Financial Statement.

Globe, Volume XXIII, Issue 226, 7 July 1881, Page 3

Financial Statement.

[By Tblkqbath.] The following is the financial statement delivered by the Colonial Treasurer (the Hon. Major Atkinson) last evening Mr Seymour,—-I have before me this evening a much more pleasing and satisfactory task than that which fell to my lot when I last had the honor of addressing yon. As, however, the statement which I am about to make is far more intimately connected than usual with its predecessors, I must ask permission to recall to the mind of the committee the financial position of the colony in November, 1879, and at close of March, 1880. This is necessary because our condition in 1879 was so unsatisfactory as to require very vigorous treatment on the part of this House, and it is to the results of the action then taken 1 have to call your attention to-night. Past Financial Position Ee- stated. In November, 1879, 1 estimated that the consolidated revenue, including the receipts from land sales, for the nine months to 31st March, 1880, the date proposed for the termination of the financial period then current, would not be sufficient to meet the ox. penditure chargeable against it to that date by the sum of £796,886, andjin confirmation of that opinion I pointed out that the revenue between June 30th, 1879, and the time at which I was speaking had already proved inadequate to meet the expenditure by about £600,000, which sum had been raised by deficiency bills, and these bills it was hopeless to expect to redeem out of current revenue. The causes of this deficiency were not far to seek. It arose chiefly from the great falling off in the sales of land, and from a avish and rapidly increasing expenditure at |a time when New Zealand, in common with the rest of the civilized world, was suffering great commercial depression. But although the difficulty was serious and embarrassing at the time, a comparison of the revenue of 1878 79 with that of former years proved conclusively that our receipts from taxation and for “ services ” rendered had been steadily and proportionately increasing year by year, and that the check which wo were then experiencing was temporary only. This House no sooner understood our real financial position than it took immediate steps to equalise expenditure and revenue. A determination was made to rely no longer upon the proceeds of land sales as ordinary revenue. A vigorous system of re? trenchment was initiated, and measures were at once adopted for the imposition of additional taxation to cover the charge for interest, amounting to nearly £300,000 a year, payable upon the new loan and Treasury Bills created. As, however, one half of the financial period of nine months had already passed, it was of course impossible to meet such a large and unexpected deficit as £796,886, by means of fresh taxation or retrenchment during that period, especially as every item of revenue was either declining or stationary. The only course open was to place the amount upon loan, which was accordingly dona by passing the Treasury Bills Act, 1879, in which provision was made for £BOO,OOO. But the actual deficit on the 31st |of March, 1880, instead of being £796,886 as estimated, proved to be nearly £200,000 more, and it was found necessary to obtain further aid by the issue of deficiency bills for that amount; and that anm, by the Treasury Bills Act, 1880, was also added to the public debt. It must be remembered, moreover, that this deficit has entailed upon the colony an additional expenditure of at least £50,000 a year for interest until this sum of £1,000,00) is repaid. The Financial Peeiod 1879-80.

