NEW ZEALAND'S FINANCIAL OUTLOOK.

Dominion, Volume 3, Issue 900, 20 August 1910, Page 6

NEW ZEALAND'S FINANCIAL OUTLOOK.

SINKING FUNDS SCHEME EXPLAINED. ." THE PREBSIER PROPHESIES. M BORROWING AFTER FIFTEEN YEARS

:'.•''■ '.In. moving the second reading of the y.'i-Public Debt Extinction; : Fund, ■ tho V-:'Prime Minister 'Stated .that he' Lad /v-: noticed that his proposals on the' sub-. , •- ject; had been misunderstood in some . ''..; quarters. .'. Of: tho. seventy-five million ;.-■,;.■ "."which- had , been: borrowed a large -pro-. :"■•■.-,■ -.portion ■ of; the loans .wore paying .the 1 :;.'■ whole; : of the interest," whilst others 1 '■.■'.;.■'.'.■ were payiug v pbrtib'n "■• of; the 'interest.. ; ■'.Railways ; and telegraph..-; fines ; ropre- ■;-: ..sented - thirty million,''whilst .'private • estates \ which had been bought repreV •Bented.six million; .'lf tlie whole of th& : ii;/..debts were'examined it..would bo found ,';•' '.that there 'was no [burden on the com- .' njunity. ■ Borrowing for -local-authqri.: ;'.'.:■."■ ties,, etc., , . for/ihe: purchase■ of Natiyi. ■■■f/, -lands and lands for settlement purposes ..-.'.would hay.e to .',be.' continued., for sonn> fears, but the amount must he limited, n - many; instances .the money ' would : ■.■"■;-be j -.lent .over' and over again..; Ho was :; . ; Agoing to give':an .outline of what .lie -. would be the- aniount. within ■'.."■'' which this; country-would have to stop ;■ -borrowing for public,works. ■; The total .■.;.'' amount" would- not iexceed .twenty mil-. .":. lions more, ..spread .over a period of V;,': fifteen years.. ■; ;As 'a. matter- of,fact, ~'.7.he believed the amount would be less <;■; ;. than, what he had "stated:-; : ~' V ■/'•■ : ~:v:. ':■'■■ Cost of Authorised Railways. '} X;'.,: ! The railways already authorised /or. l■".;.'.construction, if.they were finished -p at" r/'ohce; woujd 'take £2,343,000,- as^-un-': ;/..\-dor":—'-i'---:■•-.■■■-'•"i--'v-■'■.•■ ".'..•"•■' v .-■■-. •■■ '":".' ■■■■ " : : : ''fi'.'-". ■'-'•.■■■■'•:. ■:" i - A ' £ '-. ■ ',■';■"'■. Kaihii to Waima, ,:........:......' -15,000. ■:;; . Kawakawa . to- ■ Grahamstown: . 50,000' ." : ; Kawakawa; to Kaikbhe .......;.,-140.000 ';.'.:'Helehsvillo to, Maungaituroto,. ' ■'.'.'.-.' ''■;■■;■-" 91' miles ~.;.:.;!........:.-, 175,000 >■■- Ta'uranga- to'TePiike ■'.'. ..-100,000 K'- v ;Gisbomc:.:to: Motu :..;.■.:.;:.... ,215,000 >.' iWaipuku,"'tb'V.Wa'ihgongoro ; ..'. :/31,000 ,-!■■'.;' .Stratford-Whangamoinona ... : 140,000 :r>S-;Pi6ton-Mirza::. .. r 40,000 . ; - ,; :V,'Waip ; ara-Parnassus v.;.:..i:;\... .80,000 , ■: ..Nelson-Hope' and Buller.: Jn.-: 100,000 :-. -.-■Eeeftpn-Inangahua." Jn: . ...'...'■: 60,000 vi VOtira-Broken .River ; : v;....;.:, : .- - 700,000. ,V. ■tWes'tportjCtwelve mi1e5.'.'.....;.. 160,000 \? ■ VNgahere-Blackball A'';.......„.;;'; 15,000' ; : ;;v Greymouth-Stato Coal VMines ' .72,000. •VLawrehce-Beaumbrit '■ ~.;..:;.'.•. 70,000 ;«; : Catlins 7 Tahakopa' ,' :..:..... 130,000 .i^.'