FINANCIAL STATEMENT BY THE HON. THE COLONIAL TREASURER.

Appendix to the Journals of the House of Representatives, 1872 Session I, B-02b

B.—No. 2b.

FINANCIAL STATEMENT BY THE HON. THE COLONIAL TREASURER.

IN COMMITTEE OE SUPPLY, 27th SEPTEMBEE, 1872.

WELLINGTON.

1872.

B.—No. 2b,

FINANCIAL STATEMENT.

By the Honorable T. B. Gillies, 27th September, 1872. Mr. O'Robke, — My duty this evening is to lay before the Committee, as clearly and intelligibly as I can, the financial position of the Colony, and the position of the various funds which constitute its Public Account. It is with facts and figures I shall have mainly to deal; and so far as those are concerned, I can claim neither consideration nor indulgence —for facts and figures to be valuable, must be accurate. But I do ask, what lam sure the Committee will grant, its earnest attention, so that I may be able to impress upon the minds of honorable Members a clear and distinct view of the pecuniary position of the Colony. That view I shall endeavour to give, neither from a sanguine nor from a despondent point, but from that point of view which a mere calculating machine, without disturbing feelings, might be supposed to adopt. I need hardly assure the Committee, that no question affecting the position of parties in this House will ever lead me either knowingly to injure the credit—which means the character —of the Colony, or to retard its real progress and prosperity. I invite the Committee first to consider THE INDEBTEDNESS OF THE COLONT ON 30th JUNE, 1872. On the 30th June, 1872, the funded debt of the Colony amounted to £9,375,941; the unfunded debt, consisting of Treasury Bills, Temporary Debentures, Deficiency Bills, and Bank Overdraft, amounted to £785,000 —making at that date a total indebtedness of £10,160,941. For £175,000 of that amount, provision had been made; and that sum, together with an old £5 debenture, has since been paid. On the other hand, £5,200 additional of Defence Loan Debentures have since been issued; so that the entire Colonial debt, at the present time, amounts to £9,985,936. I must observe, however, that although this is the actual existing debt, there is an asset in the shape of Sinking Eund accrued, and held or invested, to the amount of £576,848 13s. 2d. The annual charge on the Colonial revenue in respect of the total debt amounts to £616,895 7s. sd. That, therefore, is the sum which year by year must be provided for and paid out of the Colonial revenues, General and Provincial, in some shape or way. I will now proceed to give to the Committee what I believe to be the true position of that part of the Public Account known as the Consolidated Fund, at the 30th June, 1872 —in short, a Balance Sheet at that date.

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FINANCIAL STATEMENT.

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CONSOLIDATED FUND, AT 30TH JUNE, 1872. ASSETS. CR.

LIABILITIES. DR.

According to this Balance Sheet, which I believe to be correct, or as nearly so as is possible, it will be seen that, at June 30th, 1872, there would be, after realizing all available assets, and paying all known liabilities, a deficit on this fund of £33,345 18s. lOd. to be provided for, instead of there being, as shown by my predecessor, a surplus of £10,562 3s. 3d., with which to commence the present year. The Committee will naturally ask, how this discrepancy of £43,908 2s. Id. arises. I will proceed to explain it. In the first place, my predecessor took credit as an asset for £34,277 18s. 4d. recoverable from the Provinces, which I have good reason to believe will only

By Cash in the Colony in the Bank of New Zealand ... By Cash on Deposit with Loan Agents in London, to meet Interest and Sinking Fund falling due in July By Advances repayable to Consolidated Fund:— In the hands of officers and others A large portion of this amount will probably be accounted lor as Expenditure, to which extent it is a cross entry as against the amount set down for Liabilities on the other side. Due by Imperial Government ... Due by Provinces to Consolidated Fund on Separate Account Land Fund overpaid to Provinces £ s. d. £ b. d. 92,896 1 9 7,560 10 0 68,787 10 0 8,993 11 4 7,318 17 3 593 14 8 By Sums recoverable from Provinces in Accounts under " Payments to Provinces Act, 1871," &c. But there are several of these balances disputed by the Provinces, so that, whether ultimately recoverable or not, they cannot be calculated upon as available assets, to the extent of at least 34,642 9 10 24,466 13 3 By Amount recoverable from various Funds : — Trust Fund ... Defence Loan Public Works Account Consolidated Loan ... ... ■ Wellington Municipal Corporation These, with the exception of the last, are mere transfers, which will swell this Fund, but will accordingly diminish these other Funds, and will not increase the general cash-spending power of the Colony. By Reserve Account—a mere cross entry, being included on the other side as a Liability, but which, if paid as a Liability, will be recoverable from Provinces as an Asset ... 5,725 0 7 28,917 9 3 78 16 1 8,358 11 4 21 0 0 4,995 5 4 930 0 0 14,383 12 9 314 6 1 By Dr. Balance at 30 June, 1872 ... 229,765 13 1 33,345 18 10 £263,111 11 11

To Liabilities and Engagements payable out of Consolidated Fund, existing at date : — Interest and Sinking Fund on Loans, due 1 and 15 July, 1872 Interest on Temporary Loan Debentures held by Bank, to 30 June, 1872 Interest on Temporary Loan Debentures, Deficiency Bill, and Bank Overdraft, to 30 June, 1872 ... Amount stated formerly as Reserve Account Additional Liabilities, formerly stated as Miscellaneous Engagements Sundry Balances at credit of Officers and Suspense Accounts Further Liabilities not previously estimated £ B. d. £ e. d. 109,369 14 1 592 12 6 14,540 2 5 1,718 18 0 13,000 0 0 1,304 19 4 5,000 0 0 33,845 1 9 To Bank Overdraft To Deficiency Bill held by Trust Fund Commissioners 60,000 0 0 40,000 0 0 To Accumulated Savings on Civil List Fund „ „ Armed Constabulary Reward Fund „ ,, Native Schools Fund 100,000 0 0 5,618 17 2 2,362 13 9 9,603 14 8 17,585 5 7 These savings I place as a Liability, because any Government may at any time draw from Consolidated Fund on account of them without any vote of the Legislature. They will not probably be required during the current year, but they are nevertheless a liability which should always be kept in view. The Reward Fund is in reality a Trust Fund, to which I shall at once transfer it. £263,111 11 11

FINANCIAL STATEMENT.

