POLITICAL.

West Coast Times, Issue 605, 2 September 1867, Page 5

POLITICAL.

The General Assembly is still in session, and is likely to continue so unless some political crisis should occasion a dissolution. During the early period of

the session a resignation of Ministers appeared by no means improbable. On

several of their more important mea-

sures they sustained defeat. It has, . however, pretty plainly appeared that it is not the wish, of the majority of the Assembly that they should retire from office, and they have accepted and submitted to their discomfitures with what grace they could. There is every appearance at present' of their holding their own. The masterly scheme of • finance just submitted to the House of Representatives by the Colonial Treasurer cannot fail to greatly strengthen their position.

We mentioned in our last summary the miscarriage of the Bill introduced by Ministers to increase the representation of Auckland and Westland in the General Assembly. A Bill dealing with Westland simply, has since been introduced and carried. It is, however, of a very unsatisfactory character. It confers one additional member only upon this important and populous district. Henceforth Mr Moorhouse, our present representative, will sit as member for the Westland Boroughs, consisting at present of Hokitika and Greymouth. The additional member will have to be elected for the West - Canterbury Goldfields. The Act, however, is not to take effect until after the present session of the General Assembly. A Bill has been introduced to provide for the representation to a obtain extent of the Maori race in the General Assembly. Another important measure for the establishment of a general system of Municipalities throughout the colony, has passed its second reading, and is now in committee of the House, with the certainty

of its being passed without material amendment.

The present mail will carry home the announcement of the financial policy of the Government, which, has been explained in an able and comprehensive speech by Mr Fitzherbert, the Colonial Treasurer. Perhaps no financial statement of equal importance has ever been delivered in the Parliament of New Zealand ; one more exhaustive of the subject it deals with, or one indicating more radical reforms in the monetary system of the colony. In reviewing this remarkable speech, avc shall in our present issue deal first and chiefly with that portion of the new policy which will perhaps be of most interest to home readers ; the proposed consolidation of Provincial loans. It has long been felt by all thoughtful men that the financial operations of the Provincial Governments were conducted with great loss, owing to the discredit naturally attaching to securities guaranteed only on local revenues, whilst a further damaging effect was to depreciate the General Government debentures by the presence in the money market of a great variety of New Zealand paper. As far back as two years ago, the colonial parliament awoke to a sense of the evil resulting from such a state of things, and prohibited the provinces from exercising any further borrowing powers. Since that date no provincial paper has been able to be placed in the market without the express sanction and imprimatur of the General Assembly. Several considerable loans on the part of the provinces had, however, been previously sanctioned, and Otago, Canterbury, and other provinces, have a large amount of outstanding unnegotiated debentures. It is proposed by the Government to convert these, or to extinguish them by their cash purchase. If the ministerial plan is given effect tt r >, a new colonial loan will be authorised to be raised, only in such proportions as may be necessary to buy up the provincial debentures that have already been issued, or *to issue colonial debentures' in exchange for them. The operation of conversion is . to extend over a period of three years, within the currency of which holders of provincial securities may come in. This part of the ministerial scheme cannot be better put than in the language of Mr Fitzherbert himself. After referring to the several courses open, and explaining the reasons that induced the government to give the preference to the one he is recommending to the House the Treasurer says : —

There remained but one other course, and that was a voluntai-y purchase aud exchange of provincial for colonial securities, and that is the plan which the Government has adopted. When I say voluntary, I mean voluntary on both sides — on the part of the Government as well as the holder of provincial paper. For whilst on the one hand we hope to be able to offer the holder of provincial debentures such an improved security as shall induce him to part with them either for cash or for colonial debentures, on the other hand it is necessary to take care that the Government shall not place. itself in a position which 'may enable the creditor to force it to accept -offers which are not as favorable as the colony has a right to expect. We propose to raise a loan with a maximum limit, but which is to be raised only as required and to the extent required for purchasing the provincial paper ; and we propose that all such purchases shall be made in cash or by exchanging colonial for provincial debentures by agents in England or elsewhere upon the best terms which can be obtained. But we do not think that when the colony comes forward with the offer to enlarge the security upon which those debts have been incurred, it ought to allow the holders to wait an indefinite time before availing themselves of the offer. We are not disposed to allow speculators to wait until the very offer of the Government shall have enhanced the value of their claims, and then to expect to obtain from the Government the higher prico, which the operations of the Government itself will have created." We therefore propose to limit the time during which holders of provincial paper can come in and avail themselves of our offer ; and, after that, to exclude them from all the benefits of the proposed consolidation. Three years is the time to which we propose to confine these operations, and I thiuk we may fairly anticipate that in that time tha great bulk, if not the whole, of tha provincial securities will have disappeared from the market, and thai the financial engagements of the colony will bo restored to an intelligible basis. But we hare not forgotten that some of the provinces have entered iuto large engagements upon the faith of raising loans which have not yet been fully negotiated. Wo propose to place such provinces in the same position as they would have been in, had tills Act not been passed. It is clearly of no use that such piovinces should be allowed to issue debentures, which will immediately afterwards have to be bought in. We, therefore, propose to raise money under this bill to the extent to which any provincial loans are still imraised, and to pay over that money tc the province. In distributing the payments amongst the provinces, of the interest and sinking fund, we propose to charge against each province the exact sum for which the General Government has made itself liable by the extinguishment of its debt. That is to say, if we can buy a LIOO debentnre of Otago for LBO, we shall charge against Otago the interest and sinking fund on the LBO of debt which the General Government has incurred. And we propos ) to stop out of the provincial revenues every month onetwell'th part of the annual sum thus due to us.

