THE FINANCIAL STATEMENT.

Evening Star, Volume IX, Issue 2675, 13 September 1871, Page 2

THE FINANCIAL STATEMENT.

Mr Vogel commenced his Financial Statement at ~Ao p.ra. yesterday. After referring to the exertions which had been necessary, in order to bring down the Statement at so early a period after his return, and indicating the substance of the tables which will be presented to members with the Statement, no showed that the position of affairs at the end of 1869-70 was closely similar to that which ho led the House last year to expect would be the case when he made his Statement before the conclusion of the financial year. \ reference to the finance measures of last session followed. The Government considered that the loans had been very favourably negotiated, and that the arrangement by which the guaranteed debentures were practically converted into a reserve fund would be of great value to the Colony. The short-dated debentures under the Temporary Loan Act had proved serviceable in enabling money to be obtained on favorable terms, pending the negotiation of the loans. The payments to Load Boards hail created very general satisfaction throughout the country. As to the revenue of the past year, there had been a decrease on every item. That revenue had proved to be LI 16,000 less than was estimated, and L 82,000 less

than was received during the previous year. The Government deplored this falling off, but disclaimed responsibility for it. The attention of the House was called last year to the condition of the country, and that condition was urged as a reason for hastening ou measures for the construction of pub'ic works, and the promotion of immigration. The Government certainly had not expected so large and immediate a reduction in the revenue ; but that reduction had amongst other things proved the wisdom of the Assembly in giving effect without delay to the immigration and public works policy. Many causes, doubtless, contributed to occasion the falling off in the revenue. Amongst those causes was the fall in the price of wool; but he was glad to be able to congratulate the Committee upon the recent remarkable rise in the value of that article. The reduction in the value of property, and the comparative suspension of public works, must be included amongst the contributory causes of the reduction in the revenue. 'J hey limited the expenditure cf the people, and therefore diminished the Customs revenue. It was not indeed necessary that a reduction in the Customs receipts should be accepted as a consequence of an unhealthy condition of the country, since it might be attributable to the exercise of frugality, or might result from a desire to accumulate wealth. Indeed, the reduction might follow wholly or in part from a larger use of local productions throughout the country. The Government were of opinion that the depression which had overshadowed the Colony for a long period was in course of removal. Various causes had led to this prospect, such as the increased yield of gold, the rise in the price of wool and other products, and the prospects of largely inc cased settlement throughout the country, which would follow the introduction of immigrants and the construction of lines of communication.

The Treasurer proceeded to compare the other branches of the revenue, and showed the further assets available ou account of the year beyond the receip’s up to the 30th June. Similarly, lie w.nt through the expenditure during the year, and all the engagements and liabilities on account of the

year, which remains! to be discharged in respect to the Defence expenditure. Ho specially drew attention to the fact that, instead of the amount provided having been exceeded, there was a surplus on the year ; besides which, LIO.OOO had been spent on ammunition, which was available for the future. Alter taking the assets into account, and defraying all the liabilities and engagements of the past year, there was a delicieucy of L 76,000. ilon. members would remember that there was an overdraft of LGOjOOO, which had remained unsettled for the last two years, and he considered that it was necessary now to look at it in the light of a deficit. Adding the amount of that overdraft to the amount of the deficiency before stated,'there would be a total of L 136.000. He thought that it was very important that this amount should not be added to the permanent debt of the Colony, but should be defrayed out of the revenue. Still, it would be straining the resources of the country too much to charge the whole amount upon the present year’s revenue. He proposed therefore that one-third, or L46,0((0, should be charged on this year’s revenue, and the balance to the revenue of the succeeding years. There was a preced ent for such a proceeding in the course adopted by the Assembly in 1860. In asking the Committe lo consider the provisions to bo made for the present year, it was worthy of observation that New Zealand did not stand alone as regarded a deficiency, for the same difficulty had just occurred in England, in Victoria, and in New South Wales. It was clear that, apart from the deficiency of L 46,000 which he proposed to charge upon the year, if the ordinary expenditir e of the country was kept up to its present style, there would have to be heavy taxation. The first duty of a Government, when the ’expenditure exceeded the revenue, was to consider whether the expenditure could not be reduced.

