THE FINANCES OF NEW ZEALAND.

Globe, Volume III, Issue 254, 5 April 1875, Page 4

THE FINANCES OF NEW ZEALAND.

( Concluded .) On the whole, New Zealand may congratulate itself upon having as few examples of extravagant railway construction as are to be found in any part of the world. The Government railways, when completed, will average a cost of from £6OOO to £6OOO a mile. As to their proving remunerative, cheap railways of the kind are to a new colony like metalled roads, the necessity of constructing which one recognises because of the collateral advantages they supply, and without a thought of their yielding interest on their cost. Indeed, tolls, if turnpikes are established, rarely yield sufficient for maintenance. But as an indication of the wisdom of constructing' equipped roads, costing from £6OOO to £6OOO a mile, in preference to ordinary metalled roads, I may say there is every reason to rely on the New Zealand railways yielding a large revenue. A fragment of the railway which is to connect Christchurch with Dunedin has been for some time constructed, and it pays a considerable interest over working expenses. The Port Chalmers railway, to which Mr Fellows refers, was constructed under a concession from the Provincial Government of Otago, before the Colonial Government system of railways was adopted. It was on the line of the main trunk road through the Middle Island: therefore, it had to be acquired by the colony. The Government paid something under £200,000 for it, the concessionaries realising for their rights and and interests a profit of about £60,000. Nevertheless, it was considered so good an investment that, after the purchase, the Goverment were offered a nett rental of about ten per cent for the line. The railways throughout the colony promise to at once relieve, to some extent, the charge for interest on the cost of their construction. It would be too much to expect that they should at once yield the whole interest on their cost. Mr Fellows mentions a railway at the south end of the Middle Island, which, he says, was extravagantly constructed. This, which was not “ the first railway constructed in .New Zealand ” (as he states it to have been), is a work which was carried out some years ago by the Government of the then province of Southland. Its cost was large, but at the time very high prices prevailed. The Colonial Government had not, however, anything to do with its construction; and, even in its fragmentary state, the line is yielding much more satisfactorily than Mr Fellows would lead your readers to suppose. As to the alleged extravagance on public buildings and works. I am sorry to say that New Zealand is much behind the neighboring colonies in the character of its public buildings. The instances to which Mr Fellows refers are mostly of buildings and works constructed by the Provincial Governments, and have, therefore, nothing to do with the charges against the Colonial Government. In every case, however, I believe an ample answer could be given; and because I do not enter into a number of comparatively trivial details, it must not be supposed that I admit the justice of Mr Fellows’ strictures. The authorities of the province of O ago, to whom he chiefly refers, will no doubt say they have excellent officers, who are much better able to judge of these matters than is Mr Fellows. He refers to one colonial work, the building erected for a post-office in Dunedin, and his remarks about it are a fair example of the logic he employs. He ingeniously calculates that a similar expenditure in proportion to population would absorb for the post towns of England about £70,000,000. Similar calculations, of a moreor less amusingkind, might be made with respect to any of the colonies. However sparingly they may be populated, they require certain services; and until population increases, the cost of those services bears a large proportion to the number of persons benefited by them. For example, in the colonies, many stipendiary magistrates have charge of districts containing not more than 10,000 persons. In similar proportion, Great Britain would require some 3000 paid magistrates. There are in New Zealand a Chief Justice and four puisne judges; to equal that proportion to population, 500 Judges in superior courts would be required in Great Britain. There are five bishops of the Church of England and three of the Roman Catholic Church in the colony. If the same proportion to population were maintained, 800 bishops would be needed in Great Britain. Mr Fellows uses freely Mr Stafford’s name, and quotes scraps of that gentleman's speeches. Mr Stafford was leader of the Opposition from 1869 to 1872, but in 1873 he voluntarily resigned the position. Notwithstanding that he was in Opposition, he from the first supported the Immigration and Public Works policy, though he did not approve of many of its details, Mr Stafford is a very able man. Friends and opponents alike recognise his public spirit and the love and devotion he has shown for the colony. It is certain that he is not one of those referred to by Mr Fellows as prepared or preparing to leave New Zealand “ when the day of reckoning draws near,” for it is a notorious fact that he has of late largely increased his stake in the colony. The Immigration and Public Works policy received immense support both in the Legislature and throughout the country, and it was warmly welcomed by many of the largest landowners, They did so knowing that they ran the risk, even in the case of modified success, of considerable land taxation; and they argued that if the value of their lands was increased by the opening up of means of communication, they could afford to pay for the benefit they received. But of course there was not unanimity, and the policy had many bitter and uncompromising foes. It is well known, however, that a large number of the most influential of those have changed their views, and now support the Government whose boldness they at one time feared. Compelled to admit the large increase in the Consolidated Revenue, Mr Fellows terms it ‘ an imaginary increase,’ His explanation is not very clear. He jumbles questions of exchange—such as introduced capital being represented by imports—with questions of labor, showing how very dangerous in some cases a little knowledge is. As far as can be understood, what he really means is that the large employment of labor on public works increases the revenue on account of the duty paid by the workmen on the goods they consume. This is no doubt true to a certain extent ; but it no more accounts for the large increase in the ordinary revenue, than a single shower of rain accounts for a prolonged flood. It is one of the causes that has augmented the revenue, but those acquain - ted with New Zealand will bear me out in saying that amongst the most remarkable features of the last two or three years is the increased demand for private labour. The labor employed on Government contracts is a bagatelle compared with the labor demanded for private enterprises. la the extract 1