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amount to £28,917 9s. 3d., being a difference of £5,360 9s. Id. Then, he took credit for £13,650 16s. lid., to be received from the Confiscated Lands Account; but he overlooked the fact that even if that amount were recovered, £9,373 9s. lid. of it was due, not to the Consolidated Eund, but to the Special Fund from, which the advance had been made. I cannot, however, treat any part of it as an asset. I have examined into the quantity and position of what remains of the Confiscated Lands; and I believe that after granting to the Natives from whom they were taken a considerable portion—as we mean to do—any balance remaining will not pay, certainly not more than pay, the expense of management and claims upon them. Thus £13,650 16s. lid., included as an asset by my predecessor, ceases to exist. Then, Sir, he omitted to include as a liability the interest to 30th June, upon Temporary Loan Debentures, Deficiency Bills, &c, to an amount of £2,311 10s. 6d. He also omitted the liability, which I have already referred to, in respect of Savings on Civil List, Native Schools, and Armed Constabulary Reward Eund, £17,585 ss. 7d. There is also £5,000 of additional liabilities, which I have ascertained to be due and which has since 30th June last been in great part paid. These items amotmt to the discrepancy of £43,908 2s. Id., thus : — £ s. d. Provincial Account differences ... ... ... ... 5,360 9 1 Confiscated Lands ... ... ... ... ... 13,650 16 11 Interest on Debentures, &c. ... ... ... .., 2,31110 6 Savings on Funds, &c. ... ... ... ... 17,585 5 7 Additional Liabilities ... ... ... ... 5,000 0 0 £43,908 2 1 Having thus explained, I trust clearly, the position of the Consolidated Eund on the 30th June, 1872, I will proceed to do the same in reference to two portions of what is called the Special Eund—-viz., The Defence Loan and Public Works Account. And first as to THE DEFENCE AND OTHER PUEPOSES LOAN. The following is a Balance Sheet showing the position of the cash raised under that Loan as at 30th June, 1872.

ASSETS. CR.

LIABILITIES. CR.

By Cash in the Colony in the Bant of New Zealand ... By Casli on Deposit in London, being the proceeds of sale of Bonds for £150,000, after paying all charges* By Advances in the hands of Officers A portion of this amount is recoverable in cash; the remainder, when accounted for, will be debited as Liabilities at 30 June, to which extent it is a cross entry as against the £23,792 17s. 4d. on the other side. By Amount recoverable from the Province of Otago in separate account ... ... ... ... By Amount due from New Zealand Settlements Aet Account ... This amount is not realizable, and is therefore excluded from the Assets. £ b. d. £ s. d. 62,653 17 6 149,764 0 6 4,589 19 6 9,373 9 11 1,247 0 3 £218,254 17 9 * The accounts of the Loan Agents in which this sum appeal 'une, 1872. •s, were not receivi id until after 30th

To Liabilities and Engagements for Defence Services This is the unexpended Balance of the Appropriation for the Year 1871-72, reserved for this purpose. To Amount payable to Consolidated Fund, to replace amount expended therefrom in 1871-72 for Defence Services £ s. d. 23,792 17 4 £ a. d. 8,358 11 4 To Temporary Loan Bonds redeemable* To Advance on Temporary Loan Bonds, repayable* ... 32,151 8 8 30,000 0 0 39,617 1 10 69,617 1 10 To Balance of Amount raised under this Act on account of the Province of Otago, applicable to redemption of Otago Dock Bonds 9,563 7 8 To Cr. Balance available for Defence Services of 1872-73 111,331 18 2 106,922 19 7 £218,254 17 9 * Redeemed 13 September.

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FINANCIAL STATEMENT.

From this it will be seen that out of the £635,000 raised under this loan there remained, at 30th June last, only £106,922 19s. 7d. available for the Defence Services of the current year, instead of £158,247 ss. 4d. as stated by my predecessor. This discrepancy of £51,324 ss. 9d. requires to be accounted for. £23,792 17s. 4d. of it is accounted for by the fact stated by my predecessor, that the balance of £158,247 ss. 4d. was inclusive of liabilities, and therefore to that amount not available for expenditure for the services of the current year. Still there remains a discrepancy of £27,531 Bs. sd. to be accounted for. Of this, £17,921 19s. is accounted for by the fact that my predecessor, whilst taking credit in the Consolidated Fund Account for £8,358 11s. 4d. to be received from Defence, has omitted to debit it as a liability against Defence; and that he omitted to observe that £9,563 7s. 8(1., raised under Schedule 11. of the Loan Act, is applicable to the redemption of Otago Dock Bonds still to be redeemed, which is a liability against this fund, and which it may be called upon any day to discharge. £9,373 9s. lid. further is accounted for by that sum (which, as formerly stated, was an advance from the Special Eund on account of Confiscated Lands) having been treated as an asset, but which I cannot recognize as such. The remainder of the discrepancy is the sum of £235 19s. 6d., charges on raising the last £150,000 of this loan, of which my predecessor was not aware when his Statement was made. I now come to the Immigration and Public Works Loan Account; and of it also I present to the Committee a Balance Sheet to 30th June, 1872. BALANCE SHEET, IMMIGEATION AND PUBLIC "WOKKS LOAN, 30th JUNE, 1872.

ASSETS. CR.

LIABILITIES. DR.

