FINANCIAL STATEMENT.

Taranaki Herald, Volume XXX, Issue 4070, 17 June 1882, Page 2

FINANCIAL STATEMENT.

♦ LARGE SURPLUS ON YEAR'S TRANSACTIONS. PUBLIC DEBT OF THE COLONY. PROPOSED NATIONAL SCHEME OF ASSURANCE. HOSPITAL AND CHARITABLE AID. NO EEDUCTION IN TAXATION. LOAN OF THREE MILLIONS PROPOSED. COLONIAL LOAN OF £250,000 TO BE RAISED. IN Committee of Supply, last evening, the following statement was made by the Colonial Treasurer, the Hon. Major Atkinson.: — The Budget is presented thus early because the Government are anxious that the House shonld hrve ample opportunity of carefully considering and discussing the financial position and requirements of the Colony. In furtherance of this object, which I feel sure will meet with the approval of the Committee, I hope to place the estimates in the hands of Honorable Membersnot later than to-morrow. RECEIPTS AND EXPENDITURE. The Committee will be glad to learn that the reports which have been in circulation for some time past, to the effect that there is a considerable surplus standing to our credit upon the transactions o£ the year, are substantially correct. The expenditure for the year under permanent Acts of the General Assembly was estimated at £1,570,919, including £1,499,318 for interest and sinking fund ; while the departmental services was £1,757,660 ; the total estimated expenditure was £3,278,820, being £49,759 le3s than the estimated amount. The outstanding liabilities on the 31st March, 18S2. amounted to £164,304 ; at the close of the preceding financial year the amount was £165,514, including the liabilities on the 31st March lust of £24,000 for sinking fund to the 13th March, 1882. [The Colonial Treasurer then referred to the excess of revenue over expenditure, and to the advantage of keeping the consolidated revenue separated from the land fund. He also stated tint there was sufficient money in hand on the 31st March, to carry on the public works without stoppage until about the end of February next, at the same rate at which they have been pursued during the last year, and that the public debt stood at £27,080,293. After dwelling at considerable length on the steady progress and rapid advancement made by the Savings Banks and the Government Life Insurance, he oroceeded to give in detail the financial results of the year 1881-82, and then briefly stated what the Government proposed to do with regard to local bodies, considering that they shonld be left as far as possible from central control. Our space to-day does not permit us to publish in full this portion of the speech, but it shall appear on Monday.] ESTIMATED EXPENDITURE. The estimated expenditure of the ordinary revenue for the current year may be conveniently divided, following the usual custom, into two parts — the permanent charges and annual appropriation. The permanent charges, amounting to £1,627.512, include pension payments under the Civil List and other Acts, nnd the large item of interest and sinkin? fund, which this year will amount to £1,554,848. Included in this, however, is the sum of £24.000 due for arrears of sinking fund upon the Imperial guaranteed loan of £1.000,000 of 1870, to which I have aheady referred. The total present annual charge upon our debt is therefore £1,530,848, and not £1,551,848, as might be supposed from a casual inspection of the accounts without this explanation. It must also be borne in mind that of this £1,551,848, no less a sum than £270,000, originally one-sixth, is for sinking fund — in other words, we shall pny £1,2S 1.848 fer interest and £270.000 for redemption of debt. The estimated annual appropriations for this year amount to £1,851,127. This shows an apparent increase upon last year's votes of £93,468. I say apparent, because the services for which a large portion of this extra £93,468 are required were paid for last year out of the loan. The votes for militia and volunteers, and police and constabulary, for last year, charged against the consolidated fund, were only £142,015, whereas they are this year £214,009, a difference of £71,994, which previously was paid out of the loan. This £71,994, then, is not an increase of proposed expenditure, but really the transfer of a charge from loan to consoli'tated revenue of what I regret to say is for the present a necessary expenditure. Of the balance of £21,474, £10.000 is for abatement of the rabbit nuisance, whfen last year was provided for in the land fund estimates. The remainder may be said to be comprised chiefly of increased charges for working some newly-opened sections of railways; for exchange on remittances to London ; and for some necessary increases in the small salaries of civil servants. In this estimate I have only provided the sum of £4,000 for hospitals and charitable aid, the amount voted last year. Upon this important question I shall speak more fully presently. ESTIMATED REVENUE FOR 1882-83. I will now ask the Committee to turn its attention to the consideration of the revenue for 1882-83. I anticipate, if taxation is to remain unaltered, with the Property Tax at one half-penny in the pound, that we shall receive a total ordinary revenue of £3,393,500, exclusive of land sales. To this must be added the balance of £203,683 which stood to our credit on 31st March, and wo then get the sum of £3,597,183 as the total amount available for the services of the year. Now if from this we take £3,478,639, the estimated expenditure to which I have already referred, there will remain a balance of £118,544 at the end of the current financial year. HOW TO DEAL WITH THE SURPLUS. So far, sir, all has been plain sailing. We have had to deal only with facts and with estimated results, which approach to something like a certainty ; but we are brought face to face with a problem by no means easy of solution — how can this surplus be dealt with to the greatest advantage to the community 1 What relief, if any, can be given to the taxpayers of the colony 1 But before these questions can be answered satisfactorily it will be necessary for me to revert to the questions of Hospitals and Charitable Aid, as I promised to do. HOSPITALS AND CHARITABLE AID. The total public and known private expenditure upon hospitals and in charity last year was in round numbers £88,000, and for practical purposes we may assume that an eqnal amount will be required this year. This sum was made by contributions from the Consolidated Fund, £29,000 ; stoppages from local bodies, £37,000 ; contributions from local Boards and from the public, £2200. The present system for providing the necessary funds is irritating and unfair to most, if not all, parties concerned in the charitable institutions of the Colony j and it is. I think, fair that the time has come when this important subject will have to be dealt with upon some comprehensive principle. It may be taken for granted that the indigent and the sick poor must be fed and clothed, and properly looked after, by tho community. Should private charity fail to make proper provision — and that privnt<- charity will fail to make sullicieut provision I fear is only too evident — the State will then have to undertake this business in some form. This being so, it

would seem that there are practically only three courses opea for ns to fo low — the indigent and the sick poor will have to be maintained by a poor rate, supplemented by privrte benevolence ; or by large grants from the consolidated fund, supplemented by private benevolence ; or by a system of national assurance. It may be impossible to deal with this large question during the present session, but as there is a great, and, I believe, very goner 1, repugnance to a poor rate, in which I strongly sympathise, and as grants from the consolidated revenue are, to say the least, ?ery undesirable, NATIONAL SYSTEM OP ASSURANCE. I propose to submit a--"scheme of national assurance for the consideration of the House, which I believe to ba thomughly practicable, and within the means of our people, and which would make necessary provision for the sick, the widow and orphan, and the aged. It is possible that my enthusiasm has carried me too far upon this subject, has made me too hopeful, but I have given the question much thought, and I am convinced that the scheme which I shall at an early day submit to the House is within the bounds of. practical politics for us in this Colony. Shouli, however, the scheme only lead to a dispassionate discussion of this important matter, we shall have advanced one step towards a solution of what I venture to think is one of the great problems of the age. The Government propose, pending farther consideration of this subject, to take the whole cost of hospitals upon the consolidated fund, and for this purpose I shall have to ask for a vote of £50,000 fortheir maintenance. Should this bo granted we shall ask the continued assistance of the local boards or the local committees, as the j case may bo, in their management, for without careful local supervision, abuses of a serious nature are sure to creep in. CHARITAntiE AID. With regard to charitable aid, now costing about £40,000 a year, I shall ask for a vote of £20.000, and propose that this relief should be given a« far as practicable through local institutions, the Government granting pound for pound. If this proposal would meet with the approval of the Committee, I shall have to increase the £40,000 for Hospitals nnd Charitable Aid which I mentioned nq included ' in my estimated expenditure to £70,000, thus disposing of £30 000 of ' the surplus The balance then of £118,544, which I said would probably be to our credit on 31st March, 1883, will be reduced by this means to £88,554. NO REDUCTION IN TAXATION. We have now only a surplus of £88,544 as a margin after making the temporary provision I have just proposed for the services of theyear, whicharenotof apermanentcharacter ' amounting to about £100.000. With such a surplus we might, if we did not intend — as we do — to go upon the London money market early next year for a further loan to continue our Public Works scheme, safely reduce the taxation by at least £50,000 ; but taking all the circumstances of the case into consideration, I do not think it would be prudent to reduce taxation at present If it be determined to borrow more money to enable us to complete