THE FINANCIAL STATEMENT.

Ashburton Guardian, Volume V, Issue 1247, 26 May 1886, Page 2

THE FINANCIAL STATEMENT.

Wellington, May 25.

The Colonial Treasurer, Sir Judas Vogel, delivered his Financial Statemen in Committee of Supply in the House this evening. The following ia a precis of the Statement Revenue ano Expenditure of 1885 6.

ir Julius V-gel, having referred to the fact that this is his tenth Budget, said :

Tho last fin-nci 1 year commenced will; a surp us of £l9 891, and it closed with a surplus of £37,859 Tho balance of cash and of advances ia tho hands of officers at the end of the year was £ll2 859 and there were £75 000 of deficiency bills out standing Deducing tho onr. from thother you have the surplus I have men tioned. When I made the Supplement ary Statement last year tho surplus estimated was £19,000, but increased supplementary votes and an overestimate of £SBOO of the accretions of the sicking fund dissipated the surplus, and left, according to tho estimate of expenditure and revenue, a deficiency o' £O2 The estimated revenue has proved less than was estimated by £1954. and the expenditure leas by £39.875, deducting tho £O2 and the £1954 from th; saved expenditure, you have the same result of a surplus of £37,859 ihe principal reduction m the estimated ex peiiditure was ia the item of subsidies for local bodies. A great deal of it, however, will come in for payment during tho present quarter. There wis a saving in the defend expenditure of £lO 446 and various reductions in other depar'merits, bringing the total savings up t) £109,240 ; bu 1 , on the other hand, were i here excises of expenditure amouuting ia all to £60,365 The principal items contributing to this amount were interest and sinking fund, under-estimaled £21,473 ; charitable ail, £13,984 ; printing and stationery, £1622 ; property tax on account of triennial vauiaiion,| £2545 ; posal and telegraph, £2278 for repairs aid £4743 nonuses earned by mail steamers in excess of estimate, and services not provided for, £9238 The revenue, as i have said, falls short of the estimate by £1954 The Custom? duties were £15,175 sturr, the stamps £4891 ; the railways, £5695 ; the Marine, £1876; and tho D (pasturing Licenses, £13,166. On the other hand, there was au exce-a on the item Registration Fees of £l6 >O, and £37,8i9 on the

item Miscellaneous. Of the latter increase

£25/0.) ia duo to the Sinking Fund, r leased under the Public Debts Sinking Fund Act, 1808, on account M excessive accumulation, and £19,000 to i tarest received on public m mays. Tne total amount of revenue under the estimates is £41,509, and over the estimate £ <9,585 ; the difference between the two gives the net under-estimate of the revenue £1954, to which reference has before been made. LIND FUND The land fund account had a balance at the commencement of the year of £11,931, and at the end of the year there was a deficit of £29.384. This evidently unsatisfactory result ia but the consummation of a series of diminithed receipts, not compensated sclii fientdy by reduced expenditure. I find that besides the Crown Laud Department and survey expenditure charged on the laud fund, there is debited to it the amounts paid for Crown and Native land rates. Increase of these rates, and delays in the receipt of amounts falling due under the deferred payment system, have lessened the revenue of, and increased the charges on, the land fund.

It was frun this fund that the Roads and Bridges Construction Act was to be supplied wit'! m ans, and it seems to me the ct fall thr-ugh when alt chance of moneys being available for its pu r p >ses from the land fund ceased to be poss bla. The item of Native rates charged to the fund is a very disturbing one. These payments aro made on account of Native owners, and tre recoverable as the land is sold. To make them a charge on the current revenue is, neither in spirit nor letter, consistent with the principles to which effect is designed to be given. The best r< medy 1 can propose la that the total amount of these payments shall be treated as advances from the public works fund, reducible by receipts from time to time recovered from the Natives, and an item that may fairly be recovered is the coat of the survey and expenses attending the sales of land put apart for the Little River and Akaroa Railway. Undoub ledly it never was contemplated that the proceeds of the reserves should be freed from the ordinary payments of sut -.73 and the expenses of disposing of the land. PUBLIC WOK KS FUND, 1885 86

