HOUSE OF BEPKESENTATIVES.

Wellington Independent, Volume XXIII, Issue 2729, 8 September 1868, Page 2

HOUSE OF BEPKESENTATIVES.

TUESDAY, Ist SEPTEMBER, 1868. On the House going into Committee of the whole Bouse: — The Hon. Mr HALL said : Mr Carleton, if it is unusual for the person upon whom it devolves to furnish the annual statement of tho financial position of the colony to bespeak from the Committee an indulgent hearing, I think that the circumstances under which that task devolves upon me givo me a claim to a more than ordinary measure of such consideration. I need hardly tell you that I have to speak of financial depression—that, for the first time in the history of this colony, its revenue exhibits a falling off, corresponding but too truly with the general commercial depression which wo know to exist throughout tho colony. I labor also under personal disadvantages, having but very recently undertaken, and being but temporarily in charge of the otllce of Treasurer, and having had to discharge its functions at the same time with the ministerial and parliamentary duties of my own department. I feel sure, however, that I shall be aided in the discharge of the duty now before me by a largo measure of that indulgence of which I have had abundant experience during the time 1 have occupied a seat in this House. I will promise the committee, in return for this favor, that my statement shall bo as short as I can make it, consistently with a clear explanation of tho important facts of which the committee and the colony will toe most anxious to bo informed It will probably be for tho convenience of the committee that' I should recall the anticipations put before it last, year by the Colonial Treasurer in his financial statement, and tho proposals which he submitted, and which received the sanction of Parliament; that X should show the extent lo which those anticipations and proposals have been realised and corned out; that I should then explain to the committee the provision which the Government believes to be required for the service of the current year ; fhe means by which that provision should be attained ; and the manner in which the financial relations of the General and Provincial Governments should be adjusted. THE PUBLIC REVENUES ACT. I vi ill refer first to that new system of keeping the colonial accounts, and of ascertaining the amounts payable to the provinces, which was introduced by the Public Revenues Act ol'last session. That act becar.io law on the 10th October, 1867, but its operation extends back to the commencement of the last financial year, viz. tho Ist July, 18G7. Wo have heard in eomo quarters expressions of dissatisfaction at the working of this act ; it is complained that it has not placed the provinces in possession of their accounts so soon as was promised, although it has done so sooner than heretofore and that full payments of sums due have not been punctually made. Ido not deny that the act requires modification, and the Government hopes to receive, during the present session, such a report from a departmental commission which has been appointed on the subject of the accounts, as will enable it to propose substantial amendments. Sso doubt the act lias introduced improvements into the colonial financial system, but ni so doing it has ser to the department by which it has to be administered a task of the arduous character of which the committee is probably not fully aware. It not only imposes upon the Treasury itself a very large increase of work, to be diecharged with a promptitude never before required in New Zealand finance, but it has extended to the 420 receivers of revenue, and the 360 paymasters and sub-pay masters scattered throughout the colony, the duty of keeping in many cases two. and in some cases four sets of accounts, and of Tendering these accounts monthly. Any failure on the part of any of these officers to keep the accounts of tho several funds entirely separate, or jiny error in these accounts or in one of I ho 60,000 Touchers and receipts sent up by them, gives rise to corrections, correspondence, and loss of time. It must be obvious that the getting into complete working order so extended and complex a ranhinery must necessarily be a work of much time and great labor, if, indeed, considering the qualifications of a groat portion of the agents by whom it has to be worked, it can erer, without considerable modifications, realise the expectations of its projectors. Tho difficulties I have referred to were immensely aggravated by the time at and manner in which the act was brought into operation. When it became law, one quarter of the financial year was already closed, and a second was commenced under the old system. It was impossible to make arrangements for the adoption of tho now accounts, including tho preparation of books and forms, and the instruction of the various officers at head-quar-ters and throughont tho colony, until the Ist of January. Then the accounts for tho first halfyear, which had already been made up, had to be entirely reconstructed upon the system laid down in the new act —a work of very great labor, especially as it had to bo carried on simultaneously with the ordinary duties of the department. This work has only recently been completed. These difficulties were further increased by the necessity for adjusting a number of