FINANCIAL STATEMENT.

Evening Star, Issue 3880, 31 July 1875, Page 2

FINANCIAL STATEMENT.

Friday, July 30.

The Hou. Major Atkinson delivered the Financial Statement this evening. He said that be did so under a strong sense of responsibility. There had been so many positive statements and intangible rumors discrediting the financial position of the Colony, that he desired at the outset to give them an official refutation. He thought a plain, unvarnished statement of the true condition of our monetary position would be the best possible answer to unscrupulous slanderers, while it would enable honest doubters to ascertain for themselves the truth or falsehood af what they had read and heard. His subject naturally divided itself into two parts, namely, Loans and Revenue. With regard to the raising of

THE FOUR MILLION LOAN, it must be remembered that the Immigration and Public Works scheme, when originally submitted by Sir Julius Vogel, was intended to extend over a long period; but it had been impossible to resist the pressure to hurry on works. In obedience to the desire of the Assembly, immigration and public works were both pushed on vigorously, and, as a necessary consequence, loans had to be raised more rapidly than was at first proposed. Out of the seven and three-quarter millions authorised between June, 1870, and June, 1874, it was not generally understood that nearly two millions still remained uuraised. This fact had an important bearing on the action lately taken by Sir Julius Vogel in placing the whole four million on the market at one time. The expenditure out of loans during four years—--1870 to 1874 —was L 4 289,877; and it was last year estimated that during 1874 and 1875 L 3,300,000 would be required in addition to the above. There was at least the expenditure for the current financial year to provide for, say L 2,250,000. Out of this total expenditure of L 9,839,877 to be provided for, only L 5,795,200 had been raised, and it became necessary to provide the balance of L 4,044,677. The Government decidsd to sell the whole four million if possible, and appointed Sir J. Vogel, Sir P. G. Julyan, Dr Featherston, and Mr Sargeant for the purpose. Grave differences of opinion arose between Sir J. Vogel and his co-agents. The former wished to sell the whole amount at once through Rothschilds; while Julyan, Featherston, and Sargeant thought a better price could be obtained if the requirements of the Government permitted the loan being void by two instalments. They ultimately agreed, however, to adopt Sir J. Vogel’s plan. The loan was to be raised by Rothschild at ninetyfour, out of which Rothschild received a commission of two per cent., they taking up three millions immediately, and the remaining one million within a year. The net price received

by the Colony is L9019s Id. By this arrangement the Colony was to obtain the necessary means to carry on public works and immigration. Whether Rothschilds successfully floated the loan or not, this fact was particularly commended for their consideration. The report received from Sir J. Yogel and that from the other three agents, although differing materially in opinion, on some points, concurred in*the result as being successful. Dr Featherston and the Crown Agents wrote, “ that considering its magnitude, the terms upon which this transaction has been carried out appear to us exceptionally favorable” With these facts before them, continued the hon. gentleman, the Government are decidedly of opinion that the course pursued was the right one, that the operation was marvellously good, and that to Sir .1. Vogel is due the successful termination of the negotiations. Bothschilds placed the whole loan, and L 3,167,571 had been paid to the credit of the public account at the date of last advice (31st May). On comparing the loans, the average annual rate of interest of the pre-

vious loans since 1870 is L 49s 6d per cent.; the last is L 5 2s per cent., and the average of the whole L 5 per cent., which is very satisfactory, when it is remembered that in the original estimate, introducing the Immigration and Public Works policy, it was calculated that the money might be obtained at per cent. The balance at the Bank of New Zealand in London on the 31st May had been partly reduced by a repayment to the Bank of England of the L 600,000 that had been borrowed on the LBOO,OOO of Imperial guaranteed debentures to L 2,056,716, against which drafts had been discounted by the bank in the Colony, up to the 30th June, of L 1,050,000. The Bank of New Zealand now pays interest at the rate of | per cent, below current Bank of England rates, instead ©f 1 per cent, as formerly. The probable average balance for the year is estimated by Sir Julius Vogel at L 1,500,000, and he proposes to invest any sum in excess of that amount in exchequer bills. The history of the loans raised prior to 1870, and the unproductive nature of at least three millions of that amount, are too well known to require explanation. Only the loans raised under the Acts of 1870, 1873, and 1874 are reviewed. Out of the L 790,000 authorised by the

DEFENCE ROAN OP 1870, to be spent within five years for purely defence purposes, only L 681,703 has been spent. There is also a balance eut of the L210,0u0 authorised by the same Act for other purposes. Out of the total of one million authorised, there is still an available balance of L 135.315, less the expense of raising. The unraised portion of this loan amounts to L 179.700, of which L 52.700 has been hypothecated to the Bank of New Zealand for a nominal advance of LSO.OOO. Before remarking on the operations exhibited by the tables showing the expenditure on