There have not been any new loans negotiated since the House was last in session, but an instalment of the third million of the Three Million Loan, and the proceeds of the Million and a Half Loan have passed to the credit of the fund. Since the end of the financial year i f 1884 85, including the balance at the end of that period, the total receipts of the fund amounted to £2,840,166 An amount of £600,000, representing temporary advances of the previous year, was repaid during last year, and £IBB 300, districts railways, appears on both sides of the account, the purchase price and the value of the debentures representing it having passed through the fund. sho expenditure out of the fund during the year was £1,287,086. This, and the other two amounts mentioned, from which shillings and pence have been eliminated, deaucte.i from the total, will leave a balance to credit at the end ox March last ot £768.780, which includes advances in the hands of imprestees. As pointed out on previous occasions, there is always because of these advances less money really available for expenditure than appears from the gross balance. The obligations which remain to be fulfilled make it necessary that fresh means should be promptly provided. At present the only other means existent is the North Island Trunk Railway Loan. The early meeting of Parliament will enable a decision to be more promptly arrived at regarding a n- w loan. I should like to send Home the necessary authorities for raising such loan in tim - to enable it to be raised at an early date. The nominal effect only which is given to the purposes for which the money is borrowed is mischievous to the colony and unfair to the lenders. The Government think that the proceeds of ■ future loans, and the loan for the North Island Trank Railway, should bs tied 1 down for the purposes for which they are 1 borrowed, and provision to give eff ct to 1 this restriction will be proposed to the I Assembly, >

THE PUBLIC DEBT AND LOAN CONVERSIONS

The amount of the public debt on the 31st March was, as nearly as can be eati mated without an exact analysis of the lata coqvenuWß, 1431,865,2221 The

v <uiu if of the accrued sinking fund was

L3,27d,H7 !, and the net debt was therefore L 31,058 349 It ia to be remembered thac

die tendency of the conversions which have be in going on so Urgly is t-

increase the nominal amount of the deb l , bu; to decrease the annua: charge Conversion operations have proceeded on a largo scale, since the meeting of Parliament, cf bonds tn the amount of £lO,l-53,600, for which terms of conversion were offered ; £4,137,700 hum been brought in. We are rapidly bringing our securities intojearrying « lower rate of interest. Soon there will be no part of the debt bearing interest at more than 4 per cent., and the grateful task will fall on a future Treasurer, I venture to pred’et, or converting the 4 per cents, into 3 or 3|

par con 5 Tup: Deficit of 1883 4

The House last session did not appear to have any desire to see tlie deficit of 1883-4 speedily extinguished out of the current revenue. Viewing the present condition of industrial occupations within the colouy, it may be well to follow the example the others are setting, and to hold the amount in suspense It is not desirable to take £150,000 from the immemodiate necessities of the colonists, but 1 am aveise to permanently funding the deficit, and I propose to provide for it by transferring it to five years’ debentures to bo held within the colony. They can bo taken up and extinguished as circumstances justify such a course.

Finance of Local Bodies. Sir Julius Vogel having referred at length to the provisions and effects of the Hoads and Bridges Construction Act said : —The present Government approve of

none of tiiese points. They doubt the necessity or expediency of drawing so broad a line between main and district

works They think it unwise to protide funds for local bodies out of loans raised for colonial purposes. They disapprove of the responsibility cast on the Public Works Department, or of requiring Parliament to determine the main roads. They do not see sufficient reason for applying to the two classes of works different plans of obtaining money, and they think a system of finance of a more liberal character should be accorded to the local bodies. Shortly their prop isal is, that on tlie ratepayers shall depend the responsibility of determining and accepting or of refusing works, and that when the ratepayers approve money should be provided to the local bodies ou very liberal terms. These terms are a payment of 3 per cent per annum for twenty-six years, secured on spec'al rates, the colony to be responsible for the payment of the principal sum, and to meet it by setting aside yearly a sinking fund of two per cent to redeem the debentures at maturity It is proposed'hat Parliament should determine from year to year the limits of the amounts to be available to the local bodies, but t’>at in the absence of any other provision the amount will stand authorised at not exceeding £200,000 annually. It is intended that these loans shall be only for country districts, and that the storage of water for irrigation and mining purposes shall be amongst the objects that local bodies I may carry out. I have thus exI plained to you the substitute for the Hoads and Bridges Construction Act

I It is evident, however, that, with this I prospective charge, the Government cannot recommend the subsides proposed last year, which in large' part were meant to provide a substitute for the repealed .-vet, bat thsy are reluctant to do away with the subsides altogether. It was, in a measure, on theatrengihof them that the Cbarrable Aid .\ct was passed. With regard to that Act, I must interpolate a few words. The object of the Act was not so much to save thaOulonial Governmentfrom expenditure as to relieve It from the duties it could ill discharge and to cast them on the local bodies and private individuals, who where well able to fulfil them. The Act has answered on the whole. The management of all the institutions will be improved, whilst a great many have attained to the highest degree of development in the shape of separate iic >rporation. The feature least satisfactory is the disposition to raise special rates instead of leaning on voluntary donations Reluctantly the Government yielded to the pressure exerted to give the same amount of subsidy on account of money raised by rates as on account of voluntary doaotions. They will propose now to slightly increase the subsidy on voluntary donations, to arrest the tendency to which t have referred of raising by specie! rates the money required. To return now to the subsidies, the Government propose to limit the annual sum to £150,000, of which half

shall come out of the loan money for the present. It is not intended to make the appropriation permanent, although it is believed that Government should each year make a little provision. This amount it is estimated will provide, besides the liabilities, the same subsides as granted last year, namely, half the schedule rates included in the Local Bodies' Finance and Powers Act, but only three-quarters to be payable within tbe financial year, and the fourth quarter during the three following mouths.

