FINANCIAL STATEMENT. (BY TELEGRAPH —"STAR" REPORTER.)

Te Aroha News, Volume IV, Issue 203, 14 May 1887, Page 1

FINANCIAL STATEMENT. (BY TELEGRAPH — " STAR " REPORTER.)

YVi/LLiMiTON, April 10. Sir Julr's Vocjki, delivered the Financial -Statement, in Committee of Ways and Means, in the House to-night. He said lie had not that evening to make the •announcement, so pleasant on these occasions, oi a surplus. On the contrary, he liad to tell the committee that the transactions of the year just past leave a •deficit. The expenditure during the last financial year showed a saving of !L9S,6'2G on the amount estimated. The savings of all kinds amounted to Ll29,BSo,aud the excesses to L3l,2s4,resulting in a net saving to the extent he had just .indicated. The largest items were -railways, L 65,571 ; public works (consolidated i evenue accounts), L 12,035 ; Education Department, Ll 1,886 ; customs, L 10,53!) ; defence, L 8,982 ; and mines, L 7,411. The exce^es in expenditure were principally Ll 4,388 for services not provided for, and L 10,023 for the postal service. The latter chiefly aiose through additional cost of sea sei\kes, because of the large premiums earned, and through -under-estimated expenditure for the maintenance of telegraph lines. For the year 18S0-87 the revenue showed a less amount than estimated of JLI92,4 < J3. The tollow ing were the principal items of deficiency : Cu0t0m5,L124,235 ; stamps, L 16,337 ; and railways, L 157.813. The Customs duties he should again refer to. Astheie\uisa s-a\mg on the estimate of railway expendituie of L 65.511, the net loss on the luihvay estimate amounts to L 92,302. The loss arose principally during the earlier portion of the year Towards the end the tariff showed a \nai ked increase. The loss on the stamp revenue he attributed to diminished busine^-. The po-.t-office and telegraph sen ice aie considered to ha\e earned about L 10,500 mci the it-turns estimated, but it is difficult to exactly determine the amount of stomps sold for post and for other purposes. The augmented business of the post and telegraph offices, notw ithstanding the larger use of delayed telegrams, i;> one of the°most satisfactory features of the year. The miscellaneous revenue shows a large excess on the estimate, no less than L101,'23L It arose in this way : The accumulated sinking funds on some of the English lo.ms wei-e much above what was required to meet the respective debts to ■which they belonged. He asked the Agent-Genera! to call the attention of •the tru-tees ,of the .sinking funds of the loan of 1863 to the fact, and they, m eonfmimfcy Mith the law, released L 104,749 under the Act of 1868, being the exces.- .accumulated up to 1884, and flu} released L 39,754 under the Act of 1884. On account of the excess since that period, the amount set tree under the Act of IS6B reverts to the consolidated revenue, •that belonging to the subsequent period is applicable to paying off the debentures in the colony, andXhe. amount ha.sac .CDrdii^ly been so applied. It was right toadd db'iat he had no official control whatever over the trustee^ oi the sinking-fund in England. Tiey U'ka«ed the amount .under the authority of an Act passed nearly twenty years since. As lej^aids the dubentuies created here on account of tho accrued sinking fund, he wa.s pleaded to be able to state that out •of the amount aheady mentioned as realised under the Act of IKSi. and fntfth the result of the (hawing of the bonds they held, by -conversion they had paid .off no les.-, than £302.000 of the debentures created. Out of a total of L750,9()0 ci tared since 1884, they had paid oil aheady no less than L.343,400. JEfforts were f-o frequently and perse* aringly made to discredit the operation by which the revenue was put in funds to the extent of the accruing sinking fund that it was desirable he should specially refer to the Statement.? had been put forth to the effect that New Zealand securities had fallen in value, because of what liad unwarrantably been termed the seizure of the sLukin.g fund. There was not a particle of truth in tie allegation. The plan, after it became law in 1884, was explained by the AgentiGesaeral to the London market, and did not affect either the loan then negotiated or a subsequent one. To suppose that it affected the third loan was absurd. There was no tnorc impropriety in doing ■B-hat wiite done than there was in re-horrow-iag to pay off a lotan which was about to fall due. As by the operation of conversion, portions of tlie sinking fund have been set free, debentures issued on account of the increases in the fund Jiad been paid off, .and the result of three years v,hh that -only 1107,500 remained outstanding. If the process was truthfully described, it might be proclaimed from the housetops without injuring the credit of the colony.

