PROVINCIAL BORROWING.

Colonist, Volume XVI, Issue 1660, 15 August 1873, Page 2

PROVINCIAL BORROWING.

The necessity for strictly limiting the powers of the Frounces in contracting loans; and for preserving the general credit of the Colony from being injured by, the indiscreet action of its parts, has long been felt by all Mew Zealand statesmen. The respective authority of the central and local Governments being imperfectly understood in England, there was much reason in ths assertion that however the Colony might be technically guarded against liability for loans contracted by the- Provinces, there would .be something closely allied': to repudiation, if not actually amounting to it, if the English .lender were .permitted. to suffer loss from the failure of the Provincial authorities to fulfil their engagements^ and that the Colonial credit, would, in .conse- * quence of such default, be so far reduced at to render the negotiation of a loan for the most urgent general purposes all but an impossibility. It is too late to revive the angry discussions on the exact; course taken by the Government, of the day when. a rertual guarantee was assumed to have been given for Provincial 'debts, and severely as the Colony suffered from the imprj^Mfe eagerness with which consolidation -JKr carried out, it may well be doubted whether in the borrowings of late-years there has not been a full equivalent obtained in the high price of our securities. The real mistake was not so .much in preventing the Provinces from themselves appearing on the money market as in the dogged resolution to refuse the Colonial sanction to money being raised for the most important colonising purposes^ Land, fit for settle* merit and for which keen competition was certain.to arise if it were once made accessible by roads, was left as unprofitable, because money was not to be obtained from current revenue, and the capital necessary for its development was not permitted to be raised. To a steady perseverance in thii mistaken policy must be attributed much of the depression experienced in the yean preceding the public works policy. Immigrants ..were not able to obtain land .sufficiently easy of approach to enable them ;o convey its produce to market without absorbing a large portion of its value in carriage and so the country made little progress in population. , With, the commencement of railways fresh life was infused, and it was hoped by some that railways alone would provide for all the wants, of a large influx of people, it being apparently forgotten that without roads and bridges-only a narrow strip of country along each line would be reached, and that without a large

additional expenditure the area of country opened would for all practical purposes bp far too small to furnish a payable amount of traffic. From many parts of the Colony came the demand for funds to coiittviict means of communication which would, afc the same time, be feeders of railways, anl the Government being unable to <J«Py the necessity for such works was compelled to deriie some meam for the satisfaction of

dbvious wants, and, at the same time, to save the Colony from being weighed down by an amount of debt which it is feared when added to loans for railways and immigration might excite so much alarm in the minds of lenders as to prevent them advancing money for the greater works. A distinct declaration ot non-liability on the part of the Colony is the foundation of the Government policy, and if this separation of interests could be carried out, and no damage be inflicted on the Provinces, it is probable an agreement of opinion would be speedily attained, but there is great doubt whether the danger is really so great as it is represented to be, and whether an amount of loss might not be inflicted on the Provinces far beyond the expected gain to the Colony. To float a loan of small amount secured on tolls or dues, or by consent of the General Assembly on special blocks of land, would, it is obvious, require the offer of a much higher rate of interest than is paid by the Colony, and works necessary to the complete success of the present Colonial policy would so far have less chance of being executed. It is further extremely doubtful whether it is prudent to permit the Provinces to become borrowers without in each instance obtaining the express sanction of Parliament, which could be limited to cases approved of by the Government on the recommendation of the Provincial Councils, so as to avoid the growing evil of members bringing down loan Bills to suit the districts they represent, and so tending to produce a system of logrolling discreditable to those engaged in it, and fraught with disaster to the Colony. When previously discussed and assented to in the representative body of the Province, and sanctioned by the Government after careful enquiry, Parliament might be asked to agree to money being advanced on full security, either out of Colonial funds or with the Colonial endorsement, the Government being held responsible for the strict enforcement of the conditions set forth in each Act. Thus, without any probability of loss to the Colony, all minor works could be left to the Provincial authorities, and while the whole would not be injured each part would have less interest to pay. Attempt to distinguish between them as we may, the Colony and Provinces are one, and no line can be drawn

io as with any degree of fairness to say the one should pay for its energy and enterprise opening the country and rendering it fit occupation more highly than the other, nor that in any well-considered undertaking the one should he able to refuse aid to the other. It has probably been considered by the Government desirable to prevent the political evils springing from the attempt in some Provinces to obtain year after year Parliamentary sanction for their loans, but it cannot be necessary to injure all because one or more may be too exacting. Firmness in dealing with the most clamorous would meet with ample support, and a plain declaration to risk the loss of several votes rather than consent to advances not sufficiently secured, or not absolutely required, would add more strength to any Ministry than the most active lobbying could possibly take away. Parliamentary support that can only be obtained by assenting to hundreds of thousands of pounds being advanced for local purposes i« little worth having, and experience has proved may be lost for a whim after being gained by undue concessions. To attain at once the execution of important local works and the protection of Colonial credit, we believe the Government would do well to still forbid Provincial loans, and, while requiring each advance to pass the ordeal of Parliament, be prepared to act liberally to welldevised schemes.