Wellington Independent WEDNESDAY, SEPTEMBER 13, 1871.

Wellington Independent, Volume XXVI, Issue 3301, 13 September 1871, Page 2

Wellington Independent WEDNESDAY, SEPTEMBER 13, 1871.

Subjoined is a summary of the financial statement. It will be seen that, contrary to the gloomy prognostications of the journals we referred to yesterday, there will be no additional taxation, and that it was never intended by the Government to impose an income and property tax. The Colonial Treasurer stated, moreover, that there was nothing kept in reserve, and that there are " no startling items" yet to be brought forward. It is a budget of which the leading features are retrenchment in departmental or non-productive expenditure, vigorous prosecution of colonising operations, simplification and economy in provincial institutions, abolition of provincial charges, increased subsidies to road boards, and reduction of expenditure on native affairs. The Colonial Treasurer after referring to the exertions which had been necessary in order to bring down the statement at so early a period after his return, and indicating the substance of the tables which will be presented to members with the statement, he showed that the position of affairs at the end of 18G9-70 was closely similar to that which he led the House last year to expect would be the case, when he made his statement before the conclusion of the financial year. A reference to the finance measures of last session followed. The Government considered that the loans had been very favorably negociated ; and -that the arrangement by which the guaranteed debentures were practically converted into a reserve fund, would be of great value to the colony. The short-dated debentures under the Temporary Loan Act bad proved serviceable in enabling money to be obtained on favorable terms, pending the negociation of the loans. The payments to road boards had created very general satisfaction throughout the country. As to the revenue of the past year, there had been a decrease on every item. That revenue had proved to be £ 1 1 6,000 less than was estimated, and £82,000 less than was received duringthe previous year. The Government deplored this falling off, but disclaimed responsibility for it. The attention of the House was called last year to the condition of the conntry, and that condition was urged as a reason for hastening on measures for the construction of public works and the promoiion of immigration. The Government certainly had not expected so large and immediate a reduction in the revenue ; but that reduciion had, amongst other things, proved the wisdom of the Assembly in giving effect, without delay, to the immigration and public works policy. Many causes, doubtless, contributed to occasion the falling off iv the revenue. Amongst those causes was the fall in the price of wool ; but he was glad to be able to congratulate the committee upon the recent remarkable rise in the value of that article. The reduction in the value of property, and the comparative suspension of public works, must be inclufled amongst the contributory causes of the reduction in the revenue. They limited the expenditure of the people, and therefore diminished the Customs