The security to be offered to the public creditor, is to be the consolidated revenue of the colony — the payments of the annual interest and sinking fund to be paid out of the provincial share of the consolidated revenue, in proportion to the extent to which each province derives advantage from the loan. As the provincial loans have, however, for the most part been raised upon the security of the land revenues of each province, the measure provides that where the provincial share of the consolidated revenue falls short, the General Government may immediately come upon the land fund of the particular province which is in default. The creditor, therefore, whilst nominally having only the security of the consolidated fund, has really that of the land fund as well. The reason of this

special arrangement is given. The provinces have manifested great jealously of any interference on the part of the General Government with their land revenues, which they desire to see paid over directly to the provincial chest. Mr Fitzherbert sees no reason for disturbing the existing arrangement, therefore, beyond making the land revenue responsible for any failure in the ordinary revenue of the province to meet its annual engagements on account of loans, with the General Government.

A Bill to readjust the distribution of the public revenues is to be introduced simultaneously with the Loans' Consolidation Bill, and the two are to be read together, and considered parts of the same financial settlement. Hitherto the Customs' Revenues of the whole colony have been divided in certain proportions between the General and Provincial Governments — the former appropriating five-eighths for the defrayment of the general charges of the colony, and the latter having the balance assigned to them for local uses. This arrangement has never been actuall}* enacted, but it was authorised by a resolution of Parliament. It has always, however, been subject to a settlement of accounts, the three-eighths being paid over to the Provincial Governments only on the condition that the colonial finances left an available balance for that purpose after General Government expenses had been met. The accounts have for a considerable period been kept open, and it is found that the Provinces stand actually indebted at this moment to the colonial chest in a gross sum of L 183,688, disbursed among the nine Provinces in the following proportions :—: —

£183,688 9 6 As a preliminary step to a totally new financial arrangement as between the pi-ovinces 'and the General Government, Mr Fitzherbert proposes conditionally to cancel the whole of this debt due to the colonial chest, and to absolutely close all transactions between the two Governments. Simply, however, to pass a sponge over the account, Mr Fitzherbert holds would not be to deal justly as between province and province, because all the provinces have been overpaid, some of them much more so than others, and merely to cancel the debt would be to take from one province and give to another. It is proposed, therefore, whilst abandoning the claim on the part of the General Government, to make the provinces pay such sums as may adjust the amount fairly between all. The result of this financial operation is stated as follows :—: —

£ Auckland will have to receive ... 25,380, Wellington „ 4,815 Nelson „ 615 Canterbury „ 618 31,428 On the other hand, £ Taranaki will have to pay 376 Ha wke's Bay „ 301 Otago „ 25,140 Southland „ 5,611 Thus thetotalsums received and paid over in liquidation of this debt of L 183,688 9s 6d,willbefoundonly to amount to L 31,428 The largest amount to be paid is the L 25,000 set down against Otago ; but this sum is in lieu of the L8(),000 in which Otago is indebted to the Colonial chest. The L 36,000 due by this province will be wiped off, and a balance of'LGIS placed to its credit.

Old accounts being thus closed, Ministers propose to provide by an Act for a division for the future, of the consolidated revenues of the colony into two moieties, each province receiving one absolute half of the revenue collected within it, and the other half passing to the account of the General Government. From the provincial moiety, however, some important deductions are to be made, first, for the cost of services voted by the Assembly, but provincially charged ; secondly, for the annual charges to which the Treasury will become liable on account of the purchase or exchange of provincial debentures.

