FINANCIAL STATEMENT.

Globe, Volume VI, Issue 639, 6 July 1876, Page 3

FINANCIAL STATEMENT.

( Concluded )

“ Honorable members will have understood from what I have said that the Government consider the time has come when the upset value of land should be increased. Admitting that, as was to be expected, the most accessible lands have first been selected, it is to be remembered that the value of all land has been enlarged by the settlement and public works which have been progressing for many years, and that some of the very best land is now only becoming available by reason of the communication which is being opened up to it. Interest on money is less than it was in the early days of the, colony. Every reason, in short, points to |the expediency of raising the price of laud. What we intend is to ask the Assembly to concur in raising the upset price, wherever it is less than £2 an acre, by about 25 per cent, without, however, interfering with the different land systems in force throughout the country, with two exceptions ; one that we propose to repeal all power to make free praptg laqd) including those under the

Immigrants Land Act; the other that we shall ask the Assembly to agree to a much enlarged system of deferred payments. We are convinced that no artificial system of special settlement will compare with a general provision, open alike to new comers and old settlers, to poor and rich, to acquire on easy terms of settlement, a homestead of 200 acres. T« the young men growing up in the colony, this will be a priceless boon. We had considerable hesitation in deciding whether it was expedient to recommend that the upset price of land in Canterbury should be increased. _We thought that the price should be higher than it has been during past years, but we could not come to the conclusion to raise it anywhere this year over £2 an acre. All these matters I can only touch upon now, but it is evident that as the Government have intimated their intention to raise the price of land, it is not desirable to allow speculative purchase at existing prices in the interval ; if no action is taken the land open for selection will be crowded to-morrow, I shall therefore ask the committee to agree to a resolution to the effect that upon purchases of land made after this date any addition that by law this session may become payable on similar land shall, as a condition of the issue of the Crown grant, be payable on land taken up between the present date and that of the coming into force of the general Act increasing the price. This resolution, I wish it to be distinctly understood, will in no way bind the House to agree to the additional price, nor will it involve any extra payment in anticipation of the law, but it will prevent speculation on the issues of the deliberation of the Assembly, whilst it will leave the Assembly time for considering the question. I appeal to the committee to accept the resolution in this spirit, and not to discuss the question of the increase before there has been time to take the whole financial statement into consideration.