The Committee will see from this, that out of the sum of £1,600,000 raised under the Immigration and Public Works Loan, £845,096 17s. 6d. remained at 30th June last, available in cash for carrying out the works already contracted for, or which may hereafter be contracted for. Here lam happy to say that but little discrepancy exists between the accounts of myself and my predecessor, beyond this—that when he showed on this account a balance left of £925,684 Is. 4d., he did so without taking into account the then existing liabilities actually due and

£ s. d. £ s. d. 40,666 7 0 By Cash in the Colony in the Bank of New Zealand ... By Cash on Deposit in London By ditto, being the proceeds of sale of Bonds for £850,000, after paying all charges* ... 97 7 7 848,662 16 2 848 760 3 9 By Advances in the hands of the Crown Agents and Agent-G-eneral, London By Advances in the hands of Officers in the Colony ... 17,790 10 5 9,629 16 4 f27,420 6 9 By Amount advanced to and recoverable from the County of Westland ... 7,500 0 0 I £924,346 17 6 j * The Accounts of the Loan Agents, in which this sum a] 30 June, 1872. f Of this amount about £14,000 has Bince been repaid. ipears, were not re< :eived until after

£ s. a. & s. d. To Liabilities: — Interest and Sinking Fund for three months to 15 April on £750,000 Ditto to 15 July on £1,600,000 ... 11,250 0 0 24,000 0 0 35,250 0 0 To Estimated Amount due and payable for services rendered to 30 June, 1872, including such advances outstanding at that date as have probably been expended 44,000 0 0 By Cr. Balance available for 1872-73 79,250 0 0 845,096 17 6 £924,346 17 6

FINANCIAL STATEMENT.

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payable to the amount of £79,250, or the charges on raising the last instalment of the Loan, accounts of which had not then been received in the Colony. As to the Trust Fund, the Land Fund, &c, I shall not detain the Committee, because I believe that in regard to them the statements made by my predecessor are substantially correct. Before passing from this branch of the subject, namely, the balances of the various Accounts at 30th June, 1872, the termination of our financial year, the Committee will permit me to recall to their recollection the results which I trust I have made clear. They are these — £ s. d. That on Consolidated Fund, which represents the Ordinary Revenue and Expenditure of the Colony, apart from Defence Purposes and Public Works and Immigration, we were, at 30th June last ... ... Dr. 33,345 18 10 That on J >efence Loan, we had, at the same date, available for the current year's services ... ... 100,922 19 7 That on Immigration and Public Works Loan, we had, at the same date, available for expenditure on Immigration and Public Works Services . ... ... ... 845,096 17 6 I ask the Committee to keep those results in remembrance, as I may have occasion to refer to them hereafter. I now ask the Committee to diverge for a time from the consideration of the cash balance sheets of the various funds at 30fch June, 1872 —and to accompany me in investigating the position of the various funds included under the general title of the Immigration and Public Works Loan Fund Account as at the 10th September, 1872, when the present Government took office. The state of those funds I propose to examine, with a view to lay clearly before the Committee what balance, not merely of cash in hand, but of the amounts authorized by law to be raised in whole on the several accounts, remained available to the present Government, at the time of their taking office, for works hereafter to be initiated. And first, I will take THE EAILWAYS FUND. £ s. d. The total amount authorized to be raised is ... ... 2,000,000 0 0 To which has to be added the moiety of Stamp Duties, 1871-72, less refunds ... ... ... ... ... 37,202 10 2 2,037,202 10 2 Against this has to be debited— £ a. d. Amount of accounts passed for payment by Public Works Department to 10th September, 1872 ... ... ...314,365 8 5 Further liabilities at that date for construction, rails, and rolling stock on Eailways begun or contracted for ... ... ... ... 982,347 18 11 Estimated cost of rails ordered or contracted for on account of Hues not begun or contracted for 289,168 0 0 1,585,881 7 4 Leaving a balance out of the £2,000,000 authorised, of ... £451,321 2 10 available for Departmental charges, any Interest and Sinking Fund which may be hereafter capitalized, and the construction of any other of the llailways which have been authorized by the Legislature, but not yet contracted for. It will be observed, of course, that besides the £451,321 2s. lOd. so available in cash, there will be available for the construction of further railways the stock of rails above referred to for works not contracted for, to the amount of £289,168, making a total of cash and stock (in round numbers) of £740,000. It may be interesting to the Committee to know what the estimated cost would be of the remainder of the works authorized by Parliament, but not yet contracted for.

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FINANCIAL STATEMENT.

£ s. d. The Engineer's estimate of. the total cost of the Eailways authorized, but not yet contracted for, is ... ... 2,005,110 0 0 From which may be deducted the above estimated cost of rails ordered or contracted for on account of lines not yet begun or contracted for ... ~. 289,168 0 0 £1,715,942 0 0 From this has also to be deducted the above balance available, of 451,321 2 10 Leading the amount of ... ... £1,264,620 17 2 yet to be provided; besides, the cost of raising, Departmental charges, and any Interest and Sinking Fund, vhich may be capitalized. Looking at these facts, and the contingencies, always attachable to Engineer's estimates, I think I am not far from the mark in estima jng that the Colony will have to provide at least an additional million and a-half before it can complete the Railway works already authorized. This position of affarfe I would, however, have the Committee to understand does not require to be dealt with at present. The balance of cash on hand, £845,096 17s. 6d., is sufficient not only to carry on, during the current year, the works already contracted for, but also to enable the Government during the current year, to initiate and push forward others of the various works authorized by Parliament. What those may be, the Minister for Public Works will inform the House. Meanwhile, during the recess, it will be the duty of the Government to carefully mature their plans as to the prosecution- of the lines authorized by Parliament, or any other lines which they may consider requisite for the development of the country, and to lay proposals before Parliament next Session for that purpose. We fully recognize that the policy of Railways and Public Works already entered upon cannot be reversed ; and that to be a benefit to the Colony it must be carried oh vigorously, though at the same time with prudence, judgment, and economy. THE IMMIGRATION FUND stood thus on the 10th September :-— Or. £ s. d. The amount authorized to be raised was ... ... ... 1,000,000 0 0 Dr. £ s. d. The expenditure of 1870-71, less credits, was ... 2, 638 7 5 1871-72, „ ... 39,588 12 0 £42,226 19 5 The estimated liabilities up to 31st December, 1872, as given by the late Public Works Minister ' ... ... ... ... 84,058 18 0 Estimated cost of raising £1,000,000, at \ per cent. ... ... ... ... ... 5,000 0 0 131,285 17 5 Leaving a balance of ... ... ... £868,714 2 7 to carry on further operations, and to meet Departmental expenses. THE GOLD FIELDS WATEB SUPPLY FUND stood thus, on the 10th September, 1872 :— Or. £ s. d. £ s. d. Amount authorized to be raised... ... ... 300,000 0 0 Dr. Expenditure, 1870-71 ... ... ... ... 409 0 0 1871-72 ... ... ... ... 2,206 10 6 Estimated total cost, including ironwork, of Thames Water Eace ... ... ... ... 51,495 0 0 Advances to Private Water Eace Companies ... 12,534 0 0 Estimated cost of raising £300,000, at -§■ per cent. ... 1,500 0 0 68,144 10 6 Leaving a balance of ... ... ... ... ... £231,855 9 6 available for further works and Departmental expenses.