The main feature of the present Budget was a material reduction in the expenditure of the country. It would be easily understood by honorable members that in determining to make such a reduction the Government could not fail to look in the direction of that expenditure which related to so large a proportion of the public service. He m ant the money put apart for Provincial purposes and Provincial services. It was fair to consider how far the Colonial contribution to Provincial revenue should bo reduced, on account of the Colony undertaking duties which otherwise would have to be performed by the Provinces, and also seeing that what was now proposed involved a reduction of Provincial duties, how far Provincial institutions could be made less costly than they bad hitherto been. Much of the expenditure of last session canje nnder the head of expenditure which it was orignally contemplated should be borne by the Provinces. It was right that a corresponding reduction should be made in the contribution from the general revenue for Provincial purposes. The Government had plainly declared last year that if the existence of the Provincial system interfered with the carrying out of the policy of public works and immigration, then Provincial institutions would have to be modified ; but at the same tim e untilit was proved to be necessary to take action infthat direction, they had desired not to do to. Experience had now shown that in some respects the legislation of last session required amendment. He entirely denied that either on his part or on the part of any of his colleagues there was any indiffel’enoo to the subject of immigration. The whole plans of the Government depended upon the encouragement of immigration. They felt, however, that it was duo to the Provinces to give them an opportunity of co-operating. Row, it had been proved that the plan of co-operation did not answer. He did not say that this was so because of any fault on the part of the Provinces, hut the Government were convinced that it was necessary they should take into their hands the management of immigration, and that with the assumption of management they should also relieve the Provinces of the expense. Hon. members would recognise that by taking the management of immigration might bo meant the looking after the immigrants on their arrival, as well as a defraying of the whole or part of their passage money. Other modifications, which the Government might have to propose in the policy of last session, would probably tend to alleviate the ordinary burdens of the Provinces.

There was one feature of the policy of last session, the success of which could not be exaggerated. He meant the system of subsidising Koad Boards. The expenditure neces-

sary from the adoption of such a system was one Which the Government considered might fairly be defrayed out of the loan. The adoption of that course would be proposed, to increase the amount of the subsidy from 1.50,000, as paid last year, to LIOO,OOO. By taking ch irge of immigration, and to a large extent of public works, together with the payment of the subsidy to Road Boards, the Provinces would be saved a large proportion of their expenditure. The question arose, therefore, whether, it was fair to the taxpayers that additional taxation should be imposed in order to maintain Provincial revenues at their present rate, whilst much of the Provincial expenditure, aud some of the principal responsibilities, were assumed by the Government of the Colony. The answer must clearly be —No. The Government had decided further to relieve the Provinces of the cost of the services hitherto held by the Assembly as Provincial services, aud charged against the particular allowance to each Province. After making these provisions the Government proposed to pay to the Provinces as capitation allowance los per head of population ; and to reduce by one-balf the special allowance paid last year to the North Island Provinces, and to the County of Westland. The aggregate result of these modilicationswould be to giveto the ProvincesL2s,000 less than they received last year. In that calculation allowance was made for the pay 1 ments on Pro vincial account already explained } but the expense of immigration from ■which the Province would be relieved was not taken into consideration. Supposing the Provinces would have been prepared to expend a proper amount on Immigration, they would be great gainers by the change; or perhaps, more correctly speaking, those who live in the respectable Provinces would be great gainers, although so much money would not filter through the Provincial authorities. When the effect of these pro. posals noon the Provinces singly was examined, it would be found to be somewhat unequal. Auckland appeared proportionately to be the heaviest loser, because its services had been uniformly on a lower scale than those of the southern Provinces. Welling, ton, on the other hand, was a large vainer because it had hitherto defra3’ed the cost of services winch lately belonged to the General Government and the Assembly. The Government had it under consideration by way of adjustment, to make to And - land a special allowance of L2SOD. A comparison with last year did not result altogether unfavourably ; aud kst year, it must be remembered, was the Provinces leap year —their year of jubilee—ou account of ur• pr cedented receipts from the C donial chest. Comparing the results of the proposals now ma le with the circumstances of the year before last, the’Provinces game.l L2B 000, irrespective of the expenditure to be devoted to immigration. The Government believed that the time had arrived when Provincial institutions should be made less costly. It was intended to propose that the Superintendents should be ex officio members of their respective Councils, and that the number of members of the Councils should be very much reduced. In certain cases, where Provinces were unable to fulfil their functions, it was intended to propose that the General Govermnene should take charge of their affairs. If the Assembly desired it, these reforms or some of them could be made to depend upon the option of existing Superintendents and Councils. A special arrangement as to the County of Westland would be submitted to the House. The obj ?ct of all these changes would be to simplify Provincial institntions, and to reduce their cost.

