ordinary services of the current year. It will be within the recollection of hon. members that I said last session that the Government would this year recommend the discontinuance of aubsidies. This warning was given because it was then generally admitted that the system of subsidies was not working satisfactorily, that we thought further taxation the Consolidated Fuud could no longer bear, this expenditure, owing to the annual charge on our public debt, having become so large, and that the local bodies themselves might have a reasonable notice before any change was made. Great, however, Sir, as were the needs of the Treasury last session, and great as they are at the present time, the Government hold firmly to the opinion that they then entertained that this question of local finance, affecting as it does the vital interest of the whole country, is one of paramount importance which must not be dealt with piecemeal. But, aa a whole, to propose the abolition of the grants in aid to local bodies, without substituting a workable scheme in their place would be trifling with the subject in a manner which I venture to think would not meet the approval of Parliament. Our aim is to follow our duty, being first to place our general finance upon a sound footing ; second, to put our local bodies in such a position as will enable them to do the work which rightly devolves upon them, and which must be done by them if the country is to be prosperously settled. Ido not think it convenient to trouble the Committee to-night with many reasons for discontinuing the subsidies. That question can he better discussed when considering the Bills which will be introduced. To give effect to our proposals, I may, however, point out to hon. members that the system of subsidies has operated unequally. It has largely helped the rich and populous districts, while giving little assistance to those which are poor and thinly populated. It much also be remembered that they were proposed as park of a scheme to which full effect has never been given, for the land fund being generalised instead of localised in provincial districts, and the expenditure on Public Works, instead of being limited in amount and confined to arterial undertakings. The magnitude of this expenditure will be evident, when I say that we have increased the debt for Public Works in the last year and a half, twice during which the subsidies have been paid, of £900,000, which means an annual claim of £450,000 ; and it being evident that the Treasury cannot continue to pay them, the case for reconsideration of the question is complete. It is certain that Parliament will never consent to levy additional taxation without full inquiry into the scheme which I am about to submit to the Committee, I must ask hon. members to bear in mind that sections 5 and 6 of " Financial Arrangement Act,

1876," which authorise subsidies to the Counties are to be repealed, and second, that the proceeds from land sales are not to be used for the ordinary -purpose of the Government. ' Tie ground being thus cleared, I will not endeavor to describe in detail the scheme we propose to give effect to our proposal. I shall have to ask authoiity to introduce two Bills. Tfte first will be an amending Bill. It will remove the present restrictions upon rating ; that is to say, it will permit all local bodies having the right to rate to levy rates to any amount they may consider necessary for their local requirements not exceeding two shilling in the £, or beyond that amount, if passed as a special rate. It will authorise boroughs and other local bodies to borrow at any rate of interest the ratepayers may choose to give, and to any amount, subject only to these restrictions : — 1. That the principal and interest of all new loans shall be made payable in N.Z. ; 2. That any local body desiring to raise a loan shall, before doing so, levy a special rate sufficient to co/er the interest and sinking fund upen the money proposed to be borrowed, such rate to be continuous until the debt has been repaid. The Bill will also require that any local body which has already borrowed upon its general revenue shall, before entering tho money market, levy a special rate to cover the interest and sinking funds upon the existing loan or loans, as well as providing by a special rate for the new loan. These and the other powers given by the Bill, are apparently very large, and will I fear be considered dangerous by some people. But, Sir, I would point out that if our local bodies are to be really. useful, they must ba made independent and responsible. The one precaution to be taken is to see that the ratepayers spend their own money, and not the money of other people, and this will be carefully provided for in the Bills. I now, Sir, come to a further and still more radical provision of the Bill, a provision which, however, I venture to hope will receive general approval, for it may be said to be the very foundation of this part of our scheme. It is clear that all who benefit by the expenditure of rates should contribute towards them, and carrying out this principal to its legitimate conclusion, we propose that all Government property, including the waste lands of the I Crown, and subject to one important qualification, Native lands, shall be