.;.;.:V;': : ;50,000, : iSf:JJ£: flanan ! v What': about Southland ? :■ ;rt. Suggested: Railways -anti Their. Cost. ;'; J.' , ,".'; Sir:Joseph:stated that :he would/read, ...fa/statement.shbwingjcost of suggested ;■ : - 'iailways: as under:— '<■ ■ "■'.'■:■'- '■•• ' '■•■■■'•■' ,;,!.„ '35'- : 500,000 -.-. ."■ fKaikphe-Hqkianga -::.:.: ,26 .'/260,000 :■■"■■'v'iWaip'u-'Jlaxsdcn ■■: Point , ~ ■ '. . - ■0+ (light' railway) ! l^;iv'V..-; 11J ■ ■: 40,000,. ',' r \.VMaungatur6to to Mango-- ' : ..' ■•::V.:ynur •;.;...:.:::..;.;.:....., 100 v l;000,0q0" 20v .200,000 ' ■■'"' Papakura-Clevedoh- ■!"■;:. ' '■'. .,.''.. .■', - ' ■■'■■'- '. :. .. /40 : '"350,000 •.;;...;.;.'•'.4o -'-280,000 ■■;,'Paeroa-Manurewa- ;.../... "60' - 420,000 ■'/■■ ; .Wa'ihi-Tauranga ■. .:.....;■ 54 .■ .400,000 ■■■«Te:PukciOpotikii.;.:.;...; 46 :• 414,000. ■ ; :'^TeiPuke-Mamaku :: -:. ; .V. : 34.:'200,000 :;;•........;...:' so ■■■„ 750,000 •V-'-Opotiki-Botorua: , ■.....'..;.: 60 . -450,000 ,f -:■ PukckbhcrWaiuku, .„'.;. 12j; 90,000 j-.-zNgarunwahia-Raglan'::.. 25■'.■■■'■ 250,00 ft K:-.::Kawa-Kawhia , ';.;;;.:::.;:; '■■ 28' - 280,000 ;.•'. .Te.\Awamutu-Kihikihi...: k -.. 3--r" -20,000 ■■,'■: Ohakune-Eae'tihi ..... : .. .. 7i,'"50,000 '.'.■'":-/Ohakune-Wanganui :.;.'.'' 60- '.720,000 ; : -.'.. : -Ut.iku-Mbawhango . ..... '10 , \70,000, Vi : : ..:Napier-Gisborne; .■...:.;... 116 ...1',100,000. ■ -Waipukurau-Ongaonga . . 10 '•':-."60,000 "f % Dannevirkc-East Coast:,.'.3B ■■'. 270,000; !■ V-:.'-'Masterton-:Weber-Dan-.V--'--..•':■ ' .'. : ,-'■• ■■•; X ; -;v : .;-neyirke : :,530,000 '''.'" ■'•■''": ■'.■■''':■. .or/'".--"'-'-; ]■'■■■''.'■''■ '•'■'-•" ■'•.'•■'■:'.•■•■. : ; !>; llasterton-Tenui-Castle-; : / :'■■''):•''. -, ;"■ .:'/;-*:■ :':point-Wallingfqr.d-'VVai- , '.;- '/■'•' r"j) ; -.pukurau ,;"....„:.', .'9B '■: 850,000 : ■/;:■■; Greytown-Martinborough.. 10j;.'. ; 80,000 '.-. Featherston-Martin-\ ;."■'-', ■:■■ .'"•.■■• 'v;-f - borough: ■\,:..-.'.-:.:!:i..'.i. 12 : . 93,066.I.:/ iWhangamompna-Otbro- -, ' ■". -■ ■■ ' , : 0'::;,: :hanga ; ..;.;.i'.;.;v.. ; ;.:;v 100 '725,000 ;'..:, Stratford-Opuhake -■ ; -'26J- .'.- 222,000 ; .-.- ~"\ or, .:•■ "■;.■'.,' 1 .-i:':..' -.'' .' : ; )'.{..'. Elthain-Opuhake ~....'...: 23/ ■ ,173,000 '.../■'.'.•.i'., •,'•■•.'. .'-'ori :"■■'■■-!■:■:''•■;•/■/' ■-•.■'•'■■ ..".: :-. •' '■'.■ •■■ V!y ; Te.Eoti-Opunake ..;;....;. 22 153,000' iV''v:";; ; .'- ■„ , ';'; ■'■ . .-■■' -. • <;.. .' , ■- Hawera-Opunake ...;.;.: .26 : '183,000' .' v ; Fejlding-Ap'iti. ....;;..;....:' 20;|,, 118,000 ■ -~y'-\ ?Ashliurst-Pobangina■ ;• •..'.' •'' 3f'i ' 60,000 ■. : ,'. : Foxton-Ocean Beach.. .(. ■ •-3.■>.'.• 10,000 '■' : - .': .- ...1v...: 40i ■: 400,000 ';. Bay-Gollin's -. ' ■,•'-... . ; ■ ; -;.-':-V.i. Valleyrlake : ■ iFcrryX : •..■..; ■■".'.'■. ■':: :\ ;V.'.' ■.Martinborough-Cafter- ■' '" '-.'■'.'■.■' ; -. '"ton-' ........:...........;... 70 -oOOjOOO '-'.;:. .Tβ'-Are-Island .8ay....... -3i 70,000 ;.,'- :; :Eichmond-Motiiel!a'.! ... -22"'. 180,000 \, •'■Hope and ;Buller' June- ■ /: . ; '-' ..