“ With the suggested changes from the abolition proposals of last year, we believe we may dispense with direct taxation for colonial purposes, and those changes are, education to be partly charged on the land revenue, and the bulk of the cost of charitable institutions, exclusive of lunatic asylums, to be devolved on the boroughs and counties. There is besides the change involved in taking over the railways, and with that is involved the condition of a stated contribution from the land fund of each province to the railways within its boundaries. One other point I should mention is that we think, if a limit be not set to the term of subsidies to counties, road districts, and boroughs, then, as was the case with the provinces when the Assembly comes to vary their revenues, the demand will arise to accept the liability for their loans. It is too much to suppose as these institutions progress that the consolidated revenue or land revenue can give equally progressive aid. The increase year by year will be very large, and with the probability of such large increase, I hope it will be considered that Parliament should not be bound beyond the following terms, viz, that the consolidated revenue shall pay to the boroughs, road districts or counties £1 for £1 for five y.ars, and thereafter the question of its continuance be open to the consideration of Parliament; and that on like conditions and for a like period it shall guarantee the payment of £1 to £1 out of land fund. I venture to think these plans meet fairly the many admitted difficulties. They still leave the provinces to enjoy their land revenue. In no part of the country can such distress and destitution in respect to public institutions exist as has before existed. The consolidated revenue will have only a certain loading. If necessary the revenue must be added to by taxation, but there seems to be more probability, as the railways are completed, and the heavy liability which their incomplete, and therefore unremunerative, connection occasions, is lessened, that taxation may be diminished increased of increased. It is to be hoped the system of giving away land will not be continued. We indeed start with a reduction of taxation in one direction, for we propose, as I have already stated, to abolish all existing education rates. “ In dealing with future financial arrangements,! cannot forbear a reference to the very important effects which we anticipate will follow the change which we will submit in the present system of purchasing native lands. If our proposals have effect given to them, the most fertile cause of native expenditure will be removed; the value of property in this island will be largely increased, and therefore its capacity to contribute to local works. The condition of the natives will be vastly improved, and the land revenue of the North Island much augmented, without the necessity for further loans and constant interest-bearing expenditure. No longer will the natives be galled with the reflection that instead of aiding them and receiving a legitimate consideration in return, we are always trying to get the better of them in the bargains into which they and we enter. No longer will the land revenue of the North Island be a questionable equivalent for the expenditure incurred, and no longer will the Government of the colony be forced into competition with private individuals; The revolution in' system of native land purchasing is a worthy crown to the other great changes, which we believe will relieve New Zealand of the principal difficulties under which she now labors, and qualify her for the pre-eminent position amongst these colonies to which her capabilities entitle her. THE RAILWAYS. “ We propose to arrange for acquiring such of the railways as are provincial property by deducting from the indebtedness of the province parting with the railway an amount equivalent to the value. This would lessen the charge on the land fund for loans of that province, and therefore leave more of that fund to be divided amongst the counties. As we are taking over the railways, it is right to remember the position of the Middle Island Railway Fund. That fund was created as a charge on the colony to correspond with the charge on the colony for roads in the North Island. As the railways are now everywhere to be charged on the colony, it is fair to allow to the provinces concerned a reduction of their railway debt to the extent that each ►has received credit for railways (not roads), out of the Middle Island railways fund, FUTURE LOANS “ The question of further borrowing is one about which the committee will feel much interest, and honorable members will not be surprised to learn that when abolition takes place a large amount of liabilities will devolve on the Government. Some of these will be for ineompleted engagements,

gome for existing liabilities, some for deficiencies, such as overdrafts, while a part will be for ordinary current expenditure, which it will be impossible at once to arrest. It must be remembered that, after abolition, the preseut provincial revenue, is disposed of. The revenue from licenses, for example, goes to local bodies, the land revenue is appropriated to meet certain charges with a fixed destination for the balance. In short, with respect to revenue of all kinds, the new arrangements commence when abolition lakes place, but some of the expenditure it may not be possible immediately to stop, and liabilities must be met. I cannot give you any trustworthy estimate of what the total will be, but 1 shall be glad to find that it is less than half a million. What we propose to do is to ask power to issue treasury bills or debentures to cover it as its amount is ascertained. The provincial debt of each province to be augmented by the amount borrowed to discharge the liabilities of such provinces. Some of the appropriations approved by the Government on the recommendation of the provincial governments involve expenditure which will extend far beyond the period of abolition. Especially is this the case with the provinces of Otago and Canterbury, Ministers did not recommend approval of these authorities without adequate consideration, although they felt the difficulty of continuing the expenditure after the revenues become the property of local bodies. Yet it seemed to them so inexpedient to suddenly arrest the works proceeding, for the new bodies cannot immediately get to work and mature their arrangements., that they decided to approve the estimates recommended, and to see them carried out after abolition at the cost of the provinces concerned. The works authorised by these estimates not completed when abolition takes place will be carried out on behalf of the provinces, and form part of their outstanding liabilities.

