THE FINANCIAL STATEMENT.

Auckland Star, Volume VI, Issue 1701, 31 July 1875, Page 2

THE FINANCIAL STATEMENT.

The Government summary of the financial statement delivered by the Hon. Major Itkinson, Colonial Treasurer, would occupy nearly four columns of our space but its salient point., can be stated in much briefer form Mayor Atkinson opened by giving an unqualified denial to the rumours current eTLg the financial state of the colony and said he would lay before them an hones statement of affairs upon which every honest doubter could form his own conclusions.

Loans

With regard to immigration and public works constructed by loan it had been impossible to resist the pressure to hurry on works and follow the original intention of extending Sir Julius Vogel _. original scheme of extending the expenditure over a number of years. Loans had therefore to be raised more rapidly than intended. Out of the 7? millions authorised between _une7 1870, and June 187 . nearly two millions still remaned unraised. T_P expenditure out of loans during the foutyears 1870 to 1874 was £4,289,877 and it was last year estimated that during 1874-75 £3,300,000 would be required. In addition to the above, there was at least the expenditure for the current financial year Jo provide for _ oav £225,000. Out of this total expenditure of £9,836,877 to be provided for, only £5.795,200 had been raised, and. it became necessary, therefore, to provide the balance of £4,044,677- The Government therefore decided to sell the whole four millions if possible. Thestatementthen referred to thedifferences between the Crown Agents and Mr Vogel and the ultimate sale of the loan to Rothschilds who were to take up three millions at once and the remaining million within a year, receiving two per cent commission. The net* price received by the colony was £90 193 Id. The Crown Agents agreed that considering" the magnitude of the loan, the terms secured were favourable and the Government were satisfied that the course pursued was the right one R?*h«»h lids floated all the loan, and £3,16/,571 had been paid into the Government account on the 31st May last. The average price on the basis of interest paid for loans since IS7O was £4 19 6d and the last four millions cost £5 2s per cent. The average of the whole was £5 7d per cent while the estimate made when the borrowing policy was introduced was 5_ per cent. The balance at the Bank of INew Zealand in London on the 31sb May had been partly reduced, by a repayment to the Bank of England of the £600 000 that had been borrowed on the . £800* 000 of Imperial guaranteed debentures. 'to £2 056,716, against which drafts had been discounted by the bank in the colony up to the 30th June of £I,' 050,000 The Bank of New Zealand now pays interest at the rate of % per cent below the current rate of Bank of England rates, instead of 1 per cent as formerly. The probable balance for the year is estimated by Sir Julius Vogel at £1,500,000, and he proposes to invest any sum in excess of that amount in Exchequer bills. Balances ia the Treasury. Of the Defence and Other Purposes Loan, IS7O, of one million, to extend over five years, there is an available balance of £125.315 less expense of raising. £179,000 of this loan remains unraised, and £52,000 of it has bren hypothecated to the Bank of New Zealand for a nominal advance of £50,000. Payment of Interest. A misapprehension existed to the effect that the colony was paying interest out of loans. This was not correct. In order to avoid payment of exchange, interest was paid out of funds lying to the credit of the colony in London on account of loans, but upon receipt of the Crown Agents accounts the interest and sinking fund so expended was debited to the consolidated revenue. The total sum ever asked for out of loans to pay interest was £300,000, and of this £81,500 remained unexpended, and as no more interest would be paid out of loan this balance may be otherwise appropriated. But against this payment of interest out of loan there has been contributed to the Public Works a sum of £179,303 out of stamp duties, and the contribution will be increased by the end of the year to £241,800, so that there will be contributed out of revenue towards loan purposes £23,300 over and above all interest paid out of loan, which contribution will be further augmented year by year. Since 1870, £2,314,942 has been paid from revenue for interest on loans. Last year all interest had been paid out of revenue, and the same would be done next year. Out of the General Purposes Loan, 1873, for £750,000, a sum of £463,000 is yet unraised, but the Bank of New Zealand holds hypothecated debentures to the value of £210,500 against a nominal £200,000. The available balance on this loan, less the charges of raising, is £106,500. Ten Millions Raised and Nearly pendedThe three Immigration and Public Works Loans (1870, 1873, and 1874) are thus tabulated :—Authorised, ten millions sterling. Of this there had been expended to the 30th June £6,474,695, and the liabilities amounted to £3,095,992, leaving an available balance of £429,313. The Colonial IndebtednessThe complete summary of loan,tables is as follows:—Authorised, £11,750,000; expended to 30th June, 1875, £7,734,413; liabilities, £2,531,923; available balance, £1,478,664; balance yet to be raised, £1,954,800. The public debt on SOfch June was £17,671,106, less accrued sinking fund, £1,074,647 ; the annual charge for interest, £835,150, and the sinking fund, £110,635. Of this debt the colony has a balance in hand of £2,167,896, being cash raised, but not yet expended, although subject of course to outstanding liabilities. When the amount still to be raised is obtained the total indebtedness will be £19,380,906, and the total annual charge thereon £1,035,775. Reduction of Debt. But before this prospective debt is reached, the whole of the balance now available, and portions to be raised (in all £3,877,696), will have to be expended. Assuming this to be two years, the accumulated sinking fund will by that time have practically reduced the debt to £17,980,906. Some of the loans forming this debt are specially secured on the proceeds of land, which will accrue at intervals. THE REVENUE. The revenue received during the year was 1,605,0032, being 184,8853 in excess of previous year's, and 108,4022 in excess of estimate. With the 96,3582 assets to be realised, and the' 205,5002 surplus from previous year, the total consolidated revenue of the year was 1,906,8602, and the expenditure 1,796,4142, leaving a surplus of 120,4462. The payments to provinces have been met out of revenue, and 100,0002 of Treasury bills paid off. Land Revenue: The Total Receipts from Confiscated Lands for the two yearß ended 30th June last, amounted to 80,8262, and the expenditure to