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FINANCIAL STATEMENT.

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THE NORTH ISLAND EOADS ACCOUNT stood thus on 10th September, 1872 :— Or. £ a. d. £ s. d. Amount authorized to be raised ... ... ... 400,000 0 0 Dr. Expenditure, 1870-71, less credits ... ... 51,909 14 9 1871-72, „ 68,565 14 0 Account passed by Public "Works Department from Ist July to 10th September, and Advances outstanding ... ... ... ... ... 14,893 10 5 Liabilities on Contracts to date ... ... ... 34,247 0 1 „ Day labour and piece work ... ... 3,300 0 0 Estimated cost of raising £400,000, at i- per cent. ... 2,000 0 0 174,915 19 3 Leaving a balance of ... ... ... ... £225,084 0 9 for works and Departmental expenses. Of that amount, however, nearly ] £60,000 is pledged for works north of Auckland, and £"11,000 will probably be required for maintenance of roads and contingencies during the ensuing year. THE LAND PURCHASE, NORTH ISLAND, ACCOUNT stood thus on 30th June. I have not been able to get it brought down with sufficient accuracy to 10th September: — Or. £ s. d. £ s. d. Amount authorized ... ... ... ... 200,000 0 0 Dr. Expenditure, 1870 to 1872, less credits ... ... 49,662 5 6 Liabilities ... ... ... ... ... 14,162 1 10 Estimated cost of raising ... ... ... 1,000 0 0 64,824 7 4 Leaving a balance of ... ... ... ... ... 135,175 12 8 THE TELEGRAPHS ACCOUNT stood thus on the 10th September : — Or. ' £ s. d. £ s. d. Amount authorized to be raised ... ... ... 60,000 0 0 Dr. Expenditure, 1870-71, less credits ... ... 26,585 710 1871-72 ... ... ... 31,501 6 1 „ to 10th September, 1872 ... ... 3,592 9 8 61,679 3 7 Liabilities and engagements ... ... ... 13,704 6 7 • 75,383 10 2 Expenditure in excess of amount authorized ... ... ... 15,383 10 2 This amount, together with provision for further extensions, my predecessor proposed to meet by allocating the unapportioned amount of the Immigration and Public Works Loan (£40,000) to Telegraphs. In this I coincide with him— at any rate, to the extent of £30,000 for the present; for I think experience has shown that telegraphic expenditure has been fairly and progressively remunerative to the general revenues of the Colony. The summary of these various accounts, included under the general head of Immigration and Public Works Loan, is as follows : — £ s. d. Railways—Balance of entire Loan not yet expended or hypothecated 451,321 2 10 Immigration „ „ „ 868,714 2 7 Gold Fields Water Supply „ „ „ 231,855 9 6 Roads, North Island „ „ „ 225,084 0 9 Land Purchase, North Island „ „ 135,175 12 8 Telegraphs and Unapportioned „ „ 24,616 9 10 These figures, depending as they do so largely on Engineer's estimates, cannot, of course, be relied upon as strictly accurate, but only as a fair approximation. But a very disturbing item here occurs. The £100,000 last year paid to Road Boards out of this Loan was never apportioned to any particular branch of 3

FINANCIAL STATEMENT.