unsettled accounts extending back over several years, for which the Public Revenues Act makes no proper provision. It was-only after these obstacles were overcome —which has recently been accomplished, at tho cost of an amount of continuous exertion on the part of the officers of the department which I confidently assert has not been exceeded in any establishment in tho colony —that the new system can be said to havo started, and since that time the monthly statements and payments have, with one exception, been furnished within tho time required by law. In future there is no reason to apprehend that the required accounts will not be forthcoming with reasonable punctuality. I of course «xcep tthafc period of difficulty for the Treasury accountants which elapses between the expiration of ono Appropriation Act and passing of another —during which the expenditure of the colony cannot be classified in the books of tho Treasury, because no classification has been established by law. During tin's period the account-keeping must necessarily fall into arrear, the effects of which will be felt for some time after the passing of tho Appropriation Act: but during this period payments will be made to tho provinces as nearly in accordance with tho amounts which will ultimately bo due as it is possible to estimate thorn. In spite of the drawbacks I havo enumerated, I am now enabled to lay before the committee detailed accounts (A ) of the receipts and expenditure of the colony for the past financial year, within the time prescribed by law, and at a much earlier period than lias over yet been accomplished. The Committee will, doubtless, agree with me that the comparatively advanced period of the session to which it has hitherto been found necessary to defer the Financial statement is a source of considerable public inconvenience, which ought, if possible, to bo obvialed. It may be clone in two ways —namely, eithei* by postponing the meeting of Parliament to a later time of the year, or by making the financial year terminate sooner, and in either case making provision in the Appropriation Ace for carrying on tho service of the Government for six weeks after tho termination of the financial year. Tho Government will, hereafter, submit a proposition on this subject. ACCOUNTS BETWEEN THE IMPERIAL GOVEBNMENT AND THE COLONY. The next point to which I will ask tho attention of the Committee is the subject of the claims and counter-claims of the Imperial and the New Zealand Governments. At tho time the last financial statement was made there were large disputed accounts outstanding. The mother country claimed from the Colony £1,304,963. The Colony claimed from the mother country £906,856. There did not appparmuch probability of either claim being paid, but their existence was a source of dissatisfaction, and serious injury to tho Colony. Tho Committee is aware

that these claims are now settled by each party giving to the other a release from all further demands. This Bettlemont cannot, in my opinion, be looked upon as any concession on the part of the Imperial Treasury. It is no doubt an advantage to tho Col- 1 ony to have cleared out of its way a large and formidable claim, consisting though it did of charges which in many instances were quite untenable, and in some actually preposterous, but still a claim urged with all the weight and authority of the Imperial Government, and one tho continued existence of which could not but seriously affect the financial credit of the colony. For these reasons I think it is a source of satisfaction that those accounts can now bo considered finally closed on the terms T have mentioned, although I believe that, if tho case could have been referred to an independent «ud impartial tribunal Jfor determination upon considerations of equity and good conscience, and upon a comprehensive review of all the circumstances of the ense, New Zealand would have been pronounced a creditor of the mother country to- a very large amount. I cannot leave this subject without referring to those persons who have chiefly contributed to the settlement which has been arrived at— to Mr Weld, who, by the transmission of £500,000 of Debentures, when we had nothing elso to send, satisfied the Imperial Authorities of the anxious desire of the colony to discharge to the utmost its honorable obligations ; to my lion, friend the Colonial Secretary, to whom is due the credit of having first asserted the counter claims of the colony ; to the Hon. Major Rich n-d---son, for having, in his valuable and elaborate report, supplied an array of facts and evidence in support of the Colonial chum, without which that claim would doubtless never have been successful ; and finally to Mr Fitzherbert for the judgment, perseverance and tact with which he combat! ed the serious opposition which our claims eucountorod, and for the success with which his efforts wore ultimately attended. Our acknowledgments are also due the present Secrctiry of State for tho Colonies for the considerate and liberal manner in which he has dealt with the quesiion, and which forms a remark.iblc contrast to the conduct of the Imperial Treasury. The j committee will doubtless io as gl:id as is the Government to bid a final adieu to this unpleasant and unprofitable snbjcot. REVENUE OF 1867-8. I now come to the Estimates submitted to the committee last