FINANCIAL STATEMENT.

Ashburton Guardian, Volume V, Issue 1286, 21 June 1884, Page 2

FINANCIAL STATEMENT.

(by TELEGRAPH ) Wellington, Yesterday. The following Statement was delivered by the Eton Major Atkinson in the Souse of Representatives this evening : Mr Hamlin, The task which I have before me this evening is comparatively a light one, as I have only to submit for the consideration of the Committee, the financial results of last year, and ask for the grant of a sufficient supply to carry on the Public Service until a new Parliament can meet for the despatch of business, which I hope it will do in within two months from the present time. 1 desire at the outset to ass ire hon. members that the financial difficulties with which we have had to cope during the current year are by no means of so serious a nature as some seem disposed to think. 1 am satisfied that there is nothing in the difficulties of our financial position to make us doubt our ability to meet ani overcome them without placing any undue burden upon the taxpayers of the colony, it has been my pleasing duty for the last two years to announce a satisfactory surplus at the end of each financial peri >d, but I regret to say that the serious depression under which Now Zealand, in common with a large part of the civilised world, has bean suffering for some time past, has caused a considerable falling off in some items of our revenue, and has thus transformed into a deficiency, the small estimated surplus of L 8,295, with which I hoped to have, ended the year. ORDINARY REVENUE ACCOUNT, 1883-84.

In the Statement I had the honor to make to the Committee last year I estimated the total for the financial year ending the 31st March, 1884 as L 3,661,496. Of this amount L 1.645,694 was required for interest 4 and sinkingj fund and for the Civil list and other charges under permanent Acts, and L 2,015,802 for the services for which annual provision is made by Parliament. The sums voted on the Supplementary Estimates have increased, the amount of the annual appropriations to L 2,040,369. This sum therefore, with the estimated charges under permanent Acts amounting as I have just stated to L 1,645,694 gave L 3,686,054 as the total appropriation for the year. The total actual expenditure on this account during the year proved to be L 3,681,320, being'L4,734 less than the estimated amount. The payments under permanent Acts were Lfio6 in excess of the estimate, and those under the votes of the year were L 6,241 within the amount authorised. These are the net results. Hon. members will find on looking into the Appropriation Account already laid before Parliament that in some cases the votes were exceeded, and that in others the amounts authorised were not all expended. Eliminating the imprest advances outstanding at the close of the jear, which the law requires the Treasury to include in the Appropriation Account, but which do net form part of the final expenditure of the year, the payments in excess of the votes of Parliament amounted to L 27,862, to which, however, should be added L 7,266 for services unprovided for, making the cotal of unauthorised expenditure L 35,128 chargeable against the LIOO,OOO provided for this purpose by the Public Revenues Act. On the other hand the unexpended balances of votes amounted to L 40,389. As information relating to the so-called unauthorised expenditure and unexpended balances has already been laid before Parliament, it is unnecessary for me to refer to them further. During the year 1882-83 the total expenditure out of the ordinary revenue amounted to L 3,638,334, as agaiqst L 3,681,320 expended last year ; the expenditure of 1883-84 being therefore greater than that of 1882-83 by about u 43,000. It will be see i i

