GENERAL ASSEMBLY.

Globe, Volume XXII, Issue 1963, 9 June 1880, Page 3

GENERAL ASSEMBLY.

LEGISLATIVE COUNCIL. Tuesday, June 8. In the Legislative Council, The Hon. Mr Mantbll gave notioe to bring in a Deoeased Wife's Sister's Marriage Bill. The Hon. Col. Whitmobb's motion for an inquiry into the volunteers' outrages at the Ohristohurch review, was again postponed for a fortnight. The Hon. F. Whitaker said that the irregularities, which had been much exaggerated, had been committed by Otago volunteers cm their way home. A [conTt-martial of inquiry now sitting would report in a few days. The second reading of the Babbit Nuisance Bill was deferred to Tuesday.

The Hon. Dr. Pollen's motion for a return showing how many electors have been added to the rolls by thefnew law, was oarried. The Fisheries Bill (consolidating the existing law) was read the seoond time, after a short debate, in'which the Hons. Whitaker, Colonel Whitmore, Captain Eraser, Mantell, Colonel Brett, and Waterhouse took part. The speakers mostly pointed out amendments to be made in committee. The Council adjourned at 3.5 p.m. HOUSE OP BEPRE SENT ATI VES. Tuesday, June 8. The House met at 2.30 p.m. NOTICES OF MOTION. Mr Shbimsei gave notice that he would ask why the privilege of transmitting Press telegrams by special correspondents to 10 o'clook p.m. was not extended to this session. Dr. Wallis gave notice that he would aßk if it is the intention of the Government to extend the Aot prohibiting indecent theatrical exhibitions at present in force in Otago to the rest of the colony. Sir G. Gbby gave notice that he would ask leave to introduce a Bill to perpetuate the recognition of the public services rendered by Mr Moorhouse to Canterbury. Mr Hamlin gave notice that he would move for a return of how the £50,000 voted for roads, &3., in the North had been expended. Mr Mubbay gave notice that he would move members of the House of Representatives be reduced to £IOO, and that no honorarium be paid to membors of the Legislative Council, also that the salaries payable to future Governors, as well as to Ministers of tho Crown, be reduced." QUESTIONS. Replying to Major Harris, The Hon. R. Olivbb said that it is the intention of the Government to construct a siding at Whangaroa on the Auokland-Wai-kato line. There was no reason why a reduction should be made in the fare charged to passengers to and from Runciman station, and that inquiries would be made as to the necessity for further accommodation _ at that Btation.

Replying to Mr Stewart, The Hon. W. Bollbston said that inquiries would be made respecting an order by some Licensing Courts to oertain licensees questing them, under penalty of having their licenses cancelled, to pull down their hotels (which although constructed of wood are suitable and in many instances valuable), and to rebuild the same of stone. Sir W. Fox asked whether the Government had seen in the London " Times " a prospectus for the formation of a Mortgage and Investment Company to carry on their business in New Zealand, one of the managing direotors of which is Mr John Bathgate, District Judge at Dunedin, and whether the Government considers the office of a director of such company compatible with his position as a judge receiving a salary from the Colonial Treasury, also whether, when leave of absence on full pay was given to Mr Bathgate to go to England, and he was afterwards employed as an emigration agent at a salary, it was understood that he went home on private business, and was at liberty to engage in the promotion of public companies, whose intention was to carry on their business in the colony ? The Hon. Mr Bollbston replied that he had not seen any advertisement until his attention was drawn to it by the hon. member. The Government did not consider Mr Bathgate's appointment as a director compatible with his position as_ a District Judge, and that he would be notified of that faot. It was understood that he went Home on private business, and was allowed half-pay from the judicial vote, the other half in consideration of his acting as emigration agent being provided out of the immigration vote. Replying to Mr Andrews, The Hon. E. Olivbb said that the Government was not aware that there are men who had received injuries while in the execution of duties on the Canterbury and other railway lines, who are now depending on public charity for the support of themselves and families, while the Government are employing men that have been injured outside the Government service to do work of various kinds suitable to their own injured men. Eeplying to Mr Andrews, The Hon. E. Olitbb said that fines were imposed upon the railway employes in virtue of the Act of 1876 for neglect of duty and other offences against the regulations. The head of the department was the officer authorised to sit in judgment, with a right to appeal to the Government. The funds derived from these fines went into the publio trust accounts, to be dealt with by order of the Governor. Mr BallanCE asked if it is the intention of the Government in the present session to amend the Land Act so as to provide for the ballot in the oase of deferred payments, as Easaed in this House last session, but rejected y the Legislative Council. The Hon. W. Bollbston replied that under the ballot system it was found that some persons eligible to become settlers were unsuccessful in getting land, and as the Government proposed to keep suoh an amount of land before the publio as would prevent undue competition, they thought it inadvisable to make any change at present. Eeplying to Mr Finn, The Hon. E. Oiivee said that ninety persons were employed* by the Bailway Department at Invercargill, and that only a few engine drivers, guards, &0., who were employed more than eleven hours per day, were I paid overtime. HEW BILLS. The following • Bills were introduced and read a first time—To extend|tho franchise to women (Dr. "Wallis.) To prohibit party processions (Mr Pyke.) MISCELLANEOUS. The following motions were put and carried : By Mr Ibeland—That in the opinion of the House it is desirable that post-offices, particularly in small country towns, should be utilised for the sale of the "Crown Lands Guide," Acts of Parliament, &c, with which it would be well to supply the public at a reasonable price. By tho Hon. J. Hall—That a Select Committee be appointed, consisting of ten memberg, to consider, in conjunction with any similar committee to be appointed by the Legislative". Council, Bills which '.have been introduced into the Council on the Subject of impounding, fencing, brands registration, and dog registration. . A motion substituting Messrs. Gibbs and J. B. Fisher for Messrs. Hursthouse and Macdonald on the Goldfields Committee. On the motion of the Hon. W. Eolleston the Proclamation Validation Bill was read a second time. THE LICENSING BILL. The Hon. T. Diok moved the second reading of the Licensing Act. In detailing its provisions he said that it was proposed to introduce what was known as local option, aho to do away with the bottle licenses at present in force in some parts of colony. He explained the provisions of the Bill at considerable length, and he asked the House to join with the Government in making it a Bill that would be at once fair to the publican and acceptable to the country. Mr Babbon said that climatic influences had a great deal to do with the necessities that existed for drink, and he thought that in New Zealand that f act'would operate against a uniform measure being passed for the whole colony. While agreeing with the proposal to abolish the bottle licensing system as it existed, he thought that a license of this kind placed upon a more stringent footing, the fee being say £3O or £4O, thereby ensuring that it would be in the hands of respeotable persons, would be a boon to the public. Mr Stewabt also spoke against the impropriety of the total abolition of the bottle license. He looked upon the Bill as a whole favourably. Mr Seddon complained that ample provision had not boen made against the illicit sale