year of the ordinary revenue of tho colony, and have to show to what extent those Estimates have been realised. In doing this I quole from the public accounts of tho colony for the financial year 1567-GB, already laid upon this (able. It is well known that the revenue has fallen short of the Colonial Treasurer's anticipations. The case stands as follows : — Estimated Consolidated Revenue, 1867-6S. Customs 870,000 Bonded Warehouses 5,000 Stumps 75,000 Miscellaneous 131,000 £1,081,000 Actual Consolidated Eecenue, ISG7-6S. Customs 759.8U Bonded Warehouses 4,851 Stamps 55,40.'» Miscellaneous 127,(537 950.707 Raised by Treasury Bills 25,000 £1,005,707 This is a deficiency on Customs of £50,195, and on stamps of £1 0,595. The occurrence of an actual decrease in the revenue of the colony is so novel, I believe so unprecedented a feature in New Zealand finance, that it may be apt to create a more unfavorable impression than a careful study ofthe circumstances under which it has occurred will at all justify. The year in which this falling off has taken^ plice has bfon one of general depression, not only for this colony, but for the neighboring settlements, for the mother country, and indeed for the whole commercial world. It has been a year in which the expenditure occasioned by tho presence of large bodies of her Majesty's troops has been almost entirely withdrawn, and in which the colony lias ceased to feel the stimulating effects of the disbursement of those hirgs sums of money raised by loans, Gene^ ral and Provincial, which only now remain to be paid. When these circumstances and others affecting this colony in particular, such as (he reduction to the extent of nearly one third in the value of wool, which is ono of our main articles of export, are considered, I think the result which I now state to tho committee, so far from being a cause for gloom and despondency, is valuable testimony to the extent and elasticity of the" various resources of New Zealand. The returns to be attached to this statement will show that trade, although dapressed, is intrinsically sound, the total exports being almost on a par with the imports. There aro ono or two features in tho revenue receipts for the year which appear to deserve tho notice of the committee. The departments with which I am more immediately connected, namely, the Post Office and Telegraph, have not only not, shared the general depression, but show an increase both in their gross earnings and in the amount of business transacted by them. This is eminently satisfactory, as tho business of those departments is considered to furnish a more correct index to the general condition of the people than any other branches of the public service. The proceeds of stamps have fallen very short of tho amount estimated. To some oxtent this is no doubt to be attributed to tho same causes which havo lessened our receipts from other sources, but there is also reason to believe that the use of stamps, in cases where tho Jaw requires it, is to a great extent neglected. Tho Government has under consideration measures for repressing this evil, and has given directions for prosecutions to be instituted whenever and wherever an evasion of the law is discovered. I lay upon the table a detailed return of the duty stamps sold during the past year ; it shows results both curious and instructive. EXPENDITURE OF 1867-S. From tho comparison of estimated and actual receipts, I turn to the subject of tho expenditure which has been incurred. The actual ordinary expenditure of tho Colonial Government for 18(37-68, exclusive of payments to provinces amounting to £260,683, and of payments amounting to £31,823, chargeable to provinces under special acts (aa provincial interest and sinking fund, provincial auditors' salaries, &e). Tho authorised ordinary expenditure for 1867-8 was £747,774 ; the actual ordinary expenditure for the same period was £593,578. This would leave an apparent saving upon tho expenditure authorized by Parliament of £154,196 6s 7d. A considerable portion of this saving is apparent only. Prior to tho passing of the Public Revenues Act, 1867, payments made on account of services rendered in a given finuncial year, were, as far as practicable, included in tho public accounts for that year, although actually inado in the year succeeding. In accordance with this custom the accounts for 1866-67 were kept open until tho 9th July, 1867, so as to include tho salaries for Juno, which were, of course, not paid until tho beginning of July ; these Balaries appear, therefore, in tho published accounts for the year 1866 67. Under tho Publio Rovenues Act, however, the accounts for tho year must include only sums actually disbursed during the year: and as tho salaries for June, 1868, cou!d not be paid until tho month of July, it has not been possible to include them in the accounts for 1867-68. Hence tho accounts for that financial period will be found to include only elevenmonths' salaries, and the expenditure of the colony ap pears to bo dimished thereby to the extent of about £51,000. I am anxious that this point should be clearly understood, in order that it may not be supposed tho Government is claiming as an actual saving what is after all but an involun- ; tary transfer from ono year's account to another.

There have, however, been actual savings of some considerable value.