Another important change proposed relates to the manner of computing the sums payable to the provinces. It is proposed to make the accounts relate solely to past cash transactions. Mr Fitzherbert illustrates :—: —

For example, say in the month February, as soon as the accounts arrive from various parts ot tho Colony, the Treasurer will make up an account of the half of the actual sums paid into the consolidated funds in each Province during the month of January, and of the actual sums expended on account of general services provincially charged during the same month, and the difi'erenco will be tho sum belonging to tho Provinces for the month of January. If there is anything due from the Provinces on account of interest for its debentures bought and charged under the Consolidation Act, that will be deducted also each month, at the rate of one-twelfth of the annual charge. Now this account will absolutely close all transactions between the General Government and the Provinces up to date. No money will ever be paid in advance, no balance left unpaid. The account depending on pnst cash transactions, instead of on future contingencies, will bo absolutely closed month by month, and I venture to say that this result will be equally acceptable to the General Government, to the Provinces, and to tho public — to the General Government, whoso finance w ; ll no longer be obstructed, and its accounts mystified, by engagements difficult, to be ascertained and never settled; to the Provinces, who will no longer be tempted to extravagance by the anticipation of " hearing something to its advantage" in llio annual b.ihmco sheet, or irritated by the prospoct of having to refund sums which it had overdrawn in enforced

ignorance of its real position ; and to the public who may possibly begin to understand something of the manner in which its money is disposed of, which any one but a most accomplished accountant must despair of doing under our present system.

In order to cancel tiie ovcr-payinents made to the several provinces under the Surplus Revenue Act, and release them from obligations on account of the past, without crippling the resources of the General Government, Air Fitzherbert explains that it will be necessary to " take up a further sura of money." This he purposes to do, by a very ingenious interpretation of the Act of 1863, without asking the House for a new Loan Act. The Act of 1863 authorised the Government to raise three millions by way of loan. When the whole of the bonds under this Act are taken up, L 3,000,000 worth of debentures will have been issued, but the sum actually received will be less than that a mount by the discount of upwards of L 260,000. Iv other words, the debentures will have been sold at so much under par as represents L 260,000. Mr Fitzherbert holds, therefore, that to that further extent the borrowing po iver has been conferred upon the Government by the Three Million Loan Act, and he proposes to raise this money, and to introduce a further Loan Appropriation Act to provide for the following extraordinary services : — £ Telegraph Extension ... ... 47,412 Marine (Lighthouses) ... ... 19,725 Defence 109,025 Taranaki Debentures 38,750 Contingent Defence 45,000

Amounting to £259,912 Such are what we may call the internal financial arrangements of the colony as connected with the adjustment of the relations between the General Government and the Provinces. The more general features of our finance may be gathered from other parts of Mr Fitzherbert's statement. It appears that for the year 1866-7 the estimated expenditure amounted to L 738,308 in the shape' of Appropriations for Colonial and Provincial services provided for by the General Assembly, and L 3 18,350 in the shape of payments to provinces, making a total of L 1,057,058 As against this Estimate the annual expenditure for the year was L 1,063,383 — an excess of some L6OOO over the estimated expenditure. The estimated Ordinary Revenue for the year was L 1,058,500, and the actual revenue realised L1,028,016— an excess of L 30.000 over the estimate Under the head of Es timated Extraordinary Expenditure for the year, the sum of L 308,500 appeared, whereas the actual Extraordinary Expenditure amounted to' L 282,370 only. The estimated proceeds of Extraordinary Ways and Means was L 320,000, whilst the actual proceeds amounted to L 315,489. There is a further item included in our somewhat complicated financial system — viz., Incidental Receipts, arising chiefly from the sale oi confiscated lands. Putting all the accounts together, the results of the financial year 1866-7 may be thus summarised :—: —