The Assembly would have submitted to its consideration the Question what railways should be constructed. The Government thought that when that qiustion had been proposed, there would be no difficulty in deciding to what extent the arrangements with the Messrs Brogden should be taken advantage of. If it were desired that those arrangements should be converted into separate arrangements for the construction of particular railways, the Government were of opinion there would be no difficulty in doing so. The whole question would be left to the Assembly. A Hoard of Public Works and Immigration for the whole Colony would be proposed, with, as far as possible, powers independent of the Government, so as to make it a nonpolitical body. It would be the duty of the Board to take charge of the construction of public works, and the management of immigration. It was to be hoped that the Board would assist in preventing the House from acquiring too much of a Provincial character. As regarded members deeming it to he their duty to scramble for public money to be expended in their own districts, the Governmeat hoped that in the constitution of the Board it would be provided that recommendations for the construction of public works should como through the Board, instead of being originated in the House. The question how the cost of railways should be charged, was one of a very different nature, and some modification in the proposals of last session would be submitted; Unlike the other Colonies, it was necessary in New Zealand that railways should be commenced in several different localities at onco, as otherwise the various portions of the Colony would i ot agree to any lines being constructed. It became, therefore, necessary to consider the different features of the country. Two principles, however, the Government had quite determined upon. One was that no railways should be constructed which did not at once promise to pay working expenses ; and the other was, that in order to prevent an indiscriminate scramble for railways, a power of local rating should, under certain contingencies, be provided. The Government had also concluded that for the construction of railways iu parts of the North Island, the only course to be adopted was to acquire laud representing the value of those railways ; but in parts of the Middle Island such a course was not desirable, as it might interfere too largely with existing land laws. As regarded the Middle Island, the Government would propose to charge the cost of the construction of railways upon the land fund. It was not proposed to interfere in any way witli the Middle Island Bail way fund, and while powers were given to the Government to take lauds required for the purpose of settling immigrants, it was proposed that where the laud revenues of a Province were burdened with the cost of railways, fair provision should be made to give compensation for the lauds so taken. Until a railway was completed no charge was to be made against a Province. When a railway was completed, the interest due on its construction and upon its cost up to the date of ita completion, was to be capitalised. If the revenues arising from the railway, together with the receipts from special centrihuti' iis, were not sufficient, the balance was

to he recovered from the Province within which the railway was constructed, or, if necessary, a special rate to he levied upon the persons in the vicinity of a railway who derived benefit from its construction.