have already given from the “ Official Handbook, it will be observed that it was estimated last year that from 3000 to 4000 men were employed in railway construction, and that the number would probably be increased. Five thousand men employed on Government contracts is a very high estimate of what is actually the case in New Zealand, or is likely to be. It must be remembered that of a given sum yearly devoted to railways, a very large proportion is expended, not for human labor in the colony, but for machinery, plant, rolling-stock, material, horses, carts, &c. To suppose that the revenue has increased 50 per cent because of 6000 men being employed, is a patent absurdity, in the face of the facts that during the last three or four years over 40,000 immigrants have arrived and settled in the country, and that, as I have said, the demand for more still exists. If the 5000 men ceased to-morrow to be employed on Government contracts, the setting free of that amount of labor would have Uttle effect, if other causes of depression were wanting. The province of Canterbury has some £600,000 to spend on public works. That sum is mainly an accumulation from land sales during the last year or two ; but the Provincial Government, I believe, hesitate to push works as fast as they might be pushed, dreading an undue increase of the demand for labor. If the discharge of the 5000 men meant the suspension of railway works, the consequences would be very different. Upon the faith of the railways being made, settlement is everywhere progressing. Property has immensely risen in value. Ido not exaggerate when I say that the increase in the value of property, private and public, many times exceeds the cost of the railways. The rise is to be justified by unassailable calculations. Given the means of carrying to market the produce of land at a large reduction on the previous cost of transport, and the land becomes more valuable because of the actual profits which can be obtained from it. Not only does land become more valuable because of the reduction in the cost of conveying its produce to market, but the same reduced rate of carriage enables machinery, implements, building materials, and supplies to be more readily and economically taken to the land. The means of working and improving it are thus enlarged, to say nothing of the great increase of comfort the settlers enjoy through cheaper supplies of articles of convenience and luxury. This is why property has become so valuable from one end of the colony to the other. I know numberless instances of new purchases of land, and of large holders increasing their holdings. Ido not know of any disposition to realise and retire from the colony, and I challenge Mr Fellows’s statement to that effect. I am not able to follow Mr Fellows’s calculations. Where he has correctly stated amounts, he has distorted the nature of the figures to which he refers. I will ask you to allow me to give a short resume of the financial results from 1869 to 1871. These results will show how Mr Fellows has endeavoured to make the difficulties of the past appear to be the difficulties of the present. The Consolidated Revenue has really so increased as to exceed the current requirements; and nothing but a desire to extinguish past liabilities in the shape of Treasury bills, as well as a resolution to be prepared for any contingencies that might arise, prevented last session the revenue being reduced by a reduction of taxation. So large were the balances of the Consolidated Revenue, that the Legislature authorised advances to be made from it to the Public Works Fund; and within the last few months the latter fund was indebted to the Consolidated Revenue for advances to the amount of a quarter of a million. These advances, it need scarcely be pointed out, are sometimes the means of effecting considerable savings of interest and exchange in the transfer of funds between England and the colony. The financial year in New Zealand ends on June 30th.