from the table which will be found 1 appended to this Statement, when pub- r lished, that the classes of expenditure j mainly accountable for this increase are t education L 12,200, and railways L 53,700; t but a saving of L 39,200 was effected in < the Constabulary aud Defence services. ’ The liabilities of this account on the 31st ’ March, 1884, were estimated at L 166,757, i being L 9,773 less than the amount out- I standing on the Slat March, 1883. Particulars of these liabilities have already been laid before Parliament for the purpose of enabling hon. members to compare the liabilities outstanding at the close of the last financial year with the liabilities of the three previous years. The present mode of treating liabilities having new been four years in existence 1 have had a comparative table prepared which will accompany this statement when published. The ordinary revenue of the year 1883-84, that is the revenue exclusive of the receipts from land vales, was estimated in the Financial Statement of 1883 at L 3,573,800. The subsequent increase, however, in the Property Tax of one fat thing in the pound brought up the estimate to L 3,658,800. The actual amount of ordinary revenue received and brought to account by the Treasury J during the year was L 3,493,669, being thus L 166.141 under the estimated amount. The usual comparative return of the estimated and actual receipts will be laid before hon. members. It will be seen that the main branches of revenue in which the estimated receipts have not been realised are Customs and railways. In Customs the amount received was L 123,313 short of the estimated amount, which was L 1,520,000. In railways the amount estimated to be received was L 1,020,000, but the amount brought to account proved to be L 963.109, being thus L 56.831 under the estimate. I have already stated to the Committee that the total expenditure of the ordinary revenue of the Consolidated Fund during the year J 883-84 was L 3 681,320, and that the 'revenue amounted to L 3,493,659. To the latter sum I add, however, the balance at credit of the account at the beginning of the year, L 35,549, making the total receipts L 3,529,208. Hon. members will thus see that the position of the Consolida f ed Fund for the financial year ending the 31st March last resulted in a deficit of L 162,112. X may perhaps here be permitted, Mr Hairlin, to point out the great difficulty of making an accurate estimate of revenue. Experience teaches us that a very slight alteration in the price of either wool or grain very materially affects our income. In some years when our staple products sell at a good price ws suddenly find an overflowing Treasury ; on the other hand when prices are low we And ourselves face to face with that unpleasant fact for a Treasurer a deficit. In so small a country as this is we shall always be subject to sadden rises or falls within certain limits in our revenue, and we must from time to time expect to have , to face a deficit, unless we are prepared, . in our annual budgets, to leave a much wider margin of surplus than seems to me hardly possible or necessary; for a I largo surplus, in my experience, generally r means pressing demands for greater expenditure. It also means that more money has been takqn out of the pockets of the tax-payers than was necessary for . the services of the year, and this 1 have always endeavored to avoid doing, holding as 1 do the belief that no Government is justified in collecting more.money than is sufficient to carry out the services voted by Parliament. > L\ND FUND ACCOUNT, 1883-84. The amount to be expended during the year out of the money derived from sales i of land was estimated at L 238,162, of which L :6,6 0 was for payments under • rotas for the services of the year. The actual expenditure was L 23.662, or LSOO more than the estimated amount. The expenditure under permanent acts was L 34,843, and under the votes of the 1 year L 203.819. The moneys handed over to local bodies for expenditure on roadmaking, from moneys derived from lands sold on deferred payments, was L 23,358 There was also paid to local bodies daring I the year L 45.446, for rates under the Crown and Native Lands Eating Act 1882, making a total of L 63,804 handed i over to local bodies to be expended by t them. The expenditure in respect of the r Crown Lauds Survey and other depart- ‘ meats amounted to L 165,373, being . L 3,190 within the amount estimated. The " amount transferable, under section 4of the Roads and Bridges Construction Act, 1882, to the main roads account in the PubI lie Works Fund, on account of the trana- ( actions of the year 1882-83, was found- to be L75 ; 203, but no transfer was made t during the year 1883-84, the necessity for , doing so not having arisen. The liabilities outstanding on 31st March, 1884, on this account amounted to L 33,677, exclusive of ' the sum of L 75.233 transferable to the , main roads account. In respect to the transactions of the year 1882-83, the estimated revenue during the year from sale* of land was L 275,600, the actual receipts proved to be L 232,545, being L 43,055 under the estimated amount. ■ The revenue derived from the cash sales of land was L 163,783, and from sales on deferred payments (.68,787- jTo the revenue I add the ba’ance with which we began the year, L 86,564, making the total receipts L319.J09. Deducting from this amount the expenditure, amounting to 1,238,663, which includes the sum of 1,68,804 paid to local bodies, ws get a balance at the close of the year of L 86.447, subject to the charge of L 75.203 transferable to the main roads account. THE PUBLIC DEBT. On the 31st March, 1884, the gross public debt of the colony amounted to L 32,367,710, .and the accrued sinking fund to L 2,792,808 ; the net public debt was, therefore. L 29,574,902. Of this sum, however, there remained unexpended, L8?7,912. In the Financial Statement, which I made in 1813, I informed the Committee, that when the amount represented by Imperial guarantee on other debentures amounting to L 733,300 temporarily taken up out of the moneys at credit of the Public Works Fund, and which was not, therefore, ineluied in the public debt of the colony, had been raised, the net debt would amount to L 28,503,581. During the past fyear L 599.399 of the sum mentioned haq been raised, leaving *L124,000 unraised,'which I accordingly deluct and get L 28,384,581. During the year there has also been raised the second L 1,000,000 of the loan of three millions authorised in 1882, together with L 250,000 authorised by the Colonial Inscribed Stock Loan Act 1882. The debt has further bsen increased, to the extant' probacly of L 161,300, by the conversion, to which I shall presently return, of a large amount of and 5 cent 5-30 debentures, into 4 per cent Inscribed Stocx, at the Beak of England. The reduction in the rata of interest in respect of this part of the debt has, how ever, caused a large annual saving. These Increases of the public debt, amounting to L 1,411,300, added to L 28,384,581, give a total of 1.29,793,881. From this sum, however, 1 deduct the sinking funds accrued during the year, estimated at L 220,979, leaving L 20,574.903, which I have already stated, represents the net public debt of the colony on 31st March, i 1884.