GENERAL PURPOSES LOAN, 1873, reference is mads to the extraordinary misapprehension which appeals to exist even among well-inf«rmed people with regard to the extent to which interest is paid out of borrowed money. This misapprehension arises probably from two causes, namely, from payments made in Loudon, apparently taken from loan, and from the item of L 300.000 voted under this Loan Act for “Repayment to Immigration and Public Works loan, for interest and sinking

fund paid or to be paid therefrom • As this is a question closely affecting the credit of the Colony an explanation is given showing, as regards the first-mentioned cause, that out of the consolidated revenue raised in the Colony there are charges payable in London for interest and sinking fund; while on the other hand there are large sums raised by loans on the credit of the Colony iu London, of which a considerable amount is required to be expended m the Colony. _ The practice is to pay in London such portion of the interest and sinking fund chargeable on the revenue as is required to be paid there out of the funds raised by the loan, and, on receipt of the Crown Agent’s account m the Colony, charge the interest and sinking fund so paid to the consolidated revenue. The whole transaction is merely a convenient mode of avoiding the payment of exchange, and nothing more. With regard to the second cause of misapprehension, th© total sum ever asked for or granted for this purpose was the L 300.000 above mentioned. Of this only L 218,600 has been expended, and, as no ! mote interest will be paid out of leans, the balance of L 81,500 will be otherwise appropriated ; but against this payment of interest out of loan, there lias been contributed to public Bum L 179,903 out of stamp duties; and the contributions will be increased by the end of the year to L 241.800, so that there will be contributed out of the revenue towards loan purposes L 23,300 over and above all the inteiest paid out of loan, which contribution will be further augmented year by year. The absurdity of th© assertion that th© Government has been paying interest out of lean is i • aC £ of n ?, le8 » a Bum than • ’ * baying been paid from the revenue smee 1870 for interest on loans. Last year all the interest was paid out of the revenue, and this year the same course will be followed, notwithstanding that provision has to be made for interest upon the additional four millions raised outof the General Purposes Loan of 1873 for L 750.000. A sum of L 463.000 is yet unraised, but the Bank of New Zealand holds hypothecated debentures to the value of L 210.500, against a nominal advance of L 200,000. The available balance on this loan, less the charges of raising, is L 106,500. In explanation of the othecallon •-the above advance of L 200.000, and of the L 5,000 under the Defence Loan, it is stated that it was proposed to sell in feydney L 300,000 of General Purposes Loan bonds, at par; but only about L 50,060 has been sold, and the remainder withdrawn. The hypothecated debentures have thus been unredeemed ; for although the Colony has large funds at its disposal, the wholesome restriction exists which forbids the ways and means provided by Parliament for one service from being applied to another. The liability for interest, however, has been annulled by depositing with the hank L 250,000 of the Immigration and Public Works loan, bearing the same rate of interest as the advances. The three Immigration and Public Works loans of 1870,1873. and 1874, are, for the sake of clearness, tabulated together, with the following results Authorised, L 10,000,000; expended to 31st June, 1875, L 6,474,695 ; liabilities, L 3,095,995; available balance, L 429.313. The items of expenditure will be explained in full detail by the various Ministers in the Departmental Statements shortly to be made. The summary of the loan tables show as follows Authorised, Lll,750,000; expended to June 30, 1875, L 7,739,413; liabilities, L 2,531,923; available balance, LL478.664; balance yet to be raised, L 1.954,800. The public debt on June 30 was L 17,671,106; less accrued sinking fund, L 1,074,640 ; the annual year for interest, L 835.150; and the sinking fund, L 110.635. Of the debt of the Colony there is a balance in baud of L 2,167,896, being cash raised, but not yet expended, although subject, of course, to outstanding liabilities. Besides this, the accumulated sinking fund—L1,074.647 —really represents the extinction of so mueh indebtedness. When the amount still to bo raised is obtained, the total indebtedness will be L 19,380,906, and the total annual charge thereon L 1,035,755; but before this prospective debt is reached, the whole of the balance now available, plus the proceeds of the portions of loans to be raised—in all L 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 L 17,980,906. Some of the loans forming this debt are specially secured on the proceeds of land, which will accrue at intervals. Turning now to the question of REVENUE. The estimate formed has been exceeded by L 108,402, the revenue received being L 1,605,003 or L 1,184,785 in excess of the previous year under every head. There has been an increase over the revenue previously, and only on two items has the estimate fallen short by the small amount of L 2,441. The total “ consolidated revenue” for the list year, including L 96.357 assets yet to be realised, and L 205.600 surplus from the previous year, amounted to L 1,906,800. and the expenditure to L 1,746,414, leaving a surplus of L 120.446 of the L 500,000. * THE TREASURY BILLS outstanding last year—viz., Lloo,ooo—have been paid, and the power to borrow LBO,OOO for advances to the Provinces having been provided out of the revenue, as well as an advance of L 20,000 to the trust fund against Treasury Bills held by that fund, the total amount of Treasury Bills now current is L 400,000, which have been renewed during the year at more favorable interest. This amount is less by L 310,000 than the amount outstanding in 1872. The total receipts from