Mr Hall went on to stato that the total issues from the Treasury during the year, adding tho difference between tho advances outstanding and ■at the close of the year was £668,983. A balance [remained in the Bank of £46,979 15s lid, from which £25,000 would be taken to pay off Treasury bills issued in aid of revenue during the past year. The amount of trust funds in the hands of the Government was £167,000 on tho 30th Juno last. WHAT HAS BEEN DONE UNDEIt THE FINANCE ACTS. Leaving the subject of tho current income and expenditure of the past year, I will now lay before the Committee a statement of what has buen dono under the Finance Acts of last session. Tho Surplus Revenues Adjustment Act provided that £31,053 10s. 7c(. should bo paid by the Provinces of Hawke's Bay, Otago, and Southland, to the Colonial Treasury, and by it paid over to the Provinces of Auckland, Wellington, Nelson, and Canterbury, Tho payments to the latter Provinces have been effected in quarterly instalments. Tho contributions of Otago and Southland have been raised under the provisions of the Public Debts Act ; and tho interest, and sinking fund on the sums so raised now form a charge against those two Provinces, in the proportions specified in the Surplus Revenues Adjustment Act. Of tho action taken by the Government under the Act for consolidating the numerous loans of the Colony and Provinces, full information has already been laid before the House. Mr Fitzherbert, acting in London on behalf of tho Colonial Government, has offered to tho holders of both Colonial and Provincial five and six per cent, debentures terms of conversion -which, while presenting to those holders considerable advantages, will secure to the Colony and the several Provinces, if the whole of these loans are so converted, an annual saving of interest and sinking fund of £10,000, against which must be set an increase in the amount of capital debt to be ultimately repaid of £385,150. The result of this operation, up to the latest dates of which wo have advices, is as follows; the' total amount of Colonial and Provincial loans converted into five per cent consolidated stock, with one per cent sinking fund, up to 30th June, is £2,445,200, and Mr Hall staled that the effect of the operation had been a reduction in tho annual charge upon the colony on account of its loans, far more than commensurate with the increase of tho capital debt. In addition to the financial operations n London which I have mentioned, the Colonial Government has, under )he provisions of the Public Debts Act, been culled upon to provide £27,280 for tho payment of debentures issued under tho Nelson Debentures Act, 1858, and which became payable on the Ist July last. These debentures are, by section 2 of the Public Debts Act, made payable by the colony, but the act makes no provision for the recovery from the province of Nelson and Marlborough of the money thus paid ; tho matter stands over, therefore, for adjustment by the General Assembly. In compliance with a request from the Superintendent of Wellington, Iwelvo months' notice has been given for paying off, on tho Ist July, 1869, loans amounting to £50,000 raised under the Wellington Loan Acts of 1854 and 1855, and bearing interest at 8 per cent. By the Public Debts Act, expenditure was authorised for taking up loans of Southland and other provinces, and for extraordinary services such as lighthouses, marine surveys, telegraph extension, &c, to the amount altogether of £1,114,000. This sum has been raised under the Consolidated Loan Act, or rather bonds to that nominal amount have been issued in London, realising at 97 per cent, a sum of £1,080,580. This sum either has been, or will bo disposed of for the intended purposes. ; THE INDEBTEDNESS OF NEW ZEALAND. Two tables, B and C, aro laid beforo the committee, which show the position of tho debt of the colony on 30th June. Their results may bo stated as follows: — General Government — Total amount of debentures in circulation, £3,704,5J3 15.3 lid ; interest thereon, £201,247 4s 6d ; sinking fund, £53,720. Provincial Government—Total amount of debentures in circulation—£3.oo9,2ss 17s 7d ; interest thereon, £174,418, 15s lOd ; sinking fund, £45,320 11s 2d. The total liabilities of the colony are, therefore, £6,774,099 13s 6d ; tho interest thereon is £375,006 0s 4d, and the sinking fund, £'J9,040 11s 2d. THE CASE 03? TAKANAIU. Tho committee is doubtless awaro of tho nature of the claims of the Province of Tamnnki arising under the financial arrangements of 1856. According to tho terms of that arrangement, £20,000 was allocated to Taranaki, without interest, for tho purchase of nutivo land, and until the whole sum was expended an annual subsidy of £2,200 was to be paid to the province. Only £4000 has been expended in purchasing native lands, and the annual subsidy continues to be paid. Wo propose to extinguish this claim by a special arrangement, which will require a bill to be introduced for this purpose. TUB CONFISCATED IANDS. In the last session of tho Assembly tho Government was authorized to expend out of proceeds of confiscated lands a sum of £34,750 to defray certain liabilities and charges in respect of these lands. Tho sum realized from tho confiscated lands during tho year has proved altogether insufficient to meet these liabilities ; but, considering their origin and character, wo have felt it to be a duty to tho colony to take upon ourselves the responsibility of discharging, at any rate, the most pressing of theso debts, and upon furnishing this House, as is needful in such cases, at the earliest opportunity, with a full statement of our proceedings, and of asking for its sanction and approval. The total receipts from the confiscated lands during the year including fees on Crown