The committee will remember the proposal which 1 made in 1879, that in future the receipts within the year should bo dealt with as the revenue of -the year, and the payments made within the year as the expenditure of the year. It will also be in the recollection of the committee that it was determined not to apply this new system of keeping the account to the financial period of nine months ending on 31st March, 1880, but that whatever sum might be required to equalise the revenue and expenditure to that date should be provided for out of loan, so that wo might start clear of liabilities. In consequence of this determination I estimated, in making the financial statement last year, that tha liabilities of that period would exhaust the available assets with the exception of £9918. This, however, has not proved to be the case, for, after discharging all liabilities in respect of the period now being referred to, which came in course of payment to 31st March last, there remained a credit balance of £38,555, particulars of which will be found in table No. 1 attached to this statement. The deficit, therefore, to 31st March, 1880, was £961,445, being the difference between the credit balance of £38,555 and £1,000,000, the amount of the Treasury and deficiency bills issued in aid of the revenue. Expenditure or tub Ordinary Betenue or the Tear 1880-81. In the statement which I had the honor to make to the committee last year, I estimated the cost of the services for the year at £3,473,709, and the amount which would come for payment n the ordinary course of business within the year at £3,248,709. On the passing of the estimates these snms were modified to £3,348,889 and £3,123,889 respectively. The actual expenditure was £3,168,183 (table No. 2), or £44,294 more than I thought would come in the course of payment during the year. The committee will not, however, look npon this fact with disapprobation, but rather, I venture to think, with satisfaction, when I tell them it means simply that I took advantage of opportunity of paying amounts which I had estimated would remain outstanding at the end of financial year, thus reducing these from £225,000 to £165,514. I may add, the total amount voted for the departmental services of last year, inclusive of lands and surveys, was £1,929,807, and the actual expenditure was £1,754,041, or £175,766 less than voted, and if from this we deduct the outstanding liabilities, we find that the services of the year have been performed for rather less than the votes, a result which, considering the searching revision to which the estimates were subjected by'this committee, will probably bo thought very satisfactory. Obdinabt Revenue op the Yeab 1880 81. I now come to the estimated revenue as compared with actual receipts for the year; full particulars of which will be found in table No. 3, attached to this statement. I do not include here the receipts from land sales. Of these I will speak presently. The estimated revenue was £3,238,000, while the actual receipts amounted to £3,123,961. being £114,039 leas than my estimate. It will be seen upon reference to the table to which I have referred that the receipts from railways were less than the estimated amount by £111,377, but notwithstanding this fact it will be gratifying to the committee to know that through the economical management of my friend tho late Minister for Public Works they have yielded about 3j per cent, upon the £9,228,000 spent in their construction. The property tax yielded £80,283 less than I had estimated. But of this sum £42,000 had yet to come in, being the amount outstanding and collectable ob the 31st March. Of the remainder. £20,000 is accounted for by tho alteration of the schedules, which was authorised during tho session, and £20,000 is an over-estimate. I will, however, say no more about the property tax here, as I shall _ have to speak somewhat fully upon that subject presently. Telegraphs also yielded £12,562' less than estimated. On the other hand, Customs and stamps (in the latter 1 include land and deeds) produced more than was estimated, the former by the sum of £57,634, the latter by £10,886. The increase in the Customs and 1 stamp duties is, I think, a subject for congratulation, as showing that tho commercial depres-

f sion under which we have been suffering ie passing away, and the spending power of the community is gradually resuming its normal condition. Land Fund of the Yeab 1880 81. _ The estimated expenditure chargeable against the land fund was £158,706, exclusive of £51,648, representing one-half of the proposed subsidies to local bodies. Honourable members will, doubtless., recollect that when it was found impossible, from want of time, to consider the Local Public Works scheme of the Government, it was determined to continue the subsidies at a reduced rate. I then thought that the land fund would not bear the whole of these subsidies, but I am glad to say that it has been sufficient for the purpose. I have, therefore, charged against the land fund the full amount paid on this account. The total expenditure, inclnding £110,506 for subsidies, has been £266,703. The estimated revenue from land sales was £200,000. But, through the successful handling of affairs on the West Coast of this Island by my honorable friends the late and present Native Ministers, we have had most satisfactory sales of land in that district, which has brought up the receipts from land sales to £290,166. The expenditure having been £266,793, leaves a {credit balance of £33,373. The liabilities outstanding at the close of the year amounted to £37,461. (Tables Nos. 1,2 and 3.)