CONFISCATED LANDS for the two years ended June 30 had amounted to L 80.826, and the expenditure to L 94,779. The time has arrived when these lands should become subject to the ordinary land laws, and a proposition will be submitted thereon for approval. THE ORDINARY LAND FOND has amounted to L 773,265, showing a considerable falling off from the previous year, owing probably to the purchases in 1874 having been in excess of requirements. The Government are anxious that the public estate should bo conserved, and in tireir opinion it has become the duty of the Legislature to consider carefully the matter, and insist that the public estate shall not be sacrificed or dissipated, or the proceeds misapplied.

THE SAVINGS BANK RETURNS show, for the first time, a decreased balance, the withdrawals being JA0,791 in excess of deposits. This does not arise from the saving power of the Colony, but from the high rate given by the banks, the principal amounts withdrawn being for large sums. As the banks have now resorted to more moderate rates, the deposits will probably again considerably increase. ABOLITION OF THE PROVINCES. Thus far the Statement has been a narrative of tiie facts of the financial position to June last. The expenditure for the current year involves the great question of the Abolition of the Provinces in obedience to what the Government conceive to be the desire of the Legislature and a large majority of the people of the Colony. The Budget has been prepared on the assumption that the Provincial form of government will be abolished throughout New Zealand daring the present session of Parliament.

THE PROPOSED EXPENDITURE is as follows Permanent charges, L 960.176; public departments, L 74.460 ; Postal and TeleS’anh, L 222.509 ; Law and Justice, L 66.722 ; ustoms, L 51.293 ; miscellaneous, L 43.898 ; Native, L 36.191 ; Militia and Volunteers, L 22,885 ; public domains and buildings, L 23.351; railways open for traffic, L 244.318 ; Armed Constabulary, l>91,000; grants to municipalities and road boards, LSO.OOO ; Provincial services for eight months, from Ist November, 1875, to 30th June, 1876. L 230,322; total, L 2,214,125. _To this must be added: Capita* tion and special allowances to the Provinces for months, L 92.275; advances under Provincial Public Works Advances Act, 1874, L 48,500; moiety of stamp duties to Public Works account, L 62.500; local public works in out-districts, L 60,00 0; total expenditure chargeable under the consolidated fund, L 2,405,600. The above contains four new items.

EAILWATS. Thesel include the expenses of railways under Government control for the year, and of those under Provincial control for eight months.

ARMED CONSTABULARY. The five years’ appropriation under the Defence Loan Act having expired, the charge now comes on consolidated revenue. The Native Minister will give particulars on this subject when the Estimates come on for discussion.

GRANTS TO MUNICIPALITIES AND BOAD BOARDS.

Under the provisions of the Abolition of Pro? vince Bill, there will become payable to municipalities and road boards, out of the consolidated revenue, LI for LI collected upon general rates up to Is in the LI. These payments will be in addition to the amount payable to road boards from the land revenue. For this year the Legislature is only asked to provide eight months’ subsidy, from the Ist of November next.

PROVINCIAL SERVICES. For eight months. These are required, in the anticipation that Parliament will decide this session to abolish the Provinces, so that provision may be made for carrying on all necessary departments now under the control of the Provinces. This could be done in several ways. The Government might have submitted a detailed estimate of all the Provincial departments, but there are obvious objections to such a course before the Provinces are abolished; or Parliament might be asked to permit the present Provincial Appropropriation Acts to remain in force, and give authority to continue the services at the same rates for such period as might elapse between the date of expiry of the several Acts and the 30fch June; but looking to all the circumstances of the case, the Government have thought it better to ask for the vote in its present shape. The expenditure for LANDS AND SURVEYS is, under the Abolition Bill made a charge upon the land fund, and it is proposed to continue to charge against that fund the Department Service, for local public iworks. The advantages of this mode of procedure are apparent. It brings under the notice and control of Parliament the total expenditure required for the services to be taken over, while it ensures the continuance of the several departments until the Government have had the opportunity of seeing where and how they may be advantageously consolidated. The Government is anxious to consolidate offices and reduce expenditure; but they will be very careful that no reductions be made, which will at all impair the efficiency of the public service. The proposed vote of L6i),000 for LOCAL PUBLIC WORKS IN OUT DISTRICTS will enable the intentions of Provincial Governments to be carried out with regard to many