liable to rating with the exception of Government house in Wellington and Auckland the Parliament house and grounds, the General Government Buildings, Wellington, by which I mean the large building upon the reclaimed land, and the railways and wharves. Whatever may be thought of this proposition at first sight, it will, I am sure on mature reflection, and when it comes to be discussed in all its bearings, commend itself to hon. members as fair and reasonable. I will, Sir, first state how we pro - pose to deal with Maori lands within Counties in which the Counties Act is in force. It is a fact which I think should be recorded that some eleven million acres of land in this North Island are still held by less than 41,300 Maories, men women and children, and that nob one-half -penny in the way of rates has ever been imposed upon the Natives by this House for the construction of roads and bridges which are being made throughout the Colony, and by which their lands are being enormously increased in value. Although, Sir, it is true, and ought to be noted to their credit, that many of them have voluntarily paid rates and contributions from time to time towards the cast of Public Works. The whole of their property too is exempt from taxation under the property Assessment Act. Sir, the Government think the time has arrived, and we hope and believe that our Maori friends will agree with us in the opinion, that henceforrth all Maori property in boroughs shall be subject to taxation to the same extent as the property of their fellow citizens. But, Sir, further than this, we do not propose to do. We think, after a careful consideration of all the circumstances of the case, that on grounds of public policy we may reasonably exempt the owners of Native County land from the payment of rates. It is clear, however, if this is done, that some equivalent must be found to enable those Couties containing a large area of Maori land to carry out the duties we are imposing upon them. If, therefore, we are compelled by considerations of public policy to depart in this way from the principle of the Bill, it is clear that the cost of redemption should fall upon the colony at large, and not upon the localities on j which burdens are imposed. Upon the assumption that all the land will contribute its fair share of the local taxation, it is proposed to limit the amount of ordinary land in the district in which they lie, but not exceeding 6d in the pound, and upon the waste lands of the Crown Is in the pound upon the annual value. These lands being practically unrepresented in local governing bodies, this limitation is not, I think, unreasonable. To simplify matters and avoid expense and dispute, it is further proposed to attach two schedules to the Bill, one showing for rating purposes the estimated acreage and value of Crown land in each county and road board district, and the other affording similar information with regard to Slaori land. These schedules will always enable the rateable value of Crown and Maori lands to be arrived at. The value of Maori land is £(3,370,000 ; but of this only £5,200,000 is situated in counties in which the Counties Act is in operatisnl All lands, then, being subject to rating, with the exceptions I have just stated, the committee will naturally wish to know out of what fund Ihe rates on Crown lands and property and Maori lands are to be paid, but, sir, these are by no means the only objects for which money has to be provided in any satisfactory scheme of local finance. Means must be found to construct our Maori roads throughout the Colony. Some provision must be made to repair damages done by floods and tempest to our roads and bridges, and some help must be extended, if possible, to our district roads. Thia, then, brings me to the secondf Bill, to which I referred as necessary to give effect to our proposals. The title of the Bill will be the Local Public Works Bill. It provides for the constitution of an unpaid board, consisting of the Minister for Public Works, the Engineer-in-Chief, the SurveyorGeneral, and the Public Trustees. The

duties of the board will be to. pay. tho rates on all waste lands of tfio /Css we, to. .- pay the rates on the Mii^^BO-iisifT^ hinds, and to make grants ifljjlWof the construction of main roadsjand to advance, money to consfewflflpfitrict roads. This will be done ! irofß fpbida, the constitution of which I affl[- now: describe. As I have bef ore'SpwL^ we ■ shall ask Parliament to set a^rlr't&a , proceeds of land sales for spe^l )pur- | poses, not permitting it to be*-|usea foiS? the ordinary expenses of Govihnnisiitj": charging against it only the cost of its i adminstration, including survey. Now, I think, that after this year, wo may. fairly estimate the annual receipts from land sales for some years to come at not less than £300,000. I believe hon. members will agree with me that this is a moderate estimate, looking at the fact that our unsold lands are estimated at low average as worth £12,500,000., I think we may therefore reasonably expect to realize not less than £300,000 a year for some time to come. The charges on the land revenue should not exceed £300,000 a year, so that should we only get from land sales £300,000 a year, there will be a balance to credit of at least £160,000. The bill with which lam now defcjing, provides that out of the balance of the loud Bales, after paying the expenses of administration, there shall be paid to the Board*. each year the sum of £150,000. I have estimated the land sales this year at only £200,000. It is possible that they" may produce more, but I have not, after careful consultation with the department, thought it prudent to estimate it at more than that amount. The cost oi administration and charges is set down at about £150,000. The balance, therefore, available this year, should my estimates not be exceeded, would be only £150,000. So it seems to the Government that in starting such • scheme as we have under consideration, it would be unwise to attempt to launch^ it without sufficient funds to enable the Board to make a good beginning. The prospects of the surplus land fund for this year reaching £150,000, being but small, it is proposed to ask the Houw to make a grant to the Board of £150,000 out of the loan, so as to place il in funds for the work of next spring and summer. The fund this created.' is to be applied to the following purposes ; first the payment of the rates on the waste lands ; second, grants in aid or constructing main roads and repairing damage done by floods or tempest. The rates estimated at a shilling in the pound, supposing every Road Board and every County to levy a shilling rate, wbuld amount to about £60,000, or about £74,000 if rates on more lands are included. But I much doubt if the amount of rates payable by the Board will often, reach £50,000 a year. The balance remaining, whether it b© £80, 000 *or £100,000, will be applicable to main roads and main roads only. The main roads, I should have said, will be d& fined by proclamation.- I have tfael sketch maps prepared for the information of hon. members, showing the roads it is proposed to declare at once, poww being given in the Bill to proclaim others from time to time as circumstances may require. The grants in aid will be limited by the funds at the disposal^ the Board, and will be made in this way. I will suppose, for the. sake of illustration, that a County wishes ,to construct, and construction means fetiding and metalling road, or building bridges, a section of main rood over which it has control, or to repair damage done to a main road by flood or tempest. The Council must obtain an estimate' of the cost of the work proposed to be executed, which we will suppose amounts to £6,000. The Council will then make an application to the Board for a grant in aid, but before the Board can make-a grant, the Council must show that r ft has one-quarter of the £6,000, that is £1,500 at its disposal, which it undertakes to spend upon the work, or the ratepayers of the County must impose upon themselves a special rate which will repay one-fourth of the £6,000, namely £1,500 in twenty half-yearly instalments without In other words, three-fourths ! of the cost of construction of the main roads will be paid by the Board, and one-fourth by the County, either in cash or by way of special rate, extending over ten years. Hon. members must bear in mind that the waste lands of the Crown and Native lands are subject to special rate as well as private lands. I now turn to proposed assistance to be given to distriot roadjhthat is to all roads other than main roads. The Bill provides that Board of Local Public Works may borrow from t ; me to time to 5 per cent, interest from the Postmaster-General or Government Insurance Commissioner, any sum not exceeding £100,000, the Colony being liable for repayment, and lend it to local bodies for the purpose of constructing district roads. The terms on which grants are to be made are that a special rate is to be levied by the local body desiring to borrow, which will produce 9 per cent, per annum on the proposed loan ; the interest charged to be 4 percent so that 9 per cent paid half-yearly will cover both interest and sinking fand, and will extinguish a loan in fifteen years. It will be observed that the rate of interest is very low, and the terms of repayment easy. I think, however, hon. members will approve^of substantial assistance being given 'to local bodies for the purpose of constructing roads throughout the country, if) only we keep within our legitimate means ; but the Committee will say how can the Board borrow money at five per cent interest and lend it at fo§r, Sir, this difficulty can only be got over by the same means as is proposed in the case of the fund for construction, of main roads, by making a grant from lhe loan to start a fund. I shall therefore i ask for £5,000 to be granted for the | purpose. The Board will then be "it* a I position, should the grant be made, to \ lend £150,000 or any less sum, fat 4 per cent interest, and at the same time pay L ! 5 per cent upon such sums as it .ma^ ! borrow up to the limit of £100,0p0,* with safe margin for contingencies. Boroughs. So far, Sir, I have not yet directly mentioned an important branch of the I subject. I refer to boroughs. Ido not | desire to make light of the present aid lost to these bodies of subsidies. . My proposals will no doubt necessitate for a time reduced expenditure ; but. thjsre will accrue to the boroughs the permanent right to tax Government/ and t Native property of not much less than/ than one million in value. I say