94,7792. The time has arrived when the*l|| lands should become subject to the ordiufctjll 1 land laws, and a proposition will be submit, v 1 ted thereon for approval. The ordinary land :Ifc| revenue amounted to 773,265?, showing « _'J considerable falling off from previous year's; r: The Government considered that atepi should be taken to prevent the squandering ?* of public estate. j^ The Savings Bank Deposits '!) show a decrease of 40,791?, attributed totlwSS high rates of interest given by banks. f EXPENDITURE FOR ENSUING YEARThe proposed expenditure necessarily i_. eludes provision for abolished provinces, and ':. is as follows : — ''j, Permanent charges (intarest on loans, &c) ..£950,1 _ Public Departments 74,460 Postal and Telegraph 222,509 Lawand Justice 65,722 Customs 51,293. Miscellaneous 43,888 Native 36,191 r Militiaaud Volunteers..... 22.885, Public Domains and Buildings 23,351 . Railways optn for traffic 245,318 Armed Constabulary 91,000 Cants to Municipalities aud Ro*d i^ards .. 80,000 Provincial Services for eight months, from /■■ Ist November, 1875. to 30th June, 1876.... 230,822 Total To this must be added the Capitation and Special Allowances to the Provinces for four months, £92,275; advances under the Pro- . vincial Public Works Advances Act, 1874, £48 500 ; moiety of stamp duties to Provin- 'i. I cial' Public Works account, ..02,500 ; local I public works inout-distric;s, £60,000 ; total i I expenditure chargeable on the consolidated ; fund, £2,405,400. New Items of Expenditure.-Esti-mates for Abolished Province^. The expenditure includes new items cf railway, native and defence expenditure. There will be payable to P»,oad Boards and Municipalities from consolidated revenue £1 for each pound raised by rates not exceeding one shilling in the pound annual value, in! addition to"a like amount payable to Road' Boards from land revenue. Provision is only asked for eight months provincial services, namely from November next, when the abolition proposals take effect. The Govern- , ment preferred to take the vote in the ahape stated rather than bring down detailed 68ti-, mates for provincial services. Provincial surveys and local works departments will be charged against the land fund. The Government will endeavour to consolidate offices, taking care, however, that their efficiency ' . is not impaired. The £60,000 will enable. , the Government to carry on the neces- , ' sary local public works iv districts hitherto Jreceiving scant justice, and to prevent any irregularity consequent on the proposed changes, hereafter these charges, will be made on the land revenue. Educational systems at present existing will be continued in the meanwhile, a vote of £50,000 out of the General Purposes Loan being taken for school buildings where now I necessary. The capitation allowances will be continued for four months, but not the - special allowances. Loan Expenditure. It is proposed to make the following appropriations out of Defence and Other Purposes Loan :—Defence, 20,0002 ; outstanding liabilities, New Zealand Settlements Act, 45 OOOZ. Also out of General Purposes | Lean: School buildings, 50,0002 ;■ in aid of lighthouses, 30,000? Also out of Immigration and Public Works Loan : Eailways, 767,4052; immigration, 392.3452; telegraph extension, 29.700Z; public buildings, 75,7792; lighthouses, 91,7002; Public Works Department, 77,134_ The Estimated Revenue for the current year is 2,355,7472, to which add surplus from last year, 120,4662; total, 2,476,1932, leaving a surplus over expenditure of 70 7932, without including auctioneers', publicans', and other licenses, which will be handed to municipalities. The gold revenue is not to be reduced or abolished but is to be applied by the Government to public works on go'dßelds. The expenditure of the balance of loans amounting to four millions, will be extended