Grants, has been £11,929. The expenditure has been £20,410. Unfortunately this does not exhaust tho subject. Tho claims already paid aro only tho most pressing ones ; to discharge tho remainder, and complete such surveys as are indispensable for effecting a sale of the land, will require a sum of £28,000. We aro satisfied, after careful inquiry, that the confiscated lands will realize at least this amount within the next two I years. But the debts of the colony ought not to remain unpaid for that time, nor can sales be effected unless preliminary expenses are incurred for surveys ; wo shall therefore ask tho House to authorize the above sum to be advanced by means of Treasury bills, repayable within two years, and made a first charge on the proceeds of tho confiscated lands. A NEW GOVERNMENT HOUSE, MARINE SURVEYS AND NATIVE EXPENDITURE. A sum of £55,117 will be recovered from Southland during tho present year. Wo propose' to devote £15,0L0 to the erection of a new Government House, and to providing increased oflico accommodation for the officers of the Legislature and of tho Government. As to tho necessity for this item, I boliovo that little if any difference of opinion will be found to prevail. Tho character and condition of tho residence now provided fpr his Excellency tho Governor must be admitted to be discreditable to the colony ; and while in the present condition of colonial finances wo aro as anxious as Parliament can bo to avoid any largo expenditure, we believe that a sum of £10,000 (in addition to tho proceeds of selling tho Lowry Bay estate) is the least that will provide a suitable and commodious residence at tho seat of Government for the representative of her Majesty. The necessity of further accommodation for officers of the Government as well as of tho Legislature for which the remaining £5000 will be required is very obvious. A considerable number of the departments of Government are now located in rented buildings in different parts of tho town, an arrangement involving not only considerable annual outlay, but constituting a serious obstruction to the prompt and efficient transaction of the public business. Tho marine survey, for the reasons already referred to, haa proved more exponsivo than was

anticipated ; to meet this outlay, and to complete tho survey of tho West Coast which is now in hand, a further vote of £3000 will be required. The completion of the tolegraph to Auckland will probably cost £1500 in addition to the sum estimated for it last year. For a sum of £7000 the telograph could be extended to War.ganui ; looking to the important advantages to be anticipated from telegraphic communication between that place and the scat of Government, and to the probability of the line being highly remunerative, the Government will be glad if tho House should think right to sanction this work being proceeded with. The remaining balance of about £28,000 the Government proposes should be reserved to meet any extraordinary expenditure which it may bo necessary to incur in the suppression of renewed native disturbances, if such should unfortunately occur. 1 know that this proposal will meet with opposition in some quarters ; but anxious as tho Government is to avoid involving the colony in any fresh outlay which can with safety be avoided, we feel we should be shrinking from a solemn duty if we did not ask tho Legislature to place in our hands the means for dealing so promptly and efficiently with any renewed disturbance ns may prevent it being developed into a general outbreak. I CURRENT YEAU'S INCOME AND EXPENDITURE. I will now aak the attention of the committee to the ordinary income and expenditure of the current yoar. After a very careful consideration of the condition of the colony, and the circumstances by which its sources of revenue are likely to be affected, I feel justified in estimating that the receipts of the Colonial Treasury for tho financial year ending 30Lh June. 1869, will probably bo a.s follows : — Customs £800,000 Bonded Warehouses ... 6,500 Stamps 63,000 Telegraph lf-,000 Post Office 60,000 Miscellaneous ... . 56,000 £1,000,500 The principal item in this estimate, namely, the proceeds of Customs duties, is put down at but little more than the amount which it realised during the past year. Many members of the committee will doubtless consider that more sanguine anticipations would havo been justifiable, and it is undeniable that the extraordinary richness of the Northern goldficlds furnishes a strong argument for such an opinion. It is however but prudent to anticipate, from the increasing attractiveness of the Northern district, some diminution in the population and revenue of other parts of the colony. Tho Stamp Duties may fairly bo estimated to yield a larger sum than has been realised during the preceding year, as a considerable amount of legacy duty, the payment of which could not bo enforced before the present time, will bo received during the current, twelve months. I havo next to state tho amount of money which, after the practice of that resolute economy with which, as already stated, the estimates fur the current year have been prepared, appears to I the Government indispensable for the efficient | maintenance of the public service of the colony. The estimates, showing the authorised ordinary expenditure, 1867-68 and the estimated ordinal'}' expenditure, 1868-09, are as follows : — 1867-68. 1868-09. 'Civil List 27.500 ... 27,500 Permanent Charges ...314,265 ...320.543, Public Domains 4,076 ... 2 880 Public Departments ... 43.567 ... 37.HH3 Law and Justice GU.148 ... 55.587 Postal 148,579 ... 100,401 Customs 41.471 ... 41781 Native 23,514 ... 12,381 | Miscellaneous, Special, and j Temporary 48,083 ... 30,020 Militia and Volunteers ... 24,538 ... 