Wellington Independent THURSDAY, 14th AUGUST.

Wellington Independent, Volume XXVIII, Issue 3883, 14 August 1873, Page 2

Wellington Independent THURSDAY, 14th AUGUST.

Mb Fitzherbert's elaborate criticism of the Treasurer's Financial Statement, on Tuesday evening, cannot be regarded as a success. Ingenious and clever as ' the arguments employed undoubtedly are, they fail, possibly from that very ingenuity and cleverness, to convince of the truth of the conclusion at which the speaker avowedly aimed — a demonstration, namely, of the utter hollowness and insincerity of the proposals of the Q-overnment. While falling far short of accomplishing this somewhat ambitious, and — on Mr Fitzherbert's own ■ account of the present state of parties in the House — extremely useless result, it cannot be denied that there is much which is well -worthy of attention in that portion of the speech relating to -the proposed change in the present law ivhich regulates Provincial borrowing.

The distinction drawn by the Government between Colonial and Provincial works is real and easily understood, whatever Mr Fitzherbert may say notwithstanding. The importance of completing the main arterial lines of communication, in the first instance, whatever else is done or left undone, must be admitted. To this purpose the resources of the Colony as a whole may be fairlydevoted.andfortheaccomplishmenf of this object the credit of the colony may and must be pledged. Such works may well be called colonial, nor does the admitted difficuity of definition in respect to some particular undertakings affect the substantial reality of the distinction thus expressed. But next in order may be placed a large class of undertakings, which, while they cannot certainly plead this paramount and primary claim to consideration, are yet scarcely secondary in importance to the first, inasmuch as on their successful completion, sooner or later, the success of the larger scheme ultimately depends. These undertakings, branch railways, harbor works, roads and bridges, and the like, have been designated as Provincial, from their local character, and from the fact that they may in general be more efficiently and satisfactorily undertaken by the Provincial than by the Colonial authorities. They are, nevertheless, part of the grand scheme, and in practice a most important part. To neglect the due development and extension of these subsidiary t under, takings, is to imperil, most certainly to retard, the success of the whole. If the General Government cannot assume the responsibility of their initiation and subsequent management — and perhaps it would be unreasonable to expect that it should — then it is certain that the Provinces must take this portion of the work as their special care. Nor are they unwilling to do so.' The difficulty which lies in the way in the case of all but the two southern Provinces, Canterbury and Otago, is the old and familiar difficulty of finding the money. The General Government get over this difficulty by the expedient of borrowing, and the principle of borrowing for the construction of reproductive works is universally admitted to be sound. But it cannot be denied that if money may, consistently with the principles of sound finance, be procured in. this manner for the construction of the Colonial portion of the scheme, it may with equal pro priety be obtained for the no less reproductive although subsidiary undertakings known as Provincial, always of course providing that the speedy complotiou of the Colonial portion of the work is not thereby imperilled, or the credit of the Colony unduly strained. The proposals of the Colonial Treasurer are based on an admission of the soundness of this principle; but as Mr Fiizherbert very clearly and forcibly pointed out, they entirely fail to meet the exigencies of the .case in practice. For all but the two provinces already named, the facilities for obtaining financial accommodation must remain a dead letter. The conditions imposed as to the provision of special security for each loan — however wise aud necessary they may be, if the Provinces are again to be permitted to enter the money market as borrowers — are such as to be virtually prohibitive over the greater portion of the Colony. Argument in support of this assertion is unnecessary ; wo need only, as Mr Fitzherbert dUI, iv'rv to well-known facts in connection with the Provincial revenues, and the position of the landed estate in the control of the Provinces in the North Island, and in Nelson, Marlborough, and the County of "Westland in the South. It is not too much to assert that for far the larger portion of the Colony the financial facilities proposed to be conferred on the Provinces by the Government will be found to be simply illusory and vain ; and that no urn 1 1.' i nikuiy <>f any importance will ever b" <-<>ini>lcU'.d bvilie means t.l i us offered . Even iv those cases in which it may be found possible to raise money in the manner proposed, the rate, of interest on such loans will unquestionably be much higher than that charged for Colonial loans, and it is evident Hint whether the amount be locally charged or not, the community is, to the extent of that difference, a loser. To these considerntions it must be added that it is aficr all a doubtful question ho\s far it is possible, by special legislation, to sever the local from the Colonial liability, for such loans, at Insist v* a mutter oi practice. The Ordinance empowering the loan must, we presume, be assented to by the Culoniui Ministry, which is a point of contact with each transaction that may jet be found to carry more responsibility with it than at first sight appears. In any case it may be doubted whether the failure to pay the stipulated interest on the part of any considerable number of these undertakings would not so affect the Colonial credit as to make it a matter of necessity for the Colony to take over their responsibility, at whatever cost. Should this occur, the mere disclaimer however absolute, of Colonial responsibility, would be practically valueless. But it does not follew, although it may be right and wise to forward certain Provincial undertakings with borrowed money, that therefore the Provinces must be allowed to borrow for themselves. The solution is to be found in a recurrence to the principles of- the- Public Debts Act of 1867, by which the power of appearing in the money market was acquired by the Colonial Government as its sole privilege, and acquired, so great was the importance attached to the principle, tit a very considerable cost. Let the Colony borrow, as since the passing of that Act it has repeatedly done, for such Provincial works as it approves, and at the same time make such arrangements for repay mant by the Province n ho count of which the responsibility is incurred, as in each special c;is« m*ty seem to be reasonable and fair. 'P c Assembly is surely competent to d« al with each application of the kind on ii merits, and to estimate the sufficiency

or otherwise of the security offered to the colony in each case. At the same time, it is obvious that the destination of the funds would have to be such as to commend itsolf to the approval of Parliament as sufficiently important to warrant the pledging of the credit of the Colony to the loan; and it is difficult to imagine what higher security for the deserving character- of the undertaking can be obtained. ■• All this, as we have already said, can be effected without making the slightest change in the existing law.