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it. That amount was ordered to "be paid out of the moneys for the time being standing to the credit of the Public Works Fund," which includes all these several branches. The question now arises, against which of these this £100,000 is to be charged. Upon a careful consideration of the subject, lam inclined to think that it ought to be charged against the Immigration portion of the Loan. The Railways Account is unable to bear it, unless we mean to largely curtail such works. No other of these accounts can bear it, save Immigration ; and whilst I am fully alive to the fact that judicious Immigration is our mainstay in making this whole policy successful, I do not think that, at least for some years to come, the charging of this amount to Immigration will reduce that fund below the requirements upon it. Besides, to some extent, it may be said that the opening up of communication throughout the country is paving the way for the successful location of the immigrants to be imported. The operation of subsidizing Road Eoards out of Loan, I do not propose to repeat; for however much I would desire to aid and assist those valuable Local bodies, I believe that even they are alive to the fact that, by getting these aids from Loan, they are merely gaining a temporary benefit at the expense of a constant future taxation. There is also the item of £10,000 authorized by the Act of last year to be expended generally out of Public Works Account for the prospecting of Coal Fields —a small portion only of which has been spent; and there is in the same Act an indefinite power given to aid the development of Coal Fields from the same account, without charging the sums to be so expended to any definite branch of the Loan Account. As the sums to be expended during the current year Avill probably not be very large, I propose to leave these meanwhile to go against the balance of Loan unapportioned. It will be necessary hereafter to define the special fund from which the ways and means for such payments shall be provided. I would now ask the Committee to revert with me to the point where I diverged from the Cash Balance Sheets on the 30th June, 1872. From that point I have now to start afresh to deal with the Estimates of Revenue and Expenditure for the current year. And in reference to these, I shall differ but little from my predecessor, save in a few items. The Committee will remember that the present Government have taken these seats, not on the ground of the impropriety of the policy of their predecessors, but on the ground that those predecessors had failed in the administration of the policy agreed upon. It is, therefore, unnecessary for me to enunciate a general financial policy different from that of my predecessor. My duty will be to carry out the existing policy, subject to such Administrative Reforms as I shall indicate. THE CONSOLIDATED FUND EEVENUE FOE 1872-73 Has, on the whole, been, I think, fairly estimated by my predecessor. There is a sum of from £8,000 to £10,000 (say £9,000) which will be received from surplus interest on Trust Fund and other accounts in the Colony, not, apparently, taken into account as revenue by my predecessor. As I propose, in the Estimates of Expenditure, to provide, from Consolidated Fund, for the payment of interest on the whole of the Colonial securities, including those held by the Trust Funds, it is only fair to calculate on the surplus interest on those Funds as Revenue. " Incidental Receipts," I therefore increase by £9,000. With that exception, I accept the Estimates of Revenue of my predecessor; and the Estimated Revenue for 1872-73 will therefore, according to my calculation, be £1,085,000. I will now state the PEOPOSED EXPENDITTJEE ON CONSOLIDATED FUND FOE 1872-73. There are three points under this head in which my proposals vary from those of my predecessor. In the first place, Ido not propose to continue the charging of Interest and Sinking Fund on the Immigration and Public Works Loan to the loan itself; giving a grant-in-aid to that fund of one-half of the Stamp Duties, and a further contribution towards interest from the Consolidated Fund. I propose to

FINANCIAL STATEMENT.

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charge the Interest and Sinking Eund on that Loan to Consolidated Eund direct, as the law requires ; to retain the one-half Stamp Duties to assist in meeting that charge, amending the law to enable that to be done; and to charge against the Public Works Loan for this year only such balance of interest as I find the Consolidated Eund is unable to bear. The cash result will be much the same for this year as was proposed by my predecessor ; but in the one case it will be done directly —in the other it would have been done in an indirect and misleading way. In the second place, I propose to increase the Capitation Allowance to the Provinces, by recognizing the fact that the Native population are large consumers of dutiable articles, and by giving—instead of, as formerly, an arbitrary allowance—a capitation in respect of the Natives in each Province, to the amount of 10s. per head, according to a table which will be appended to this Statement as printed. In the third place, whilst accepting, and asking the Committee to pass, the estimates of the Ordinary Expenditure, Class I. to VIII. inclusive, as they have already been brought down —because there has not been time to have them recast and reprinted, and further, because to alter the mode in which the votes are stated would confuse the accounts of both the Treasury and the Controller—l propose to calculate on a reduction in expenditure upon those Classes of at least £10,000. The Committee will remember that such reduction can only be over six months of the year, inasmuch as three months have already nearly gone, and that reductions of officers cannot take place without giving the holders some months' notice, so that the proposed reduction of £10,000 for six months of this year really represents a reduction of £20,000 on a year's expenditure. The proposed expenditure will, with these alterations, stand thus :— £ s. d. Civil List ... ... ... ... ... ... 27,500 0 0 Interest and Sinking Fund ... ... ... ... 399,384 18 2 Permanent Charges ... ... ... ... ... 33,258 C 8 Classes I. to VIII., as per Estimates ... ... ... 383,531 3 0 Eedemption Treasury Bills ... ... ... ... 45,000 0 0 Capitation Allowance ... ... ... ... .. 220,241 2 6 Giving a gross Estimated Expenditure of ... ... ... £1,108,915 10 4 From this falls to be deducted the savings to be made on the Estimates ... ... ... ... ... ... 10,000 0 0 Giving a Net Expenditure for the year, of ... ... £1,098,915 10 4 To this, however, has to be added the debit balance on the Balance Sheet of Consolidated Fund, previously stated £33,345 18 10 Less the Civil List and Native School savings, which will not, probably, be required to be paid within the year ... ... 15,222 1110 ■ 18,123 7 0 Giving thus a Total Estimated Expenditure of Consolidated Fund (including the wholelntercstandSinkingFundon Public Works Loan of £90,000) for the year 1872-73, of ... ... ... ... £1,117,038 17 4 being £32,038 17s. 4d. in excess of the Estimated Revenue for that year. This I propose to meet by debiting the Immigration and Public Works Eund with £34,500 of the Interest and Sinking Eund on that Loan for this year only. The difference between these two amounts will probably be required by the Supplementary Estimates, which it may be necessary to bring down. Should 1 in another year have the honor of laying financial proposals before this Committee, I shall set my face entirely against charging any portion of the Interest and Sinking Eund of the Immigration and Public Works Loan to the Loan itself. It is true, that in calculating what our railways and other works will cost us, we ought to capitalize interest as a matter of account ; but it is not prudent finance, that we should evade payment of current and annually recurring burdens, by placing them upon loan. By so doing, we are dealing unfairly by the public creditor who lent us the money on the faith of the Loan Act, which declared that the interest was to be paid out of Consolidated Eund

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12

FINANCIAL STATEMENT.