Tbe Deficiency. When account Wtis taken of the Jsupplejtnentary estimate brought down after the Financial Statement last year was delivered his expectations amounted to a small surplus oi L 1,500. He greatly regretted there was instead a deficiency ; but considering the fears which hap been expressed of its amounting to a very large mm, hon. members would be glad to learn that it amounted to no more than L1)2,293. He could not accept any blame for this result. The circumstances which UHually lead to estimated revenue falling «hort had heen conspicuously present ; moreover, lie informed tne House before last «e»»ion that lie feared the expected revenue would not be large. This was the first deficit since he resumed office in 1884, and he thought he liad reason to be gratified, and that the present amount wan comparatively small, seeing how he had been disappointed during this period in other places. The amountof the deficiency could be identified in the statement of the revenue and expenditure, and the fund by deducting the credit balance L 186,805 from the outstanding deficiency bills of L 279.100.

Land Fund. The deficiency in the Land Fund had increased, Ho would explain Jater that the

change in the land policy was accountable for the result, and that it was necessary to make some permanent provision to meet the altered financial condition of this class of revenue.

Tho Public Works Fund, 188S-87. Last year a new and important departure was made by placing under distinct amendments the residue of old loans, and the amounts to severally arise from the North Island Trunk loan, and from the loan authorised during the session. He took credit in his statement for a balance of L 768.780 remaining out of old loans, and said that when recoveries were made on its account and the North Island Trunk loan, there would be more than LBOO,OOO to be voted as the House pleased on other purposes than railways, such as buildings, purchase of native lands, roads, and other works on goldfields, &c. He added : ".We look to its yielding at least tw-6' years' provision." Subsequently, in the 'Public Works Statement, his colleague more particularly described the transfers proposed, both for rolling-stock and for ,£he purpose of native lands. These transfers had amounted to L 350,781, and together with L.87,312 realised under the Consolidated Stock A-ct, 1884, had raided the amount of tho old loans available for expenditure to LI, 127,872. The exjwnditure had amounted to L(53(i,620, so that there was*: balance of L4!M,246 available for expenditure this year.

North Island Railway. The North Island Trunk Loan had not been floated yet. He expressly kept it out of the market until the proceeds were earmarked by tho legislation of 'la-t year. There now stood charged against jt L 324,685, including expenditure ot L 70,378 on the purchase of native land to servo as an endowment for promoting settlement along the line. There was about L 07,500 of it still available for expenditure.

The Loan. The loan of L 1,325,000, 325,000 authorised last year wa.s negotiated at a little over 97— a price which wa.s notsatihfactoryu hen the con dition of the market at the time the loan was floated was taken into consideration. Wheu all the instalments parsed to credit, as since the end of the year they had done, the balance left unoxpende • would amount to L 713,755 ; the expenditure during the year having been L 555.765.