It was proposed to keep the Public Works and Immigration Fund entirely distinct, and that all revenues from the lands acquired, as well as all recoveries from the Provinces or from immigrants, should be paid directly into it, as also should one half of the Stamp Duties, in accordance with the determination arrived at last year. On the other hand, it was proposed that all cos's and charges, including interest and sinking fund, should be paid olit of the Public W. rks and Immigration Fund. It must not be considered that this was to be done in order to relieve the revenue On the contrary, the payments into the fund this year out of the Stamp Duties would cover interest ami sinking fund winch had to he paid, and (as had already been explained) deficiencies after any railways had been completed were to be recoverable from the Provinces. A plan would be proposed by which the Board would be able to construct feeder branches for railways under a system of partial guarantee from the persons benefited by their construction, to be recoverable if necessary by a special rate. This, however, would only be done at the request of a stated majority of the residents in the vicinity of the railway, representing a majority in value of the lands in the district. The proposed expenditure for the year showed an immense reduction. Last year the estimates were for an expenditure of LI 050,000, including L 50.000 for Road Boards, and 134,000 was subsequently added for Snplemcntary Estimates. This year, the total estimates, irrespective of the LIOO.OOO for Road Boards, which would he transferred to the loan, was L 896.000 to which would have to be added L 40.000 the moiety of Stamp Duties, to be paid to the Public Works and Immigration Fund, and 1,46,000 on account of the deficiency from the oast year, making in a11L952,000 to be provided for. This showed a very large saving, and the Government desired that the present Budget should be known as the Retrenchment Budget. A comparison of the various services showed a considerable saving in most of them. The Post Office Department, including provision for the Californian service, showed a saving of LI IS. He would ask honorable members to recol'cct that although there was a very great retrenchment, that retrenchment was on unproductive services ; that out of the revenue large provision was made on account of the deficit of the past year ; and that one half of the amount of the Stamp] Duties was proposed to be paid in aid ot public works. He would now ask the Committee to consider the question of providing for the estimated expenditure of L 952,000. The Government were averse to proposing fresh taxation, but they consider that the Stamp Duties should be brought up to the amount which it was promised they would yield List year. The Government would therefore submit some additions to those duties, but those additions would ho such only as they really believed ought to have been included when the duties were first proposed. The House would also be asked to impose a moderate duty upon cereals, rice, and timber. He mentioned this, although he did not intend to take credit in the ways and means for the amount of such duties ; but t ose ways and means would make apparent s > small an excess, that taking into ac ount the possibility of there being Supplementary Estimates, and also some unauthorised expenditure during the year, 1 eon He red the excess shown would be insufficient. Therefore, the House would be recommended to impose duties on all cereals, rice, and timber, so as to raise thereby an estimated amount of L 7.500. Whilst that recommendation would Be made on strictly revenue grounds, it might with propriety be urged that the fiscafpolicy of the neighbouring Colonics forced such a proceeding upon hew Zealand. The various items of estimated revenue showed on the whole a reduction of L 51,000 upon the revenue estimated last year, and Loo, 000 more than the actual receipts during that year. The operation of the Distillation Act was producing a very large loss to the revenue. The Government did not wish to show any harshness towards those who had embarked their capital in this industry ; still, the result was very unsatisfactory. The revenue would lose L 25.000 on account of the spirits already manufactured in the colony, which manufacture had led to the consumption of 53,000 bushels of grain. Such a loss was rather a large one to he expended by way of encouragement for such a production of cereals. In 1867, the Custoips Dqtio, amounted to L 3 Ifis 7i{d I P l ' head of the Furouean population, whilst at the rate now proposed it would amount to only L2 18s 6d per head. The Government would be glad when the time arrived for making an absolute reduction in the Customs duties, besides the reduction in the contribution per head cppseqncnt upon the increase in the population. The surplus upon the year would be L 7500, and it must be recollected that this result was arrived at without the imposition of further taxation, unless the addition which it was proposed to make to the Stamp Duties could be considered in that light, and the estimates, it would be remembered, provided for a payment of L 46 000 out of revenue in a>d of public works. He believed that this result was very much more favorable than the majority of honourable members had expected. The Treasurer concluded by expressing his opinion that the depression which had overshadowed New Zealand would do it very much good, if the retrenchment which that depression made necessary this year became the rule of the colony in the future. [We arc indebted to the General Government for the foregoing summary of the Treasurer’s Financial Statement.]