LOAN OF ONE MILLION' RAISED IN JANUARY. Last year 1 na-i occasion to congratulate the Oommittee on the unprecedented success which had attended the negotiation of the instalment of the loan of three millions authorised iu 18S2. That loan, as hou members are aware, was offered to the public through the Bank of England iu the form of a 4 par coot Inscribed Stock, at a minimum of L9B 10s. The average price at which it was placed being

L9B 12s sd. The second instalment of one . million was raised in January of this - year. Sir P. G. July an and SirF. D. Bell acted as ageu'3, and the loan was ?offered ‘ to the public in the same form as on former occasion, and at same minimum, L9B 10s. Tenders received at the Bank of England were 607 in number, amounting in the’ aggregate to L 6.073,000, at prices varying from the minimum of L9B 10s to Llool6s6i. The average price obtained whs LIOO 6s 6d, being no ksi than LI 14s Id in advance of the price obtained for the first million. There is therefore still greater room for congratulation on the present occasion of this renewed***- ; pression of confidence in the resources of the colony, and at the prospect which the state of our credit affords of our being • able, if we continue to manage our affairs with prudence, to obtain the necessary - loans f«r our public works upon very : favorable terms. Papers relating to the negotiation of the loan|will, as usual, be laid before Parliament at an early date..

COLONIAL INSCRIBED STOCK. As I have already stated,|fche loan an-. thorlsed by the Colonial Inscribed Stock - Loan Act 1882, v.as raised last year. It was taken up by the Postmaster-General at par, as an investment on account of the Post Office Savings Bank, and it bears interest at the rate of 6 per cent. , per annum. The proceeds were, in accordance witli the Act, paid into the Public Works Fund. It was found whan preparations were,being made for offering the (stonkto the public, that the Act would require amendment in certain directions to render it workable, and it was proposed to offer the stock through the medium of the Post Office. The whole of the loan has been temporarily taken up by the .Post-master-General, unti 1 the Act can'be' amended, and a fa o-- le opportunity arises for disposing of the stock to the ’ public. •