of spirits. He also maintained that some concession should bo made for the accommodation houses. He also objected to single women being allowed to hold licenses. The debate was interrupted by the 5.30 p.m. adiournment. EVENING SITTING. The House resumed at 7.30. Mr Spbisht moved an adjournment of the debate on the Licensing Bill. The House then went into Oommittoe of Ways and Means, whentho Treasurer delivered his FINANCIAL STATEMENT as follows : Mr Seymour,—When in November last I had the honor to submit for the consideration of this committee the usual financial statement, it was thought by many persens not unfriendly to the Government, that in estimating the probable deficit for which it would necessarily m ike provision by the Ist of April last at .£BOO,OOO. I had taken far too gloomy a view of the financi*l position. I regret to say that my anticipations in this respect have been more than realised, and that the financial resnlts of the last nine months have proved loss satisfactory than I ventured to predict as probable. I for one have not the least donbt that the present check to oar prosperity (a check which has been felt at the same time throughout the civilised world), is temporary only. Yet, bearing in mind -the effect which this check, and other causes which might been controlled, have had on our finances, and also the amonnt of public debt as compared with our population, the duty of economy and retrenchment has become clearer and more pressing. It is therefore gratifying to know that the plain facts of the financial position which I had tbe honor to submit to Parliament last session, have fully awakened the public attention to this vital subject, and produced in the public mind a determination that the annual expenditure shall be brought within the annual revenun, by reducing the one as far as compatible ■with efficiency, and if necesßnry increasing the other so far as may bo needed. The Government propose, sir, to ask Parliament to give a practical effect to this determination. My task, therefore, this evening, considering the extravagant habits into which we have fallen of late years, is ono of unusual difficulty, in the execution of which I venture to hope for at. least as large a measure of consideration as the Committee have kindly givon me on former occasions. Sir, in submitting tho Financial Statement and the proposals of tho Government in the last budget I said that it would be impossible to surmount the monetary difficulties and escape the dangers of the position without something like a complete remodelling of finance, both general and local, without careful administration by Ministers, and without the exercise of much thrift and Eelf-denial on the part of all classes of the community. In accordance with the opinion so expressed certain measures were introduced by the Government, and passed by the House last session, modifying very considerably our fiscal system, but leaving untouched the system of local taxation and subsidies. Upon this subject I said " that the important question of local finance is far too large to go into this session, therefore I will say no more upon the subject now, except, sir, that the Government fully recognise the fact that it is their duty to submit to this House, upon its first meeting next session, a scheme which shall place local finance on a satisfactory, and something like a permanent, basis; and by satisfactory, the Government understand placing local bodies in such a position as will enable them to obtain as far as possible sufficient funds for all necessary works, while drawing' broad and distinct lines between local and general finance—and such a scheme the Government will endeavor to mature before the next Parliament." To-night I shall endeavor to redeem this promise. I trust, however, that the Committee will not expect too much. The subject is one beset on every Bide with difficulties, and nothing but a strong determination on the part of local bodies to rely more on their own resources and less upon external help than hitherto, will render any satisfactory solution of this vexed question possible. But before submitting to the consideration of the Committee the proposals of the Government, it will be moro convenient that I should place before them the results of the transactions for the last financial period, which, through a change in the financial year, comprises nine instead of twelve months of the year 1879-80. I will first explain the actual financial result of the tear ended 30th june, 1879.

It will be remombered that I estimated that after the payment of all liabilities outstanding at the close of the year, and taking credit for the assets of the year, there would be a deficit of .£131,824. The actual deficit on the transactions entered upon up to 31st March last, .in respect to the period now referred to, has proved to be £69,418. There remained unpaid, however, on that date liabilities to the amount of .£70,193, including .£50,009 owing to the Bank of New Zealand, as the balance of the overdraft of the late Provincial Government of Otago, while or *-he other hand further assets, amounting to £5821, have been realised sinct the 31st of March, so that the total deficit, including assets and liabilities, on June 30th last was .£133,790, instead of £131,824 as estimated.

EXPENDITURE OF THE PERIOD ENDED 31ST HAEOH, 1880.

In the statement I had the honor to make to the committee last session I estimated that the expenditure would amount to £3,110,262, but this sum was increased to .£3,139,539 by the passing of supplementary estimates. The actual expenditure to the 31st of March last, including advances in the hands of officers of the Government, amounted to £2,772,270. It will be recollected by hon members that last session I proposed that future receipts within the year should be held to be revenue of the year, and expenditure made within the year should be expenditure of the year. For reasons which I shall state presently, when I speak of the final results of the period ended 31st March, I shall ask the Committee to permit me to postpone giving effect to that proposal until dealing with the present year. In accordance with the provisions of the Pub. lie Revenues Act, 1878, Amendment Act, 1879, returns of liabilities outstanding on 31st March, certified to by several.Under-Secretarios, have been laid before Parliament. The liabilities amount to £342,966, from which, however, I deduct the £70,193 already referred to as belonging to the period ending 30th Jnne, 1879, leaving £272,773 in respectof the period now under review. Adding this Bum to the actual expenditure on 31st March, amounting as I said to .£2,772.276, we get a total expenditure of £3.045,049 as against £3,139,539, the estimated amount, there being thuß an apparent saving of £94,490 a year. A comparative return of the estimated and actual expenditure in each class, with the liabilities added, has been prepared and will be appended to this statement. I desire, however, to point out to the Committee that included in the apparent saving of £94,490 there are several items arising merely from over estimate, and which can Hot be regarded as savings, such as interest and the 20 per cent, of land fnnd payable to counties. On the other hand there are certain necessary payments for services not provided for, which reduce of course the nmonnt of the total net saving for the period. Under the head of annual appropriations, where alone savings can really be effected, the expenditure in eight classes out of eleven, after including outstanding liabilities, was £92,620 less than the estimated amount, or including, as showed, £13,100 for storeß purchased for the Eailway and unexpended, the amount wa3 £105,720. In the remaining three classes the expenditure was £9036 over the estimate. Hon. members recollect that six months of the nine had practically elapsed before Parliament rose, and the Government think that they may congratulate themselves on accomplishing so considerable a saving in so short a time. I now come to the estimates. REVENUE OF THE COLONY FOR THE NINE MONTHS ENDED MARCS 31ST, 1880. The total revenue received during this period amounted to £2,133,759, to which add £50.000 receivable on the Ist April from the Land Tax, which the Committee will remember was included in the estimate, making together £2,183,759, the estimated amount being £2,445,200. The revenue, therefore, fell short of that anticipated by £261,441. From returns which will be appended] to the statement when printed, hon. members will be able to see the heads of revenue under which that deficiency has arisen. I shall however refer to some of the leading items. The revenue from the Customs did not reach the estimated amount by £47,335. This, although chiefly caused by the general depression throughout the colony, has been partly caused, I believe, by the awaking of our population to the necessity of cultivating mora thrifty habits and practising greater self-denial. So far as arises from those last named causes, the Committee will agreo with mo in thinking that it is a matter for rejoicing rather than although it may result in temporary inconvenience so far as the revenne is concerned. The stamp duties produced £32.921 less than the estimate, bit this large amount doeß not represent an actual falling off to that extent in the receipts. The revenue, as hon. members know, was stated in the Ministers' return made during the year. The gross revenue from the stamp duties during the nine months ended the 31st March, amounted to £111,057, and the refunds to £18,979, an altogether unusual amount, but an estate which paid £18,405 duty in the year 1878-79, was declared by the Supreme Court to be not chargeable, and that sum therefore had to be refunded in February last, and is included in the refunds above mentioned. The stamp revenue, but for this unexpected occurrence, would have realised £14,516 less than the estimate instead of £32,921. The falling off in thin instance is, I think, due to the general depression, but this branch of the rovenuo without doubt will recover with returning prosperity. The receipts frsm

railways fell short of the estimate by .£113,072, but the loss is counterbalanced to some extent by the not inconsiderable saving of £43,242 effected in the expenditure by my hon. friend the Minister for Public Works. The land revenue, too, I regret to say, produced only £ 155,108, instead of £246,700. The postal revenue, however, exceeded the estimate by £12,961, but of this sum £6982 wa3 the' profit of the Post-office Savings Bank account, which has heretofore been treated as incidental revenue. There were also small excesses derived from several minor sources of revenue to which I Deed not particularly refer. FINANCIAL BESTJLT3 OP THE PEBIOD