showing an excess of expenditure, which Mr Fitzherbert very justly says " is of trifling amount indeed, considering the dimensions of the figures." The history of the year will not, however, be complete without the record of another operation which, the Colonial Treasurer has effected, and which is the initiation of a very important reform. It has hitherto been the practice to make use of certain moneys deposited with the Government to meet the exigencies of the public service. This custom Mr Fitzherbert pronounces to be an unsound one, and he accordingly proposes to abandon it. For the future these deposit moneys, with the exception of " some of a current character, which he thinks may fairly be employed as a working balance," will bo treated as a trust fund, and as "an instalment of reform of the abuse," sums amounting to L 24,431 have been re-funded during the year. In addition to this sum the amount of the overdrawn account at the Bank of New Zealand (L 26,361) has been repaid, making the total amount of payment beyond the expenditure for the public service, L 50,792. The money to effect this part of Mr Fitzherbert's general scheme of financial re-adjustment has been taken from the unappropriated balance of the loan, amounting to Ll 73,000. Coming to the proposed arrangements for the year 1867-8, the Treasurer makes the following statement of estimated revenue : — Customs £870,000 Bonded stores 5,000 Stamps 75,000 Miscellaneous ; 134,000 £1,084,000 Against this gross estimated income is set dowit the following Estimated Expenditure ?—? —

The apparently large excess of revenue over expenditure is to be explained by the circumstance, that the payments to be made to the provinces out of the general revenue, are not represented iv the items of General Government outlay set down. The principle on which these payments to the provinces are to be made, has been already explained.

We have now disposed of the Financial Statement so far as it is likely to be of any interest to home readers. The following figures, however, illustrating the steady and uninterrupted progress of the colony of New Zealand for the past ten years, are worth extracting from Mr Fitzherbert's speech :—: —

Revenue fboje 1857 to 1867.

From its usual state of political quietude, [lokitika has passed into a phase of excitement such as has not for a long time past been witnessed here. Mr T. L. Bright, one of the members for the town in the Provincial Council, having resigned, two candidates have appeared in the field to contest the vacant seat. The one is Mr James A. Bonar, the present Mayor of Hokitika. The other is Mr Evan Prosser, who sat as one of the first members for the district of Westland before it was divided into separate electorates.

In our last Summary we mentioned the appointment of Mr Bonar as Goldfields Secretary. His appointment has since been gazetted, and he has proceeded to Christchurch to receive the necessary instructions prior to his entering upon his official duties. Mr Bonar returned to town last week, and holding it to be necessary, in order to his being a " responsible" member of the Executive, that he should have a seat in the Provincial Council, he at once announced himself a candidate for the representation of Hokitika, and on the same day Mr Prosser appeared in the field as his opponent. The contest is likely to be a very close one. The nomination takes place to-day, and the poll will be taken to-morrow.

It is not easy to convey in few words to distant readers any very correct idea of the issue involved in this contest. The appointment of a responsible minister for Westland, holding a seat both in the Provincial Executive and in the Provincial Council, was strongly insisted on during the last two sessions by the five members for the district, as a concession due to the importance of its interests and to the right of the people to a voice in the administration of local affairs and the expenditure of local revenues. Speaking on the 25th June last in the debate on the financial statement, Mr Bright' is reported to have said: —

Whilst the statement made by the hon. the Provincial Secretary contained unexpected proposals for the entire reversal of the financial policy of the Government as regarded Westland, there were other points omitted to which referenso might have been anticipated. There was no word in that statement indicating a policy which he (Mr Bright) had hoped to have seen laicl before the Council, and which would in some measure have placed Westland in a similar position to the other portions of the province — he meant the creation of the office of a responsible political Minister to administer the affairs of that most important and populous district. (Hear, hear.) . . . This was a subject on which he could not hold himself to have discharged his own conscience, unless he expressed his strong convictions that the political rights of Westland had been disregarded — (hear, hear) — and upon this point he and his hon. colleagues had never ceased to press the Government of the day, both in and out of the House. (Hear, hear.) It would be remembered that during the last session of the Provincial Council, when the Estimates were under consideration, he look occasion to ask the Provincial Secretary, whether the attention of the Government had been directed to the necessity of effecting some reform in the administration of Westland, and inaugurating responsible government iv that important and prosperous district. The Provincial Secretary stated that tho Government were most anxious to adopt such a reform, and he recognised its importance by stating to the House, that it would be one of the subjects to be remitted to the consideration of the Westland Commission. Ho (Mr Bright) clid not wish to speak adversely to (he gentleman at present holding tho office of Commissioner iv Westland. He was a gentleman of great intelligence —of much official aptitude — and he believed was such a sevrant as any Government might well be proud of ; but it was an important part of the practical art of Government to satisfy that instinct of self-reliance, to gratify that desire for self-control which naturally belonged to every community of free men ; and if hon. members would consider the population of Weotlund — a population certainly equal if not superior to the population of this side of the province — if they would bear in mind its large revenues, its important public works, which were increasingly going on ; if they would bear in mind its large interests, both as a mining and mercantile community, he thought that the House would agree with him that such a modification should take place in tho Government as would give to that people some voice in the management of their own affairs, some share in the expenditure of their large funds. (Hear, hear.) He saw that the Westland Commission had suggested the appointment of a responsible minister; he saw that a similar recoinmcndetion had been adopted by the Civil Service Commission, and he might mention that he and his colleagues were prepared to suggest to the House proposals by which the integrity of the province would be maintained, and, afc the same time, an opportunity would be afforded to the people of Westland of gratifying their natural and proper desire of self-government, and in the enjoyment of that power maintaining themselves in peace and prosperity.