0 LOANS XO FARMERS ON MORTGAGE. 3 The Government have not overlooked f the report of the Select Committee last 5 year-on the subject of reducing the rates 1 of interest farmers have to pay for loans on mortgage. Interesting information > relating to the course of procedure in some 1 European countries will ba presented to i Parliament. I regret to say lam not able . to make proposals on the subject, if the Government were to enter the held as a s lender of money, it must obtain that i money somewhere. In European coun--1 tries where Governments do this sort of I business, there is a sufficient market for f he securities that provide the meney, but i n the colony there is not, at present, hough I do not think that it will be long i o. There is no sale for 4 per cent securi ies at even large discounts, and 5 per ent bonds hardly command par in small uamities, whilst considerable quantities ould not te placed. To lend by giving o the borrower debentures, which he would have to sell at a discount, would mean to give him less money than the loan purposes, Take an example—Suppose that a person on a propertv worth £2OOO borrows £ISOO, and that he is paid by debentures current in the colony only. I take dadentures of this kind because, if they are negotiable in Great Britain, they would come under remarks I shall presently make. I need only now say, t arenthetic dly, that If payments were made in English debentures it would be better in every way that the Government should negotiate them in bulk and pay in money. To return to local debentures Supposing they bore 4 pec cent, interest and were current for fifteen years, as pro-

posed by the Select Committee, I am sure they would not realise as much aa £9O per £IOO, and that they would be only saleable in small parcels, whilst if they bore five pot cent, interest they will not realise much, if anything, over £95 per £IOO A larger currency might make the Five per Cento more valuable, but it would make the Four per Cento less so. Sit Julios Vogel adduced several i lustra tions in suoport of his contentions, and addecf :—Within the last two years only there has been a fall all r uud in the rate of such interest of about 2 per cent., and that fall is c mtinuiug. Doubtless it may not felt so much by borrowers of small amounts, and were the Government to di any hing they should confine there operations to small loans, but even then they are not Imeiy to be able safely to mnci mt rove on what private competition wil be able to do, and their entry into th fiold would drive away private oompetitio; to an extent that might ultimately prove mote iojurtoT# tq bonowen thro would

be repaid by any temporary advantages they gained. The stand the Government now take is that at present the colony's credi 1 : would suffer by their entering into Uio business, and they are hopeful prtvajfs rntertjris: will give such relief to the small farmers as will render Government interf recce unnecesfary, They recognise, however, that the subject should be watched and further consideration given o it.

Estimated Exsenditure 1886-87. The estimated expenditure during the present financial year amounts to £4,070,208. which is £49,155 in excess of the estimates of vote-, and £89,030 in excess of the expenditure of last year. The exc ss is fully accounted for by three items, viz. ; —On Education, £20,978 is estimated to be required more than last year; on subsidies to local bodies, £39,368 ; and on working railways, £07,225. The first of these increases is the representation of the yearly growing educational demands. The second has been already explained. Tim third is consequent upon tho larger mileage being

worked. The net profit on railways is estimated at £38,471, in excess of last year. When the increases which I have explained on the three items are deducted, tha balance of the estimates shows a leas total anticipated expenditure during the yeaf than the actual one of last year of £38,540. There have been the usual additions to salaries under £l2O. The proposed increase of salaries above that amount are very few. Each case of the kind has been most carefully considered

by the Government, and they are prepared with the necessary explanations. I entreat hoc members not to do old and tried officers the injustice m coming to a decision before Hearing the reasons for the few increases submitted. I confidently ask all the gentlemen who within the last few years have heln office to look into the additions, and say if they consider them undeserved. As I have stated, there are very few real increases. Some of the seaming ones are co - sequent on the removal of officers from one part of the country to another, and others are merely due to ‘he promotion of officers to fill the place of those retiring from the service. I a these instances we invariably endeavor to retrain from bringing in new officers. We save part of the money, give other officers promotion, and end with the appointment of a cadet. Thus, although the operation is slow, the officers r se, and the expenditure is kept down. Iso Government coul 1 be more anxious to reduce expenditure when they see it can be safely done. Whenever there is an opportunity of amalgamating offic s we are glad to seize it, and no effort has been, or shall be, wanting on our part to to take advantage of it. This process ia also slow, but on it depends the best hope of reduced expenditure. Sir Julius then referred in detail to the expenditure in each Department.