-:■■ tibii-Inangahua June-.'- -:■' : : ; tion ....,.;.;;........;.;:, 53 1,000,000 .■. Tiyelve ( :. miles on. West-', '.".'" ' •■•V; .;!port'.vtqj. Inangahua ■ ;',-.:, Bailway to liiangahua '■■•'. .«:' V;i Junction .... ■........../ 14'- 280,000 't: ' Cape Foulwind-Charles-, . . •■•'■■. : :? .-it0wn;■'■■■::;.:;;; .:,.....::... 12 120,000 .:-:' : 'Koss-Waitaha .:.:..;.;..> 10 ' 110,000 ■I-:.:-Jfirza-Parriassus..' .;'.. 78 950,000 I:: ;Culverden-Hanmcr. ;,.;„ , 18 ,- ; 150,000 ••;f. ; .VCulye.rden-Waiau; ,'.',;■;■'....;■: .14; •:■:•■■ .'56,000.- -' ■■- i. Culvcrdon-Conway ' : .;... 30 . 450,000 :■ '. ■Darnold-Greendale ■ ■;;/;..'Mfii , -.50,000 .■..'......... 8i ',32,225 /X'.-?Little(. River-Akaroa: i.. ; 23' , ; 115,000 ".fiv'Ashburtqn-Mayfield-,,-.;... • 6-' .',30,000 r-<;Orari-Geraldine f .;'.'.:...-.-■ 4i .';■■■l7,ooo v: ; Tcmuka-Kakah\i'-;.;;....V 13i '• .64,800 .".Pleasant.Point-Rain- ',: '.' , : r : - : cliffe ■ .::...^...:....:^:; ; . 10 51,200 ■Fairlie-Pukaki. .;......'..;- " 640,000 -Ikrke's Pass-Tekapo ... V l7 . 100,000 Fairlic-Burke's-Pass .:.-■ 12 . 50,000 :' Normanby-Pareora. ■......■' M 6 71,000 . -iWaihao. Dpwns-Waiho- • '.'/-■' • -runga .;....... 7i' 56,000 ; Duntroon-Naseby .:.... 39 375,000 Toknrahi-Liviiigstone ... 3-i ■ 25,000 ;'.'■ Otago Heads 12J 125,000 '. ■•. Kaikorai-Cattleyards ... 3 20,000 .V'.Clyde-Hawoa ~.....;': 50 -500,000 - , Brooklyn-Brighton-Taieri .;•:'•:■•'■■ Mouth '. .........:.... loi 80,000 ; ''Xoveirs Flat-Kaitangata 8J 40,000 ■I -Balclutha-Roxburgh .... 62 500,000 .'■'-: Tahakopa-Tokomii ....... 33 320,000 •■-•Clintoin-Cljdevafe 16 112,000 24 170,000 '-■::. •ffyndham-Mokorota , .:. 20-200,000 Wrinht's Bush-lleddon ■ : Bush .........'..:....:..:. 18J /100.000 ■■.-' AVihton-Heddon Bush ... 12 60,000 '■"■.Waicola-Orowia ~....;.... 13J 90,000 Roads, Public Buildings, Etc. ■"'"■■ Sir. Joseph, proceeding, / said that the ■ • • ." total for railways . authorised and sug-'■-■■••'gested for the. 'North' Island - was v £13,197,000, and: for the South Island . £8,887,285. ' From this total about . two million might be- deducted,. : as they represented duplications,' which might' not be undertaken within that time. There would also be required for new .roads £2,750.000. which was estimated

on the basis of 1850 square miles of country, and that there were still seven and a half million acres of Native lands and four and a quarter million of Crown lands still - •liriroaded. Telephone and tolegraph' extensions during .the next five or six years would cost £744,000, or an average of £120,000 per , . annum. 