Including the proceeds of £150,000 of Treasury bills, there remained at the close of the financial year 1868-9, after satisfying all liabilities for the year, a balance of £76,000 to pass to the credit of the following year. There was at the time, inclusive of the £150,000, a total of £878,000 of Treasury bills outstanding; and there was also an outstanding overdraft, or Deficiency Bill, of £60,000. The result of 1869-70, after satisfying all liabilities, but including the issue of £150,000 Treasury bills, was a credit balance of £76,774 with which to commence the following year. The Treasury bills then outstanding amounted to £528,000, besides the £60,000 Deficiency bills. The year 1870-1 showed a debtor balance of £76,000, besides theDeficiencyßillfor£6o,ooo, The amountof Treasury bills outstanding was £520,000, or £BOOO less than at the close of the previous year. It was resolved by Parliament that the year’s deficit and the £60,000 bill, together £136,000, should be made chargeable on the revenue of the three following years. During 1871-2, £46,000 was to be paid off, and Treasury bills were to be issued at two and three years’ date, for £46,000 each, to cover the remainder of the £136,000. The result of 1871-2, after satisfying all liabilities, including the year’s portion of the previous year’s deficiency, but including as aid to the revenue the proceeds of a £IOO,OOO Deficiency Bill, was a credit balance of £90,700. The Deficiency Bill was made payable the following year. Had it been included in the year’s liabilities, there would have been a deficit of £9700. As it remained outstanding, there was the credit balance I have mentioned, and the floating debt amounted to £610,000 Treasury bills and £IOO,OOO Deficiency Bill. The end of 1872-3, after all liabilities had been satisfied, showed a deficiency of £2159. But during the year, besides that the Deficiency Bill of £IOO,OOO was paid off, there was also extinguished £45,000 of Treasury bills, part of the deficit of 1870-1, and the amount of Treasury bills left outstanding was £565,000 The results of 1873-4 were a credit balance of £207,000 with which to commence the current year, besides that £65,000 of Treasury bills had been paid off, leaving £500,000 outstanding. The surplus of 1873-4, added to the estimated revenue for 1874-5, enabled Parliament last session, in preference to reducing taxation, to provide for a further extinguishment of £IOO,OOO of Treasury bills, besides charging to the Consolidated revenue £171,000 already authorised to be charged to loans. So that, instead of making the loans aid the revenue, the revenue was made to aid the loans. On November Ist last the £IOO,OOO of Treasury bills was paid off. The floating debt, which on June 30th, 1872, was £710,000, is now reduced to £400,000. The revenue is fully maintaining the estimate, and is so abundant that, when I left the colons, a temporary advance had, as I havealrraly stated, been made to the Public W orks Fuad,[to the amount of a quarter of a million,

During the time I have referred to—from June 30th, 1869, to June 30th, 1874 —some £300,000 was paid out of the Consolidated Revenue to the accumulating Sinking Fund for the extinguishment of the colonial debt. I subjoin in tabular form the particulars I have narrated;—

Referring to the revenue receipts for 1873-4, the Colonial Treasurer, in his last financial statement, said:— “ I announce with great pleasure that the revenue has exceeded that of the preceding year by the sum of £300,814 8s 2d, and has exceeded the estimate I ventured to make by £239,716 17s 3d. These results are enormous, when the proportion they bear to the whole revenue is taken into consideration. A comparison of the revenue receipts during the last four years is full of interest. Towards the close of 1870 the Immigration and Public Works policy was adopted, and during the financial year 1870-1 steps were taken to give it effect; but, of course, much could not be done during the first few months. The ordinary revenue for the four years stands thus:— £ s. d. 1870- 936,188 5 10 1871- 1,031,082 18 7 1872- 1,119,904 3 4 1873- 1,420,216 17 3 “ The revenue of 1871-2 thus exceeded the revenue of the previous year by 10‘ 13 per cent; 1872-3 again showed an increase on its predecessor of B’6 per cent; and the year just passed showed an increase on the previous one of 26-8 per cent. The aggregate result is, however, the most striking. The revenue of 1873-74 exceeded the revenue of 1870-71 by 61*7 per cent.” As so many figures were given by Mr Fellows with the object of disparaging New Zealand, I must ask you to publish the following, which may perhaps create a different impression as to New Zealand’s position. The figures show the Land Revenue (exclusive of the receipts from gold) during the respective years:— £ s. d. 1869- 209,623 3 6 1870- 208,091 5 0 1871- 336,311 0 6 1872- 889,642 14 1 1873- 1,038,797 13 8

