BORROWING AND TAXATION.

Timaru Herald, Volume XXX, Issue 1479, 18 June 1879, Page 7

BORROWING AND TAXATION.

[From the Timartt Herald, June 10.] There are all sorts of conflicting reports current about the amount of the expected loan, each of which professes to be based upon the • most trustworthy information, if not actually inspired by the Government. A telegram from Dunedin, which was stated to be "on the very best authority," announced a few days ago tbat the House would be invited to consent to the borrowing of from five to nine millions; and as the Attorney- General and Mr Maeandrew had then recently arrived at Dunedin, they were commonly supposed to be " the very best authority " referred to by tbe telegram. Some weeks previously, tho Northern Advocate, a paper which arrogates to itself a special knowledge of Cabinet secrets, stated positively that the loan would not be less than ten millions. The day before yesterday, however, the Wellington Chronicle, the Colonial Treasurer's own particular organ, stated equally positively, that the loan would be not more than three millions. Certainly, if the different JMJinisters are still as little agreed on this very important subject, as their respective organs are, the business of the country must be m a queer state, considering that the session is now only foui- weeks distant. We think it extremely likely, indeed, that there really is a decided disagreement among the Ministers as to the purposes, and consequently as to the amount of the loan. Some of them would no doubt like to make a grand coup, and usher m a period, long enough to last their time, of specious prosperity, by borrowing as many millions as the' House could be induced to * authorise, and lavishing them on every conceivable object of expenditure. Others again are known to be opposed to borrowing as a general rule, and would like to do without a loan at all, or at all events to do with as small an one as possible. There may also he a third section attached to some scheme of borrowing which would require the present authority of Parliament for a , vast sum, but would not contemplate the raising of more than a small part of it at a time. We have reason to bei lieve that each of these views is repre-

sented m the Cabinet ; and we think it probable enough, judging from what has occurred m connection with other subjects, that each Minister, or coterie of Ministers, will stick to his own particular view, until the inexorable division bell compels tbem to go into the lobby together at the bidding of the strongest. There could hardly be a more marked illustration of the evil of a dispersed and disunited Cabinet, than this matter of tbe loan presents. The commercial condition of the country is such that all attention is centred upon the ex- : pected loan, and the greatest interest mit is manifested from one end of the colony to the otber. This has gone onfor months, until, indeed, the public have quite made up their mind that tbere is to be a loan, and a great many people, we have no doubt, are speculating pretty confidently upon it, m the arrangement of their future plans. ; Yet not a word bas ever yet come from i tbe Government of the country, either to justify such a positive belief, or to discourage it m any way. The Ministry must have known, of course, what the public feeling on the subject was ; and they are, therefore, the more to blame for baying taken no steps whatever, either to guide that feeling into an useful channel, or to check it if it was a mistaken one. The state of . suspense in' which they bave kept the country , concerning the loan, is very injurious m many ways ; and it migJht have been terminated long since, if they had been at all equal to the occasion. They might easily have done a vast amount of good, by merely considering the question of the loan early, and making their decision upon it public. Before he got into office, Sir George Grey was for ever railing at the Ministry for not taking tbe public into their confidence, or letting the public know what was being done m connection with their affairs ; and he used to make a great point of promising that when he ruled the colony, he would practically refer every matter of importance to public opinion, by making the views of the Ministry upon it known at the earliest possible date. Instead of doing that, though, his Government has been, without any exception, the most secret tbat ever was experienced m the colony ; and public opinion never gets a chance to express itself beforehand, on any matter of public policy, unless some incautious JMinister blurts out some inkling of it by accident, or publishes a hint of it, more or less garbled, m his organ, m the course of the internal warfare of tbe Cabinet. It would surely be much better for everybody concerned, if the Ministry would remember that they are the servants of the public, that all their power comes from the public, tbat all they do, is done on behalf of the public, and that, therefore, the public have a right to know as much as concerns them, about the progress of public affairs. We cannot think of anyreason wby the intentions of the Government with respect to the loan should not have been officially announced long ago, if the Government had been agreed upon the matter themselves. It is not a party question, nor would there bave been the slightest risk of Ministers playing iuto the hands of theii- political opponents, by stating fully the course wbicb tbey propose to adopt with regard to it. It is not a matter which can be speculated upon m any way to the disadvantage of the colony. On the contrary, the official announcement of the intention to ask for a new loan of a stated amount, would probably have had an effect m the London market favorable to the colony, by inducing investors to abstain from purchasing old five per cent debentures at a premium of three or four per cent, with a view to competing for the new ones at some price below par. No harm, at all events, could possibly have been done. On the other hand much good would undoubtedly have been done, by tranquillising the public mind throughout the colony on the subject of the loan, by removing false hopes and wrong impressions, and by placing the country m a position to look with certainty a little way ahead. Any policy must be an injurious one which takes the country by surprise ; whilst, on tbe contrary, any policy for which the country has been prepared, is half way to success before it comes into operation. While still m perfect darkness as to what the nature of the Government proposals for borrowing may really be, we find it very difficult to offer any remarks on the subject which may be of service to our readers. We may say, however, tbat we do not think an extravagantly large loan would find favor, at the present juncture, either with the House or with tbe country. .Any new loan, unless a very modest one indeed, must be accompanied by an increase m taxation ; and the commercial circumstances of the people are such, that any additional taxation would be exceedingly burdensome and unpalateable. A ten million loan, however, would necessitate an immediate increase of the taxation to such an extent as the people would not be able to bear. Already the expenditure largely exceeds the revenue, and this year, the land revenue having failed to come near the estimates, the Treasurer will be m a deficiency. His effort to raise a hundred thousand ponnds a year by direct taxation is a lamentable failure. The land tax *will probably not return half that sum. Yet it has already aroused a great outcry throughout the country, and will assuredly arouse a much greater one when it comes to be actually collected. What would happen, then, if the attempt .were made to increase the tax by five or six times its present amount ? No representative of any district containing a considerable proportion of taxable land, would dare to support such a proposal, or could do so without betraying the interests of his constituents. If it were carried, it would act so oppressively on the landed class that it would effectually drive away capital, and put a stop to settlement. It would depress the value of all land enormously, and the lands of the Crown as much as any others. It would strike a blow at the staple industries of the country, and sap the very sources of her commercial prosperity. If, on the other hand, an attempt were made to add such a large sum to the indirect taxation, unless the whole system of the : Customs tariff were completely changed, . the articles bearing the additional duty i would be too dear for consumption, and i trade would be obstructed without the revenue being benefitted m proportion. Jin short, it would he next to impossible

to increase the taxation m New Zealand just now, sufficiently to pay the interest upon a very large loan, witbout oppressing the people unwarrantably ; and we do not believe that tbe Legislature would sanction any such course. Our own impression is that, m spite of the popular cry m favor of borrowinfr, the House will be found very critical on that point, and will require the Government to be moderate m their proposals, and to give an exact account of tbe purposes upon which the money, wben raised, is to be spent. A very weighty responsibility rests upon both tbe Government and the Legislature, m their treatment of this question ; for a mistaken policy with respect to it, may plunge the colony into difficulties from wbicb it may not extricate itself for many years. We hope that both the Government and the Legislature will act with so much caution and sound judgment, as to acquit themselves well of that responsibility.