'Among the now requirements would' be new switchboard systems at Auckland, Christchurch, Dunedin, and Wellington; also provision in connection with wireless telegraphy, which-would alone represent £40,000. After, the new Parliament Buildings were erected next year the cost to the country for public buildings' would not exceed. \ ■■£loo,ooo per annum, because the building policy had'been liberal in the past. Tho figures he had.given-to.,thc House related to. the next fifteen years. If during that time. £550,000 'per-'aiuium were emended on roads,: the'country would havo. met" the requirements' to which he had alluded. This year the amount to-be borrowed was: £1,750,000, and if the Government borrowed one and ahalf millions per annum-for. the next five'years, the. amount, could be reduced to ■ one million -.for. the.-. balance of ten years, for. during that time the country-' would be: cablo to"- provide £500,000 a year from tiie Consolidated Fund, which, added to the "million per annum to bo borrowed, would cover all he had indicated to tho .House. .', Essentials of a Real Scheme. ~ Upon the whole, ithe'loans which had been, borrpweu had been-fairly well spent.: Ift- his opinion, seventy-five years was a proper term. within which to bring about the extinction of . the public debt. -.'. The. first,attempt of tho kind at Home.was introduced by.Walpolej but it broke dowii.', ,: Next there was !the system introduced by Pitt. The .weakness of these was 'that 'about, half •' of the amount- that. was'to be applied 'to'the' ' extinguishment of , the ..loans. was obtained Vfrom vfresh.V.loans. r'.The' system which he.-', (Sir Joseph) •was proposing included' what ! were recognised, to be the'two necessary..essentials in: regard.to real sinking funds, by writers on economics.- .One was.that ■ there should: be an' annual or other periodical payment : of a regular sum derived from taxation or interest with accumulations•; and.the.other was that tho.!moneys in- question 'should be applied to -the fund for that purpose only; ■Sinking", funds wore part and. parcel .of our; borrowing from its inception, ami •therjj 'had been a-great deal of misconception, about -tho' sinking funds oi 1884.. Prior to 1884 the. accumulations were £2,803,000. ■;This'amount";, had' been, paraded by. the. .Opposition over hill and over dale.;; They had:whistled about-it, arid,must'be surprised it was ■so 5ma11.... -. ~;,.-■ :■ , :. ' .' Mv.. Massey (sarcastically): That 'is 'nothing. -■ .- I '-'.'.'.- ... ■ . . v Sir Joseph: ,If is nothing to the hon. gentleman. He .made, it about/ fifty, millions in his speeches.. The whole of tho sinking fund .from..then right on iiuder all headings had hover-amounted to more" than £3,600,000.: • "■ ..■'•'.. Hov; the Funds' Would be' Made Up. :■. Sir Joieph'went on to. say that up till now there-had, been an absence of. con-tinuity-of • system, which was an essen-,-tial. The whole of the . sinking' fund: would be put oh'-an'assured basis for repayment. There was no reason why the war loans.should be paid oft'soonti than the other loans. : -The : amount to bo paid into-the. new sinking ■ fund, would not be a fixed percentage on each sum.but a sum to extinguish the whole of the'debt in a given 'time. It would be unwiso'to make,thoiterm too short, because it. would make the annual paj--ment too large. The question was often asked where was the'-'annual payment; of £150,000' to come from, arid he would answer it. , To-discharge a debt of.