permanent, for I think no one can doubt that if once he principle oft axing Government property is admitted by this House, it will never be possible to retrace that step. The rates upon all Government property it is proposed to charge upon the Consolidated Fund, as being properly included in the ordinary expenses of Government. I trust, feir, that the proposals which I have thus brieav sketched will commend tnemaelvas to hon. members. As at any rote the basis upon which this important question of local finance may be ultimately settled. We are all of opinion, I think, that subsidies should cease, if means to a reasonable extent for carrying on the necessaiy works can be proxidedon in a better way, and I submit that our proposals are better in, every respect. The scheme is sound because it is based upon two principles which are now unanimously accepted in this House ; first, the proceeds of land sales should be applied to opening up and settling country ; Becond, that land mußt for the future practically find means to maintain the roads of the Colony ; and it has, moreover, this great additional advantage, that it will enable ua to complete the separation of the general and local finance. One will in future be in no way dependent upon the other, an advantage whicli I venture to think -will be of incalculable benefit to fcoth the Government and to local bodies. Should our proposals meet with the approval of Parliament, I shall alsojusk for authority, where necessary, to permit local bodies to receive directly every tax or rate which belongs to or hfis been made over to them. [A portion of the speech, relating to the *Muction of all Ministers' salaries 20 per cent., and Civil Servants 5 per .cent., is here omitted till to-morrow. We have received strong representtation that one portion of the Property Tax w extremely distasteful to a large section of the people. Discontent has we beleive largely arisen from the misapprehension of the Act which does not as is commonly supposed, empower any officer of the Government to enter a man's house to value his goods. But as I say, discontent exists, and whether baseless or not, Bhould as far as possible be removed. Removal of this obnoxious feature of the Property Tax is fortunately rendered more easy from the fact that is is generally admitted that this <ym not be done without the substitution of some other tax which will produce at least an equal amount to that advanced by the Government. » Therefore in accordance with what they believe to bethedesireof taxpayers, I will ask the House to exempt personal eftects, furniture, books &c. , from assessment under act. By this concession, Sir, it is estimated the revenue will lose £40,000 a year. This then, together with deficits «f £8,709 has to be made good. The question is how can it be done in the most effective and least objectable manner. I fear, Sir, there are only two practicable courses open to us. We Stay reimpose the tea and sugar duties, jfir we may tax beer. The Government, Sir, have carefully considered -Which of these courses to follow, and have determined to ask Parliatoent to impose a tax upon Colonial beer of 6d per gallon. It is with great regret that I make this proposal. When Colonial Treasurer some time ago, my colleagues and I carefully considered .the subjects, and we ultimately decided that we would not propose this tax, and when in opposition, two years ago, I •helped to throw it out when introduced bj the late government, upon the grounds that it was practically beginning a system of excise taxes, which I was very loath to see introduced into New Zealand so long as it could be avoided, but the financial position of the Colony U. such as to compel us to resort to iaxes which in more favorable times we should not have supported. We also propose, to increase the duty upon imported beer by 6d per gallon. I hope to obtain from the beer tax during the "current year £80,000, or at the rate of £3.00,000 per annum. It will be within the recollection of honorable members that it was proposed last year to introduce a Bill to increase succession duties, but that through want of time the Bill was never circulated. I propose to proceed with' that Bill, and should it become law, it will increase the stamp revenue this year by about £10,000. .Summarising then, sir, my proposals for the convenience of the committee, they amount to this :— The deficit, as shown between estimated expenditure and revenue is £8709, to which I add £40,000 lost by the exemption of the proposed Property Tax making a total of #10,000 for increase of stamp duties We obtain £90,000, thus showing, if our expectations prove correct, a credit balance of £41,291 with which to end the year, a margin, as the committee will agree, none too wide. Conclusion. In conclusion, Mr. Seymour, the committee will permit me to recall to their 'minds some of the main facts of our position, and to sum up shortly our proposals. I would first call attention to one fact of cardinal importance, which,' more than any other, has embarrassed- our finances for some time past, a fatal mistake — as pernicious in practice, as it is bad in theory — of treating the proceeds of land sales as ordinary revenue. This, and our