Revenue, and that the entire money borrowed was to be spent on certain reproductive works ; and we are dealing unfairly by the Colony by limiting the amount of public works which the money authorized to be borrowed should produce. If a year hence I find the Consolidated Revenue unable to bear these annual charges, I shall be prepared to meet the difficulty by an augmentation of revenue which would properly involve changes in the incidence of taxation rather than that the Colony should be deceived by the idea that it is getting public works for its borrowed money, whilst it is in reality spending its loans in paying interest upon the loans themselves. But before resorting to any augmentation of revenue, this Government would greatly fail in its duty to the country, and to those whose votes have placed its members on these benches, if it did not meanwhile strain every nerve to economize, and to reduce the expenditure of the Government. I believe that reductions to at least £25,000 per annum can be made upon the General Estimates ; and the Committee will have reason to find fault, if, when I bring down the Estimates next year, that reduction is not effected. The Public Works Estimates will be laid before you by the Public "Works Minister, although I hope that on future occasions the Treasurer will take the responsibility of bringing clown to the House all the Estimates for the various departments. Permit me, Sir, only to say further, that, recognising as I do the important reforms instituted by my predecessor in the department over which I have now the honor to preside, it will be my duty, as well as my pleasure, freed from the cares of any other office, to devote myself during the recess to reducing those intended reforms into such a practical shape as will simplify the Public Accounts, reduce the existing circumlocution and conflict between the various departments, and enable both the public and the Public Service to be better served at a reduced cost. The whole subject of the financial relations of the Provinces and the Colony will also have my most careful attention; and, however difficult the task may be, I do not despair of arriving at such a solution of this much-vexed question as will, on the one hand, terminate entirely the uncertainty from year to year of those relations, and, on the other, do justice between the respective sections of the Colony.

13

B—No. 2b.

Auckland, — " Auckland Loan Act, 1863 " 33 years from date of issue, or 1st June, 1896. Tide supra. 31,600 0 0 1,475 10 5 30,124 9 7 1,896 0 0 632 0 0 2,528 0 0 " New Zealand Loan Act, 1856 " " Consolidated Loan Act, 1867 " " Defence &c. Loan Act, 1870 " 90,000 0 0 510,150 O 0 50,000 0 0 29,591 11 4 ] 21,70119 1 60,408 8 8 538,448 0 11 3,600 0 0 C 25,507 10 0 ( 2,500 0 0 1,800 0 0 5,101 10 0 500 0 0 5,400 0 0 30,609 0 0 3,000 0 0 u Total, Auckland .., 681,750 0 0 52,769 0 10 628,980 19 2 33,503 10 8,033 10 0 41,537 0 0 (a) £5 pa (S) Issued (c) £5,201 :d off 19th August, in anticipation of ) issued in additioi 1872. moneys to be raii i between let Jul1 ied under " Thi i and 10th Sept e Consolidated Loi ;ember, 1872. An an, 1867." mual Charge, £i ■80. 4

Table A. STATEMENT showing the DEBENTURES in CIRCULATION at 30th JUNE, 1872, under the several Loans of the New Zealand Government, the Amount of Sinking Fund Accrued, the Balance of Indebtedness, the Amount of the Annual Charge, and the Proportions in which the several Loans are chargeable against the Colonial and Provincial Governments. Also, of all TREASURY BILLS in CIRCULATION at the same date; also of all OVERDRAFTS or other MONEYS borrowed from the Bank or otherwise at the same date, with alterations in liability up to the 10th September noted.

PROVINCIAL GOVERNMENTS.

TABLES REFERRED TO IN THE FINANCIAL STATEMENT.

ew ieala: oteen: :ent. Total Debt, after deducting Sinking Fund. Annual Charge. Act authorizing the Loan. Due Date of Debentures. In Circulation. Sinking Fund accrued. Interest. Sinking Fund. Total. £ s. d. (a) 316 0 0 156,000 0 0 £ 8. d. £ s. d. 316 0 0 104,707 19 0 £ s. d. £ 6. d. £ s. d. Ordinance of Legislative Council ... " New Zealand Loan Act, 1856 " ... f £300,000 ... 25,000 ... £500,000 J 25,000 ... 50,000 ... t_ 50,000 ... " New Zealand Loan Act, 1860 " ... "New Zealand Loan Act, 1863 " ... On Presentation. 31st Dec, 1887 30th Sept., 1888 31st Dec., 1888 30th June, 1889 30th Sept., 1889 June, 1894 1st July, 1891 15th July, 1914 lBt Nov., 1915 15th Mch., 1891 15th June, 1891 15th Dec, 1891 93,100 0 0 488,000 0 0 500,000 0 0 201,500 0 0 236,000 0 0 93,900 0 0 51,292" 1 0 26,328 3 1 66,771 16 11 6,240 0 0 5,586 0 0 3,120 0 0 1,862 0 0 9,360* 0 0 7,448 0 0 "NewZealand Debentures Act, 1864," and Amendment Act, 1865 "Taranaki Loan Ordinance, 1863 "... Consolidated Loan, 1867 1st issue, £3,780,000, 15 June, 1868 2nd „ 201,100,15 Sept., 1868 3rd „ 209,900,15 Jan., 1869 4th „ 262,100,15 April, 1870 134,052 5 11 1,385,347 14 1 76,284 0 0 20,508 0 0 96,792 0 0 31st Dec, 1867 1st April, 1873 1,519,400 0 0 2 S M <m s.i 2 § 8 If &£&'% pJ 0)11 Nil i 60-2 a, £*S S 1 30th Sept., 1872 31st Dec, 1878 150 0 0 14,300 0 0 2,047,200 0 0 ~\ "I 150 0 0 14,300 0 0 1,001 0 0 102,360 0 0 20,472 0 0 1,001* 0 0 122,832 0 0 £4,453,100 "Immigration and Public Works Loan Act, 1870" 1st issue, £750,000 2nd „ 850,000 £1,600,000 "Defence and Other Purposes Loan Act, 1870" 1st issue, £450,000 2nd „ 150,000 £600,000 1,600,000 0 0 3,979,431 18 9 96,000 0 0 94,768 1 3 80,000 0 0 16,000 0 0 427,000 0 0 21,350 0 0 4,270 0 0 25,620 0 0 O>) 2,000 0 0 (c) 35,600 0 0 2,000 0 0 35,600 0 0 120 0 0 1,958 0 0 120 0 0 1,958 0 0 Scrip Certificates " Defence &c. Loan, 1870 " 5,895,066 0 0 306,440 11 3 5,588,625 8 9 294,899 0 66,232 0 0 361,131 0 0

B.—lfo. 2b.