“ At an earlier period of my statement this evening I explained that a considerable amount appropriated for public works for the year just expired had not been expended, and I also stated approximately the ways and means for public works that were yet available. We propose to continue the progress of the trunk railways and a reasonable expenditure on immigration. The latter we think should be temporarily reduced because of a somewhat less demand for labor. The construction' of the trunk railways should be continuous, and as rapidly as may from time to time bo found convenient. I have already said I should be glad to find that half a million would meet the liabilities of the provinces. There is indeed little chance of this. The liabilities to the consolidated revenue and that to the public works account make nearly the sum, without including liabilities to be discharged after abolition takes place. We propose to ask authority to borrow £750,000 for provincial liabilities and £1,250,000 for public works and immigration. We do not think it will be necessary to negotiate more than a million this year, unless a favorable opportunity occurs. My colleague, the Minister for Public Works, will explain as soon as possible the views of the Government as to the expenditure of this money. I may, however, mention that we propose to devote it to continuing the main lines of railway and to immigration. It will be the duty of my colleague to enter into details concerning the intended expenditure for the year. OUR FINANCIAL POSITION. “ 1 desire to say a few words about the general position of New Zealand’s credit. There is no use disguising that it has suffered, partly from detraction, which I hold to be altogether unmerited, and partly from the fact of the colony having borrowed very largely. It is impossible to secure for the public debt of a colony like New Zealand an accurate consideration of its true nature. People will not pause to analyse, A public debt means to them a public debt in itsordinary acceptation, and they compare New Zealand’s public debt with the national debts of old countries. The comparison is essentially faulty, for the New Zealand debt is mainly composed of moneys expended on objects which have no place in ordinary national debts, but the value of which is fully recognised. If a person wished to show the extremes of good and ill which distinguish a country, he would be apt to point to the small extent of money expended on the usual objects for which national loans are contracted, and to the vast expenditure on the purposes for which mostly the debt of New Zealand has been contracted. Do not let us say there is nothing in a name. If a large proportion of our New Zealand debt had the shape of a loan to railway companies, not to the colony, its amount would be accepted as a proof of the colony’s progress and judicious promotion of settlement, As it is. we must accept the position, and we must show that we do these by so improving the condition of the securities already outstanding as to leave no room for carping complaints, and by contracting our expenditure until the market has time for recovery. I have already mentioned that the agents have not sold the last parcel of debentures, for the negotiation of which authority has been sent home, and that they are negotiating for a temporary loan on them. Obviously it is desirable to add to them at present as little as possible. To improve their position is also very desirable. I commend hou members’ attention to the paper respecting the inscription of stock by the Bank of England. The Government are of opinion that through the arrangement which has been made the Assembly has it in its power to greatly improve the position of New Zealand securities. The House will be earnestly asked to consider this matter. It is one of vast importance to the colony, for it not only involves the improvement of the present credit of the colony, but it includes, a great saving of future expenditure in regard to loan charges, In another way you will be asked to improve the position of New Zealand’s credit by making its finances more simple, and therefore more easily comprehensible. With the system of illdefined partnership and no-partnership which has prevailed, tncre have been so many intricate details that people have shrank from the task of mastering themselves the real position of!thecolony, and have consequently been inclined to accept any misrepresentation which might be made. I hope we shall this year define what are and what are not purposes to which the consolidated and other revenues are to be devoted, so as to leave no doubt what the financial position of the present is, and what the financial arrangements for the future are to be. I have said that the New Zealand loans include amounts for objects which persons