Future Expenditure. On the subject of retrenchment, the Treasurer said lie would giva a list of nearly all those servicee which could be cm-tailed or abolished, without apparently direct inj jury to the revenue, but he did not say without injury to parts of the colony. The list was as follow* :— The legislative, the audit, the electoral, and the Lunatic Asylums services ; and those that come within the Department of Justice — education, native affairs, mines, and defence. He would be reluctant indeed to have it supposed that ho doubted the necessity of the ' services alluded to for the peace, order, and good government of the colony. The point at issue wa.s whether the scope and extent of any of the services enumerated could be beneficially cm tailed. With reference to the Legislative Department the view of the Government was that a reduction might be made, especially by allowing officers who can be spared to follow other n\ ocations during the recess. It is proposed to refer the subject to a Select committee. Meanwhile the estimates are presented as sent in by the Speaker. After re\iewing the service^ performed by the other Departments, the Treasurer said the committee would, he thought, agree with him that the usefulness of the revenue-yielding departments, and of those that neither directly nor indirectly yield revenue, cannot be reduced — or, in other "words — that the public service must l)e niaintainee at not less than its present standard of efficiency. He now came to the question common to all : The bi an< he.s of the public service can the same efficiency be obtained at less than tho present cost. This opened a wide field of inquiry , and the Government had been unceasingly engaged in studying it .since Parliament last separated. Individually he felt a doubt if it were wise to go the length in reducing the status of the service to which public opinion unquestionably pointed. They railed against the pensions. Did they quite appreciate the long and able services that had been rendered from the point of view from which he regarded the Civil Servants — as tried and trusty aids to the good government of the country V It did not seem to him they should grudge a retiring pittance to those whose lives had been devoted to public pursuits ; but the decree had otherwise gone forth- The country had determined ag-fvinsfc the undoubtedly increased expenditure of a service protected and privileged beyond a reasonable extent. The Government did not, however, precisely understand the wish to be that the tenure of the public servants should be quite on the level with that of private employees, but something approaching to it. The Act of last session was very important in this direction, for it provided that all Civil servants in future appointed shall be entitled io only threemonths' notice and in order to provide that they shall have some means at their command on leaving, five per cent, of their salaries was to be impounded, and handed to them, improved at compound interest, on their retirement. A more radical alteration could scarcely have been decided on, and it was the reflection of the stern determination of Parliament in favour of retrenchment. Tho Government went into the recess with the duty before them of giving effect to the wish of the Legislature, but they were unable to discover that a reduction of tho existing services was required. It was their more economical management that was demanded. Exclusive of tsmall but necessary savings of an extraneous character, to all of which the Government had give their attention, tho chief saving to be effected was in the number and salaries of civil servants. In studying what could be done of this nature, Ministers" were confronted with the consequences of bygone engagements in the shape of pensions and retiring allowance, to which civil servants who might be dispensed with would be entitlod. Each case had to be considered on its own merits, for in many instances where the mutual growth of a service was certain, ifc would be a loss to part

with a good man on heavy terms of compensation, when fresh assistance would soon be required ; but again in some cases it appeared likely the permanent dimensions of the service could be limited, and consequently could with advantage be at once curtailed. Besides the present reductions the Goverment had laid the train for large savings of expense in the future. Before detailing these steps, he wished to say that in his opinion ten years hence the difference in the cost of the Civil Service between what it would have been under the provisions prior to last year, and under the new conditions, would be equal to a reduction of 20 to 25 per cent., supposing, of course, the new conditions would be maintained.

Reduction in the Civil Service. The Government have made a claim under the following heads : - A reduction on travelling expenses, doing away with officers, amalgamation of ofiices, saving in appointments to vacated offices. Under these heads the alterations already made will result in a considerable saving, and the .steps taken to continue the efforts in the same direction will lead to yet larger savings in tho future. To secure these tho Government have determined that when vacancies occur the office vacated shall, if possible, be amalgamated with some other office, or failing this being practicable that there shall be a considerable saving in the salary attached to the appointment to the vacant oilices. The scale of such reductions has been laid down, and many hon. members will appreciate the importance of the further pro\ision made by Ministers (which, however, i? of course open to remission by future Governments), that where any departure i.s proposed from the conditions just mentioned, the Cabinet shall bo consulted A classification list has, moreover, been drawn up. It will be found attached to the tables circulated with the Financial Statement. After the session, endeavours will be made to place all officers in the service within onvs of the divisions set forth. The classification will confer no claim to a. yearly increase or to promotion by seniority, but among other things, the same Mill tend to more consistent dealing with «>ho Civil servants. The Committee would sec by the estimates that they had amalgamated under tho one head of Treasury and inland revenue the .several departments of the Treasury, i Customs, Marine, Stamps, Property Tax, Lands and Deeds Registry, Post Office, and Telegraphs. The chief offices of such branch and the Minister or Ministers -will form a Board, which will sit periodically, with the view to find means of enabling the employes of tho different blanches to act interchangeably. It will not be necessary that one Minister only should preside over all the branches If the members of the present or a future Government desire to redividc the departments over which Ministers at present preside, it will still be open to them to maintain the consolidation of this great department. The Government have very carefully considered whether it was desirable that a reduction should be made in the salaries of the Civil servants. They felt reluctant to adopt this course, because of its wearing the appearance of specialising one cla.s3 of the community for subjection to an income tax ; but the House, having indicated its resolve that the cost of the service should be reduced, one of two courses only was open -either to arbitrarily lessen the salaries of some officers, trusting to their not being in a position to refuse to accept the lower salary ottered, or to make a fairly graduated reduction all round. The latter seemed the more considerate course, because of its probability of proving of a temporary character. This year there would be large retiring allowances to pay ; besides that, the effects of the conditions which he had explained, would only bo partly felt. A reasonable rateable deduction need not be permanent. Moreover, the Civil servants must be aware that there had of late been a general fall in the rate of salaries outside tho Government service, and they must also know that the cost of living and the commodities has become so much less during the last few years that any amount they receive now represents as compared with the same salary a few years back a larger purchasing power. The reduction contemplated is not of an extent to fall heavily on the officers, j especially those receiving low rates of remuneration. Salaries up to Ll5O will not be affected ; on over Ll5O and not exceeding L2OO, a reduction of 3 per cent, is proposed ; and over L2OO and not exceeding L3OO, a reduction of 4 per cent, is proposed j on over £300 and not exceeding L4OO, a reduction of 1 5 per c6nt. is'proposed ; on over L4OO and not exceeding L5OO a reduction of 6 per cent, is proposed ; on over L5OO a reduction of 7i per cent, is proposed. Tho deductions in any one class are not to make the salaries smaller than the last salary in the class preceding. The plan will not apply to the officers in the Agent-General's Department, as they are subject to the English in-" come tax ; neither will it include policemen or men in the permanent militia, nor.^nen on wages, whether weekly or monthly, in any department, nor gaol nor lunatic warders. It will not apply to persons whose salaries are permanently fixed by Acts. Ministers, however, accept it as regards their own salaries. It will rest with *the members to apply it to their honorarium if they see fit. They may desire that a percentage shall be deducted corresponding with that levied on similar amounts. The total amount the deductions are expected to yield is about L 20.000.