22,183 Total 717,771 Defence (charged on loan in 1807-68) 109,025 ... 47,497 £850,7'.)6 £704,047 The only item in which there is any increase, is that of" Charges on Public Loans." This is accounted for by the interest, &e., on the additional , sum of £200,000, which, as I have already explained, has been raised for the several services ' enumerated in the Public Debts Act of last session. Founding on the above figures, Mr Hull pointed out that there had been a decrease in the expenditure of many of the departments. [ NATIVE TVUVOSES AND THE DEFENCE OFFICE. The sum asked for native purposes is reduced from £23,544, as voted for 1867-68, to £12,384 for the present year. In both case3 this is in addition to the £7000 provided by the civil list, and to the permanent appropriation of £4000 contained in tho Native Schools Act. . i As has already been stated to tho Legislature, , steps have been taken for abolishing tho Defence Ofliee as a separate ministerial department. The oflico of Under-Secretary for Defence has been done away with, and that of Defence Minister will also bo dispensed with within a very short time after the operations at present being carried out are brought to a close, tho reductions effected last year in the provisions for militia and voluuteer services were so considable that no further savings of largo amount have been found practicable. The capitation grant for volunteors throughout tho colony has, however, bcon considerably reduced, and if the Legislature should be of opinion that, in consideration of the fmnncial exigencies of tlie country, tho volunteers may bo reasonably expected to forego even this reduced allowance, a further saving to the amount of £6216 5s ma} 7 bo effected. Tho remaining expenditure for Dofence Office and for tho armed constabulary is now for the first tiino charged upon the ordinary revenue of tho year, instead of upon loan, so that although thoiv is an apparent increase under this head in tho ordinary expenditure of tho year, the cost of this service has, in fact, been brought down from £109,025, including outstanding liabilities, which was authorised for its maintenance during the yoar 1867-68, to £47,497 for tho prosent year. The Govornmont has reduced to the utmost to which its sonso of duty will allow both the numbers and the cost of tho small constabulary force which a r'-gard for the peace of the colony precludes it for tho present from entirely dispensing with ; but having brought down this cost to tho amount which it has now reached, they believe that it should be be borne so long as it continues indispensable, as ono of the ordinary burthens of tho colony, and should not be allowed to add to its indebtedness. This remark applies only to tho ordinary annual cost of tho constabulary force, and not to any extraordinary outlay which may be entailed upon us by the suppression of such disturbances as those which have recently occurred on tho West Coast. Tho total amount required for tho services churged on tho ordinary revenue of the present year ia less by £152,149 than that voted for the same services during 1867-68. KO REDUCTION OF TAXATION. Tho facts and figures I have already given will have prepared tho committee for tho announcement that tho Government is unable at present to propose any reduction in tho heavy taxation of tho colony. Tho Government is alive to the weight of existing burdens, and lias anxiously considered tho practicability of relief. But these figures will, I trust, satisfy every prudent and impartial financior, that though it might not be difficult to change tho incidence of taxation, wo cannot afford to diminish at tho present time the sura total which that taxation produces. THE GENERAL AND PROVINCIAL GOVERNMENTS. Mr Hall stated that his deep conviction that ono of tho most serious obstacles to bo found in tho way of affording relief from tho weight of present taxation, was to be met with in tho financial relations of the General and Provincial Governments. Tho estimates of expenditure for those services of the General Government which were provinciully charged had been, by Btrict economy on the part of tho Government, reduced from £204,173, which waa voted for them during the

last session, to the sum of £172,069 for the current year, being a Saving of no less than £32,10'!. Instead, however, of this saving being uvailable for the purpose of effecting an instalment of that reduction in the taxation of the country which they aro all anxious to see accomplished, the whole of it would swell the payments to bo made from the Colonial Treasury to the several Provincial Governments. "If," he continued, " the estimated provincial moiety of Consolidated Revenue for the present year is compared with the necessary deductions to be made from it, on account of services provincial];? charged, and on account of Interest and Sinking Fund on Provincial Loans, it will be found thufc in four Provinces out of the nine, not only is there no surplus available for police, gaols, and harbour services, but the Provinces will actually be left in debt to the Colonial Government, in most instances, this result is owing to the heavy sums which have now become payable for Provincial Interest and Sinking Fund ; in some to an aetunl falling off of revenuo ; and in many cases to the unfairness of the system by which the revenue accruing to each Province is at present determined. PROPOSAL TO CLOSE THE PAIITNKRSIUP. After a careful consideration of the evils of the existing sj'stem, of' the impediments which it presents to any early reduction in the taxation of the country, of it* incurable unfairness as between different parts of the colony, and in view of the. financial difficulties under which sumo of provinces are now laboring, we have decided to recommend to Parliament that on