outside do not accept as coming within the scope of ordinary national debts. Within limits I am not sure that we are altogether right, and others altogether wrong. It has often been asked here, when money for useful objects was wanted by local bodies, such as Provincial Governments, Harbor Boards, and Borough Councils, why should not the colony borrow it at as low a rate as it can be obtained ? The answer is partly to be found in the fact that the quotations for our loans are not so high as we should wish. Those who lend money have, a great prejudice against various borrowing. The Imperial Government has often said, when urged to borrow for the colonics and for other than directly national purposes, that if the country committed itself to such loans, its credit would not be so good, and it would have to pay more for the money it borrowed. As a matter of fact the direct loans of the country command a considerably higher rate than those which are equally well secured by an indirect guarantee. It does not follow that the bodies to which Imperial assistauce is refused fare badly. There are many public bodies in Great Britain which have borrowed money almost as cheaply as the Imperial Government could have borrowed it for them, and without the risk of generally reducing the value of the Imperial securities, lam convinced that in New Zealand we must in future be very chary of giving the guarantee of the colony to local bodies. I think we should continue to add to the ordinarily recognised purposes of public debts, the cost of railway and immigration, but that we should avoid making the colony liable for the large number of public works, most useful in their character, of which in future the local bodies are to have charge. In the Bills relating to boroughs and counties, which we shall bring before you, we make it perfectly clear that the colony is not liable for the debts they may incur. We propose to give them certain powers of ordinary borrowing proportionate to their rates. When they wish to go beyond this, and to borrow for special purposes on special securities, we desire to make it necessary that they should obtain the consent and approbation of the ratepayers, and with that consent they may go into the market and make their own financial arrangements. I am not thoroughly familiar with the system at home, but I believe that to some extent it includes Go vernment supervision, with, in some cases a power of approval or veto. After much consideration we think this would not be desirable here. Anything of the kind in the colony would be construed into a quasi liability, and the Government would not be strong enough to resist the argument that their approval of a loan committed the colony. At home the Government is so powerful and so accustomed to disregard inferential claims of the kind, that they would treat with indifference any liability not direct and explicit.” EXPENDITURE OP CURRENT YEAR. Turning to the expenditure for the current year, the Treasurer explained that including £112,000 for nine months’ grants to municipalities, and also including capitation and special allowances for three months, and a moiety of stamp duties for three months, to be paid to the public works account, the total was estimated at £2,317,000. The incorporation of the Provincial with the General Government estimates had occasioned an_immense amount of trouble ; and after all, some of the former had to be incorporated as they stood. The Government were sanguine that, when the provincial departments had been taken over, very considerable reductions on, the estimates would be effected. The Treasurer added, “ I have kept in the estimates a statement of all the appropriations last year. I will forbear on the present occasion from entering into an analysis of the differences that taking over the provinces will involve. Hon gentlemen will be able to form their own conclusions upon that point. They will probably consider that by taking over the provinces we are incurring a larger expenditure than we meet bj the payment of capitation allowances. Indeed that this is so may be readily conceived, when we remember that the amount of revenue we take over with the provinces is a mere bagatelle, whilst we are undertaking to satisfy substantial items of expenditure. The two systems are indeed so entirely different that every person who chooses to enter upon a comparison of them may do so from a different point of view, and therefore come to a different conclusion.

“ This is not a time for me to justify or defend the abolition policy. I strongly hope that one of its results will be that, on the whole, throughout the colony there will be a less amount of expenditure, and I look upon it as a great advantage lhat a very large proportion of the expenditure that has been conducted by the Provincial Governments will be conducted by a number of truly local bodies. As to ways, the Treasurer said the consolidated revenue was estimated at £2,199,000, inclusive of £443,000 as receipts from railways, the land revenue was set down £770,000, and the goldfields revenue at £85,000. This did not include license fees, which would be paid direct to counties and boroughs, and he had prepared a table of revenue in this form for statistical purposes only, and his reason for so doing was that New Zealand had often been placed at great disadvantage through comparative statements of revenue, the receipts from laud and from goldfields being included in the totals given for Australian colonies, but having been excluded in the case of New Zealand. The actual ways and means of the Government for the current year were estimated as follows Consolidated revenue, £2,199,030 ; balance available at the commencement of the year, £72,000, and the two per cent contributions from land revenue on account of railways within the respective provinces, £75,000, These items represented a total ©f £2,346,000, and deducting the amount of the estimated expenditure, there would be at the close of 1876-7 a surplus]of £29,200. This would no doubt be considered a very small balance, especially as there were sure to be supplementary estimates, but if the committee resolved that the supplementary estimates should not be excessive, he thought it would be found that the ways and means provided would be sufficient for the services of the year, He was indeed sanguine of reductions in the estimated expenditure being effected when the Provincial debts were in the hands of the General Government. The Treasurer explained why he had not included goldfields revenue in his estimate of available means. “ Last session,” he said, “ The goldfields members persuaded he House to accept a clause by which, after defraying all the expenses of the goldfields, the balance of