ENDED 31ST MABCH, 1880. In my last financial statement I estimated that the. deficit for the period ended 31st March, 1880, would amount to £796,886, which sum was increased to £826,163 by the supplementary estimates. Hon. members will recollect that Parliament made special provision to meet this deficiency by passing the Treasury Bills Act, 1879, authorising the issue of Treasury bills to the amount of £BOO,OOO, with the intention of adding the amount to the permanent debt of the eolony, and thus starting cloar of floating debt from the 31st of March, 1880. Measures have been taken to secure the equilibrium between tho revenue and expenditure from that date. In consequenco, however, of the revenue of the last financial period not realising the amount estimated by £261,441, it became necessary to fall back upon the contingent authority to issue deficiency bills granted by the Public Revenue Act, 1878, and bills to the amount of £200,000 were accordingly issued, making » total issue of £1,000,000 Treasury and deficiency bills during the nine months. The Government propose to deal with this sum of £200,000 in the same manner as the £BOO,OOO which I have referred to, and Parliament will be asked to sanction a Bill to enable them to do so. Tho necessity for the adoption of this course will be obvious to members, and it explains why for tho period which I am now referring to effect cannot be given to the proposal indicated in my last statement, that in future the receipts and expenditure within tho year should be regarded as revenue and expenditure for the year. If it were probable that the revenue of the current financial year would be able to bear the charge of tho liabilities outstanding on the 31st March this modeof providingforthemwouldnot be suggested, but it isaltogether hopeless to expect that it will. • In adding this amount to the permanent debt, Parliament will only be carrying out the policy adopted last session for the purpose of enabling the colony to take a new departure financially with tho beginning of the current year, by providing for the whole of the floating debt up to that date. For tho convenience of the Committee, I have summarised the results at which I have arrived :—The deficit during 1878-79 has been shown to be £133,790, the expenditure for the nine months ended 31st March last £2,772,276, and the liabilities on tho same date £271,774, making a total of £3,178.840. The receipts for the period ended 31st March were £2,133,758, land tax due Ist April £50,000, assets £SOOO, making a total of £2,188,758. Taking therefore the total revenue from the total expenditure we arrive at a deficit of £990,081 for the period ended 31st March, 1830, to meet which, as I have already stated, Treasury and deficiency bills have been issued to the amount of £1,000,000, leaving a credit balance of £9918 to be carried forward to the next financial period. It is perhaps convenient that I should here say a few words about tho Public Debt before referring to the public works fund. On the 30th of June, 1879, the gross public debt of the colony amounted to £23,222,311, on the 31st of March, 1880, it was £27,422.611 ; or deducting the accrued sinking fund, £1,805,493, the nett public debt was £25,617,113. This amount is exclusive of the treasury and deficiency bills for £992,000, held by the public works fund, and the £BOO,OOO unsold debentures of the loan of 1870 guaranteed by the Imperial Government. Since the 30th of June, 1879, the loan of five millions authorised last year has been raised. On the 1 st of March last Treasury bills amounting to £442,000, and forming part of the public debt on the 30th of June, 1879, matured, and were temporarily redeemed out of tho public works fund, provision having been made under the Treasury Bills Act, 1870, for renewing them to the 31st of December, 1882, and exchanging them at that date for deben* tures, with a currenoy of three years, During the nine months ended 31st March last additional Treasury and deficiency bills to the amount of £1,000,000 have been issued. Bills for £550,000 have also been taken up temporarily by tho public works fund, so that tho actual addition to the public debt by the new loan and these bills amounts at present to £5,000,000. On the other hand guaranteed debentures amounting to £Boo,oou have been redeemed, and the debentures of the North Otago District Publio Works Loan for £7700 have been paid off, making together £807,700, which sum being deducted from £5,000,000 leaves a net increase to the public debt of £4,200,300. When the Imperial guaranteed debentures for £BOO,OOO are sold and the whole of the Treasury and deficiency bills now held by the public works fund, and representing advances to the Consolidated Fund to the extent of £992,000 are issued to the public, the gross debt will amount to £29,214,611, or deducting the accumulated sinking fund of £1,805,498, the debt will be £27,409,113, subject to an actual charge of about . £1,535,000. In this statement of the public debt, the last loan of £5,000,000 is treated as uninscribed. Should the whole of the debentures be converted on the terms offered, the public debt will be increased by £1,000,000, but the interest will be reduced... by £IO,OOO per annum. Parliament will during the present session to make provisions for extending to the 31st of December, 1882, the currency of certain Treasury bills amounting to £390,000, partly falling due within the current year, and to grant authority for exchanging them at date for debentures, with a currency of three years, as in the case of bills for £442,000 provided for by tho Treasury Bills Act, 1879. Similar provision, as I have already said, will also be required with respeot to the deficiency bills for £200,000, ; issued under the Publio Revenue Act, 1878, forming part of the bills, amounting to £1,000,000, issued during tha past financial period. Before leaving the question of the public debt, the Committee will naturally expect some account of the raising of the loan of £5,600,000. In last year's budget I said that the Government had reason to believe from advices received from London that not more than £3,000,000 of the £5,000,000 could be then successfully floated. When, however, the time arrived for placing the loan on the market, the loan agents considered that it would be safe to ask for the whole amount at once, and the result proved that they wore right. Had they succeeded in floating £3,000,000 only, instead of the whole amount, our position at this moment would have been one of grave embarrassment. The Committee will understand this when I tell them that it has been necessary up to the present time to use the loan to the extent of upwards of £3,060,000, of which £1,818,000 was for expenditure, and £1,342,000 for advances to the Consolidated Fund on Treasury and deficiency bills. Now that these facts are before them, hon. members will easily appreciate the anxiety of tho Government last session when it wa3 considered certain that not more than £3,000,000 of the loan could be raised at once, and the remainder not for a year, at least, thereafter. They will also understand how necessary it was that our agents should offer the loan at such a price as would ensure its sale. There is no doubt that the price obtained was low, and the terms of conversion at the option of investors very favorable to purchasers; but hon. members who are disposed'to think that |these terms were too favorable must bear in mind, on the one hand, that investors would naturally look on tbe large amount of our already existing pnblic debt, and the unusually large sum asked for, whilst, on the other hand, our agents had to consider serious complications which would have arisen had they failed to obtain the loan. It is an unpleasant truth, but one which we shall do well to recognise in regulating our expenditure for tho future, that our financial agents in London felt themselves compelled to offer our 5 per cent, loan at 97£, and to ensure its sale, even at that price, to leave it optional with the pnrchaser to exchange it for a 4 per cent, loan at 81i, and (using an authority given them in case of need) to undertake that the colony should not for the next three years again enter the London money market. In the absence of the loan agents' accounts, which have not yet been received in the colony, I am unable to state the precise net price realised for the loan, but after allowing for discount, commission, and accrued interest on tho bonds, the prico will be about 95& for five per cent, debentures and 79£ for those converted into four per cents. At the close of the year 1878-79 the balance to the credit of the Public Works fund amounted to £500,205, of which £298,513 represented advances in the hands of officers of the Government, the cash balance in the public account being £207,662. During the nine months from SOth June, 1879, to March 31st last we received on account of the proceeds of the five million loan £4,249,000, and certain special receipts and recoveries amounting to £22,849, making with the balanceat the beginning of the period, a total of £4,778,051. On the 31st of March the cash balance in the public account, after providing for outstanding orders on tho bank, was, in the colony and in London together, £862,410, and the advances in the hands of officers of the Government amounted to £315,763, making together, £1,178173. Wo -had thus issued during the nine months ended 31et March last, £3,599,881, asfollowB: On public works, immigration, and other services, £1,750,881; redemption of guaranteed debentures of the loan of 1870, which are of course available for re-issue, £800,000; temporary advances to the consolidated fund on treasury and deficiency bills, £992.000 ; temporary advances on the debentures of the Wuimea Plains Railwuv Company, £IO,OOO ; arid Waaganni Harborßoard, £17,000; total. £3,599,881. I have had prepared the usual statement

