B.—No. U,

£ s. da draw the attention of the Committee to some of the points of Expenditure in year 1860-1 ... 17,800 14 0 interest in this return, which exhibits Tery clearly the past „ „ 1861-2 ... 25,372 711 relationship of colonial and proTineial expenditure. „ „ 1862-3 ... 53,412 19 1 It appears then, that during the period referred to, the „ „ 1863-4 ... 52,599 3 2 expenditure, as borne on the civil list, -which comprises the „ „ 1864-5 ... 60,291 6 9 salaries of all the high officers of state in the Colony, has „ „ 1865-6 ... 49,547 19 0 only grown from £19,000 to £27,500—an increase of less than ~ „ 1866-7 ... 30,751 4 0 one-Half. I believe I may safely say that there is no colony That is to say, Native expenditure for 1865-6 was about one-fifth where there has been such a system of economy (not to say less than it was in 1864-5, when the expenditure of that class parsimony) as in the Colony of New Zealand, so far as the reached its maximum, and for the past it was one-third less than provision for its Executive is concerned. that of the preceding year; thus showing a rapidly decreasing We next come to a charge which lias grown in nine years ratio of expenditure. This reduction, I admit, may bo attributed from £20,265 to £305,365. This item is " Permanent Charges," in some slight degree to the fact that certain services formerly which principally consist of interest and sinking funds ; and has charged under tlie class " Native " were transferred to other become fifteen times larger than it was in 1858. It is an ugly ok sea. At the same time an attempt, of the only kind which item ; you have no control over it; it must be borne like the ills was practicable, has been made in the present estimates to of life; and it is all the uglier, because it is a charge of an introduce an clement of limitation into the Defence estimates, unproductive character; it is, in fact, the condign punishment It consists in charging locally a certain portion of the " Militia of war —a war, however, it must be observed, which was not and Volunteer services," in the manner which will be best sought for by the G-eneral Government, but into which it was explained by a reference to the estimates themselves. hustled, and its charges flung at the Colony no doubt with a The result to which I have referred is also partly due to w-ish for good luck, like the old shoo at the wedding, the careful manner in which the departmental estimates have We now come to the second table, which shows expenditurebeen prepared, for otherwise an estimated expenditure could provincially charged. It consists of recognized local charges, not have been submitted showing only so slight an increase An examination of the growth of this class of expenditure, will over last year as appears in the following figures, viz.: — show that whereas the Auckland local charges have been the Estimated Appropriations, 1866-7. most economical, on the other hand those of Otago have been £738 308 0 0 *^c mo9'' extravagant. It is only reasonable to conclude that _, ~ , , , ... ,n,,*o the ultimate settlement of accounts will show a corresponding Estimated Appropriations, 1807-8. . L £744,178 7 6 difference in results. We next glance at the third and fourth tables, and remark Now, with a proposed expenditure of only £744,178 7s. 6d., up fQ 1864 . 5 ProTinccs were s]lort paid] and that and an estimated revenue of say £1,084,000, it would at first during the j^ twQ yearB> they haye been over . paid . sight appear that there was no ground for the assumption This feet v notewortliy on iwo acC ounts. Ist. Because it is which I just now made, namely, that there was very little coinc ident with the increase of taxation. I refer to an estimate margin, and it would seem that it could not be necessary to (No y according to wh i ch i calculate that the additional relieve the ordinary estimates of the charges for certain services reTenue receiTed during the last two-and-a-half years, in conseand make provision for them elsewhere, and so indeed there qnmce of the increase of the Tariff in 1864; and tho i mpos iti o n would be ample margin, but for tho necessity of making of the Stamp Duties in 1866) hag amounte d to £580,000, and provision for the Provinces—a necessity, however, which I have accord i ng to tue return before us £626,000 has been distributed already stated tho Government recognizes. Here then is our to t]ie p rovinces during the last two years. Now if there had great difficulty—the bete noir of New Zealand financiers—and been no such increase o f t h e taxation, such a distribution could if the present Government succeed in making such a settlement not l, aTe been effected. I doubt, therefore, the wisdom of of this much vexed question as may be accepted by prudent and those! whOj witllin the recesses of t ] ie i r respective Provinces, reasonable men, they believe they will have conferred a lasting declaim against the General Government, as the devourer of the benefit on the country, by removing a great cause of delay, procee( j s o f the taxation of the country. 2nd. Because the uncertainty, and irritation. But this question cannot be dealt principal over-payment (which was that of the last year) was with satisfactorily merely as one of measure, it is one of manner made by a Government which has been attacked on account also, and the one is only second in importance to the other, if, of ita alleged anti-provincial tendencies ; a Government which that is to say, any character of stability is to be stamped on our it now appear3i However, has, without authority of law, actually proposed arrangements. overpaid the Provinces (the proportion of 3-Bths of the gross The results of the past financial relations of the Colony and customs revenue having been paid over to the Provinces for the Provinces can alone afford data on which to base safe thirteen instead of only twelve months within the past year, a proposals for the future. Now, lam not going to travel over year whiell may henceforth be recorded in the almanac of the the ground which I took in 1865, when I endeavoured to Colony as "The Provincial Leap Year"). The Committee may expose the defects of the system of distribution of surplus sanction this proceeding or it may not; but certainly this would revenue, as settled by " The Surplus Revenue Act, 1858." The be a dro ll conclusion to arrive at, viz., that a Government, arguments I then used, to show that the effect of the system was exceeds the law to aid the Provinces in their embarrassto keep the public accounts in a chronic state of arrears, and mcntj ; s at tlle Bame timo seeking tne ir destruction. lam cause sums to be distributed under the delusive character of reminded of a domestic complaint of ill-usage once brought surplus sums when in fact no available surplus existed, have before a police court, which, after cross-examination, was not been controverted, and are, I believe, incontrovertible, reduced to this, " Well then, your honor, he gave me such a But it is indispensible, before proceeding to propose any new l oo k!" I need hardly inform the Committee that the court arrangement, to take a retrospect of the past. With this object dismissed the case. I have had a return (No. IV.) compiled, consisting of four if fairly judged, these over-payments to Provinces ought to tables, exhibiting the annual authorized expenditure for colonial be regarded as the reductio ad absurdam of the present and provincial services respectively; also, the annual amounts surplus revenue system. distributable to the Provinces compared with those distributed. Another striking result is, that whereas £1,597,842 was all I do not vouch for the entire accuracy of this return, but the that was distributable under the Surplus Revenue Act since its errors, if errors there are, are proportional, and will not commencement to 30th June last, there has actually been invalidate the conclusions I seek to deduce from it. The return distributed the sum of £1,781,531; showing an over-payment extends from 1858 (the year in which the Surplus Revenue Act amounting to £183,689, and therefore due by the Provinces to was introduced) to the end of last financial year. I propose to the public revenues. 2

5

FINANCIAL STATEMENT.