CONVERSION OF DEBENTURES.. -,,. f Last year, in adverting to the Treasury Bills, amounting to L 1.832,000, expended on the 31st December, 1832, for debentures having a currency of three years, issued under the Treasury Bills ' Acts of 1879 and 1880, to be afterwards converted into four per cent, inscribed stock, I stated, with reference to the

proposed conversion, that circumstances had not proved sufficiently, fayorablelfor e successful operation, but that the Government intended to inscribe the debentures

as soon as a' fitting opportunity offered. The desired opportunity presented itself... lest year, and under the wise end skilful management of Sir P. Julyan and Sijr P, D. Bell, the stock agents under the Act of 1877, the operation has been carried to e successful issue. It was not, however, restricted to the conversion of the debentures for L 1,832,000. Hob: members who are familiar with the form and 'currency of debentures, will recollect .that e portion of them was issued with a currency of thirty years, redeemable at the pleasure of the Government in any year after the fifth year from the date of iesne, • on the Government giving six months’ notice by advertisement of its intention to pay them off. The Government had long contemplated the conversion of these 530 debentures amounting to L 7,250,000, the five years from date of issue having expired, and the stock agents were empowered to convert them, and were only waiting for a favorable opportunity to do so. They determined, therefore, to combine in one large operation the two classes of debentures, amounting in all to L9,082,000 f hot, however, by the compulsory celling in of the - 6-30 debentures, but by giving to the holders the option of conversfea on certain terms. Accordingly, in September 1883,. an announcement was made public through the Bank of England that up to the 30th November, applications for conversion would be received in respect of the following debentures, viz..—L 6,000,030 4£ per cent 5-30 debentures, ai LlO3 of stock for every LIOO in debentures; X 1,250,000 '5 per cent. 5-30 debentures, at LlO3 10s of stock ; and L 1,832,000 5 per cent, at LIOO of stock. The result of this invitation was that the following debentures ware brought in and converted, namelyL3;os3,o 4) 4& per cent. 6-30 debentures, L 503,700 6 per cent. 5-30 debentures,’ ' and L 1,832,000 5 per cent debentures, making a total of L 5,388,700. converted out of L 9,082.000. Full accounts have not yet been received from the stock agents, but it is calculated that aftersetting aaida a sufficient sum by way of sinking fund to cover the increase of debt arising from the conversion, a sum of about L 28,000 will be annually saved to the colony by the redaction of the rate of interest, a result which I think the Oom» mittee will agree with me may fairly be characterised as highly satisfactory. I may inform the Committee that the whole of the debentures for L 1,832,000 were held on behalf of the sinking funds of New Zealand loans, the Post Office Sayings Bank, the Government Insurance Department, the Public Works, and other funds, .and that the right to place immediately L 500,000 of the 4 per cent Inscribed Stock on the London market vu reserved when the proposed conversion was announced, n undertaking having been given not to sell the balance -before the third instalment of the three million loan was raised. I may farther state that the Government received from the AgentGeneral advice by cable of the sale of stock to that amount on favorable terms. ■ PUBLIC worxs. For the year ending 31st March last Parliament voted out of the Pablic Works Fund L 2,014,767, exclusive of the vote foe land purchase, L 77.000. The actual expenditure was L 1,277,710, exclusive of the expenditure for laud purchases amounting to L 24,480, and alto exclusive of the expenditure un ter the Roads and Bridges Construction Act, 1882, amounting to L 106,395, for which, as hon. members know, no vote is taken in the annual appropriation. Ihe chief items of expea- . ditqre were Railways, Lfi61,846 ; roads, L 222,243; public buildings, L 164,375; immigration, L 107,041, and other services, L 123.202. A return of this expenditure will be found in a table annexed to this . Statement. The liabilities Outstanding at the end of the year, exclusive of those for land purchased, amounted to L 997,443, which, added to the sum expended (L 1,278,710), gives a total of 111,216,153, as against L 2,014,767 voted for the year. In speaking of the expenditure ont of the Public Works Fuad, and the liabilities - outstanding at and of the year, I have excluded both the expenditure and liabilities in respect of land purchases and also those incurred under the Hoads and ■ Bridges Construction Act, The land purchase liabilities on the 31st March last, as