•f the total ways and means of the Public Works fund,'and the total net expenditure to'3lst March lost from the beginning of the Public Works policy. It: will bo seen that tho statement, is- laid on the tablo. and that since the beginning of that policy in the year 1870 we have borrowed for Public Works to the extent of £18,700,000, which amount has been supplemented to the extent of £361,794 by stamp dnties and other receipts, making a total of £19,064,794. Our net expenditure during thesame period on services permanently charged against the fund has amounted to £15,286,621. To this sum I add advances in the hands of officers of the Government on the 31st March last £315,763, and an estimated sum of £200,000 for discount and charges of raising the last loan, making altogether £15,802,384, which being deducted from £19,064,794—fr0m the total of ways and means—leaves a balance on 31st March of £3,262,410; consisting of cash in public account in the colony and in London, £862,400 ; balance of five millions loan to be received (estimated), £551,0C0; guaranteed debentures unsold, £BOO,OOO ; temporary advances at interest, £57,000; temporary advances to the consolidated fund, £992,000; total, £3,262,410. With regard to the Treasury and deficiency bilk of • the consolidated fund to the amount of £992,000, taken up under authority of the Public Revenue Act 1878, and the Treasury Bills Act 1879, out of the monies at tbeeredit of the puWic works fund, I regret to inform the committee that since March Ist it has become necessary to take up out of the same f nnd a fnrther sum of £350,000, of which £200,0110 represents consolidated fund, and £150,000 for the redemption of bills to that amount issued in February last. Thus the extent to which, at the present date, the public works fund has been applied iu aid of the revenue amounts to £1,342,000. It will of course be apparent to hon. members that we can recoup moneys so applied from funds available for expenditure on public works and other services. Deducting the sum of £1.342,000 from £3,262,410, the balance of ways and means on 31st March last, we have left a sum of £1,920,410 available for public works and other requirements until we can sell the Treasury deficiency bills referred to. Having stated the amount of ways and means available, I shall now inform tho committee what are the liabilities, to meet which funds must be set aside before the question of entering upon now works can be entertained. According,-to the returns certified to by the Under-Secretaries of the several departments, the liabilities, of the Works fund on 31st March last amounted to £2,455,313, made up as follows £IO,OOO ; Public Works department, £644; railways, surveys of new lines, £ISOO ; roads, £180,698; land purchases, £1,061,486; water works on gold fields, £11,704; telegraph extension,£lo34; public buildings, £205,314 ; lighthouses, £l2O ; miscellaneous public works, £73,309. To this sum I add further liabilities incurred by the Public Works department since 31 Bt March, £IIO,OOO, and a contribution for the current year towards the cost of the Defence Force on the same scile as for the past nine months, £140,000. These sums amount to £2,705,313. from which I deduct advances in the hands of officers of the Government on 31st March, £315,763, leaving £2,389,550 as the sum required to be set aside out of ways and means at the credit of the fund on the 31st March, amounting as I have informed the Committee to £3,262,410. Hon. members will however bear in mind that of this sum of £3,262,410. £1,312,000 is represented by Treasury and deficiency bills issued in aid of the consolidated fund. It will be seen that the largo amount of Kahili' ies to which I .have referred will absorb the whole of the cash at the credit of the public works fund, and will necessitate the sale of £469,000 of Treasury and deficiency bills hypothecated to that fund.: The means available for n3w works and services will therefore be represented by £873,000 in Treasury and deficiency bills, being the balance of £1,342,000 now held by the Public Works account. So much then, sir, for the history of tin past. I will now submit for the consideration, and I hope the approval, of the Committee, our

SCHEME OF LOCAL FINANCE and proposals ,f or the ordinary services of the current year. It' will be within tho recollection of hon. members that I said last session that tha Government would this year recommend the discontinuance of subsidies. .This warning was given because it was then generally admitted that the system of subsidies was not working satisfactorily ; that without further taxation the consolidated fund could no longer bear this expenditure, owing to the annual charge on our public debt having become so large, and that the local bodies themselves might have reasonable notice before any change was made. Sir, great as were the needs of the Treasury last session, and great as they are at the present time, the Government hold firmly to the opinion that this question of local finance, affecting as it does, the vital interest of the whole country, is one of paramount importance, which must not be dealt with piecemeal, but as a whole. To propose the abolition of grants in aid to local bodies without substituting a workable scheme in their place, would be trifling with the subjeot in a manner which, I venture to think, would not meet with the approval of Parliament. Our aim is twofold—our duty being first to place our gfneral finance upon a sound footing, and Eecond, to put our local bodies in bucH a position as will enable them to do the work which rightly devolves upon them, and which must be done by them if the country is to be prosperonsly settled. I do not think it convenient to trouble the Committee tonight with many reasons for discontinuing the subsidies. That' question can be better discussed when considering the Bills whioh will be introduced to give effect to our proposals. I may, however, point _ out to hon, members that the system of subsidies has operated unequally.' It has largely helped the rich and populous districts, while giving little assistance to those which are poor and thinly peopled. It must also be remembered, that they were proposed as part of a scheme to which full effect has never been given, for the land fund has been generalised instead of localised in provincial districts, and the expenditure upon public works instead of being_ limited in account and confined to arterial undertakings,; has been lavish and extended to works of all descriptions. _ The magnitude of this expenditure will be evident when I say that we have increased our debt for public works within the last, three years and a half (the time during which' subsidies have been paid) by £9,000,000, which means an annual mortgage of £450,000i£ The circumstances of the colony having greatly changed Bince the system of 'Subsidies was introduced, and it being evident that the Treasury cannot continue, to pay them without the imposition of fresh taxation, the case for the reconsideration of the whole question is complete, for it is certain that Parliament will never consent to levy additional taxation for such a purpose without full enquiry and careful deliberation.' In the scheme [which I am about to submit to the Committee, I must ask hon. members to bear in mind that I take it for granted, first, that sections 5 and 6 of the Financial Arrangements Act, 1876, Amendment Act, 1877, which authorises tho subsidies and grants of 20 per cent, of the land fund to counties,'are to be repealed, and, second, that tho proceeds from land sales are not to be used for tho ordinary purposes of Government. The ground bein<? thus cleared I will now endeavor to describe in sufficient detail the scheme we propose to give effect to our proposal. I shall haveto,,ask authority, to introduce two Bills. The first will be an 'amending Bill. •" 'lt will remove the present restriction upon rating ; that is to say it will permit of local bodies having the right to levy rates to any amount they consider necessary for local requirements, not exceeding 2s in the pound. If passed as a special rate, it will authorise boroughs and other local bodies to borrow at any rate of interest the ratepayers may choose to give, and to any amount, subject only to these restrictions—(l) That the principal and interest of all new loans shall be made payable in New Zealand. (2) That any local body desiring to raise a loan shall before doing so levy a special rate sufficient to cover the interest and siuking fund upon the money proposed to be borrowed, such rate to be continuous until the debt has been repaid. The Bill will also require that any local body which has already borrowed upon its general revenue shall, before again entering the money market, levy a special rate to cover the interest and sinking fund upon the existing loan or loans as well as providing by Bpecial rate for the new loan. This and other powers given by the Bill are apparently very large, and will, I fear, be considered dangerous by some, but, sir, I would point out that if local bodies are to be really useful, they must be made independent and responsible. The one precaution to be taken is to see that the ratepayers spend their own money, and not the money of other people, and this will be carefully provided for in the Bill. I now sir, come to a further and- still more radical provision in the Bill, a provision which, however, I venture to hope you will receive with general approval, for it may be said to be the very foundation of this part of our Bcheme. It is clear that all who benefit by the expenditure of rates should contribute towards them and carrying out this principle to its legitimate conclusion,' we propose that all Government property (including the waste lands of the Crown) and, subject to an important qualification, Native lands, shall be liable to rating, with the exception of the Government Houßeß in Wellington and Auckland, the Parliament House and grounds, the General Government buildings in Wellington (by which I mean the largo building upon the reclaimed land), and the railways and wharves. Whatever may be thought of this proposition at first Bight, it will I am sure on mature reflection, and when it oomoa to be discussed in all its bearings, commend itself to hon. members as' fair and reasonable. I will, Bir, first state how we propose to deal with the Maori lands within counties in which the Counties Act is in force. It is a fact which I think should be recorded that some eleven million acres of land in the North Island are still held by iessi than 41,300 Maoris (men, women, and children), and tnax not one halfpenny in the way of rates has ever been imposed upon the Natives by this House for the