Proposed Expenditure. This year the estimates of proposed expenditure are as follows :—: —

ORDINARY REVENUE. Estimated. Voted. Expended. 1887-88 1886-87 & & & Civil List . . 29,750 29,750 31,015 Interest and Binkingfund 1,764,793 1,031,500 1,012,876 Under special Acta .. 232,867 231,05* 232,189 Totals .. 2,027^10 1,015,301 1,906,080 Lorislutivo Department 17,000 17,810 17,620 Colonial Sec/a Department 130,515 163,236 102,910 Treasury and Revenue Departments 407,833 456,323 450,609

Justice Department.. 110,170 118,084 118,571 Educational Department 381,509 383,489 371,603 Native Affairs Department 17,828 22,830 20,836 Mines Department 28,983 40,104 32,693 Workingßallway Department .. 748,000 761,282 095,772 Public Building and Domuinu Department . 35,850 40,210 27,981 Defence Department .. , 186,201 191,551 182,569 Totals •• £2,003,894 £2,105,919 £2,092,180 Grand totals £1,091,304 fli,l 11,223 £3,998,2(30 Services not provided for, expended, L 14,333 ; deduct from salaries, L 20.00 0; grand tdtal estimated, L 4.0 71,304 ; expended, L 4,012,398. After deducting item of interest for both estimates, the votes we submit this year are less than those of last year by the large sum of L 150,212. The amount for interest has increased by Ll 10,000.