-one million in."; seventy-five •■ years would require an annual payment of £2230 invested, at 4. per cent., compound, interest.."'■ So that, the whole of: the debt, deducting, the twelve -millions .which -. had -.'internal/ funds of their own, could be extinguished by' an annual investment of- £140,500. per annum. If the term were only 50 years the annual aniount would be £6550 per million or £412,050. But; to make, the term 50, years would ;mean ■that the.scheme would,pud,in disaster. How,then would the Sinking Fund be made up? At-present the Consolidated Fund ivas paying first oii'uld war loans amounting ,to £3,995,000, a sinking fund of 1 per cent. This meant that since 1906 £39,9.50' had been paid in every year to the Public-Trustee to be invested, aiid at- maturity'of the loans in 1945 it was to.be paid as the Minister ; directed in extinguishing the stock representing those loans..' Secondly, a sinking fund, varying, from' "•tiino K to time from l.A.per cent, to ,2' per ccnl. on. the amounts borrowed. for the purposes of, loan's. to local boilies.-, Tho amount paid to the, Public Trustee had, of course, varied, from year to year, incrsasing i» : tho 'amount' borrowed increased. Last year it was £52,358. Consolidated Fund to Find Only £11,392. - It was now proposed to discontinue these payments 'out'of-the-Consolidated Fund to the-Public Trustee, and • pay them under a nay system,to the Sinking Fund Commissioners.: In addition to the payment of these two: sums there was the interest'on the amounts already in the hands of the Publii: Trustee from tho accumulations to- these- two funds, amounting to-£922,ooowhich would be paid to the Commissioners. "This latter sum £36,800 had to ho added to the two , sums previously mentioned, £39,950 and £52,358 respectively, and that would give a.--grand total of £129,108. It would thus be seen that the amount to be found from 1 the Consolidated Fimu every year would be only £11,392. ,I'or every fresh million that, was borrowed in the future a further contribution of £2300 would have in .'be, , made into the Sinking Fund. Supposing that the public debt ever reached ICO millions, which he did.not believe; it'ever would, the amount that would be required to invest annually to extinguish the whole amount would be only £223,000 per annum.. . ' Would tho Funds be Seized? Combating the suggestion that the Government might seiae the ■ sinking funds the Prime Minister said that ih December, 1892, Mr. John Ballanco put £14,000 aside in trustees' hands. Was any honourable gentleman prepared In say that any measure had emanated from the Liberal Government to seizo any portion of the sinking funds that had been accumulating? .' Mr. Massoy: You seized' them without an Act. Sir Joseph: The Act you refer to was in operation when we came into power. '■ Mr. Massey: Yes, but you used it.