construction of roads and, bridges which are ' being made throughout the country, and by whien their lands are being enormously increased in value, although it is true and ought to be noted to their credit, that many of them have voluntarily paid rates and contributed from time to time towards the cost of public works. The whole Maori property too is exempt from taxation under the Property Assessment Act. Sir, the Government think that the time has arrived, and we hope and believe that our Maori friends will agree with us in our opinion, that henceforth all Maori property in boroughs shall be subject to taxation to tho same extent as the property of their fellow citizens. But, sir, further than this, we do not propose to go. We think, after careful consideration of all the circumstances of the case, that oa the grounds of public policy we may reasonably exempt owners of Native country lands from the payment ef rates. It is clear, however, if this is done, that some equivalent must be found to enable those counties containing a large area of Maori land to carry out the ' duties we are imposing upon them. Therefore we are compelled, by considera- . tions of public policy, to depart in this w*y from the principle of the Bill. It is clear that the cost of exemption should fall upon the colony at large, and not upon the localities on which the burdens are imposed, upon the assumption that all thu land will contribute its fair share of the local taxation. It is proposed to limit the amount of ordinary rates leviable upon Maori country lands to one-half the rate levied on the ordinary land in the district in which they lie, but not exceeding 9d in the £, and upon waste lands of the crown Is in the £ upon the annual value, these lands being practically unrepresented in the local governing bodies. This limitation is not, I think, unreasonable. To simplify matters and avoid expenses and dispute, it is further proposed to attach two schedules to the Bill, one showing for rating purposes the estimated acreage and value of the Crownlandin eachcountyand Road Board district, and the other affording similar information with regard to Maori land. The land in each case will be divided into two classes, pastoral and agricultural, valued respectively at 6s 8d and 20s per acre. These schedules will alwayß enable the rateable value of Crown and Maori lands in any district to be ascerta ned, notwithstanding that sales go on from time to time, by simply deducting from the amount fixed iu the schedule 6s Sd or 20s per acre, as the case may be, for all land sold, according to its class. The total estimated value of Maori land is £6,370,000, but of this, £5,200,000 is situated in counties in which the Counties Act is in operation. All lands then being subject to rating, with the exceptions I have just stated the Committee will naturally wish to know ont of what fund the rates on Crown lands and property and Maori lands are to be paid. But, sir, those are by no means the only objects for which money has to be provided. In any satisfactory scheme of local finance, means must be found to construct our main roads throughout the colony. Some provision must be made to repair damage done by floods and tempest to our roads and bridges, and some help must be extended, if possible, to our district roads. This, then, brings me to the second Bill to which I referred as necessary to give effect to our proposals. The title of the Bill will be The Local Public Works Bill. It provides for the constitution of an unpaid Board, consisting of the Minister of Public Works, the Engineer-in-Chief, tho Surveyor-General and the Public Trustee. The duties of the Board will be to pay the rates on all waste lands of the Crown, to pay the'rates on the Maori country lands, to make grants in aid of the construction of main roads, to advance money to construct district roads. This will be done from funds the constitution of which I will now describe. As I have before slid, we shall ask Parliament to set apart the proceeds of land saJo3 for special purposes, not permitting it to be used for the ordinary expenses of Government, charging against it only the costs of its administration, including survey. Now I think that after this year we may fairly estimate the annual receipts from land sales for some years to come at not less than £300,000. I believe honourable members will agree with me that this is a moderate estimate. Looking at the fact that our unsold lands are estimated at a low average as worth £12,500,000, I think we may, therefore, reasonably expect to realise not less than £300,000 a year for eoxe time to come. The charges on the land revenue should not exceed £l4O 000 a year, so that should we only get from land sales £300,000 a year there will bo a balance to credit of at least £160,000. The Bill with which I am now dealing provides that out of the balance of the land sales after paying the expenses of administration there shall be paid to the Boan; each year the sum of £150,000. If, however, the land sales should not in any year produce a surplus of £150,600, then such a less amount only as the aa'es may produce will be paid to the Board. I have estimated the land sales this year at only £200,000. It is possible that they may produce more, but I have not, after careful consultation with the department, thought it prudent to estimate it at more than that amount. The cost oi administration and charges is set down at about £150,000, The balance, therefore, available this year, should my estimates not be exceeded, would be only £50,000. Sir, it seems to the Government that in starting such a scheme aa we have under consideration, it would be unwise to attempt to launch it without sufficient funds to enable the Board to make a good beginning. The prospects of the surplus lend fund for this year reaching £150,000 being but small, it is proposed to ask the House to make a grant to the Board of £150,000 out of the loan, so as to place it in funds for the work of next spring and summer. The funds thus created are to be applied to tbe following purposes :—First, the payment of the rates on the waste lands of the Crown and Maori country lands ; second, grants in aid for constructing main roads and repairing damage done by floods or tempest. The rates, estimated at a shilling in the £, supposing every Boad Board and every county to levy a shilling rate, would amount to about £60,000, or to about £74,000, if rates on Maori lands are included; but I much doubt if the amount of rates payable by the Board will often reach £50,000 a year. The balance remaining, whether it be £BO,OOO or £ 100,000, will be applicable to main roads, and main roads only. The main roads I should have said will be defined by proclamation. I have had sketch maps prepared for the information of hon. members, showing the roads it is proposed to declare at once ; power being given in the Bill to proclaim others from time to time as circumstances may require. Tho grants in aid will be limited by the funds at the disposal of the Board, and will be made in this wny : I will suppose for the sake of illustration that a county wishes to construct —and construction means forming and metalling roads or building bridges—a section of main road over whioh it has control, or to repair damage done to a main road by flood or tempest. The council must obtain an estimate of the cost of the work proposed to be executed, which I will suppose amounts to £6OOO, the Council will then make application to the Board for a grant in aid. But before the Board can make the grant the Council must show that it has one quarter of the £6OOO, that is £ISOO, at its disposal, which it undertakes to spend upon the work, or the ratepayers of the county must impose npon themselves a special rate which will repay one-fourth of the £6OOO, namely, £ISOO, in twenty half-yearly instalments, without interest. In other words, threefourths of the cost of the construction of the main roadß will be paid by the Board, and onefourth by tho county, either in cash or by way of a special rate extending over ten years Hon. members must bear in mind that the waste lands of the Crown and Native lands are subject to the special rate, as well as private lands. The reason for making no grants unless the county is prepared to contribute a fair proportion of _ the outlay will be obvious to the committee. Hon. members will, I think, admit that the contributions have been made as small as compatible with prudence. I now turn to the proposed assistance to be given to the district roads, that is to all roads other than main roads. The Bill provides that the Board of Local Public Works may borrow from time to time at 5 per cent, interest, of the Postmaster-General or Government Insurance Commissioner, any sum not exceeding in the whole £IOO,OOO, the colony being liable for its repayment, and lend it to the local bodies for the purpose of constructing district roads. The terms upon which grants are to be made are, that a special rate is to be levied by tho local body desiring to borrow,, which shall produce 9 per cent, ner annum upon the proposed loan. The interest charged is to be 4 per cent., so that 9 per cent, paid half yearly will cover both interest and sinking fund, and will extinguish the loan in fifteen years. _ It will be observed that the rate of interest is very low, and the terms of repayment easy. I think, however, hon. members will approve of substantial assistance being given to local bodies for the purpose of constructing roads thronghout the colony, if only we keep within our legitimate means. But the Committee will say, how can the Board borrow money at five per cent, interest, and lend it at four ? Sir, this difficulty can only be got over by the same means as is proposed in the case of the funds for the construction of main roads, by making a grant from loan to Btart the fund. I shall, therefore, ask for £150,000 to be granted for the purpose. The Board will then be in a position, should the grant be made, to lend £150,000, or any loss sum, at four per cent, interest, and at the same time to pay 5 per cent, upon such sums as it may borrow up to a limit of £IOO,OOO, with a safe margin for contingencies. BOBOUGHB. So, far, sir, I have not yet directly mentioned an important bianch of my subject; I refer to boroughs. I do not desire to make light of the present loss to these bodies on the subsidies. My proposals will no doubt necessitate for a time a reduced expenditure, but there will accrue to tho boroughs the permanent right to tax Government and Native property of not much less tb4u,one million in value. I say per-