revenue from them was to be handed over to the local Government bodies, to be subject to the payment of a subsidy of £2 to £l. The Government explained at the time that such a clause would mean nothing, that they could not hold out any hope of such a subsidy being more than nominal. A moment’s consideration will show how hon members that the idea involved in the clause is absurd ; it is that the Government shall pay a subsidy of £2 to £1 upon the amount of revenue collected. Such a plan would be rolling a stone up a hill with a vengeance, If the Government had to pay £2 to £1 upon the balance arrived, at in the way stated, then the Government would not improbably think they were doing right in making that balance as small as possible. The plan would work out in this way. Occasionally heavy “ finds” would be made within some goldfields, and the Treasury would have to deplore such results as making unexpected calls upon the revenue of the colony. Instead of the Treasurer being allowed to rejoice, as he would naturally desire to do, in the progress of the goldfields, he would have to dread the occurrence of discoveries which would otherwise cause general satisfaction. But whatever the Treasurer might feel, it was clear that the clause agreed to last session was incomplete. It provided that the surplus of gold export duty, as well as of goldfields ordinary revenue, should pass to the local governing body of the district within which it arose, but it did not provide or suggest how the amount arising within each district should be ascertained. When the Treasury came to look into the question, it was found therefore that the clause could not be carried into effect. It would be impossible to connect the payments made into the Custom House on account of export duty, with the quantities of gold brought down from the several fields, even if all the gold was conveyed by escort. This difficulty can easily be remedied by legislation, but the rest of the subject demands larger attention. The Government desire to make a proposal which they hope the goldfields members will recognise as more beneficial to the district than that of last session, namely, that instead of charging against the revenue from the goldfields all the expenditure upon them, including that for gaols and police, and handing over the balauce subject to the provision proposed laat session, all the ordinary revenue for each field, including the export duty, shall be handed to the local governing bodies of the districts within which the fields are situated, for expenditure on local works. If the hon members representing goldfields still require that we shall adhere to the plan of last session, then we shall have to charge against the revenue every item of expenditure, and except in the case of lucky ‘finds’ little money will revert to the local bodies. It will,” continued the Treasurer ‘‘be satisfactory to the country and to hou members to find that it has not been deemed necessary to propose any increase of taxation, Indeed, we propose to some extent to reduce taxation—since we ask Parliament to do away with the education rates that have been levied in some parts of the colony. The year we are now commencing is, in my opinion, the most difficult we have had to do with for some time past, and for which we shall have to provide for a long period to come. Besides that, it is the year in which we have to take upon ourselves all the immense responsibility which we shall have to meet when abolition takes place. It is the year in which we shall be made particularly to feel the effects upon the revenue of having to meet the interest on the cost of railways in course of construction, and which are not yet reproductive. As the railways are completed and come into use, they will year after year give us greater relief financially, and I see no reason to suppose that after the present year we shall not be at liberty to resume immigration upon a considerable scale. I am confident that if the provisions we propose for giving land upon deferred payments are made they will induce a great amount of settlement, thus to some extent relieving the labor market, and creating a demand for further labor. I am sure I need scarcely say that it has not been, and will not be our desire to cause a glut of the labor market. Statements that the Government have such a desire have been made, but they are not true. No doubt, in parts of the countryjthere are some unemployed persons, but in no circumstances and under no conditions would it be possible, whether the scale of immigration be large or small, to find a country in which there are not some people who are not able at times to find work, or upon whom others would not look as undesirable employees. I am sure the number of such persons in this colony at present is not large. In that statement I believe I shall be supported by hon members from the various districts. Still in view of the fact that some of the authorised railways are being completed, and from other circumstances, we have thought it better for the next few months to reduce the number of assisted immigrants, RECAPITULATION. “ I will briefly recapitulate the principal points of the statement I have had the honor to the committee. We wish to have it understood that we do not consider the question of abolition an open one. We look upon it as already decided, and we are of opinion that that there is no chance whatever of the decision being reversed. We wish hon members and the country to recognise that abolition does not end with the mere coming into force of the Abolition Act, but that the operation of that Act will cast upon the Government a large number of gravely onerous duties. I have desired to make it clear to hon members that a leading feature of the present budget is the putting upon a simple footing the finance of the colony, relieving the consolidated revenue of various contingencies, giving to the colony its finance, and to the different local bodies theirs, preventing in future the clashing of claims of interest which has caused so much mischief in the past. It has been my duty to point out that certain changes in the abolition proposals, agreed to last session, have been rendered necessary by the larger knowledge and experience which the past year supplied. These changes are represented principally by the cost of education being now proposed to be partly borne on the land fund and by the cost of charitable institutions being mainly devolved upon the people of the colony themselves, and on- the districts in which the institutions are respectively situated, or the residents within which they serve. I have had to explain to the committee that in the opinion of the Government it is necessary the colony should take charge of the railways of the country, and that In order to do so and to meet the pressure of the interest on the post of works in course of