I am aware that Mr Fellows ingeniously suggests that the larger the Land Revenue the greater is the loss of capital. If the sales of land in any one year made a serious impression upon the total area available for sale, there might be some force in the suggestion. But hitherto the land sales in New Zealand have been such year by year, that through the progress of settlement the unsold lands have acquired increased value more than compensating for the land parted with at current value. Not many months since, an estimate was made that, excluding all confiscated and native lands, and adopting the very low average price of only 7a 6d per acre, the unsold lands of the colony represented a value of £13,500,000. The value of imports into New Zealand is shown by the following figures ; a careful division being also made between consumable articles and those which, being non-consum-able, may fairly be regarded as more or less adding permanently to the wealth of the colony.

As regards exports, the above table must be of interest. It shows, for the six years 1867 to 1872 inclusive, the average yearly value of the exports named, from the colonies of Victoria, New South Wales, and New Zealand, and also the rate per head of population in each case. The only preliminary explanation needed is, that for 1871 and 1872 the amount of gold coin produced in the Mint in Sydney, from gold received from other colonies, has been deducted from the total export of gold as shown in the export returns of New South Wales.

Mr Fellows lays stress upon the debt of the colony increasing at a ratio sixfold that of the population. To prove his case, he takes the debt at the end of 1862, and compares it with the debt at the end of 1871. The figures thus taken by Mr Fellowes are for the period from just before the commencement of the war of 1862, and inclusive of only one year of the immigration and public works debt. The proper deduction from those figures would be, not one against the public works policy, but that they show how very largely the indebtedness of the colony was increased under unproductive expenditure consequent upon native wars. The increase of the public debt of New Zealand on account of immigration and public works, must be taken as dating from early in 1871, and for only a small amount during that year ; whilst from the end of 1862 to the end of 1870 the increase was principally for war purposes and for provincial loans, the proceeds of which were expended on provincial public works. A comparison between the two periods will be instructive, as showing the effects on the public debt of the first three years and a half of immigration and public works expenditure. I give the results in tabular form ; but I should remark that the total debt on June 30th last includes £ 1,500,000 which had recently been raised, and of which not more than half a million was expended.

These results do not compare unfavorably with that other period from 1862, when the debt was only £836,000, the amount per head £6 12s lOd, and the annual charge per head 9s 7d. The increase to 1870 was much more serious; and, considering the increase of debt from 1870 to 1874, with the large increase of revenue per head to meet it, I am reminded of a well known anecdote. An Irishman, after selecting something in a store in the United States, asked the price. “ A dollar,” was the reply. “ A dollar,” said he ; “ why, I could have bought it for sixpence in Ireland.” But, after a moment’s pause and pulling out a handful of money, he added, “ Never mind, I hadn’t the sixpence there, and I have dollars here.” The people of New Zealand can better afford now to pay, in taxation, £4 than they could in 1870 to pay £2. Some months since an exhaustive analysis was made of the public debt of the colony. 1 will ask you to publish a short abstract of that analysis, which appears in the “ Official Hand-Book of New Zealand ” : “ New Zealand has, apparently, when tested by its population, a heavy public debt; but when tried by the only true test, the burden which the debt bears to the earnings of the people, it compares favorably with older and more settled countries, although the public debt of the colony includes works, such as railways, waterworks, roads, and bridges, which in other countries are either the results of joint-stock enterprise, or of local taxation, or of loans not included in the general indebtedness. Again, in the colony, against the public debt there is to be placed an immense and valuable estate in the land which still belongs to the Crown. The charge per head upon the population, on account of New Zealand’s public debt, taken as a whole, was some months since computed to be £1 17s 4d per annum. That total was thus composed : On account of colonial indebtedness, exclusive of Public Works and Provincial, 18s per head; on account of Public Works, 6s 8d; on account of provincial Loans, 12s 8d; making together £1 17s 4d. But taking the test of the average earnings of the population, the charge per head on account of New Zealand’s total indebtedness is computed to be 2 4 per cent on the average earnings, while in the United Kingdom it has been computed at 28, and in the United States at 2.7 per cent. In the former, the cost of railways and of other public works which are regarded as 1 colonial,’ is not included; in the latter the State debts are included. Exclusive of provincial indebtedness, the colonial debt, including that for railways and some other public works, is computed to be equal to an annual charge per head of about 1-6 per cent on the average earnings of the population. The provincial indebtedness is secured on the Crown lands, and these, at a moderate estimate, are worth at least four times the amount of the provincial debts.” The references I have made to the Imperial Government demand some explanation. Otherwise, it might seem that I somewhat harshly reflect on the removal of the troops, and that I imply that the prosperity of New