shown by the return laid upon the table of the House according to law, amounted to L 235,400, as against L 509,299 shown at the conclusion of the previous year ; but as hon. members are aware only L 200,000 was set apart under the Three _ Million Loan Act, 1882, for purchase of* native land, the House having approved of the abandonment of such of the proposed purchases as the Government did not think it desirable to proceed with. Of this L200,00Q, L 56,400 has been spent ijp to the 31st March last, and it is estimated that by abandoning such purchases as I hare referred to, the balance of L 143.600 will be sufficient to cover the liabilities. Of L 350,203 standing to the credit of the fund available under the Roads and Bridges Oonstruction Aot, L108,30S has bean expanded. Of this L 89.496 was on account of main roads, and Ll€,9 f on . account of district roads. The liabilities outstanding on the main roads'-account, . are L 160,483, and upon the district.road account L 43.777. The balspoe of' the Public Works ' Fund * remaining unexpended on the-31st March last, including the balance of L 389,000 of the secondin'

stalment of the loaf , - m . 'rtfa to 1877,812 One effect of limit ; a ’b’ expenditure of the loan of 1882 to about one million a year, was not, I think, foreseen when the Act was passed. For example, to exactly spend L 1,000,000 per r annum on public woiks, with only L 1,000,000 per annum in c sh available, would under a> y circumstances be next doer to impossible, and in the case of railways it is altogether impossible. The works may be roughly divided in three viz (1) Formation and bridges, (2) material for permanent way, and (3) plate-laying a r d stations, and each of these items absorb nearly a third of the total amount. If, therefore, the formation on most of the lines be done during the first year, it would be necessary that the whole of. the work in the country should be stopped during the second year, in order to pay daring that year for the rails, and sleepers, and thus provide for the laying of the rails and the making of the stations during the third year. If, however, the workjin the country be continued during, the second year, it is evident that the rate of expenditure originaUyfproposed must be overrun, and this in fact has to some extent occurred. The Government have, therefore, whenever circumstances appeared to justify such a '.course, ventured to slightly exceed the authority directly given by Parliament in ordering rails and roliirg-strck, so as to prevent the work standing still longer than was absolutely necessary, and this action on the part of Government will explain to hon. members how it comes to pahs that the expenditure and liabilities together exceed the vote by the sum of L 261,596. I may inform the Committee that there is material to the value of about. L 300,000, consisting of rolling stock not set up, and rails either in the hinds of the Government, on the sea or being made to order of the Agent-General. I desire to call the attention of the Committee to these facts, because 1 think no Government‘should exceed the votes of Parliament in committing the country to expenditure or liabilities without . the attention of Parliament being specially called to it. It will be for Parliament to determine ‘if the action of the -Government in thus exceedin' the vote by 'liabilities' for material for future use was justifiable; Had we not acted as we have ‘ done, one of two things must have happened; either come L 260,000 less must 'have ■ been spent on works on the line, thus rendering the depression still greater : than at present, or rails and rolling stock to'thfit amount must have remained unordered,'to the great delay of the works generally in the future. In the Public •Works Statement made in 1882, it was ’'pointed but that a large expenditure would be required for works upo i the opened lines, and it was proposed to allocate a large Sum out of (he balance of the five million loan for this purpose. The sum available has, 1 regret to say, s been fvand quite inadequate to meet the r necessary expenditure. Belying upon • that proposal as being sufficient