necessary works in districts hitherto receiving scant justice These works will be charged on the land fund, but this year, in consideration of the possible inequalities incident to the proposed changes, it is thought fair to charge it on revenue. It will, therefore, be in addition to the expenditure provided out of the land fund. The Government recognises EDUCATION to be of vital importance and Colonial concern, and they therefore desire to feel their way most carefully before moving in it. Education is now being carried on more or less successfully throughout the Colony, and the Government do not desire to alter it until they are satisfied they can improve it. For the present year it is proposed to let education matters remain practically as they are—seeing, however, that proper provision is made where it is now wanting. While education is properly a charge on the consolidated revenue, it is proposed this year to defray this charge, if necessary, out of the land fund. A vote for L 5,000 will be taken out of the General Purposes Loan for school buildings to immediately satisfy the want existing in some parts of the Colony. It is proposed to pay the “ Capitation and Special Allowances to Provinces ” for four [months, at the same rate as now existing, except in the case of the extraordinary allowances, amounting to L 40,000, granted to the Provinces of Auckland, Nelson, and Westland. The Capitation allowances amount to L 92,275, and payments under the Public Works Advances Act, L4B,soo—viz., Auckland, L 16,000 ; Wellington, L 5,500; Nelson, L 23.000; Marlborough, L 4,000. LOAN EXPENDITURE. Itl is proposed to make the following appropriations out of defence and other purposes : Loan, defence, L2C,000 ; outstanding liabilities, under the New Zealand Settlement Act, L 45,000; also out of General Purposes Loan: School buildings. L50.G00; in aid of lighthouses, L 30,000; also out of Immigration and Public Works Loan : Railways, L 767,400; immigration, L 392,348 ; telegraph extension, 1 29,700; public buildings, L 75.779 ; lighthouses, L 91,700; Public Works Department,

L 77.13 4; making the following totals :—Out of the Defence Loan, LGS,COO; out of the General Purposes Loan, L80,OOO; out of Immigration and Public Works Loans, L 1,434,063 In most of the above cases the amounts are merely revotes, and will appear in the Annual Estimates. THE WATS AND MEANS next claim attention. The estimated revenue for the current year is L 2,355,747, to which ado surplus from last year, L 120.466; total, L 2,476.193; leaving a surplus over expenditure of L 70,793. The total revenue as above this includes L 118,370 taken out of the Land Fund to meet interest and sinking fund on the permanent debts of the Provinces, after deducting from the debts of Canterbury and Otago, L 600,000 and L 270,000 respectively, as the value pf Provincial railways to be taken over by the Colony. It also (includes L 127,250 charged upon the Land Fund for interest payable by the Provinces on the cost of railways completed, and to be completed, during the year. It includes likewise Provincial revenue as estimated by the Provincial Treasurer for eight months, deducting therefrom all receipts for auctioneers’, publicans’, spirit, and trading licenses, &c., the whole of which will be handed to municipalities. THE LAND FOND is not, as in other Colonies, included in the revenue. This year the amount is estimated by the Provincial Government at L 702,192; but returns already received show the land revenue is much under-estimated. GOLD DUTY is not to be abolished or reduced ; but, as roads and other means of communication in the goldfields are large and imperative, the Government recognise the necessity of meeting these requirements, and propose to apply the whole of the gold revenue to road and public works on the gold-fields. FUTURE FINANCE, as affecting Immigration and Public Works, has received careful consideration. It would be unwise to enter the London market with any new loan for some time to come. It is proposed to expend considerable sums yet available, amounting to about four millions, over a period of two years. This will enable the formation of main trunk lines, immigration, and other important works, such as lighthouses, telegraph, and public buildings, to be got on with. Below is stated the FINANCIAL EFFECT THE PROPOSED CHANGE WILL HAVE on the