our main lines of railway, it will obviously be necessary to continue taxation pt such a rate as will insure an ample margin of revenue to pay interest on money borrowed. Taxation must, as a matter of course, remain at a hij,h rate until the works now being constructed out of loan are completed and have had time to become reproductive Sir, we feel assured what the House desires, and what the country demands, is steady progress with our public works; that we should pay our way fromye^r to year, and not again fall into debt for current expenditure ; and, although we are apparently raising less revenue this year than will cover our expenditure, it mnst be borne in mind that temporary and extraordinary services which are this year being; charged against revenue amount to more than the difference between expenditure and revenue ; that the use of a surplus for such a purpose is quite legitimate finance, when there is no reasonable doubt thai, next year's revenue will be ample to provide for the service of the year. ESTIMATED EXPENDITURE AND REVENUE FROM LAND SALES. The estimated expenditure chargeable against land sales fund is as follows :—: — For charges fixed by Acts of General Assembly ... £41,500 For Crown Land, Survey and Mines Departments ... £153,810 Receipts from land sales are estimated to reach £354,000 For current year, adding to ! this sum the balance at beginning of year £11,360 I Deducting estimated expenditnre £195,310 We have a balance remaining of £170.050. The question of disposal of this balance must be postponed for the present, until the Legislature has determined what form of aid shall be given to local governing bodies. The proposals of the Government in reference thereto will be submitted when I introduce the Bills which have been prepared for dealing with this subject. LOCAL INSCRIBED STOCK. It will be in the recollection of hon. members that last year I intimated to the House the intention of the Government to submit for consideration a bill authorising the issue at par of a loan of £250,000, the principal and interest of which would be payable in New Zealand only. Circumstances prevented Government from giving effect to that intention during the last session of Parliament, but steps are now being taken to prepare a bill which will be submit ted for the consideration of the House during the coming session. I have drawn the attention of the Committee, in a previous part of this statement, to very large accumulations of money in the Snvines B.inks in the Colony, and the Government think, as I remarked in the estimate I had he honor to make last year, that many of the depositors of this money, as well as the public generally, might be glad of a more permanent form of inves'ment, if one can be provided, which is, at the same time, secure and easily convertible into cash. I proposed, as before, that the loan shall bear interest at a rate not exceeding 5 per cent., and that the proceeds shall be paid into the Public Works Fund, to be appropriated by Parliament. I also propose that the loan shall be issued in the form of inscribed stock, with the right to the subscribers to obtain at any time when desired bonds payable to the bearer of £10 and upwards. The Government believe that securities such as those I have described will find favour with the public so soon as their nature is generally understood. The loan will be disposed of gradually as it comes into favour, the object of the Government not being to obtain funds for expenditure, but to provide a class of security for the investment of savings which seems generally to be desired, and is likely to have a Tory beneficial operation. INCIDENCE OP TAXATION. I will now any a few words about incidence of taxation. Does our present taxation press heavily upon any particular class, especially upon that class which is least able to bear it, because if bo, although we might not be able to reduce the total amount, we might be called upon to shift the burden from weak to other stronger shoulders. I have been looking into this question of the incidence of taxation in order to ascertain the amount borne by the different classes, so that relief might be given, if necessary, to those upon whom the taxes appeared to press most heavily. I will state broadly, for the information of the Committee, the resulU of my inquiries. The results of my inquiries soum to mo to show that our taxation is upou the whole | fairly distributed over the community, al- ■ though what is fair, in such a case, is a proper