14

FINANCIAL STATEMENT.

Table A— continued. STATEMENT sb iwing Debent ukes in Ciectjlation", &c.~—continued. Pi tovmciAL Gk>\ fEBNMENTS — continued. Total Debt, after deducting Sinking Fund. Annual Charge. Act authorizing the .Loan, Due Date of Debentures. In Circulation. Sinking Fund accrued. Interest. Sinking Fund. Total. Taeakaki, — " Consolidated Loan Act, 1867" > " Defence &c. Loan Act, 1870 " j Vide supra, Preceding page. £ s. d. f 25,000 0 0 I 6,000 0 0 £ s. d. I 1,096 3 11 £ s. d. 29,903 16 1 £ s. d. f1,250 0 0 I 300 0 0 £ s. d. 250 0 0 60 0 0 £ s. a. 1,500 0 0 360 0 0 Total, Taranaki 31,000 0 0 1,096 3 11 29,903 16 1 1,550 0 0 310 0 0 1,860 0 0 Wellington,— " New Zealand Loan Act, 1856 " ... " Consolidated Loan Act, 1867 " ... " Defence &o. Loan Act, 1870 " " Consolidated Loan Application Act, 1869" " Wellington Loan Act, 1862 " " Wellington Loan Act, 1866," No. 3 " Wellington Debts Act, 1871" Vide supra. j) i) 1st Jan., 1873 1st July, 1877 1st July, 1886 31st Dec, 1876 27,000 0 0 133,379 0 0 17,000 0 0 72,000 0 0 2,000 0 0 10,327 10 0 75,000 0 0 8,877 9 5 ) 5,715 10 10 18,122 10 7 144,663 9 2 72,000 0 0 527 10 5 8,157 10 10 75,000 0 0 1,080 0 0 (6,668 19 0 I 850 0 0 4,320 0 0 160 0 0 826 4 0 3,750 0 0 540 0 0 1,333 15 9 170 0 0 80 0 0 206 11 0 1,620 0 0 8,002 14 9 1,020 0 0 4,320 0 0 240 0 0 1,032 15 0 3,750 0 0 1,472" 9 7 2,169 19 2 Total, Wellington 336,706 10 18,235 9 0 318,471 1 0 17,655 3 0 2,330 6 9 19,985 9 9 Hawkb's Bay,— " New Zealand Loan Act, 1856 " ... " Consolidated Loan Act, 1867 " ... " Wellington Loan Act, 1866 " Vide supra. 27,000 0 0 83,171 0 0 3,172 10 0 8,877 9 5 3,459 10 1 18,122 10 7 79,711 9 11 3,172 10 0 1,080 0 0 4,158 11 0 253 16 0 540 0 0 831 14 3 63 9 0 1,620 0 0 4,990 5 3 317 5 0 1st July, 1886 Total, Hawke's Bay 113,343 10 12,336 19 6 101,006 10 6 5,492 7 0 1,435 3 3 6,927 10 3 Nelson, — " New Zealand Loan Act, 1856" ... " Consolidated Loan Act, 1867 " ... "Nelson Waterworks Loan Act, 1864" i Loan due 1st January, 1876. i Loan due 1st January, 1881. Vide supra. Not determinable *39,351 5 0 27,821 7 7 14,200 0 0 12,938 10 1 1,158 16 10 2,440 16 1 26,412 14 11 26,662 10 9 11,759 3 11 1,574 1 0 1,391 1 5 1,136 0 0 787 0 6 278 4 3 284 0 0 2,361 1 6 1,669 5 8 1,420 0 0 Total, Nelson 81,372 12 7 16,538 3 0 64,834 9 7 4,101 2 5 1,349 4 9 5,450 7 2 MiBLBOKOUGH, "New Zealand Loan Act, 1856" ... " Consolidated Loan Act, 1867 " ... Vide supra. *5,648 15 0 7,878 12 5 1,857 5 8 327 14 2 3,791 9 4 7,550 18 3 225 19 0 393 18 7 112 19 6 78 15 9 338 18 6 472 14 4 n Total, Marlborough 13,527 7 5 2,184 19 10 11,342 7 7 619 17 7 191 15 3 811 12 10 Canterbuey,— "New Zealand Loan Act, 1856" ... " Consolidated Loan Act, 1867" ... " Canterbury Loan Ordinance, 1856 " " Canterbury Railway Loan Act, 1860" i of Loan due 30 June, 1893. „ 31 Dec, 1894. 31 Dec, 1895. „ 31 Dec, 1896. 31 Dec, 1897. " Canterbury Loan Ordinance, 1862 " Vide supra. 28th Sept., 1872 Not determinable 51,230 15 5 561,680 15 4 830 15 5 53,792 6 2 16,844 8 7 23,363 2 11 830 15 5 34,386 6 10 538,317 12 5 53,792 6 2 2,049 4 7 28,084 0 9 66 9 3 3,227 10 9 1,024 12 4 5,616 16 2 33 4 8 1,075 16 11 3,073 16 11 33,700 16 11 99 13 11 4,303 7 8 2nd Jan., 1915 15,784 12 4 947 1 6 157 16 11 1,104 18 5 15,784 12 4 Total, Canterbury ... 683,319 4 8 41,038 6 11 642,280 17 9 34,374 6 10 7,908 7 0 42,282 13 10 Westland, — " New Zealand Loan Act, 1856 " ... " Consolidated Loan Act, 1867 " ... " Canterbury Loan Ordinance, 1856 " " Canterbury Bail way Loan Act, 1860" " Canterbury Loan Ordinance, 1862 " Vide supra. 28th Sept., 1872 Vide supra. 2nd Jan., 1915 22,769 4 7 153,369 4 8 369 4 7 23,907 13 10 7,015 7 8 7,486 8 3 6,379 8 1 369 4 7 15,282 16 4 146,989 16 7 910 15 5 7,668 9 3 29 10 9 1,434 9 3 420 18 6 455 7 8 1,533 13 10 14 15 4 478 3 1 70 3 1 1,366 3 1 9,202 3 1 44 6 1 1,912 12 4 491 1 7 23,907 13 10 7,015 7 8 Total, WeBtland 207,430 15 4 14,235 0 11 193,195 14 5 10,464 3 2 2,552 3 0 13,016 6 2 Otago,— " New Zealand Loan Act, 1856 " ... " Consolidated Loan Act, 1867 " ... " Defence &c. Loan Act, 1870 " " Consolidated Loan Application Act, 1869" " Otago Loan Ordinance, 1861-62 ... £k of Loan due 31 Dec, 1874. Jg „ 31 Dec, 1875. " Otago Loan Ordinance, 1862 " " Otago Harbour Loan Ordinance, 1862" " Otago Public Buildings Loan Ordinance, 1862" Tide supra. }> 1st Jan., 1873 Not determinable 81,000 0 0 903,450 0. 0 100,000 0 0 7,000 0 0 40,100 0 0 26,632 8 3 } 38,520 19 9 12,970 14 2 54,367 11 9 964,929 0 3 7,000 0 0 27,129 5 10 3,240 0 0 f45,172 10 0 I 5,000 0 0 420 0 0 3,208 0 0 1,620 0 0 9,034 10 0 1,000 0 0 1,203 0 0 4,860 0 0 54,207 0 0 6,000 0 0 420 0 0 4,411 0 0 1st July, 1898 116,700 0 0 11,349 4 5 105,350 15 7 7,002 0 0 1,167 0 0 8,169 0 0 1st Nov., 1874 44,100 0 0 12,740 2 3 31,359 17 9 3,528 0 0 1,323 0 0 4,851 0 0 1st Oct., 1875 40,075 0 0 9,760 9 2 30,314 10 10 3,206 0 0 1,202 5 0 4,408 5 0 Total, Otago 1,332,425 0 0 111,973 18 0 1,220,451 2 0 70,776 10 0 16,549 15 0 87,326 5 0 Totals op Funded Debt, — Colonial Provincial ... 5,895,066 0 0 3,480,875 0 0 306,440 11 3 270,408 1 11 5,588,625 8 9 3,210,466 18 1 294,899 0 0 178,537 0 0 66,232 0 0 40,660 5 0 361,131 0 0 219,197 5 0 9,375,941 0 0 576,848 13 2 8,799,092 6 10 473,436 0 0 106,892 5 0 580,328 5 0 * These are the estimated proportions chargeable.