LIND FUND, 1886-87. The expenditure for the current year ia estimated at £l6B 752 This includes the usual charges under special Acts, sauo as the thirds of the sa'es of land on deferred payments, New Plymouth Harbor Board Endowment, and other charges ; also the Land and Survey Departments, and rates ou Crown Lands. The revenue for the year from land salos is estimated at £143,800

FUTURE REVENUE. The Customs revenue showed a deficiency on the estimate, as I have said, of £10,170. The estimate last year was a low one, amounting to about £19,000 only in excess of tbe actual receipts of the previous year. Hon. gentleman wiil recollect that Parlia > ent authorised last session a considerable increase in the duties chargeable on wine and spirits. Notwithstanding those increased duties, the whole Customs revenue only exceeded the revenue of the previous year by £3723. Judging from the first month's return, and rrom the continued operation of the chief causes that tend to reduce the Customs receipts, I do not feal myself justified so large a enstomea revenu as that of last year by about £5060. If there had bean no excptional influence to keep down the Customs revenue, it should by natural increases during the last few years yield considerably more than £l, 500 000 per annum, whereas I am unable lo istimate more than £1,410,000 for the current year The diminished consumption of spirits and the diminished value of goods both leave the people bettor able to Veep up the gross yield of duties, and financially the Government consider it unwise to allow this great branch of revenue to lose its elasticity. The reception, however last year of the proporals to increase the Customs duties was not of a nature to indnee the Government to again submit similar proposals to the same House, and with great regret they feel themselves debared from doing so. I cannot say that additional taxation is necassery this year, for it is not. On the contrary, 1 can do with lees, and I propose to take off one-sixteenth of a penny of the property tax, making it ihirteensixteeatha this year, instead of seveneights This is equal to a redaction of £24,000, or oven 7 per cent of the estimated yield of the tax. 1 should have liked to take off more, and I am convinced that In every way the colony would benefit if the House were to sanction the reduction of the proderty tax to five-eights, and substitute a moderate increase of duty on articles (other than sugar and tea and such like necessaries of life) than can wall bear the taxation.

Eshmated Be venue for the Year 1886-1887.

The estimated revenue of the year the reduction of the property tax wIA I have described, is as follows :

Sir Jalius Vogel congratulated members upon the prospect of the early construction of the Midland Railway, and referred to other public works, and read to the Com* mittes a list of the railways to which it is proposed to devote the million and a half loan :

£ Extension north of Auckland 70,000 For doubling railway line out of Aackland southwards 33,000 Thames-Te-Aroha .. 80,000 Auckland-Eotorna .. ~ 120,000 Napier-Palmerston .. .. 100,000 Maurioeville-Woodvilla ~ 125,000 Blemheim-Awatere ~ ~ 50,000 Hokitika-Greymouth .. .. 100,000 Livingtone branch .. 150,000 Catlin’s river .. 50*000 Seaward Bush extension ~ .. 30,000 Edendale, towards Fortrose .. .. 40,000 Mossburn 51,000 Kiversdale-Switzers 41,000 Otago Central 200,000 Mount Somers-Alford Forest .. 14,000 Blenheim-Tophouse 100,000 Weatport-Inangahua . 75,000 Open lines .. .. .. .. 200,300 Raising loan and contingencies .. 93,000 Total £1,500,000 SETTLEMENT AND INDUSTRIES Sir Julius Vogel then referred «c settlement Industries, and the general condition of the colony* end concluded by layiug

The lesson life hub taught ui. it that there are few difficulties which ciunot be overcome, and that the d» r moment Ib nearest the dawn. For thirty-four years I have closely watched the progre.-s of the Australasian Colonies. Theie have been times when it seemed to me that terrible reverses mud. infallibly overtake them, and again and again has the weakness - f uxy judgment been rebuked, until I have leatoed to t ank that the logic of facia is in favor of recovery rath than of decline Th > prowih of the .e colonies has h <en so marvellously rapid that the mind is unable to retain the memory of halting periods in the past. As to the future, as d in all humbleness of spirit, I dare to predict that many generations will puss away before the colonibi beneath the S.m hem Cross roach the culminating gr? 'toK- s "f their destiny.

1886-87. IS35-S6. EstiEsti- ! j mated. mated. 1 Actual. Customs .. 1,410,000 1,430,000 1 1,414,825 Stamps, including Post and Telegraph (cash) .. 617.500 611,900 607,000 Property Xa.\ .. 312.000 327,000 326,276 Peer duty Railways Registration, and I 1,500,000 55,006 1,050,000 55.165 1*044,305 other Fees Marine .. .. j Miscellaneous 36,00c 34,000 33,606 44,000 M.wo 32,000 69,819 Total 0-637,500 i S-S'Si.n: IJc|j.i>turiug Licenses, Rents, &c. 186,328 1 9S»ooo 181,834 Debentures for increases of Sinking fund .. 051,100 258,000 252,200 Total Revenue ,, 4.074,928 4,006,900 3,999,046