revenue. It was not, indeed, necessary that a reduction in the Customs receipts should be accepted as a consequence of an unhealthy condition of the country, since it might be attributable to the exercise of frugality, or might result from a desire to accumulate wealth. Indeed the reduction might follow, wholly or in part, from a large use of local productions throughout the country. The Government were of opinion that the depression which had overshadowed the colony for a long period was in course of removal. Various causes had led 10 this change ; such as the increased yield of gold, the rise in the price of wool and other products, and the prospects c: largely increased settlement throughout the country, which would follow the introduction of immigrants and the construction of lines of communication. The Treasurer proceeded to compare the other branches of the revenue, and then showed the further assets available on account of the year, beyond the receipts up to the 30th June. Similarly he "went through the expenditure during the year, and all the engagements and liabilities on account of the year which remained to be discharged. In respect to the defence expenditure, he especially drew attention to the fact that, instead of the amount provided ha\ingbeen ex ceeded, there was a surplus on the year, besides that £10,000 had been spent on ammunition which was available for the future. After takiug the assets into account, and defraying all the liabilities and engagements of the past year, there was a deficiency of £76,000. Honorable members would remember that there was an overdraft of £60,000, which had remained unsettled for the last two years, and he considered that it was necessary now to look at it in the light of a deficit. Adding the amount of that overdraft to the amount of the deficiency before stated there would be a total of £136,000. He thought it was very important that this amount should not be added to the permanent debt of the colony, but should be defrayed out of revenue ; still, it would be straining the resources of the country too much to charge the whole amount upon the present year's revenue. He proposed, therefore, that onethird, or £46,000, should be charged on this year's revenue, and the balance to the revenue of the two succeeding years. There was a precedent for such a proceeding in the course adopted by the Assembly in 1860. In asking the committee to consider the provisions to be made for the present year, it was worthy of observation that New Zealand did not stand alone as regarded a deficiency, for the 6ame difficulty had just occurred in England, in Victoria, and iv New South Wales. It was clear that apart from the deficiency of £46,000 which he proposed to charge upon the year, if the ordinary expenditure of the country was kept up to its present scalo there would have to be heavy taxation. The first duty of Government when expenditure exceeded revenue was to consider whether expenditure could not be reduced. The main feature of the present budget was a material reduction in the expenditure of the country. It would be easily understood by hon. members that in determining to make such a reduction, the Government could not fail to look in the direction of that expenditure which related to so large a proportion of the public service ; he meant the money put apart for provincial purposes and provincial services. It was fair to consider how far the colonial contribution to provincial revenue should be reduced on account of the colony undertaking duties which otherwise would have to be performed by the provinces, and also, seeing that what was now proposed involved a reduction of provincial duties, how far provincial institutions could be made less costly than they had hitherto been. Much of the expenditure of last session came under the head of expenditure which it was originally contemplated should be borne by the provinces. It was right that a corresponding reduction should be made in the contribution from the general revenue for provincial purposes. The Government had plainly declared last year that if the existence of the provincial system interfered with the carrying out of the policy of public works and immigration, then provincial institutions would have to be modified ; but, at the same time, until it was proved to be necessary to take action in that direction, they had desired not to do so. Experience had now shown that in some respects the legislation of last session required amendment. He entirely denied that either on his part or on the part of any of his colleagues, there was an indifference to the subject of immigration. The whole plans of the Government depended upon the encouragement of immigration. They felt, however, that it was due to the Provinces to give them an opportunity of co-operating. Now, it had been proved that the plan of co-operation did not answer. Ho did not say that that was so because of any fault on the part of the provinces, but the Government were convinced that it was necessary that they should take into their hands the management of immigration, and that with that assumption of management they should also relieve the provinces of the expense. Hon. members would recognise that by taking the management of immigration might be meant a looking after the immigrants on their arrival as well as a defraying of the whole or part of their passage money. Other modifications which the Government might have to propose in j the policy of last session, would probably tend to alleviate the ordinary burdens of the provinces. There was one feature of the policy of last session, the success of which could not be exaggerated. He meant the system of subsidising road boards. The expenditure necessary from the adoption of such a system was one which the Government considered might fairly be defrayed out of the loan. The adoption of that course would be proposed, and it would also be proposed