to meet the requirements of the public service, no farther direct provision was made in the •ehedule to the Three Million Loan Act for 'the necessary improvement to the open lines which the increasing traffic is perpetually demandingj such, for instance, as inenaaed rolling stock, further station accommodation, heavier rails, sidings, and water supply. It is true that a large ■ portion of this expenditure might under tha Loan Act, 1882, he charged upon the - lino named in the schedule, but this mode of -charging does not appear satisfactory to the Government, and no provision has been made for a number of the open lines qpon-which a large expend!'ure has been found necessary. At any rate it is Clearly a .question which requires the .apodal consideration of Parliament. Under the authority of the votes of Parliament, liabilities have been incurred and • 'expenditure made upon the open lines during the two years since the 31st March 1882, to the extent of L 830,000. Of this L 460,000 has been charged against the fi»e million * loan, leaving L 370,00), which is at present charged under section 4 of the Act of last year •to the loan account, and'for which further ■ways and meant will have to be provided, or the amount will have to become a permanent charge against the loan. It_ will be necessary also to make' some provision - for further expenditure - upon open lines, which cannot be possibly avoided. 1 fear that ijum of not less than L 1,000,000 .will'be required to be expended annually upon the open lines, bssides all charges for renewal,, maintenance, and repairs, which are of course charged against the receipts, if the railways are to keep pace With the increasing traffic. TBX FUTURE. Under ordinary circumstances, Mr Hamlin j it would now be my duty to submit for the consideration of the Committee the proposed exi penditure of the ordinary revenue for the current year, and then-to ask Iheattenjion of hon. members to the-estimated revenue with Which it was intended to meet snob expenditure, but as matters siuua ... this House I have only to ask the Committee to grant sufficient supplies to carry ; on the public service until the meeting of the new Parliament, and to make temporary prevision for the -deficit of last year, and snob further provision for public works as may be required until the new Parliament shall have decided now the expenditure upon open lines is to be ultimately pfiarged. I do not propose to pek the' Cammittee to consider estimates Of expenditure out of the - Consolidated JPnnd or of the Public Fund, but to obtain the necessary authority for expenditure by an amendment of the Public Revenues Act, which will extend, the appropriations of last year, with such few - as may be necessary, Until the . end - of August next I shall ask the - authority of Parliament ta issue L 150,000 deficiency bills,'to provide foe the deficit ■ft the Consolidated Fund to the 31st ,28ttieh- last These bills will be in addithe L 400,000 at present authorised to be raised in temporary aid of the jewftae,’’ I .may.here say that 1 am of 3urimon, from the experience of last year, of defioit bills are scarcely to carry on the public service of incurring serious diffiTfceeia - difficulties -arise chiefly 'to pay, at certain periods sums for interest -andbefore the consolidated re ' «jaeq»nplatad sufficiently to S^^^weoftiary'payment. The re-. ftSwPwiirowwi '**'fwwgnlarly from customs especially from the ■SKBBt!sSS'’-faw>-wM<ih-la collected only once propose, therefore, aa'the Property Jauc-i.: be ■ oolleoted within- the ' to ask for farther deficiency bills ' to MMbßhSSß&H'iit' 150,000. Withthis addiof way* and means, and ii toigrant authority to fte deficit in' last -there will be m B all necessary payment! the new Parliament. the ..Public 1 Worki there was an uu of L 877.912, but of thi in the handso vifej >hon/ members who follow thi know, advances outatand included in -balance in band available fo* expenditure -advances vary iron HffiSßfty.'tiiae fiom L 60,000 to LSOO.OOO daring Apr l and Ma; ' amounting t ffaiMflilf 61 - 1 tfia* jWying- the unexpende 'fbi l fond bn' tfiolstjune ba ainodnt L299,7S