over two years so that the colony will not have to go into the London market which would be extremely unwise at present. The Treasurer then entered into a statement shewing the effect of the proposed changes on the provinces of Auckland and Canterbury selected as examples. Of the PROVINCE OF AUCKLAND he said : " It be admitted on all sides that the present financial position of the province of Auckland is a public scandal, and the continuance of such a state of things as now \ exists there ought not to be permitted. The \ necessity for a remedy is imperative and J immediate. It is for the Parliament to determine what the remedy shall be, and how it can be best applied. The people of Auckland require to be placed in a position of financial independence, and the proposals of the Government will satisfy that demand. The province af a whole will be provided with all accessary institutions of a provincial character. Its police, gaols, harbours, lunatic aßylums, and educational establishment will be provided for out of the revenue of the colony, and its large public works will also become matters of colonial concern. The cities will receive! the revenue from publicans' and trading licenses, with their boundaries, the tolls on roads and bridges, and a contribution equivalent to two pounds for everyone collected as rates. Under prudent local management, each of these communities can secure its independence, and it will have an income growing with its growth, and adequate to its own wants. The Thames will no longer be governed by or dependent on the city of Auckland, but wUI have the administration of its own funds, the out-districts, Buch as Tauranga, Waikato, and the Bay of Islands, receiving besides the items of income referred to above, an addition of two pounds for each pound collected by rates, will possess larger and more certain means for improving their several districts than they have ever yet enjoyed^ The Government have no doubt that the City. Council of Auckland, with the aid of the licence fees collected in their city, and a contribution equal in amount to their ordinary rate, could govern themselves without the aid of a Superintendent and Provincial Council. They believe that the citizens of the Thames would accept the same obligations on the same terms. As an old country settler, I know well what the outlying settlers will say to the proposals which gfive them the means of real local government." The contrast bearing on Canterbury refers specially to the absorption of the provincial debt and the acquisition of licenses. The Debt and General Conclusions. A detailed statement is entered into to relieve the minds of those who fear the colony is not able to bear its debt, shewing how the revenue had been increased by immigration and railway receipts, making it fully equal to colonial requirements. The railways were reliable assets, which might be disposed of for at least eight millions. The Treasurer concluded that it was impossible to ignore the law of vicissitudes, and a period of depression might be expected after the late unexampled prosperity, but he thought he had shewn that there was good ground for confidence in the future. He contended that, while the colony is now financially sound, there was a disturbing element which one day, if not soon eliminated, inevitably must land us in financial disaster. The continued existence of the provinces meant the continued and constantly increasing pressure upon the Government and upon this House for money in the interest of a locality, without any reference to the necessities of the colony as a whole. Last year the House resolved that the time had come when this great danger in our path should be removed. This resolve has bee^ approved by the country; the GoTernnpto have now given it form, and it remains for this Legislature to give it effect, i v-»i^T