to increase the amount of the subsidy from £50,000 as paid last year to £100,000. By taking cbarge of immigration, and to a large extent of public works, together with the payment of the subsidy to road boards, the provinces would be saved from a large proportion of their expenditure. The question arose, therefore, whether it was fair to the taxpayers that additional taxation should be imposed in order to maintain provincial revenues at their present rate, whilst much of provincial expeudidure aud some of the principal provincial responsibilities, were assumed by the Government of the colony. The answer must be clearly No. The Government had decided, further, to relieve the provinces of the cost of the services hitherto voted by the Assembly as provincial services, and charged against the particular allowance to each province. After making these provisions, the Government proposed to pay to the provinces as capitation allowance, fifteen shillings per head of population, and to reduce by one-half the special allowance paid last year to the North Island provinces and to the County of Westland. The aggregate result of these modifications would be, to give to the provinces £35,000 less than they received last year. In that calculation, allowance was made for the payment on provincial account already explained, but the expense of immigration, from which the provinces would be relieved, was not taken into consideration. Sup posing the provinces would have been prepared to expend a proper amount on immigration, they would be great gainers by the change, or perhaps, more correctly speaking, those who live in the respective provinces would be groat gainers, although so much money would not filter through the provincial authorities. When the effect of these proposals upon the provinces singly was examined, it would be found to be somewhat unequal. Auckland appeared proportionately to be the largest loser, because its services had been uniformly on a lower scale than those of the Southern provinces. Wellington on the other hand was a large gainer, because it had hitherto defrayed the cost of services which really belonged to the General Government and the Assembly. The Government had it under consideration by way of adjustment to make Auckland a special allowance of £2,500. .Comparison with last year did not result altogether unfavorably ; and last year, it must be remembered, was the provinces' leap year, their year of jubilee, on account of unprecedented receipts from the colonial chest. Comparing the results of (he proposals now made with the circumstances of the year before last, the provinces gained £28,000, irrespective of the expenditure to bo devoted to immigration. The Government be- , lieved that the time had arrived when j provincial institutions should be made J less costly. It was intended to propose that Superintendents should be ex officio members of their respective councils, and that the number of members of the Councils should be very much reduced. In certuin cases, where provinces were unable to fulfil their functions, it was intended to propose that the General Government should take charge of their affairs. If the Assembly desired it, these reforms, or some of them, could be made to depend upon the option of existing Superintendents and Councils. A special arrangement as to the County of Westland would be submitted to the House. The object of all these would be to simplify provincial institutions and to reduce their cost. j The Assembly would have submitted to its consideration the question what railways should be constructed. The Government thought that, when that question had been answered, there would be no difficulty in deciding to what extent the arrangements with Messrs Brogden could be taken advantage of. If it were desired that those arrangements should be converted into separate arrangements for the construction of particular railways, the Government were of opinion there would be no difficulty in doing so. The whole question would be left to the Assembly. A Board of Public Works and Immigration for the whole colony would be j proposed, with, as far as possible, powers independent of the Government, so as to make it a non political body. It would be the duty of the board to take charge of the construction of public works and the management of immigration. It was to be hoped that the board would assist in preventing the House from acquiring too much of a provincial character as regarded members deeming it to be their duty to scramblo for public money to be expended in their own districts. The Government hoped that in the constitution of the board it would be provided that recommendations for the construction of public works should come through the board instead of being originated in the House. The question how the cost of railways should be j charged was oae of a very difficult nature, and some modifications in the proposals of last session would be submitted. Unlike other colonies, it was ( necessary in New Zealand that railways should be commenced in several ditferent localities at once, as otherwise the various portions of the colony would not agree to any lines being constructed. It became therefore uecessary to consider the different features of the country. Two principles, however, the Government had quite determined upon. One was that no railways should be constructed which did not at once promise to pay working expenses, and the other was that, in order to prevent an indiscriminate scramble for railways, a power of local rating should, under certain contingencies, be provided. The Government had also concluded that for the construction of railways in parts of the North Island, the only course to be adopted was to acquire land representing the value of those railways. But in parts of the Middlo Island such a course was not desirable, as it might