FINANCIAL STATEMENT.

15

B.—No. 2b

Table B. STATEMENT showing the AMOUNT of TREASURY BILLS in CIRCULATION, the Dates at which such Bills mature, and the Annual Charge for Interest thereon; also of Debentures and other Securities deposited against Temporary Advances, &c.

Table C. PROPOSED PAYMEMTS to PROVINCES.

Amount in Circulation. Due Date. Rate of Interest. Annual Charge for Interest. £ s. d. £ s. d. Tebastjet Bills — "Treasury Bills Act, 1869," No. 2... " Treasury Bills Extended Currency ( Act, 1870 "a I " Treasury Bills Act, 1871" [ 150,000 0 0 315,000 0 0 55,000 0 0 45,000 0 0 45,000 0 0 1 Not., 1874 )f 30 June, 1873 30 June, 1874 4d. "ffi cfc. per diem 3|d. •$• cent, J 9,125 0 0 ■ 22,194 8 1 | 4,961 14 4 )> a , £36,281 2 5 Debhnttjkes—■ ;' Temporary Loan Act, 1870"— In hands of Controller on account of Trust Fund ) b 30,000 0 0 30 Sept., 1873 6 f- cent. < Due June 30,1872 448 15 4 ( „ to Sept. 13... 369 17 3 £818 12 7 Hypothecated to Bank of New") Zealand to secure an advance of ( £40,000 (reduced by a credit C to £39,617 Is. lOd) ... J 5*45,000 0 0 )> » ( Due June 30,1872 592 12 6 I „ to Sept. 13... 488 8 8 £1,081 1 2 Deficiency Bill —■ Issued April 23.—In hands of Con- "J troller on account of Trust Fund ) c 40,000 0 0 30 Sept., 1872 5 f- cent. f Due June 30,1872 372 12 0 ( „ to Aug. 23... 295 17 10 £668 9 10 Overdraft, Bank of New Zealand ... c*60,000 0 0 6 f cent. ( Due June 30,1872 897 10 8 ( „ to Aug. 23... 532 12 0 785,000 0 0 £1,430 2 8 a £20,000 payable out of money to be received under the New Zealand S( h Redeemed September 13, 1872. c Paid off August 23, 1872. * 3 per cent., or half this interest, will be credited in the Bank Interest ai ittlements Acts. Mount. J. We iODWAKD, Assistant Treasurer. Treasury y, September 18, 1872.

Province. Poeu: NATION. Capitation Allowance : At 15s. for European, and 10s. for Satire Population; with 2s. 6d. extra to Westland. European. Native. Auckland Taranaki Wellington Hawke's Bay ... Nelson Maryborough ... Canterbury County of Westlaud Otago 64,337 4, 599 25,015 6,212 23,062 5,384 48,906 15,381 73,956 23,227 2,355 5,322 3,102 483 369 607 68 826 £ s. d. 59,866 5 0 4,626 15 0 21,422 5 0 6,210 0 0 17,588 0 0 4,222 10 0 36,983 0 0 13,492 7 6 55,880 0 0 266,852 36,359 220,241 2 6