unexampled prosperity for some years, led tw to greatly over-estimate our resources, and bo complotely to^misunderstand our financial position ; and to such length had this gone, that the House was content in 1878-79 to vote one million of proceeds of land sales aa revenue of year, and adopt a scheme of public works requiring yearly receipts from land sales of £750,000 more. When, therefore, land sales suddenly fell to less than £200,000 a year, our difficulties became great and pressing, [for it was manifestly imivMßible to stop immediately the enfous expenditure then in full prob, based upon the assumptton that land fund would reach something like two millions a year. The Government, Sir, of which I have the honor to be a member, have been blamed both in this House and in the country for stopping the expenditure too suddenly, and therefore intensifying the depression under which we are suffering. But when I tell the committee that during the nine months ended on 31st March last, we actually spent on ordinary services of the Government and on public works, in hard cash, notwithstanding our strenuous endeavour

to retrench, no less a sum than £4,523,---257 of which £2,741,963 was borrowed money, they will fully appreciate what I have siiid. As to the difficulty of bringing our expenditure within reasonable limits. Founded as it was upon an exaggerated assumption of our means, you°l think will fully acquit the Government of undue parsimony, to meet this serious difficulty and retrieve our position, the Government at once set to work to reduce expenditure in every direction ; but this must necessarily be a work of time. Our committments both by habit and engagements being so large, we propose to separate our land sales receipts from the revenue, and to impose additional taxation to raise a sufficient sum to meet our necessary expenditure. But although all this, so far as it could be done, was done promptly, it was impossible to bring it into effective operation during the last financial period, the time being far too short, and as a consequence of our want of forethought through our years of prosperity, we have now to add one million to our funded debt. That is a permanent charge of £50,000 a year as a result of deficit outstanding against the consolidated fund. Of the necessity of funding this, no one who considers our engagements and our heavy taxation, will, I think, entertain a doubt ; and if only we have learned a lesson of economy and thrift which our difficulties should teach, we shall not have passed through the present crisis in yam. We must make up our mind to three tilings— to greatly reduced expenditure, both on public works and from consolidated fund; to complete separation of our local and general finance ; and to submit to fncreased taxation for some years to come ; and I would also emphatically point out that we ought to connect far more closely thau we have ever yet done, the idea of additional taxation with further borrowing. As soon as It is actually realised by the people of the colony that each new loan has to be repaid, but that, until repaid, it imposes yearly a burden which must be met if not by increase of tax paying population, then by increase of taxation itself. As soon as this iB fully realized, I say fresh loans will be much eeldomer called for, and much more carefully spent. That some further borrowing will be necessary it is to me evident, but I trust that it will be only in very moderate sums, and for Bpecifio objects. I also hope, Sir, that time is not far distant when through restoration of real economy in our finance, we Bhall see our way to addressing ourselves seriously to the task of reducing of our large public debt, and I trust that the proposal^ theGovt.in part already sanctioned by Parliament, will at lust tend towards making such a course possible. I sincerely thank the Committee for the kind attention with which it has listened to my statement, and would only add before resuming my seat, that I have no doubt of the thorough soundness of the Colony, and the great future before us, now that the people have awakened to the real facts of our financial position and the responsibilities it involves. The Treasurer concluded by moving that towards raising the supply to be granted to Her Majesty, there' shall be levied and charged on and after 9th day of June, 1880, an excise duty of sixpence per gallon on all ale, beer, and porter, or other malt liquors brewed or made in New Zealand, before removal from any brewery, cellar, warehouse, or any other place in which the same may be stored, such duty to be levied, collected and paid in such manner as the Commissioner of Customs may direct. That in lien of duties of customs now charged on the undermentioned articles, the following duties of Customs shall, on and after the 9th day of June, 1880, be ch.rged tliereon on importation into New Zealand, or on being[Jcleared from any warehouse for home consumption, viz. ale, porter, beer, of all sorts, cider and sherry in bottle, gallon Is. 9d. ; ale, porter, beer Bs. all sorts, cider and sherry, in bulk, or gullon, Is. sd. The resolution was agreed to after a long discussion, and the House adjourned at midnight.

Late this evening the charge against Mr. Parnell, under the Arms Act, was dismissed.