the Ist of January next the partnership aceouwt should bo (inally closed, and that the funds, if any, which may be issued from the treasury for provincial administration should be voted annually and for specific services by this Legislature. This will end the distinction which has for ten years been maintained between general and local charges. All the appropriations will be general appropriations. There will be no contingent bahmces to bo the subject of dispute between the Colonial and Provincial Treasurers. The accounts will be reduced to the simpler and more natural form which they present in other civilized countries. As a necessary consequence of such a change it appears to us that tho several provincial debts, which by the Public Debts Act, have received ihe colonial guarantee, should cease to be charged to the provinces by which they were incurred A similar course will have to be adopted wil h respect to those portions of the colonial debts which have been allocated to particular provinces. We have carefully considered the provision which will have to bo made for police, gaols, and harbor departments. The latter wo consider as a matter of economy, by means of combination with the Customs service, and as a safeguard affecting external commerce, should bo placed entirely under the Colonial Government, which would, of cour.se, receive the port dues and pilotage fees now paid to the provinces. With respect to police and gaols the Government is of opinion that although it is incumbent, upon it to make a reason- ' able provision for these indispensable services, it is desirable to preserve, where possible, the advantages of local administration. We propose, ' therefore, that the Assembly shall vote te the governing bodies in the several provinces or otiier divisions of the colony a capitation grant based upon the census and animal estimates of population to enable or assist them to maintain police and gaols; i.hatit should bo a condition of such grants that they should be devoted to the specified services, and that accounts of (ho expenditure, like that of all other votes, should be furnished to tho Government to be laid before the Legislature ; also that the police and gaols should be subject to inspection and report by an oiHecr to be approved by tho Colonial Government, with a view of enabling it to satisfy this House that its votes have been usefully applied. There would remain to the provinces the land fund collected within their borders, and the strictly local revenue raised under provincial enactments, the amount of which is shown, by a return already on the table of this House, to be not inconsiderable. We believe, sir, that if Parliament is pleased to assent to this important ' change, not only will tho work of the government of the colony be considerably si/npliuVd and facilitated, but in most instances the provinces themselves, freed from their present debts and relieved from all doubt as to their financial resources, will bo placed in a better position to devote themselves to the discharge of those important functions of colonisation mid settlement which in many parts of New Zealand aro still left to them to fulfil. As some provinces would gain and others lose by this arrangement it is proposed to adjust the inequality. Southland it is intended should contribute £12,000 per annum from her land fund to tho consolidated fund, and that in the event of her land revenuo in any one year exceeding £52,000, the surplus should be applied to the redemption of this animal subsidy. It is proposed to give Nelson £90,000. Tho case of Wellington, says Mr ILill, is oven more difficult to determine. She would lose by tho now arrangement, because she would no longer receive any part of her neighbors' revenue ; but also, to some extent, because her debts are small in proportion to her present < population, which has increased considerably sinco the removal of the seat of government. It is therefore proposed that payment should bo made to Wellington of a lump sum of £15,000. THE SINKING rUN». It is proposed to introduce a bill vosting tho sinking funds, botli General and Provincial, in Commissioners, consisting of tho Colonial Treasurer for the time being, of the Comptroller, and of two trustees, to be appointed by the General Assembly. The first question to bo settled is to whom shall the provincial sinking funds, as they become freed ho paid over, audit is of course a question for tho Legislature to determine. The Government is of opinion that if fhe Colony absolutely undertakes the payment of tho provincial debts, it is but fair and reasonable that the Colony should have use of whatever provision has already been made towards such payment. If the Houso should agree in this view of tho case, there will como into the hand,s of tho commissioners of tho sinking fund for immediate disposal a sum of £78,223 6=j, and by degrees, ns the holders of tho remainder of tho provincial and colonial debentures agree to the terms of conversion, thoro will be a further sum so available of £115,724. 