i July and. August will be less per month than the expenditure for the months of i .Ap-il and May. The expenditure for April and May, though large, would have been gradually tapered off month by i month until the floating of the next million of tl e three million loan, but owing to the largo expenditure which has been found necessary during the last two years upon the open lines, and the action which sleepers, and rolling stock, so as to expethe Government Las taken in ordering rails, dite the works, it will be necessary to obtain some temporary aid for the Public Works Fund, until, as I have said, the new ’ Parliament has determined hoW the expenditure upon the open lines is to be charged, and until the raising of the third million of the three million loan. A table showing, amongst other things, the expenditure and liabilities of each vote authorised by the schedule of the Loan Act of 1882 will be published with this Statement. This table will, I think, enable hon. membe s clearly to understand the position of the fund. I shall ask the House to permit" the issue of deficiency bills to the extent of LIOO.OOO This will be sufficient until about the beginning of September. Sim e the three million loan was authorised, the expenditure out of the Public Works Fund has been, for 1882-83, L 897,037. La-t year it was L 1,409,588, making a total ex pegditure for the two years upon public works of L 2,306,625. But this amount includes L 154,127 advanced for purchasing rails for the open lines, which will be repaid hy the working railways department, as soon as the rails arrive and are handed over. The not expenditure for the two yearslwas therefore L 2,152,498, or an annual average expenditure for the two years of L 1,076,249, inclusive of L 106.398 expended under the Roads and Bridges Construction Act; so that the average expenditure' a little exceeds the one million a year, which the Government estimated the colony might safely spend ; and this expenditure would have been L 260,000 less if the Government had not taken upon themselves, as I have already pointed out, to order sleepers, rails, and rolling stock, in anticipation of the requirements of the current year. CAUSES OF THE DEPRESSION. And now, Mr Hamlin, 1 would like to say a few words about the depression which prevails in the colony. Ln the first place it does not arise, to any appreciable extent, either from defective law or errors of administration on the part of the Government. It does not arise from the withdrawal of capital, or from the distrust of capitalists ; there is no sign of such distrust to be found anywhere, so far asl know. Capital Can now be obtained in any amount, and upon reasonable terms, tor any undertaking whici will give a fair return for the outlay incured. Capital has not, as a matter of fact, been driven from our shores, either by our system of direct taxation or by the nature of our land laws, or by any other cause. Far more capital has flowed into the ''colony during the last three years than in any period of our history, b’or does the depression arise from the largo amount of interest we have to pay upon our public debt and private borrowings. We can, I cm satisfied, pay with ease all the interest we have undertaken to pay, because the employment of the borrowed capital has enabled, and is enabling, us to produce far more than the share our sleeping partners draw in tho way of interest, and this must be evident to auy one who will look at the amount of our exports, and remember that this is the surplus after our population has supplied itself with all the chief necessaries of life, and especially when the enormous direct advantage to the producers which accrues from our railways is considered, a saving to the community of *at least two millions per annum. The present depression, is traceable ultimately to three causes. , I irst the habits of extravagance, arising out of the wonderful prosperity which, with only slight and temporary checks, we have enjoyed for tha last thirteen years, habits which our' general circumstances never justified us in indulging, if indeed any circumstances could be their justification. This extravagance is a response to the unbecoming folly now recognised as an evil and successfully combatted. Secondly, the class of distributors and middlemen is far too numerous in proportion to our population, 'i here are,' no doubt, too many mercht nts, traders and agents; numbers of these are trading upon capital borrowed on terms at which it is impossible for them to do business upon a sound basis, and the consequence is they interfere and ruin the legitimate tusiness of the responsible merchant and trader. It is generally admitted by all competent authorities that in the year 1882 over-importation of goods, to the value of at least one million sterling, had taken place, and I find upon enquiry that the stocks in the warehouses were equal in value in Deo., 1883, tothose in "'Vcamber, 1882, so that the relief which was hoped for last year in the rt duction of blocks has not occurred. Thirdly, the low prices which have obtained during the last year for your chief articles —wool and grain. It is said that wool and grain are never low in price at the same time, and this is no donbt true'as a general rule, but unfortunately this has not proved true during the last year. The loss to our spending power upon these two articles of export has been, I estimate, not less than half a million sterling. I myself believe that had wool and grain been at anything like an average price we should have had no deficit in our Consolidated Revenue to provide for. These causes sufficiently account for the want of confidence in our immediate prospects, and for the condition of trade in some districts of our colony. The real circumstances 'do not justify this lack of confidence, but there can be no doubt that the present depression is an unfortunate fact, and that we cannot hope fora return of prosperity until confidence is again'restored.. As I have on several occasions pointed out, the action of Parliament and the Government has, to a certain extent, intensified the depression, by the determination which we arrived at two wears ago, to limit to a moderate extent ;ha expenditure of borrowed money. As hon. members will have seen from statements which I have just made, tho Government have not arbitrarily curtailed tha expenditure by a hard and fast line, but have endeavored to make reduction as little felt as possible, by increasing the expenditure during the current year to the full extent of the limits imposed by Par-