subject for discussion, and a question upon which there may be a great diversity of opinion. For tbo purpose of comparison, I have divided the population into three classes, which for the object I have in view may be considered natural divisions. First, the wage earning class, which I shall hereafter, for convenience, call the industrial class, consisting of 312,436 souls, exclusive of 11,903 domestic female servants ; second, the intermediate class, numbering 96,260 souls. This class is composed of all those who are known by the census a3 not belonging to the industrial class, and who do not pay property tax, consisting of 68,445 souls. The total taxation upon which my calculations are based, j for what we term taxation proper, as distinguished from that which is paid for services rendered, is £1,717,748. This was made up as follows :— & Customs 1,276,199 Stamps (nob including postage stamps) 126,148 Property Tax 257,000 From the Customs' duties I deduct the duties paid on wines and spirits, foreign beer and tobacco, sugar used in brewing (£3,493), and the amount (£5,512) estimated to be paid by Maoris on General Customs, and also the duty paid on cotton piece goods, which are now free. These amount in all to £083,794. I make these deductions because, with the present information at my disposal, it is impossible to apportion to each class the expenditure under the head of wines, spirits, and tobacco with any ace j racy, and because the other artioles enumerated do not come within the soope of the inquiry. Bat I have no doubt that if we could make now a true distribution of the amount paid under the heads of wines, spirits, and tobacco, we should And that the intermediate and property classes pay a large share, and that the relative proportion between the three classes which I am about to give would be but little, if at all, changed. I assume, of course, a moderate use of these articles. If used in excess it is impossible to say which class may pay most ; but I think it will be generally admitted, or at any ra*e ought to be admitted, that those who use spirits or tobacco, or any other article, in excess, to whatever classes they belong, are fair subjects for heavy taxation. Now I have received from sixteen of the chief towns in the colony trustworthy information as to the actual expenditure of a large number of mechanics and laborers. I have compared the expenditure so obtained with the expenditure of the same classes in England, and I find only such difference as the change of circumstances would lead one to expect. I think, therefore, we may take these returns as approximately accurate for practical purposes. 1 believe that further information which I am collecting will generally bear out the results now piven, and that any error which may be found in my estimates will be in the direction of a slight over estimate of the amount paid by the industrial class. The returns to which I have alluded show that the average amount paid to the State by families of industrial classes averages 16s. 6d. per member, or a total of £214,522 for the various families. This estimate is made from the actual expenditure of fifty-six typical families resident in all parts of the colony, but to this amount we must add the duty £51,256 paid by 49.355 single men, equal to £1 os. 9d. per head, and the duty, £3983, paid by single women over 18 having occupations, equal to 19s. lHd. per head. The aggregate of these amounts is £269,751, thus giving an average over the whole class of 17s. 3d. per head. But to this amount we must add £10,311, being the duty paid by the 11,903 domestic female servants for drapery at 17s. 3d. per hoad, thus giving a sum of £280,062 as the total taxation paid by the industrial class, exclusive of course of the duties on spirits, wines, fee, tobacco, and colonial beer. I have included all the domestic male servants and the married couples at service as paying in the industrial class, although probably the chief part of their consumption ought to be credited to the intermediate and property classes. This, I need hardly remark, makes no difference as to the average rate per head, but only in the total paid by the class. I have, following the best authorities on the subject, included the duty payable upon articles consumed by domestic female servants, except wearing apparel, in the amount paid by the intermediate and property classes. I hare said that the total amount paid by the industrial class is £280,062, and that this amount is ascertained by means of the actual expenditure made by fifty-six families in various parts of the Colony, and that these returns have been carefully checked by comparison to expenditure of the same class in England, proper allowance being made for the difference in circumstances, of the total populations, and also by due consideration of what is possible for this class to spend on dutiable goods, after providing from their earnings for the other necessaries of life and for house rent. If we now deduct £280,062, the amount paid by the industrial class, from ihe total duties which we are now considering, we get £312,343 as the Customs duties paid by the intermediate and property classes. This amount, after careful consideration, I have divided at an equal rate per head between the two classes last named. This will give per bead for each of these olasses £1 17s lid. The total revenue collected for stamps, exclusive of postage stamps, is £126,148. This I have also divided at an equal rate per head between the intermediate and property classes. This gives for each member of the intermediate and property classes 15a. 4d. per head. I think there can be no doubt that the stamp duties are paid by these classes. It is possible that a small amount may be paid by the industrial class, but it is so