Analysis of the Estimates. Hon. members will wish me to run through the estimates, and to explain some of the savings that are proposed. I am sorry to say the Government do not see their way to making the new subsidies to local bodies at more than half the rate of last year, and with the same condition as to payment. Tho full amount due on the liabilities of last year will be paid, but including them a reduction of L 20,000 appears in the estimate of the consolidated revenue, and in that of the Public Works. Tho subsidies altogether from both sources will be L 100,000, which shows an increase of Ll 4,000. In the permanent charges there is a new item under the Rabbit Nusiance Act of last session of L7, 500, but in the stock estimates there is a reduction of LlO,OOO in the item expenses of working Cattle, Rabbit, Sheep, and Brands Act, and of L 2.000 for a number of inspectors dispensed with. The stamp and deeds branches show a reduction of nearly L 3,00(). There are large reductions in the Treasury, miscellaneous, and property estimates, but they are due to services not required, such as the London Exhibition and cost of property tax valuations. In all these departments savings have been made wherever teasible. The same remark applies to the post office. Savings have been made on vacancies occurring, and as tho vacancies occur they will be filled by reducing other offices where the extent of busmen will justify it But the postal and telegraph business has largely increased. We reckon the returns last year to have been nearly L 10,500 in excess of the estimate, and we expect ;v larger re"\ enue this year by several thousand pounds. The telegraph work has greatly increased, and it is neces sary to enlai'ge the vote for " extra labour and material for repairs " by LS,U()O. On account of the expense, we were deterred last year from carrying the inland parcelpost system into force. It is, however, t>o much needed, that I shall introduce it this year as soon as the necessary arrangements can be effected. On the conveyance of inland mails we have made a saving of very nearly L 2,000. There is one saving I re. ret we find it desirable to make. The island service performed by the Janet Niooll comes to an end next month. It costs L 4,200, and we do not propose to renew it. We take a vote to June only. We are trying to make arrangements with the London Post office to sort the mails by the American route, so as to enable us to dispense with sending mail agents by the San Francisco route. In the Customs I have effected material reductions, amounting to no less than L-5,630. This may be considered a genuine annual reduction of a permanent nature arising from officers retiring and dispensed with, and irom promoting junior officers to vacancies at small salaries. The dismantlement of the Hawk schooner forms part of tho reduction. I regret to announce that Mr Seed retires by his own wish in June. It is due to him to remind the committee of the many years of able arduous service he" has given to the colony, and of the excellent organisation into which ho has brought the Customs Department. In the Marine branch, several substantial departmental reductions have been effected. 1 I have to announce that the Government have determined to lay up one of the Government steamers for the remainder of the year, and to use only one vessel. The Marine Department will show a reduction altogether of nearly Ll 1,000. In the Justice Department there is a saving of LB,OOO, In the Department of Education, .the amount is about the same as last! ye ! ar. The public library vote has been lessened by L 2,000, and Is of the 5s extra capitation allowance has been deducted. There is a substantial reduction in the Native Department of L 5,000, of which L 3,000 may be deemed departmental. There is the large reduction of over Ll 1,000 in the Mining Department, of which a considerable .-portion may be set down as savings on "expenditure. In the RailDepartment the estimated expenditure is L 13,300 less than it was last year. The Defence Department estimate of expenditure is less by over LB5O. L 15,000 of the cost of the Permanent Militia will be charged to the harbour defence vote, instead of Ll2/)00 last year.

„, „ Future Revenue. There may not this year be mnoh material increase in any item of revenue, whilst with the same causes still at work quite independent of the prosperity of the country, there may be less collected on some items ; so that with estimated exjjendituresuehasl have explained, and similar revenue without the L.10,000 unexpended obtained, there is obviously likely to be a considerable deficit for j the .yiiar, independent of the deficit of ! the past year. The depression existing in this colony is nothing compared with j what other countries have had to contend with, and although it has undoubtedly aftected the revenue to some extent, the cause of a considerable portion of the loss of revenue has nothing to do with the depression, but is consequent on circumstances of a satisfactory nature. The Customs revenue last year was L 124,235 less than the estimate, and that estimate was less than the actual receipts of the previous year by some L 40,000, so that the Customs revenue for 1886-87 is less by more than L1'29,000 than the receipts of 1885-86. It is still more deficient when we consider that the Customs is the main branch of revenue, and that it ought

to show a natural increase corresponding with increase of population and the increased service necessaiy to meet its wants. The Customs revenue in 1882-83 was £1,489,000, whilst for 1886-87 it was only £1,289,000.