Zealand is a consequence of the Imperial Government leaving the colony to itself. I never approved the removal of the troops, and I teared that dangerous results might arise from it; but it is right I should say that many public men in the colony had expressed an opinion in favor of the removal, believing that whilst the troops remained the evils of double government and divided responsibility would continue. At one time Parliament supported this view, but not at the time when the removal took place. It was then generally recognised that the increasing difficulties with the Maoris made the removal at least inopportune. I should be sorry to convey the impression that the colonists believe they have done that which the Imperial Government were unable, or would have been unable, to effect, and that any blame attached to the troops. The Colonial Government had at their command means which were not placed at the disposal of the Imperial generals. As a military operation, nothing could have been complete than Sir D, Cameron’s conquest of the Waikato districts. The natives have sometimes expressed a desire for the return of the Waikato lands, but they have never questioned the thoroughness of the conquest. As a military operation, that conquest was a great one. Later still, the colony rang with admiration at the march through from Wellington to New Plymouth, successfully completed by General Chute, at the head of a mixed force of Imperial and colonial soldiers, and accompanied as a volunteer, by the present Agent-General of New Zealand, Mr Featherston, At the time (some nine years ago) this was regarded as a most important feat, and a very skilful and brave one. It was unquestionably all that was said of it. It was most important to show that, in defiance of the natives, troops could penetrate from Wellington to New Plymouth; and it was not only a dangerous operation, but one requiring great skill. For the Maoris are not contemptible warriors ; they are born soldiers, and, with their skill, trees become fortresses, forests impenetrable defences. But I am quite sure that if Sir D. Cameron and Sir Trevor Chute were asked, they would not only willingly do justice to the assistance the colonial troops rendered them, but would also allow that they would gladly have had at command other weapons than fire and sword. The Imperial Government could spend money on warlike operations, but not on colonising pursuits. New Zealand was a constitutional colony ; but had it been a Crown colony, things might have been different. As it was, the Colonial Government could devote themselves to colonising, and could replace the sword and the gun by the axe and the pick. It was with these instruments at his command that Sir Donald M'Lean, the Minister to whose special charge native affairs were confided, was able to apply, with consummate skill, his knowledge of the natives to making them contented, instead of discontented, with European rule. Two or three times each week coaches convey passengers and mails through the country in which General Chute performed that dangerous march. Coaches run from Wellington and from Rangitikei to Napier; from Napier .to Taupo Lake, always deemed the central strategic point of the North Island; and from Taupo to Tauranga. The very heart of the North Island is open. It is as safe now to travel from Auckland to Wellington as from London to Edinburgh. The immigration and public works policy, which Mr Fellows so industriously slanders, has been the bridge between the dangers of General Chute’s great march and the safety and security of the present day. If the Imperial Government could have adopted similar colonising measures—had money been available for peaceful as well as for warlike purposes—they might have done as much as has been done. It was a generous and high-spirited act of the North Island to accept the position of a constitutional colony. Had it remained like others in which military movements have been carried on, a Crown colony, New Zealand would have been some millions, less in debt. Do not blame the colony because it roused itself to the task of improving its means to bear its liability for unproductive expenditure on native purposes.