small that it could not appreciably affect the results. We find, then, that the stamp duties paid per head by the intermediate class is 15s. 4d., and the Customs duties £1 17s. lid. This gives £2 13s. 3d. as the total sum per head paid by the intermediate class, and a total for the class of £256,272. The property class I have assumed pay an equal amount per head with the intermediate class for stamps and Customs. They, however, paid with the property -tax, at a penny in the A, which it wns at the time to which my calculations relate, £3 16a. 3d. per head for that tax, making a total per head of £6 Bs. 6d., or a total for the class of (£439,818. With the propertytax, however, at one hnlf-penny in the £ the amount paid per head by the property class would only be £4 10s. lOJd., or a total for the class of £310,719. To summarise them we find that the industrial class, consisting of 312,436 souls (exclusive of 11.903 domestic female servants), pays £269,751, being at the rate of 17s. 3d. per head, or including the drapery duties paid by the domestic servants, £280,062. Tie intermediate class, consisting of 96,260 souls, pays £256,272, or £2 13s. 3d. per head ; and the property class, co isisting of 68,445 souls, pays £439,819, being at the rate of £6 Bs. 6d. per head ; that is the property tax at Id., but if we take that tax at one half-penny, they pay £310,719, or at the rate of £4 l«a. lOJd. per head. Those amounts are, ns I have already said, exclusive of the duties paid upon spirits, wine, tobacco, and colonial beer, and do not in* elude for obvious reasons, that part of our soculled taxation, which is paid for by each class in proportion to use for services rendered by the State, such as post-office, telegraph, Court fees, &c. The hon. members will, I hope, understand that in speaking of the expenditure at per head, I only use a form of expression so far as the intermediate and property classes are concerned, and individual expenditure being widely different according to means and habits ; but with the industrial class the dif-

ference is not so wide. With taxation it is of course impossible to meet individual cases in the taxation of the community. We must take a wider view, and deal with classes. It is difficult to exaggerate the importance of this subject, for badly adjusted taxation means undue exaction from some class or classes, which cannot fail to be detrimental to the community as a whole ; while, on the other hand, fairly adjusted taxation means that the public burdens are borne with as much case as their extent will permit, and I would express the hope that this question will receive the careful attention of hon. members and of all interested in the pnblic finance throughout the Colony, so that when our financial position permits we may deal with the subject on broad and intelligent principles. THE PROPOSED LOAN. I have now only one more snbject to deal with, but, although last, it is by no means least in importance. I refer, of course, to the question of a new loan. We have first to consider whether a new loan is advisable, this year, and secondly (if the first question is answered in the affirmative), how much will it be desirable to borrow ? Now, with regard to the first question, we must, in o.der to arrive at a reasonable conclusion, consider the state of the Public Works Fund and the amount wo can prudently expend per annum. I have already said that the balance in the Public Works Fund on the 31st March last was £924,865, with outstanding liabilities at that date of £541,400, exclusive of the liabilities on the land purchase account, for which we must add at least £100,000 ; so that, in addition to the £541,400 which is in course of expenditure under existing contracts and authorities, there only remained in hand at the beginning of the financial year about £283,465 for the continuation of the worksalready begun and for new works for which liabilities have not been incurred or appropriations made. We thus see that if no authority for a further loan is granted this year, our spending power on public works for one year and three-quarters, after paying for outstanding contracts and engagements to which I have referred, will only amount to £283,465, because, if a Loan Bill were passed next session, the money could not be raised before about December, 1883 ; and Government are quite determined not to enter into engagements in anticipation of raising money at a particular date. The question, then, narrows itself to this — Is it prudent at the present time, and under the present circumstances of the Colony, to borrow again, or ought we to be satisfied with a total expenditure of £924,865 in the twentyoue months, commencing with the current financial year? Sir, the Government are fully aware of the responsibility they incur in placing before the Committee their answer to this question. They recognise clearly the principle that before the public debt is increased the gain of the Colony shall be seen to be more than commensurate with the increased liability; and they believe that a case within this rule has now arisen. They think that, our ordinary finance being restored to a