iiqment. How depression is to ba speedily overcome, is a question of great importance to all of. us. I confess at once that I see no royal road by which we can be relieved from present dullness. The only remedies are to live well within our means, to increase as largely as possible the number of producers by settlement on lands of a class of persons able imd willing to cultivate them, by encouraging the consumption of local products and manufactures, to believe in ourselves, and to resolutely set our faces against the expenditure by public moneys from revenue or loan upon purposes unnecessary or unproductive, while at the same time we steadily push on our public works. If we determine, as 1 believe we shall, to follow such a course as this, then bur prosperity is, 1 venture to say, already assured. Had it fallen to my lot, Sir, to have submitted a complete Budget for the current year, my proposals would not have necessitated my asking Parliament for any increased taxation for purposes of carrying on the services of the year, as I saw.my way to make both ends meet, with a margin for contingencies, by means of reductions under proposals for reform of tho Uiril

Service which Government have had under '■on-i-10-ation, hy aavii ga which would have been effected under our Hospital and Charitable Aid prop, is its, and by the savings upon other votes to which we should have asked the sanction of the House. In conclusion, Mr Mamin, I would point out that within six months after the Hall Government took office, which it did in October 1579, the Government had to face a deficit of one million sterling upon the ordinary revenue. This, as I have often said, arose chiefly from the falling off in the land revenue, upon which we had been relying. Tha Government at once set to work to face the deficit. In the first place It excluded the Land Fund altogether, as a source from which the ordinary expenditure might be met, charging against it only the cost of iis administration, and the charges to wlrch it was locally liable, and salting apart the balance for local works, and to their separate use it has been applied .ev.r since. The deficit ol one million for the period ending March, 1880, had to be met by a permanent loan, and the expenditure of the following year balances with the revenue, by means of a very large reduction in expenditure, and considerable increase in taxation. At that time, for some years preceding and for two years subsequently, a large portion of the charge for Armed Constabulary was borne upon loan. Our five million 5 per cent loan had been sold in December 1879 at L97£, with the option of converting into a 4 per cent loan at Ll2O. la other words, our 4 per cent stock then sold for LBIJ. This sale was undoubtedly at the time a most successful one, and certainly represented our credit in its moat favorable light. In 1881 there was a small deficit in the Consolidated Fund ; in 1882 there was a surplus of L 203,000, and the opportunity was therefore taken in that year of transferring the cha 1 ge of L75,0U0, then paid out of loan for Constabulary, to the Consolidated Fund, and taxes were reduced to tha extent of about LUO, 000. lit 1883 there was a surplus of L 35,000 not withstanding the large reduction of taxation which took place in 1882, and the fact that the Consolidated Fund was charged for the first time with the whole cost of the Armed Constabulary, an additional charge amounting to about L 75,000. In 1884, we have to face a deficit of L 152.000. This has arisen from the falling off in the railway receipts to the extent of L 56.000, and in the Customs duties of L 123,000. Upou looking at the circumstances under which the Estimates of 1882 ware made, I cannot say I believe either Estimate was more than might' have been reasonably expected. The deficit is to be regretted, but it is not certainly a matter about which we should feel any anxiety. It can be provided for without burdening any class of the community. Moreover, our credit never stood higher than it does in London at the present time. Our last L 1,000,000 four per bent, loan is realising no less than LIOO 6s 6d per cent. We have, Sir, as far as my judgment'goes, nothing in our present circumstances to dishearten us—nothing, Sir, but what should nerve ua to renew our exertions with certainty that groat prosperity, will agrin reward our efforts. Meanwhile periods of pressure may be on the whole beneficial to the community by forcing attention of the colony to our affairs, public and private, prudence in our speculations,- and bettor organisation in our industries and our administrate ?. Waste is more or less an incident of all human work which the greatest skill, sagacity, and prudence cannot who'ly terminate, and the tendency in times of excessive confidence is to neglect the attempt. It is generally admitted that but for this fact our large colonial enterprises of the last fourteen years would have been a more signal success. If the country and Legislature are capable of profiting by the uses of adversity, our future progress as a people will more than compensate in its increased stability for whatever it may sacrifice in swiftness.