15s 7d, making a total of £193,948 Is 7d. Wo propose that out of this sum thoro shall bo paid to tho province of Nolson, in satisfaction of claims arising out of tho consolidation of provincial loans, £90,000, and to the : provinco of Wellington £15,000— the balance, j as ifc becomes available, to pay off, as far as practicable, Treasury bills now m circulation. It is more than probablo that by tho timo tho funds for the above purposes aro actually roquirod they will have become available by tho realisation of sinking funds ; but to provide for any temporary deficiency, wo shall ask this Assembly for authority to issue, if found necessary, Treasury bills to an amount not exeooding £30,000, to be repaid out of tho first funds coming into the hands of tho Sinking Fund Commissioners available for tho purpose. There are one or two possible objections to tho proposals of the Government, which I am anxious to anticipate. The first is that it is a disturbance of tho financial arrangements of 1856, undo? which £200,000 of debt, incurred to pay off the Now Zealand Company, was made a charge on the territorial revenue of the Middle If land. This is true ; but on the other hand it is to be borne in mind that by tho same arrangement a sum of I £180,000 oxpended for tho purchase of native lauds in the North Island was charged upon tho revenues of tho provinces of that island. We propose to release both islands from these special charges, and a reference to their respective contributions to the consolidated fund will show that the advantages of such a release are at the present time considerably in favor of tho North Island. Another objection to the liroverninent proposals will be that tlioy release the territorial revenue of Ihe Middle Island provinces from its presonfc liability on account of the respective provincial debts, and may possibly throw the payment of those debts on the consolidated revenue of the

rest of the colony. Except in tho case of Southland, which is to be specially dealt with, this objection, though, theoretically true, is of no practical weight. In the other. Middle Island provinces the consolidated revenue, if fairly distributed, is, and is likely to continue, amply sufficient fco meet A the loan charges. fl& TVnAT THE GOVEEJTMENT CLAIMS FOB ITS PEOPOSAIS. But the Government claims for its proposals not only tho abolition of a sefc of troublesome accounts, nor even the satisfactory solution of difficult and complicated financial questions ; it believes that these proposals are fraught with large and important political advantages. If adopted they wili, to a great extent, vemore the inducements to tho formation of, and the mischief resulting from, separate provincial factions in this House, each looking rather to the advantage of its own particular province than to the welfare of the colony; they will facilitate the formation of those rational political parties, indispensable to healthy political action on the great political, social, and commercial questions which are looming in the not distant future ; and especially, Sir, they will disembarrass the Local Government question of half its difficulties. At present one of the main obstacles in the way of any alteration of the existing terrifcoral divisions of the colony consists in the presence of large provincial liabilities imposed on the revenues of the whole province, which must be allotted on ! any sub-division of the province ; another diflij culty is the securing to any new territorial divisions of such a shave of tho consolidated revenue as will enable it to provide, where necessary, for police and gaola. Both these obstacles are entirely removed by the proposals now before the committee. Tho provincial debts nre disposed of, the police, gaols, and harbors provided for ; tho positions and the powers of the Provincial Governments are defined and simplified ; and the question of further local organization is reduced to ono o( how the local and territoral revenue, including the gold revenue, can be most advantageously disposed of in the promotion of settlement and the construction of public works. The shape which the government proposes to submit this important question for the decision of the LegisluUire Jb in a series of resolutions, which I shall conclude by proposing to the committee. Upon the main principle which these resolutions embody, namely, the termination of the partnership between the provinces and the colony, the Government will stand or fall. The details of the plan, including the proposed adjustment;, are fair subjects for amendment to any extent which will not be antagonistic to the principle of the scheme. If these resolutions should be adopted by tho Assembly, bills will be brought down for giving effect to them, and it will also be my duty to submit supplementary Estimates providing for tho payments to tho provinces of Nelson and Wellington, and the votes required for harbor departments, the erection of a Government House, and tho capitation grant to the provinces on account of police and gaols. TUB GOVP.ItNMENT ItESOiUTIONS. Mr Hall concluded his speech by moving the following resolutions : — 1. That in order to simplify tho relations between the Colonial and Provincial Governments, to remove uncertainty from provincial finance, and to facilitate the ultimate reduction of taxation, it is expedient that the system of provincial charges on the general revenue bo abolished, that the consolidated fund bo at the disposal of the General Assembly, and bo charged generally with tho interest and sinking fund on the colonial and provincial loans, and with the expenses of the Colonial Government, including the maintenance of the harbor establishments. 2. That in order to equalize the effect of the above change as between the several provinces, a sum of £90,000 out of the proceeds of tho accrued sinking funds realised by the operation of the consolidated loan act, be paid to tho province of Nelson, and £15,000 to the proAince of Wellington, 1 and an annual sum of £12,000 be deducted I from the territorial revenue of the province of Southland in aid of tho consolidated fund until the repayment of the consolidated loan shall be . effected. 3. That annual appropriations in proportion to population be made to the several provinces and other divisions of the colony for tho maintenance of gaols and police. 4. That tho above arrangements be brought into operation on the Ist January, 1869 ; and that leave bo given to bring in a bill for giving effect to these resolutions.