Reduoed Consumption of Liquor. He drew particular attention to the fol~ lowing return, statement of the duty collected on spirits during the undermentioned financial years. Financial Rato of Quantity. Duty year. duty. £. 1882-83 .. 21s, 11s, 12s 58o,AG2gals 410 506. 1883-81 .. 218, 14s, 12s 576,232ga1s 403 500 ! 1881-83 .. 21s, Us, 12s 539G92ga1s 377 696 188>-3li .. 21s. 11l (id oOO.oldgals 359,780 IStitf-irf ..; 21s, 14s (id 468 241 gals 339,?10Hon members would observe there had been a continued falling off each year compared with the previous one, as follows :—lBB3-84,: — 1883-84, L 7,006 j 1884-85, L 25.804 ; 1885-86, L 17.91 6, 1886-87, L 20.070 ; so that the duty for the year just past, notwithstanding that its rates hail been increased, was L 90,706 less than the duty collected in 1882-83, with a tendency still downwards, whereas under ordinary conditions they might have looked for LlOO,OOO increase. The use of beer had also greatly fallen off. During ISB2 the consumption was S'7 gallons per head ; during 1883 it was 8*1 ; during 1884 it was 7*3; during 1885 it was 7 # ; and during 1886 it was6*7. It had been said that the reduction of strong drinks was as much due to the depression as to the growth of temperance habits, because an increased consumption of tea and coffee is not simultaneously visible. A few years since the Revenue Commi&sioneis of Great Britain. took a similar view, though he believed they had since modified it. He might be wrong, for he was unable to speak from experience, and he he submitted himself to correction from those who have a larger knowledge of the subject, but it seemed to him that because a person in the self-denial of temperance habits consumed loss alcohol, there was no reason to conclude that he would liy to tea for comfort. With a diminished use of ardent spirits, the human*, frame could do with less liquid nourishment. If the falling oii were really only the consequence ot less power of expenditure, and not due to the spread of temperance, he should expect to »cc a considerable increase in the consumption of beer. On the otherhand, he would look rather to the use of a beverage like gingerbeer and fruit syrups than to tea a& a proof in the direction of temperance. They were not able to gauge the consumption of these delicacies, and however lai-ge it might be, it was not a financial compensation for the revenue lost on alcohol. Surely no one would declare that there was reason other than for rejoicing that the colonists had been spared the absorption of a quantity of fiery liquid that put into one receptacle would make a small lake. He really thought the Colonial Treasurer was the one fortunate being in the colony who had to grieve over what should rejoice him, for he had to make up for the deficiency and was met with insinuations that he was increasing the- taxation of the colony. The Falling off in duties was not confined to spirits. There was a deficiency as between 1885-86 and 1886-87 of close on L 25,000 on cigars, tobacco, wine, and beer of over L 19,000 ; on goods by weight (excepting sugar, on which there was an increase of L 70,000) of L 65,000 on ad valorem goods, and L 6,000 on other duties. On a considerable portion of these goods the consumers had saved a great deal more than the duties in the diminished prices at which the commodities have been landed in the colony. Had the prices of 1880 ruled during 18S6 the value of imports during the year, which amounted to £6,759,013, would have been £8,060,198, so that people saA*ed last year, because of the fall in the prices compared with 1880, no less a sum than L 1,301,185., 301, 185. The Government deem it necessary to strongly urge an immediate increase in the Customs, duties, and they wish to record that their proposal will not be so severe on the colonists as those brought in force in years past. The alterations proposed were for revenue purposes : each item was moro or less calculated to add to the return. The committee, however, should be glad to learn that many of the changes are of a character likely to stimulate local production. People are in tho habit of comparing New Zealand with other colonies, without remembering the difference in its position.

The Property Tax. An increase in the Customs revenue naturally bi oughu them to a consideration of the system of direct taxation by means of the property tax, Had he as Colonial Treasurer afresh field to start on, he should recommend a land tax and an income tax in lieu of a property tax, though he was not blind to the fact that there was a great deal to be saiji on each side. Tho chief objections to a property tax were, that it taxed unproductive property, discouraged investment, and left untouched incomes upon which savings were not made. The chief objections to a land and income tax were, that the first left unaffected a really beneficial owner in the soil, the mortgagee, and that the second would in a large number of cases have left real incomes to escape, and would mainly reach those whose incomes arose from that uncertain commodity— brains. There was, of course, a vast deal more to be urged in favour of the present systejtn— that })eople were accustomed to it, that contracts tad been made depending on it (such as those between mortgagors and mortgagees ),. and that an alteration should not lightly be made. At any rate, the Government did not now propose a substitution. Thee Treasurer then referred to the question of exemption, and the varying proportions, which the L5OO exemption bore to the= amount of tax payable. The Act was a much larger means of relief topoor people than to rich. To tho person who pays on LlOO or less,, it means that if he owns L6O he pays only a. sixth of that sum. If the exemption were removed, he would pay six times the amount for which he is liable. On the othor hand, to the man paying on, say, L 50,000, there would be an addition of only 1 per cent, to his taxation. If they left the incidence on one aide,