•Continuing, Sir Joseph said these sinking funds, now amounted to more than £'36*000 per annum. Tho security proposed under the Bill was not liquid or convertible. l-'ull provision was made that when a sum was borrowed, n sinking fund should' attach to it 'automatically. Another departure was in lending money to our own people,' but what would bo the position 20 years hence? In 20 years this country would not be, a borrowing country, or if it 'was it would only be to a small extent because we- would by that .time have, had completed our road and railway requirements, deferring to the allegation that tho Government would seize the loans Sir Joseph asked what Government or 'Parliament would daro to pass legislation to repudiate a contract .endorsed upon the . stock itself and require farmers and local bodies to repay their'loans at call. W 7 hen_thc world knew that we provided sinking funds for all our loans we would be in a more solid position than we were before. Our debts must bo paid some time and under £12,000 per annum would be required at the commencement. No fresh taxation, would be required and administration would cost hardly anything. : REMARKS BY MR MASSEY. ■:. ■ ■- . ■ _i . LOANS SHOULD BE PAID OFF ON DUE DATE. A ,WOED ABOUT BORROWING. Mr.'; Massey; Leader of the Opposition, remarked that he had. been unable to look into the Bill as closely as he usually did, and it had been quite impossible:to follow the strings of ng-uros'which-had-been quoted by the Prime Minister.. Tho matter could bo ■more fully discussed when tho speech had been printed and members had had a chance of analysing it. There might not be a precedent" for this, it was true, but tliat was no reason why it' should not be. done. • This House was in the habit of establishing precedents. Mr. Massoy took exception to the suggestions in reference to personal criticism made by Sir Joseph Ward. • He'had never indulged in it, and he was pot going to commence now. The Prime Minister's speech seemed to him to bo a cross between a Financial Statement, a. Public Works Statement, and a chapter from Sinking Funds. (Laughter.) Sinking Funds and Borrowing, If Sir Joseph would go back as far as 1907 he would find that he had said that sinking-'funds, should'not bo established for: general loans until the I Dominion "had-ceased-, to. borrow. Oi course everyone was entitled to change liis opinion. (Laughter.) No doubt in another three years the. Hon. -gentleman would chancce his. mind again. The sinking funds' in the Financial Statement, it was true, were not, under-stood-lit the- time, as Sir Joseph, had suggested, but they. ,w,ero thoroughly understood-now by those who took an interest" in public affairs and the financial affairs'-of the country. Loans, Productive'and .Reproductive.' There should, said Mr Itass'ey, be a distinction, for the purposes of sinking' [funds, between loans' that were, reproand those that were not reproductive. New Zealand was going '.into the money market'for money for the purposii of-purchasing Native.lands and -making' them Crown lands. The settlers took these lands up, but as they.were paid for the money was "being used-as the ordinary revenue of the Dominion, instead of for purchasing further lands. Ho trusted that in tho future when Crown lands were, sold the money would be used as ho suggested. The .Government had never endeavoured' to provide anything in the nature of insurance of public buildings. Ho • believed that every public building should be insured or else a big depreciation fund should .ibe established. In his opinion there should be a depreciation fund in connection with the whole of the public buildings, which fund would .pay for/the buildings during their avorago/lifo, which was long short of 75 years'; '.: ;-.' . -./■ Taper OR Borrowing.. ,Sir -Joseph had[said tho time must come when the country should : cease -borrowing. Ho "(the speaker) . could, i'tako credit for supplying this- suggcs : tion.