construction, as well as the deficiency to j cover interest, which the receipts in'&useM I of expenditure may for some time show, there m should be made from the land revenue or J each provincial district during the next nine years a contribution, beginning at 2 per cent ' and falling gradually to per cent, upon - the cost of the railways within its own boundaries, I have further to explain that the Government believe that the time has now come when a material increase in the price of the waste lands of the Crown should be made, not with the view of benefiting the Colonial Government, but to enlarge the surplus at the disposal of the local bodies for the purpose of doing justice to those who long years since purchased land at its present price, and who have a right to consider that their labors in making the colony what it is, render it bat fair that those wbo now come in should pay a higher rate for land than was paid by the pioneer’s of the settlement. These are tho main points of the budget, and I commend, t it as a whole to the earnest and favorable consideration of bon members. This is no time for party or personal I animosity. I feel that lam in the midst of three generations of public men. lie around me those who have grown grey in the service of the colony, when little more than its name was known to me. I see those who, contemporaneously with me, have given their best services to the country -J during the last decade, and I see and welcome with great pleasure! a number of members who, though only this session entering public life, have already given evidence of vigorous thought, ami fluent and eloquent speech. We meet on no common occasion. We will this session make an imprint on the history of the colony that cannot be efface.l in all the yews to come. As far as the internal affairs of New Zealand are concerned, it has fallen to us—the old, the middle-aged, and the young in public life—to give to the country a new constitution, which those who live now, and those who come after us, will have to work out. In the presence of such a duty, the sacrifice and prejudice of the hour should be hushed, free from every disturbing influence from which we can possibly escape; let us devote ourselves to the endeavor to frame a constitution which will give to a law-abiding, liberty-loving and noble people, powers of self government, unfettered by e.ny control, save that which one parliament in the country deems it necessary to give.

WASTE LANDS RESOLUTION PROP.BET) AFTER THE STATEMENT. After a long discussion the resolution wasamended as follows :—That whereas the committee has under consideration the question of increasing, during the present session, the price of the waste lands of the Crown throughout a great part of the colony to a price not exceeding £2 per acre it is resolved by the committee, if any such increase is made during the present session it shall take effect as to all sales made on or after the sth day of July, 1876, and until the end of the session, and that as to all such Sales the purchaser shall be required to pay such increase; and further that this resolution be forwarded to the several Waste Lands Boards and Commissioners of Crown Land*, in order that; its terms may be made known to intending purchasers, provided always that this resolution shall not affect land leased or sold on deferred payments.” The resolution as amended was reported to the House. The House adjourned at 3,15 a.m.