t j manent, for I think no one can doubt that if once tho principle of taxing Government property is admitted by this House it will never be possible to retrace that step._ The rates on all Government property it is proposed to charge upon the consolidated fund, as being properly included in the ordinary expenses of Government. I trust, Eir, that the proposals which I have thus briefly sketched will commend themselves to hon. members, as at at any rate the baais upon which this important question of local finance may be ultimately settled. Wo are all of opinion, I think, that the subsidies should cease i£ means to a reasonable extent for carrying on the necessary works can be provided in a better way, and I submit that our proposals are better in every respect. The scheme is sound, because it is based upon two principles which are now unanimously accepted in this House —Pirst, that the proceeds of land sales should be applied to the opening up and settling the country ; second, that the landowners must for the future practically find the means to maintain the roads of the colony. And it has moreover this great additional advantage, . that it will enable us to complete the separation of general and local finance. The one will in future be in no way dependent upon the other—an advantage which I venture to think will be of incalculable benefit to both the Government and the local bodies. Should our proposals meet with the approval of Parliament 1 shall also ask for authority, where necessary, to permit local bodies to receive directly every tax or rate which belongs to or has been made over to them. ESTIMATED EXPENDITURE OF TEE CONSOLIDATED FUND 1880-81. I now come, Mr Seymour, to our proposals for the current year. Honorable members will kindly bear in mind that the land fund, by which I here mean the proceeds of land sales, and the charges against it, will be treated separately, and that it ia therefore excluded from the estimates of expenditure and revenue i which I am now about to submit for the consideration of the committee. I need hardly say that although treated separately, the land fund remains to all intents and purposes a part of the consolidated revenue, for the purpose of security to the New Zealand bondholders. The estimates, which'.will be in the bauds of hon. members to-morrow, show a very large reduction of the charges upon the consolidated fund as compared with last year, amounting in the gross to £541,000. And but for the increase in expenditure over last year of .£109,000 for interest, .£23,000 for education, over which, of course, the Government had no control, the reduction would have been £675,0C0. And if we deduct from this the sum of £150,000 transferred as charges against the land sales, there would still have remained the very substantial reduction of £523,000. But even after making provision for this increased expenditure of £132,000 on .interest and education, and allowing for the loss to the revenue of the proceeds of land sales £200,000, there will be a net saving of expenditure from the consolidated fund of £341,000, and this without impairing the usefulness of the local bodies, the efficiency of the public service, or shifting burdens which should be borne upon revenue to loan or other funds. The total proposed votes for the year, exclusive of liabilities, are £3,473,709. But of this we cannot spend and bring into the accounts within the year more than £3,248,709. This advantage will net recnr, but fortunately comes to our aid now, thus giving the revenue time to recover its normal condition, as we have every reason to hope it will by next new year. There are some items of expenditure to which I desire to call the especial attention of the committee, showing the reductions which have been effected, and the directions in which the Government think further reductions are possible and should be made. It will perhaps astonish hon. members te hear that we are now paying over £1,009,000 a-year salaries, pay, and wages, and £18,070 for pensions. This includes our railway employes and our ordinary complement of constabulary and police. Of this sim £643,000 is for salaries, pay, audwagesof £2OO a-year and under. Tho government, sir, as must be evident to every one, have had no time to grapple with this enormous expenditure dnring the short recess just termiated, but they have made reductions wherever it was possible to do so without detrimentally* affecting the machinery of government. We have given the subject as careful consideration as the time at our disposal would permit, but, as I have often before pointed out, effective and permanent reductions, as distinguished from spasmodic efforts at economy, must be the work of time. Sir, the Government are of opinion that it will take tho whole of next recess to deal with this matter as it must be dealt with. To assist us in the accomplishment of this object % Boyal Commission has been appointed to inquire and report upon the whole organisation of the Civil Service. Its labors will, I feel sure, be of great value to the House and Government in dealing comprehensively with this difficulty. But, sir, although time was neceisary to deal with this subject comprehensively, and we had so little time at our disposal, we felt this could be no excuse for not at once making a beginning. Besides several minor reductions, my hon. friend the Minister for Public Works has reduced the expenditure of his department by £36,000 without impairing in any way its efficiency. The Native Minister has succeeded in reducing the expenses of his department from £46,941, which was last year's estimate, to £14,262 (?) this year, or atter allowing transfers to other departments, to nearly 50 per cent. Salaries and contingencies were last year £21,164, this year they are estimated at £13,453. Nor is this a<l, for in the land pnrchase department, which had grown into a serious excrescence on the Native office, he has reduced the salaries from £IO,OOO to £6OOO a year, or about 40 per cent, and in both cases I venture to assert the service is being better performed than formerly. From this hon. members will see that the hon. gentleman has more than fulfilled his promises of reduction made to this Committee last year. My hon. friend will no doubt explain what he has done more fully when the Native estimates are under discussion. I have said, sir, that we are paying over £1,000,000 yearly for salaries, pay, and wages, and this upon estimates which have been apparently reduced to the lowest possible amount. The Government have had under consideration the questions of the reduction of the salaries of Ministers. They do not think Ministers are overpaid, and they are not prepared at present to recommend a reduction of their salaries. That question will be carefully considered during the recess. But looking to the financial position of the colony and the necessity for reduction, which must be made in some form, we propose that 20 per cent, shall be deducted from their salaries for the current year, beginning on the Ist July next. So far, sir, a reduction is simple enough. Bnt how to de.il with the service generally is a far more difficult question, as gross and cruel injustice may be easily done to many deserving officers if large reductions are indiscriminately insisted upon, and the efficiency of the public service may be seriously impaired. We have among our civil servants not only a large number of willing and efficient officers, but we have men who would be a credit to any service. And while some of our departments urgently require reform or remodelling, or even abolishing by consolidation with others, some I am sure could hardly be touched without being injured ; and again while some officers are no doubt overpaid others, considering the value of their services and the difficulty of filling their places, deserve more than they get. We can therefore lay down no inflexible rule for retrenchment. But, sir, an effort must be made in the interests of economy at once. We shall therefore propose to the House, notwithstanding the fact that the estimates havo been apparently kept within tho narrowest limits, that 5 per csnt. or £50,000, be struck off the votes for salaries, pay, and wages, and we shall then proceed in the manner I have indicated to make this saving. And if with tho aid of the departments we are unable to make the necessary reductions to cover this amount, we Bhall issue a scale of percentages showing the sum to be deducted for every employe of the Government, which together will make up the £50,000. I hope, sir, the Committee will think this a sufficient earnest of our intention to take this subject seriously in band. The task, sir, is a very unpleasant and a very thankless one, but it is a clear duty, and must therefore bo done. If, then, the Committee should at>reo to this reduction, the total expenditure within the year I estimate will be £3,193,709, for which provision has to be made. ESTIMATED REVENUE OF THE CONSOLIDATED FUND, 1880-81.

In estimating the revenne of the year 18S0-Sl, which I do at .£3,190.000, fall particulars cf which bon. members will find in Table No. 7 attached to this statement when printed. 1 regret to say that I am unable to take as hopeful a view of the Customs receipts as I did last session. It must be admitted that there is no known basis on which to found a trustworthy calculation a 9 to the probable receipts from Customs duties in the colony. The influences at work are so various and uncertain in their operation that it is impossible to form more than an approximate estimate as to the receipts for any period of financial or commercial dc-pressi'u such as we are still suffering under. There are, however, indications pointing to a gradual improvement, which I hope has begun, but which I think I am not justified in belying upon to a larger extent than I have done, in estimating the Customs at £1,250,000 for the year, it is an ominous fact that there was a decrease of duty of .£107,681 paid at the Customs during the year 1879 as compared with the year 1878, and that a more than proportionate decrease has continued for the first quarter of 1880. Notwithstanding the large increase of duties imposed in November, 187!*, the Customs receipts for the March quarter of 1880 were less by .£42,257 than for the corresponding quarter of 1879. The imports, too, were less in the former quarter than in the latter by I And this difference was not caused by any large tailing off in railway material or other article imported for the Government, the total value of Government imports being for the March quarter, 1879, £95,203. as against £54,012 for the March quarter, 1880. Tobacco yielded an