satisfactory state, and our main trunk lines of railway being still incomplete, it is now prudent to raise a fresh loan for the purpose of completing these railways or carrying them a stage nearer to completion, and for certain other definite and important public works. In this opinion the Governmentare strengthened by the fact that the railways already made are now paying practically 4 per cent, annually on the amount expended in their construction, and that they are steadily improving in this respect. The Government, sir, reoommerd that a loan should be raised, but only if the money can be raised at n reasonable rate of Interest, and authority of Parliament will be asked to empower the Government, if necessary, by postponing the works so as to arrange the expenditure, as to enable them to wait for a favourable market. We have now to confiider what amount should be raised, and this must be decided b/ two considerations— (l) the amount which can be profitably expended on necessary or directly reproductive public works ; (2) the amount npon which we can afford to pay interest without placing undue burdens on the people of the Colony. Now lam afraid that there are so many necessary or directly reprodoctire works only waiting to be done for want of cash to do them, that we shall find no practical limit in that direction. In this fact lies no doubt the cause of our far too lavish expenditure in the past. From the past we should take warning and proceed at a very much more moderate pace than we have been doing upon average for the last ten years. We must confine ourselves for the future in expenditure of borrowed money to works of necessity, or to works which are directly reproductive, and strictly limit amounts spent yearly on such works by our capacity to pay interest with tolerable ease. A £3,000,000 LOAN. It is in the opinion of the Government of great importance that the Colony should steadily pursue a progressive policy, and that our main trunk lines should be pushed on as vigorously as is compatible with the means at our disposal. Government then taking into consideration all the circumstances of the J Colony, and, acting upon principles which I have just laid down, have determined, Sir, to propose to Parliament a loan of £3,000,000, to be raised and expended at a rate not exceeding £1 ,600,000 per annum. My hon. colleague, the Minister for Public Works, when he makes the Public Works Statement will inform the Committee in detail of the items of the proposed expenditure and of the mode by which we hope to confine the expenditure to specific works determined upon by Parliament before the money is borrowed. The Government attach great importance to this provision of their proposal. » It is, 1 thiuk, clear, looking at the ex- ! perience of the past, that if our borrowing is to be governed by that pru ience which is essential, we must carefully consider what works we are justified in the construction of ; at what rate of speed they should be constructed ; and at what cost to the State. When we have determined these conditions wo are then in a position to decide upon the amount to be borrowed. Upon these rules of conduct in this matter, which I am sure will meet with the approval of the Committee, ) the Government have acted in arriving at the amount which they proposed shall be borrowed, i THE " DARKLY SHADED POLICT OF 79." And now I have done. The Committee, I am sure, will not be disappointed at the shortness of my statement, when it remembers that this is the natural and appropriate result of the simplicity in keeping Colonial accounts which we have been enabled to adopt. I will only add one word. In 1879, I stated to a Committee, fully and fairly, the position of the Colony, neither concealing nor exaggerating grave difficulties, which had then to be met, and I pointed out obvious remedies. That statement has often been characterised, especially by those who had taken least trouble to master it, as too darkly shaded, as giving too gloomy a view of things, though it has never been attempted to disapprove fncts nnd figures which I then adduced. Sir, I venture to say that except, so far as the gloom was in the facts themselves, it never had any existence. It certainly was not of my importing. It was prudence nnd not folly to look our difficulties fully in the face. It would have been folly and not prudence to doubt that we could overcome them. The Government and this House had full confifience not only in the abounding vitality and vast resources of the Colony, but, which was no lebs important, in the willingness of the colonists to make necessary s icrifiees, and that confidence has been amply justified by the facts I hare just had the honor to lay before

the Committee, and as prudence and economy and a cautious and well-considered advance in public works, as funds became available, was onr rule then, and has been since, so it should be now; and in the future I have fall confidence, sir, that, following that rule faithfully, we shall not only maintain, but a 9 the resources of the Colony become developed we shall steadily increase, the pre« sent satisfactory condition of our finances.