MUNICIPALITIES, ROAD BOARDS AND OTHER PUBLIC INSTITUTIONS IN THE i PROVINCES OP AUCKLAND AND CANTERBURY. These Provinces have been selected—the one as representing those Provinces which are practically unable to perform the duties of governing, and the other as being the most favorably affected by the proposed change. It will 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 immediate. It is for the Parliament to determine what that remedy shall be, and how it can best be 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, as a whole, will be provided with the necessary institutions jof anjapproved character. Its police, gaols, harbors, lunatic asylums, and educational establishments will be provided for out of the revenue of the Colony, and its larger public works will also become matters of Colonial concern. The cities will receivethe revenues arisingfrom auctioneers’, publicans’, and other licenses for trading within their boundaries, together with a contribution

equivalent to the rates, counted up to Is in the ill. The out districts will receive the revenue from publicans’ and trading licenses within their boundaries, the tolls on roads and bridges, and a contribution equivalent to L2 for every one collected as rates, Under prudent local management each of these communities can secure its own independence, and it will have an income growing with its growth and adequate to its own wants. The Thames will no longer he governed by or dependent on

the City of Auckland, but will hare the administration of its own funds—the out districts, such as Tauranga, Waikato, and the Bay of Island receiving besides the items of income referred to above, an addition of L2 f»r each LI collected by rates, will possess larger and more certain means of improving their several districts than they have ever enjoyed. The Government have no doubt that the City Council of Auckland, with the aid of the license 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 their cousins of the Thames would accept the same obligation on the same terms; and as an old country settler, I know well what the outlying districts will say to the proposal, which will give them the means of real local self-government.

The proposal explained above with regard to Provincial debts, when applied to Canterbury, will place that Province in an extraordinarily favorable position. Speaking broadly, most of her public debts will be cancelled, leaving her land fund free for public works -within the district, besides having all necessary departments of the Government carried on as now. Christchurch will obtain what she has so long contended for—the license fees collected in the city—besides the contribution of one pound for one, collected by ordinary rates. It may be said the Government have proved too much. It will be said that if there is money enough to carry on the Provincial districts in so satisfactory a manner there is money in the Provincial Government, but this by no means follows, nor, if it did, would it be any answer to the proposal of the Government: for, in the first place, the proposed method of local administration, being simpler, will be much less costly and much less wasteful; secondly, the Statement of this evening has, the Government submit, conclusively proved that the revenues of the Colony are amply sufficient to meet all liabilities and provide efficient government. Yet, the experience of the last twenty years has shown that, with the present Provincial Constitutions, it has been practically impossible for the General Assembly to distribute the revenue equitably, so as to meet the requirements of the people. As the capability of the Colony to bear the burden of its debt is a matter of grave uneasiness to some people, a detailed statement is entered into, showing how the increase from immigration, railway receipts, and other means Is calculated to enlarge the revenue and make it fully sufficient to enable the Colony to meet its requirements. The House is reminded that a very considerable part of the debt has been incurred for railways, which are now reliable assets and might bo disposed of if the country were foolish enough to desire it, for a very considerable sum ; say at least eight millions. It is impossible to deny or ignore the law of vicissitude which seems to govern human affairs, and, after the unexampled prosperity of the last five years, we may have, from time to time, periods of depression. There is no sign of that depression at present, but if it should come, the facts and figures adduced give abundant grounds for confidence in oar future.

CONCLUSION. The Financial Statement concludes as follows : In making this statement I have kept two main objects in view. First, to give a full and intelligible account of our finances; secondly, to show the bearing upon our finance of the proposed constitutional changes. lam fully aware that even the financial advantages of abolition—and I say nothing of others not less important—are susceptible of far more complete and convincing treatment than they have received at my hands to-night. Indeed, I have assumed that it was my duty rather to Indicate than enlarge upon supposed advantages. The figures I have adduced do not need much comment—they show beyond doubt that our financial condition is at once sound and exceedingly prosperous ; but whoever reads these figures in the light of a knowledge of our political his tory must be well aware that there is in our finance a disturbing element which one day might—l had almost said which, if not soon eliminated, inevitably must land us in financial disaster. The continued existence of the Provinces means the continued and constantly increasing pressure upon the Government and upon this House for money in interest of locality without any reference to the necessities of the Colony as a whole. Ido not for a moment deny the public spirit of the gentlemen administering Provincial offices ; I only deplore that this public spirit should be circumscribed by the boundaries of the particular Province within which they live. I could easily give instances forcibly illustratingwhat I have said and which have occurred within the present month, I might say within the present week—but I am sure it is not needed that I should prove again what is obvious to every one who will only open his eyes. Last year the House resolved that the time had come when this great danger in our path should be removed. This resolve has been approved by the country; the Government have now given it form ; and it remains only for this committee and the Legislature to give it effect.