interfere too largely with existing land laws. As regarded the Middle Island, therefore, the Government would propose to charge the cost of constructing railways upon the land funds. It was not proposed to interfere in any way with the Middle Island railway fund, and while powers were given to the Go\ eminent to take lands required for the purpose of settling immigrants, it was proposed that where the land revenues of a provinco were burdened with the cost of railways, fair provision should be made to give compensation for the lands so taken. Until a railway was completed, no charge was to be made against a province ; when a railway was completed, the interest upon its cost up to the date of completion was to be capitalised ; if the revenues arising from the railway, together with the receipts from special contributions, were not sufficient, the balance was to be recovered from the province within which the railway was constructed, or if necessary a special rate to be levied upon the persons in the vicinity of any railway who derived benefit from its construction. It was proposed to keep the public works and immigration fund entirely distinct, and that all revenues from the lands acquired, as well as all recoveries from the Provinces, or from immigrants, should be paid directly into it, as also should one half of the stamp duties in accordance with the determination arrived at last year. On the other hand, it was proposed that all costs and charges, including interest and sinking fund, should be paid out of the public works and immigration fund. It must not be considered that this was to be done in order to relieve the revenue. On the contrary, the payments into the fund this year out of the stamp duties would cover interest and sinking fund which had to be paid, and (as had already been explained) deficiencies, after any railways had been completed, were to be recoverable from the provinces. A plan would be proposed by which the board would be able to construct feeder branches for railways under a system of partial guarantee from the persons benefited by their construction, to be recoverable, if necessary, by a special rate. This, however, would only be done at the request of a stated majority of the residents in the vicinity of the railway, representing a majority in value of the lands in the district. The proposed expenditure for the year showed an immense reduction. Last year the estimates were for an expenditure of one million, and fifty thousand pounds, including £50,000 for road boards ; and £34,000 was subsequently added for supplementary estimates. This year the total estimates, irrespective of the £100,000 for road boards, which would be transferred to the loan, was eight hundred and ninety-six thousand pounds, to which would have to be added £40,000, the moiety of the stamp duties to be paid to the "Public Works | and Immigration Fund, and £46,000 on i account of the deficiency from the past year, making in all £982.000 to be be provided. This showed a very large saving, and the Government desired that the present budget should be known as the Retrenchment Budget. A comparison of the various services showed a considerable saving in most of them. The Post Office department, including provision for the Californian service, showed a saving of one hundred and eighteen pounds. He would ask hon members to recollect that although there was a great retrenchment, that retrenchment was on unproductive services, that out of the revenue large provision was made on account of the deficit of the past year, and that one-half of the amount of the Stamp Duties was proposed to bo paid in aid of public works. He would now ask the committee to consider the question of providing for the estimated expenditure of nine hundred 'and eighty-two thousand pounds. The Government were averse to proposing fresh taxation, but they considered that the Stamp Duties should be brought up to the amount which it was promised they would yield last 'year. The Government would therefore submit some additions to those duties ; but those additions would be such only as they renlly believed ought 1 to have been included when the duties I were first proposed. The House would also be asked to impose a mode rate duty upon cereals, rice, and timber. Ho mentioned this, although he did not intend to take credit in the ways and means for the amount of such duties. But those ways and means would make apparent so small an excess, that taking into account the possibility of there j being supplementary estimates, and also of some unauthorised expenditure during the year, he considered the excess shown would be insufficient. Therefore, the House would be recommended to impose duties on cereals, rice, and timber, so as to raise thereby an estimated amount of seven thousand five hundred pounds. Whilst that recommendation would bo made on strictly revenue grounds, it might wilh propriety be urged that the fiscal policy of neighboring colonies forced such a proceeding upon New Zealand. The various items of estimated revenue showed on the whole a reduction of £61,000 upon the revenue estimated last year, and £55,000 more than the actual receipts during that year. The operation of the Distillation Act was producing a very large loss to the revenue. The Government did not wish to show any harshness towards those who had embarked their capital in this industry, still the result was very unsatisfactory. The revenue would lose £25,000 on account of the spirits already manufactured in the colony, which manufacture had led to the consumption of 43,000 bushels of grain. Such a loss was rather a large one to be expended by way of encouragement for such a production of cereals. In 1807, the Customs duties j amounted to £'3 16s 7£d per head of the European population, whilst at the rate now proposed it would amount to only £3 18s 6d per head. The Go- 1

vernment would be glad when the time arrived for making absolute reductions in the Customs duties, besides the reduction in the contribution per head consequent upon increased population. The surplus upon the year would be £7,500, aud it must be recollected that this result was arrived at without the imposition of further taxation, unless the additions which it was proposed to make to the stamp duties could be considered in that light, and the estimates, it would be remembered, provided for a payment of £40,000 out of revenue towards the deficiency of the pastyearas well as£4o,ooo out of ordinary revenue in aid of public works. He believed that this result was very much more favorable than the majority of hon members had expected. The Treasurer concluded by expressing his opinion that the depression which had overshadowed New Zealand would do it very much good if the retrenchment which that depression made necessary this year became the rule of the colony in the future.