increase of £7193 dnring the last quarter, bat this was owing totheincrea«cdd;ity;Hl,7.i6lh J or 12£ p3r cent, less being cleared than in Marek quarter, 1879. But the greatest portion of the decrease may be traced to the fact that in the preceding quarter there had been withdrawals of tobacco from bond considerably in excels of the usual average, in'the expe t ti n cf the dnty being increased. Drapery and spirits both show an actual falling off dnring tho bust quarter, .as compared with the corresponding qnartir of 1879, the former of £63,348, the latter of £7457. Drapery yielded for the first quarter of 1830 .£39,862, and spirits .£82,482. Hen. members will observe that the percentage of loss upon drapery is nearly double that upon spirits, which I take as an indication that smuggling and illicit distillation have not increased to any appreciable extent through the additional duty imposed upon spirits last pesfion. looking at all these facts, I do not think it would be wise to estimate the Customs for Ihs jp.-r at more than 1 have done, naaiely, Hon. members will see there is a considerable increase lin the estimited Enrplus cf receipts over the railway, Eaniely,.£4l.Gß2. But my honorable friend, the Minister for Public "Works, proposes to slu-htly increase the charges for freight and still farther to reduce the_ expenditure. The rem-vring items of estimated revenue do not I think call for special remark, except that I Bhould point out that the proceeds of land sales are not included as revenue. I have said that the estimated expenditure to ba made wi'hin the year is £3,103,709 and the estimated revenue is £3,'.90 000, thus leaving a balance unprovided for of £S7Q9; thongh I would again call the attention of the committee to the fact that if we made up oar accounts as wo have done heretofore, there would be a still further amount to make good of .£225,000. But as I have said before, this will not become payable within the year, and therefore I do not propose to make provision for it. I hope hon. mcmDert, will understand that, although this is> ir> no sense putting off a payment which could be made during the year, yet that in future years the postponed liabilities at the end will te counte*balanced by the outstanding liabilities at the beginning. In other words, through beginning this year free we have to pay less during the year than in any succeeding year by the amount of liabilities winch will necessarily be outstanding at the end ef this year. THE LAND FUND. I must, sir, here say a few words about the land fund, the receipts of which from all sources are estimated at .£335,000, of this £200,000 is for land sales, and .£135,000 for pastoral rents. The pastoral rents being revenue have been included in the consolidated fund, but the £200,000 estimated to be received from land sales has not been so included but in accordance with our proposal of last session, repeated this evening, it has been set apart to be separately dealt with. The charges as honorable members will see upon reference to the estimates against this. a-nountto£lso,223, leaving a balance of £49 777, which, if our scheme of local finance should meet with the approval of the House, will hfl handed over to the Local Public Works Board. We shall further propose that in every year when the proceeds of land sales is more than enough to pay charges and administration and the .£150,000 to the Board of Local Public Works, that the balance shall be paid inta the Public Works fund. PROPOSALS FOE THE JDTFEI.

The Government, Mr Seymour, had hoped to do without proposing any alteration or increase cf taxation this year, and would not hare made any such proposal if on the one hand the taxes imposed la»t session had been generally accept ?d with only that amount of reluctance which is perhaps the natural attitude towards all direct taxation, and if upon the other hand the proceeds of the taxation had amounted to what might reasonably have been expected. But I have shown that in the customs duties the increased rate haa not been sufficient to preTent a decrease in the amount collected, while from many quarters we have received strong representations that,' one feature of th i property tax is extremely distasteful to a large section of the people. The discontent has, I believe, largely arisen through a misapprehension of the Act, which does not, as commonly supposed, empower any officer of the Government to enter a man's house to value hia goods. But, as I say, the discontent exists, and whether baseless or not, shoold, as far as possible, be removed. The removal of this obnoxious feature of the Property Tax is fortunately rendered more easy from the fact that it is generally admitted that this cannot be "one without the substitution of some othef tax which will produce at least an equal amount to that abandoned. The Government, therefore, in accordance with what they believe to be the desire of the taxpayers, will ask the House to exempt personal effects, furniture, and books, &c, from assessment under the Act. By this concession, sir, it is estimated that the revenue will low JE4O.COO a year. I his, tcgetker with the deficit of j£8709 to be made good, necessitates the question of how it can be done in the most effective and least objectionable manner. I fear, sir, that there are only two practicable courses open to us; that we may reimpose the tea and sugar duties or we may tax beer. The Government, sir, have carefully considered which of these courses to follow, and have determined to ask Parliament to impose a tax upon colonial beer of 6d per gallon. It is with great regret that I make this proposal. Wb.ea Colonial Treasurer some- time ago_ my colleagues and I carefully considered the Bubjeet, and. wa ultimately decided that we would not propose this tax; and when in Opposition two years ago I helped to throw it out when introduced by the late Government, upon tk« ground that it was practically the beginning of the Bystem of excise taxes which I was very loath to see introduced into New Zealand, eo long as it could be avoided. Bat the financial position of the colony is such as to compel us to resort to taxes which in more favorable times we should not have supported. We also propose to increase the duty upuu imported beer by 6d a gallon. I hope to obtain from the beer tax during the current year J 830,000, or at the rate of £ 100,000 per annum. It will be within the recollection of hon. members that I p:oposed last year to introduce a Bill to increase the succession duties, bnt that through want of time the Bill was never circulated. 1 propose to proceed with that Bill, and should it become law it will increase the stamp revenue this year by about .£10,006. Summarising then, sir, my proposals, for the convenience of the committee, they amount to this. The deficit as shown by the difference between the estimated expenditure and revenue is .£8709, to which I add the £40,000 loss by the exemption proposed in the property tax, making a total of .£18,709. The estimated produce of the beer t ix is .£80,006, to which I add the £\ o,ooo for ir.creaEe or" stamp duties, and ofcUin_ .£9O 000, thus showing, if our expectations preve correct, a credit balance of £U ,2SI with which to end the year, a mareiu, as the Committee will agree, none too wide. In conclusion, sir, if the Committee will permit me to recall to their minds the main facts of our position, and to sum up shortly our proposals. 1 would first call attention to o,ie fact of cardinal importance, which more than any other has embarrassed the finances for some time past, namely, the fatal mistake (as pernicious in practice as :t has been in theory) of treating the proceeds of land sales as ordinary revenue. This and our unexampled prosperity for some years led us greatly to over-estimate onr resources, and so completely to misunderstand our financial position ; and to such a lengthy had this gone, that theilonso content in 1878-75) to vote one million of tho proceeds of land sales as revenue of the year, and adopt a scheme of public works requiring a yearly receipt from land sales of £ 50,000 more. When, therefore, the land sales suddenly fell to lers than .£200,000 a vear, our difficulties bee me gre.t and pressing; for it was manifestly impossible to stop immediately the enormous expenditure then in full progress, which was baser! upon the assumption that the land fund would reach something like two millions a year. Tho Government, sir, of which I have the honor to be a c ember, have been blamed both in the Hou e and throne hout the country for stopping the expenditure too suddenly, and thereby int nsift ins the depression under which we are suffering : but when I tell the Committee that dnring the nine months enr.ing 31st March last, we actually on ordinary services of the Government and pnbbe works in hard cash, notwithstanding our strenuous endeavours to retrench, no less a sum than .£4,523,257, of which .£2,741983 was borrowed money, they will fullj sprreoiate what I have said as to the difficulty cf bring:ng the expenditure within rtasoi.f.b'e limits, fonnd.das it was upon an exaggerated ii-snu,p:ion of our means, and will, 1 tin; k. fully acquit the Government of undue p r ir:;ony. To meet the serious difficulty and rerr eve our portion, the Government at once set to werk to reduce the expenditure in every direction, but this must necessarily be a work of tin e, our commitments both by habit and engagement being so large Wo propose to separate land Kale receipts from revenn«. nnd impose additioi al taxation to raise a sufficient sum to meet onr necessary expenditure; but altbi all this, so far as could be done, was done promptly, it was impossible to brins it_ into effective operation during the la t financial period, the time being far too short *\j d, as a ccnseqreufp of the want of forethought thr ngh our years cf prosperity, we have now to add one million to our funded debt, that is n pern a-ent charge of .£SO 000 a year, as the re ulr of the deficit outstanding againßt the c<ns lida'ed fund on the 31st of March last. Of th ne.: t-sity of funding this, no one who considers onr er.pageinents.Jind our heavy taxation will, I think, entertain a doubt, and if only we h'ive burnt the le;son of economy and thrift which unr dfficnlties should teach, we shall net have passed through onr troubles in vain. If, however, we are to come successfully through the present criui*, we must make up our minds tt> three thini-s : a preatly reduced expenditure on public workß, and this from the consolidated fund : to a complete separation of i or local from general finance; aud to submit to ice ."eased for je:ir3 to