If I have pressed hardly on Mr Fellows, it has not been from a desire to do so. Whenever I have had to use a harsh expression, 1 have earnestly sought for the least offensive word that would do justice to my meaning. I cannot acquit Mr Fellows of intentional misrepresentation concerning the immigrants Hundreds of thousands of people in the United Kingdom are eagerly looking for information as to those who have emigrated to New Zealand, It is cruel in the extreme to tell them that their friends and relatives have cast themselves upon a country from which one-half of them will find it necessary to depart. Passing over this misstatement, I willingly think that Mr Fellows is not without earnest belief in that which he writes. He is one of those persons, of whom France produces so many, who find it impossible to be contented with any Government under which they live. When he first arrived in New Zealand from Vancouver Island, he was equally prolific of complaints against the colony from which he then came. That, according to him, was a glorious country, but the Government was intolerably bad, and he had left in consequence. I do not think there is any colony the Government of which he would approve. I have answered Mr Fellows under circumstances of difficulty. I received your number, containing his article, at Florence, several days after it was published; and my reply has been written amidst the weariness attending a slow recovery from serious illness, and with but few books and documents accessible. I should have liked to do more justice to New Zealand, The colony is as prosperous now aS any country in the world. It has immense resources, and is sure of a great future. But not only on its resources does it depend. As a comparatively recent colonist, I may, without egotism, say that, far above climate, soil, and mineral and other capabilities, the strength of New Zealand depends on its people. A country may support population even in spite of original sterility—as witness Utah, not to mention many spots in Europe. Upon its people depends a country’s success ; and the colonists of New Zealand have those virtues of frugality, faith, industry, and energy which ensure success and happiness to their possessors. In the New England States, the grand qualities of the early Puritan founders show themselves in their remote descendants. Generations will live and die in New Zealand, and still the homely virtues of its pilgrim fathers will be reproduced, and will earn for the land a great place amongst the dependencies of the empire to which I believe they will, like their ances-

tors, glory to belong. To the people of New Zealand, who have won their way to success through so many difficulties, that happy phrase, ‘ the heroic work of colonisation,’ is peculiarly applicable. I am, &c., ULIUS VOGEL, Paris, January 17th, 1876.

-4-» a Balance at end of i 0) Treasury Bills and cu (H ®5 C M d£ cm fear. Year. y Bil ency n aid durin fear. Deficiency Bills. a W Dr. Cr. a ® S ® 2 o <v Q 3 O) a ► Eh .2 Paid off. Outstanding. £ £ £ £ £ 1868-9 76,000 150,000 • •• 438,000 1869-70 ... 76,774 150,000 • •• 588,000 1870-1 76,000 ... • •• 8,000 580,000 1871-2 • •• 90,700 100,000 • •• 710,000 1872-3 2,159 ... • •• 145,000 565,000 1873-4 • •• 207,000 • •• 65,000 500,000 18 7 4-5 ... 66,000 ... 100,000 400,000

Imports Total Value of Imports. Value of Consumable Articles. Value of NonConsumable Articles. 1867 1868 1869 1870 1871 1872 1873 £ 5,344,607 4,985,748 4,976,126 4,639,015 4,078,193 5,142,951 6,464,687 £ 4,178,515 3,719,648 3,901,378 3,479,805 3,081,525 3,701,671 4,339,529 £ 1,166,092 1,266,100 1,074,748 1,159,210 996,668 1,441,280 2,125,158 Totals ... Gold Wool Agrcaltural Produce Timber ... Flax Exports, M 1 o wot 'oo'tf* Ol to w 2S a* 'h-» 'bi o g p CD OFQ CD ST ct* £13 o ! o 03 or V* w so p* P H-* H-* O tO &• lb OO 'br • >—* CO fcO CO CO 00 O 05 lb lo^ £- 3 IsO "00 a g ■»TO % o a C5 »— CD zn 0 B Ptb o 0 o-o» w ta 0 ST s* - p. to o : h-* 00 H* Ivj cn P to 00 P* P “ O CD 09 Ih <1 w to c* JO,045 53,372 0 ”0 to ow ib WO) CD 0 p 0 CTQ * CD tzi tD 3 CO CSJ lb ►—* a* o o 0 h-J os to tb to 04 w ws. g ® s p - 0 Oi a* P.'O 5 ->* 0 05 SI P* ►5

Total debt, Colonial and Provincial. Total Debt, less SinkingFund Amount per Head of Year ending Population. Gross Debt. Annual Charge. Revenue. £ £ £ s. d, £ s. d. £ s. d. December 31,1870 7,841,849 7,384,505 248,400 31 11 4| 2 0 5 3 18 li June 30, 1874 ... 13,411,736 12,500,000 308,000 43 10 10f 2 10 6 4 12 2\