These views were at that time endorsed by the whole of the colleagues of the gentleman who spoke, and the words used by him were in fact simply the reiteration of representations that had been long pressed upon the Government aud the Council. It was in accordance with those views that Mr Hoos, another Westland member, and Mr Barff, his colleague, moved

and seconded a resolution declaring it expedient that a responsible minister for Westlaud should be appointed to the Executive. By some blunder or infatuation which has never w been explained, the motion was allowed to be put without debate, and the two ministers in the House voted against it when the division was called for. But the Government afterwards made the concession. They admitted the force and equity of the claim for a Goldfields Secretary made by the Westland members. A man thoroughly identified with Westland interests, altogether free of suspicion of Christchurch proclivities is nominated to the office. If the district is to have a Goldfields Secretary at all — and that is what the people and their representatives have all along demanded — a happier choice could not have been made than that of Mr Bouar. Mr Bonar, seeking a seat in the Provincial Council, is however opposed.

His opponent as we have said is Mr Prosser, and the history of the opposition is curious. The hopelessness of obtaining justice from the Provincial Council in which Eastland votes largely preponderate, having been established by the proceedings of the last session a movement was set afloat for obtaining Separation, and the erection of Westland into a new province. Mr Bonar has not identified himself with the movement, clinging to the hope that he will be able if strengthened by public support to obtain a practical redress of the grievances under which the district has long labored — but holding himself free to join the Separation movement if he should be disappointed in that hope. Mr Prosser did identify himself with the cause of Separation at the outset, but has siuce withdrawn from it because the League adopted a programme in his absence, which he did not approve of. Having done his best to check and defeat the movement, this gentleman is now, by his opposition to Mr Bonar's return, helping to deprive the district of such guarantee of justice to its interests, as would be provided by the replacement of the Commissioner by a Responsible Secretary until a more radical reform can be secured. We cannot believe that the issue of the contest is doubtful. The people must have too much good faith and good sense ; too much appreciation of the hard battle their representatives have beenfighting for them; to repudiate their acts, simply because Mr Bonar, instead of some one else, has been appointed to the office he holds

This contest, so unseemly under the present circumstances of the district, has done much during the past week to divert public attention from the Separation Petition, which is still in process of signature. The petition, we believe, will be forwarded to Wellington for presentation early during the present week, and we shall probably in our next Summarj»be in a position to announce not only the number of signatures attached to it, but the manner in which it has been received by the Assembly.

.857-58 ... 138,998 1862-63 ... 488,522 .858-59 ... 160,830 1863-64 ... 617,002 ... 178,117 1864-65 ... 643,297 .860-61 ... 20i,612 1865-66 ... 796,227 .S6l-62 ... 339,393 1866-67 ... 864,668 .867-68 ... (estimated) ... 1,084,000

Divil List Permanent charges Chiefly Interest and Sinking Fund.) . " Dlass I. — Public Domains and Buildings ... ... Ulass II. — Public Departments „, Dlass 111. — Law and Justice Dlass IV.— Postal Dlass V. —Customs 3lass VI. — Native . . . 31uss Vll.— Militia un:l Volnnteors ... Class VIII. — Miscellaneous £ s. a. 27,500 0 0 305,818 5 5 4,376 4 0 45,025 10 4 69,892 4 0 155,241 4 0 44,810 7 6 24,058 17 6 28,052 8 6 39,403 6 8 £744,178 7 6

Revenue. Ordinary Revenue. . . Incidental... Extraordinary £ s. d. 1,028,006 s*lo 17,489 10 9 298,000 0 0 £1,313,495 16 7 Expenditure. Ordinary Extraordinary 1,063,382 18 1 282,370 17 10 £1,315,753 15 11