cense. And I also would emphatically paint out we ought to connect f»r more oloselv than we have ever done the i.ie* of additional taxation with further borrowing, as it must bo actually realised oy the paopl9 of the colony, not only tkat oacl new loin has to be repaid, bat that until it is repaid is imposes a yearly burden, which must be met, if not by an increase of a tax payinsf population, than by an inofease of t .xation itself. As soon as this '.is fully realised I say that fresh leans will he mnch seldomer called for and much mora o ir(-fnlly cpent. That some further borrowing will bo necessary is evident, but I trust that it will be oily very moderate. The time is not far distant when through the restoration of real B'Mnomy in our finance we shall see our way to addressing ourselves seriously to the task of reducing the large public debt, and I trust that the proposals of the Government, in purt already sanctioned by Parliament, will at least tend towards making such a course possible I sincerely thank the Commi'tee for th:i bind attention with which it has listened to my statement, and would only add bafore resuming my seat th it I have no doubt of the thorough aoundnes3 of tho colony and of the great future before us, now that the people have awakened to the real f.tcts of our financial position and the responsibilities it involves. The Treasurer concluded bymoving'' That towards raisingthe supply to tie arante.l to her Majesty, thereßhall be levied, and charged on and after the ninth day of June, 1880 by an excise duty of sixpence per gallon on all aid, b°er, porter or other malt liquors brewed or made in New Zealand before removal from any brs'wary, cellar, warehouse, &c, or other place in which the same may be stored ; such a\iby to be levied, collected and paid in such manner the Commissioner of Customs may direct. That in lieu of the dntie3 of Customs now chirged on the undermentioned articles, the followiug duties of Customs shall, on and after the ninth day of June, 1880, be charged thereon, on importation into New Zealand, or on being cleared from any warehouse for homo consumption, viz.:—Ale. porter, beer, of all sorts, cidor ■ant perry, in bottle, the gallon, Is 9d; ale, porter, b?er. ot all sorts, cider and perry, in bulk, the gallon, Is 6d." Sir G-korgb G-ijey pointed out one great defect iu the financial proposals of the Government. He said that it was necessary before thoy could induce the colony to give up raising loans, they must make them feel the weight of the burden. The faot was that the first who should be made to feel that weight were the law makers, and yet the tendency of the Government polioy was is the opposite direction. The owners of large estates benefited by the public works should be made to bear that weight, and yet the only relief proposed was that the tax was to be taken eft' books and other personalties, and put on beer. By that means the members of this House and their friends wuuld alone be benefited, and the population as a whole made to suffer. The personalty was the only tax that those gentlemen could not shift from their own shoulders. They were taking the tax off themselves, and placing it on all the springs of industry. All improvements would be taxed, and that would operate against the march of progress. Then again the foreign bondholders were to escape free, while the same class in New Zealand was to be taxed. Every ona of the proposals meant to drive capital out of the oolony. That would be done in self-defence, so as to avoid the taxation imposed in this colony. What he said was, " Let us begin with a fair system of taxation —taxation that would fall on tbe great magnates of the place. Not until that was done would they bring the population as a whole to a tense of the extravagance that had been going on. The proposals made were unjust, tyrannical, and unwarrantable, aid he hoped they would not be submitted to. Major Atkinson said that the last speaker knew nothing about what he was talking of. The oxemption would be largely in favor of the poorer classes of taxpayers. It would exempt a class who just came within tho operation of the Act. He knew one great magnate who paid uuder the land tax £4 per annum, whereas under the property' tax he would pay as many hundreds. The tax was one which would overtake the wealthier classes. Any person possessing over £ioo in personal property belonged to a olass will able to bear the imposition proposed by the property tax. Tho last speaker was one who had industriously circulated the opinion that the Government could enter upon the premises of a taxpayer and make an inventory of his effeots. That was false. If a false return was made, the tax collector was not entitled to make a valuation. He cauld only require the owner to get sworn evidence of the correctness of hit own valuation. Sir G. Grey was the very man who complained about works of art being taxed, and now he complained about that exemption. He was one of a class who was never content. Hit him high or low, he was never content, and thero was no use trying to please him. Sir G. Gbbx said that it was true that he had objected to works of art being taxed, but that objection was made simply as an objection to what was a part of the whole objectionable system. "His speech was simply an effort on the part of the Treasurer to delude the House. No British eommunity had ever before submitted to a tax of the kind. He repeated that the whole efforts of the Government had been to tax the poor man, and allow the wealthy to get off. If the tax was kept on at all it ought to be made to apply to personal Eroperty, so as to overtake the rioh man. He oped they would join with their constituents in an endeavour to get the obnoxious tax repealed. Mr Beid quoted from " Hansard " to show that the Treasurer on the occasion on which it was proposed to impose a beer tax denounced it »» wrong in principle. The Hon. J. Hazli said that the explanation given of these proposals was that they were made in view of the pressing exigencies of the case. No matter what their proposals had been, Sir G. Grey would be bound to oppose them. He complained that they had not imposed a tax on shipping. The effeot of that wonld have been that all the shipping would immediately have been removed elsewhere. He had told them that the large landowners should pay for the railways as these railways had benefited their properties. The faot was that large and small property was scattered indiscriminately all over the colony, and it would be impossible to separate the operation of the tax from one property. The wider the railways spread the more they increased the value of small properties as well as large ones. Again, they were told that their measures were calculated to drive oapital out of the colony. That was a new character to take up. It was not eo long since he told a public meeting in this flace that they did not want the capitalists, t was not true that they were going to tax the bondholders in New Zealand and allow the foreign bondholder* to go free. That was not the case. What they aimed at was to tax the property in New Zealand, and any attempt to tax the foreigner would not be taxation but simply repudiation. The effeot of the land tax passed by the Government of which Sir G. Grey was the head was to tax the struggling land owner and allow those who resided in a town away from their land to go free. As long as Sir G. Grey confined himself to declamation he was admirable, but the moment he touched upon questions of policy he immediately upset himself. Sir Geokch! Gbby said that under a judicious system they might raise enough for their requirements without going outside to borrow money. What he wanted was that land should be made cheap, and a tax imposed suoh as would create a revenue for the colony. Hid that course been followed up in Canterbury there would have been no gridironing such as had been the curse of that province. His views on that subject were shared in by the United States, as well as some of the ablest men at Home. These proposals were of a nature to encourage men to acquire enormous estates. He had called for returns on the subject, and believed it would be shown that at that very moment they were conniviDg at tho acquisition of such estates. No answer had_ been made to the obarges preferred by him that the tax would not fall upon the wealthy population. He called upon them to produce the Auckland compact, but they would not do it. The fact that they would not producethat compact, which he knew they had in their pockets, was evidence that there was something radically wrong. These were facts, and it was wrong of tho Premier to say that he did not deal with facts, and facts, too, which they were not able to answer. He ealled upon them to answer his arguments, and not shield themselves behind a plea that it was mere declamation. He had been misrepresented by the Premier in regard to the foreign bondholders. What he contended for was that the foreign holder should be taxed the same as the New Zealand bondholder. Colonel Titiirum quoted from " Hansard" to prove that Sir George had been in the habit of making unfounded and inaccurate sfca ements. Mr Moss said that when the Government came into office the Treasurer stated that his predecessor had left nothing in the treasury out of the public works appropriation, whereas he had now stated that there was a balance to the credit of the fund. They had *

been told that a Baring had been effected in the Native Department. He could understand that seeing that the present Government had not had the expense of the great Native meetings to bear. Still he reminded them that the present Government had spent thousands of pounds on the West Coast, whereas their predecessors had not spent ten shillings. He should have liked to have seen lees heat and less party feeling imported into this debate, but ho held the Government solely responsible for that occurrence. Mr Geohge defended Sir G Grey from the acousation made against him by Colonel Trimble.

Mr J. B. Fishbb also spoke on the same side.

Mr Gisbobnb objeoted to the proposals for taxation made in the statement. The property tax was like the proposed beer tax, unsound in principle. He suggested the repeal of tho property tax, and the substitution of a tax on incomes.

In reply to Mr Montgomery, The Hon. CotONiAii Tbbasurbb said that provision would be made by which the new duty might be added to prices under existing contracts.

Mr Seddon opposed the property tax, advocating the exemption of mming machinery. Mr Speight said that Major Atkinson had shown there was no real ground for making the property tax exemption he promised, as the objections were purely imaginary. The motion was then put and carried. The House adjourned at 12.10.