- (Laughter.)'" When he.was speaking on;.the"'Financial Statement, ho expressed the opinion that .the. time had come when wo should taper off our borrowing. We should now be able to look forward: to the time when' wo would have our borrowing down to £1,000,000 a year..', It was quito . impossible to go on borrowing £4,000,000 a year as had been done; It ought even to be'possible to look. forward to tho. time when wo, would cease borrowing altogether. He had oftou expressed his opinion, on sinking "funds 5 established in connection with reproductive loans, and he did"not intend'to: oppose any proposals' which made for the reduction' of the .public debt, even at' the end of 75 years, i From what had happened to sinking-funds in the 'past they, would know what to expect. Loans should }x paid off at their due date.' The Prime Minister:. That is what we do now. ,■;■■' ■ . Mr. Massoy: The ' hon. gentleman does not pay off—he converts —he. certainly never/pays off. ■ (Laughter.) ' Continuing, Mr. Massey said the real object of the. sinking funds was to financo the State Guarantee Fund. The Prime Minister had endeavoured; to create an impression that .at the end 'of 75 years there would be .no national debt. This was not the. case. The present debts would be wiped but in that time, but what about future loans? The Prime Minister: These are Tpro-.v-idcld for, in tho Bill. '•_.•._ -' . Tho opinions of tho Prime- Minister in regard to sinking funds were, continued Mr. Masscy,- quito in keeping with tho weathercock policy of. : the--Government. This . present proposal seemed to aim'at setting aside thousands by way of sinking fund and borrowing in millions. This wa.i tho hon. gentleman's idea of "finance. The Prime Minister: No, that is your idea. i Risk of Breaks of Continuity. There could be ho scheme to last 75 years without a number of breaks. Sir Joseph: What do you call a break?.- ; .. . •* Mr. Massey said that a settler or a local body might pay off their loan's before the due date. In the past, New •Zealand had endeavoured to hand on their burden to "posterity. The next generation might get tired of paying tho sinking fund. He favoured a sinking fund, but he believed tho PrimeMinister had plunged—gone too far. If the money were used as it camo to .baud the difficulty would be at an end. Sir Joseph had said it was a slander to say that the Government had passed an Act to enable them to seize sinking funds. Why; the Stout-Vogel Government had done that. Then, again, the Primo Minister had taunted him-witn reference to the amount that had been set apart in the past: If Sir. Joseph would be less flippant in tho course of his remarks, it would be more conducive, to. his dignity," and the dignity of the Honso. He would like to refer to a loan iif half a.initlion which was , - to mature in 1915. When £200,000 of sinking funds had . accumulated, the Bank of. England. notified, tho 'Sinking Fund Commissioners that it would not be necessary to make any further payment, because the sinking funds would be sufficient to pay oft' the loan by tho due date. But .what happened? The Treasurer wanted money. After £100,000 had bnen taken, it w.as necessary to increase the debt of the country by £116,000, in order to get the remaining £160,000. This meant that instead of funds being available to pay off the loan five years hence, £016,000 i would be required to meet it. Under

the new Advances Act, the local bodies would undoubtedly get a much smaller return on their sinking , funds. This was to ho regretted, because the smaller local bodies would suffer most. VIEV/S OF MR, T. E, TAYtOR. Mr. T. E. Taylor (Christchurch North) saiil that from what hu could see tho funds would either come out of the Consolidated . fund or loan, jnoneys. In connection with every loan, a portion of thu amount was not reproductive. Personally, he thought that the amount which would require to bo got to complete tho necessary sinking fund would come out of borrowed money. Who should create the sinking funds? Not a farthing of the money should be taken from the salaries and tho wages of the majority of the men of this country. There should bo a special tax designed to fall on 'the accumulated wealth of this country. It was certain that the poorer people in tin's country were getting poorer. Ho believed in sinking funds for the purpose, suggested. Mr. Hanan (Inyercargill) considered the proposal outlined by the Prime Minister would be a monument to Sir Joseph's statesmanlike ability. He trusted that the Bill would bo fairly and impartially treated when it reached Committee, for it was a measure of which every member might be proud. Tho, debate was ■ then adjourned.