I he Public Debt. The gross public debt of the colony on the Slat of March, 1880, amounted to £27,422,611. On the Slat March, 1881, it was £29,165,511 ; sr, deducting the accrued sinking funds, £2,057,241, thenet public debt was £27,108,270. (Tab’o No. 4.) It will be observed on reference to the statement I made to the committee last year that the gross amount of the debt on the 31st March, 1880, did not include £992,000 Treasury and deficiency bills, taken up out of the moneys at the credit of the public works fund, or the £BOO,OOO unsold debentures of the loan, guaranteed by the Imperial Government. As £560,109 of the bills referred to have been disposed of during the year, and advances amounting to £300,000 have been obtained upon the security of the debentures, these sums have now to be added to the public debt as on 31st March, 1880. The public debt has further been increased during the year by the conversion of £4,476,000 5 per cent, debentures into £5,371,200 4 per cent., under the option which expired on the 16th March lost, given to subscribers to the Five Million Loan of 1879. This operation resulted in an increase of the debt by £895,200. Since the 31st March, 1880, the following debentures have been redeemed and cancelled: —Nelson Waterworks Loan of 1864, £6200; North Otago District Public Works Loan of 1872, £6200. The net increase of the debt during the year, exclusive of the increase by conversion into inscribed stock was therefore £847,700, bnt inclusive thereof it was £1,742,900, Adding to the gross debt on 31st March, 1881, the balance of the guaranteed debentures, £500,000, and the Treasury bills, £431,900, held by the Public Works fond, the total gross public debt when these securities are disposed of will amount to £30,097,411, or deducting the sinking fund accrued to 31st March, 1881, of £2,057,241, the net debt will be £28,040,170, in respect of which the annual charges will amount to abont £1,543,000. I may add that by the conversion of £4,476,000 5 per cent, debentures into £5,371,200 4 per cents., a saving of £8952 interest per annnm has been effected. Public Works Fund on 31st March. 1880. The total ways and means available, subject to liabilities, was £3,778,173. This sum included! cash in the colony and in London, £862,410 ; advances in the hands of officers of the Government. £315,763; balance of the five million loan, £751,000; guaranteed debentures of the immigration and Public Works loan of 1870, £800,000; amount advancsd temporarily at interest, £57,000; and advances to the consolidated fund upon Treasury and deficiency Bills £992,000. Daring the past year special receipts and recoveries amounting to £43,174 came to the credit of the fand, making, with the balance of £3,778,173 at the beginning of the year, a total of £3 821,347. The expenditure, a summary of which will bo found in table No. 1 appended to this statement, amounted to £1,960.974, thus leaving an unexpended balance of £1,860,373 at the close of the year. The liabilities outstanding on the 31st of March last, including £997,725 for land purchase, as certified to by the heads of depart-, ments, amounted to £1,585,512, particulars of which will be found in table No. 6. Setting the amount of these liabilities against the unexpended balance of £1,860,373, there remains to be appropriated for new services the smalt sum of £274.861. Bnt in arriving at this balance of £274,861, honorable members will observe that £997,725 is set aside as a liability on account of lands purchase. Should, however, the policy in reference to snch purchases enunciated by the Government be carried ont, the sum which 'it will bo necessary to reserve ont of the existing balance will not exceed £200,000. The available balance for future appropriation will then be £1,072,583, instead of £274,861, as first stated.

Financial Results op the Tear 1880-81. Honorable members -will recollect that it was determined last year that for the future the revenue of the year should be the actual sum paid into the Treasury during the year, and that the expenditure should be the money actually paid away during the year, thus dismissing both assets and liabilities from the public accounts, the one being treated as revenue of the succeeding year, and the other being provided for in its votes. I have said that tee expenditure within the year was .83,168,183, and the receipts from revenue £3,123,961, exclusive of land sales, but including the balance of .£38,555 brought forward from last year’s account, the receipts amounted to £3,162,516 ; so that upon this division of the account there was a deficit of .£5667. The expenditure from land fund was .£266,793, and the receipts .£299,167, the surplus upon this account being .£32,373. The total expenditure therefore of the consolidated fund was .83,434,976, and the total revenue .£3,461,862, thus leaving a surplus balance of .£26,706 upon the actual transactions completed within the year. Now, if hon. members will compare the position as just stated with the state of things in March, 1880, they will at once see that the view taken of the financial position of the colony by the Government baa been borne out by facts. I then stated, and gave my reasons Tor ,the belief I expressed, that the check we were then suffering was only temporary, and that notwithstanding the very large deficit which had to be met ont of loan, the financial condition was thoroughly sound, requiring only reasonable self-sacrifice, and care and prudence in the management of oar affairs, to restore us to renewed prosperity. At the close of the financial period ended 31st March, 1880, we bad borrowed in aid of the revenue of that period .£1,000,000 by way of Treasury hills. After closing the accounts of the year ended March 31st, 1831, we can see our way to provide ont of ordinary revenue for the liabilities outstanding at that date, with every prospect of a fair margin of receipts in excess of expenditure at the end of the year, and this notwithstanding the fact that the interest we have to pay has been increased by some £300,000 a year. Local Finance, I now come, Mr Seymour, to the consideration of that difficult problem '* local finance.” A problem difficult of solution chiefly because of the restless pushing energy which still demands more local works to open up the country, and this notwithstanding the fact that we have already borrowed so largely for these purposes that we are compelled in our general taxation to trench somewhat upon the funds which we should like to see left free to supply local wants,while at the same time it seems to be entirely forgotten that the localities themselves have largely benefited by the public works scheme, and that by the construction of railways, roads and bridges at the charge of the colony, they have been permanently relieved of much expenditure. It was, indeed, quite certain that if we are to people the waste lands and make the country progress, as we have determined it shall progress, we must find the means, not only to keep in proper repair our roads and bridges already constructed, but also to extend onr road system throughout the colony step by step with advancing settlement. I propose, to-night, to speak only in relation to the financial aspect of the question, without reference to tha organization or powers of the local bodies. Of these I shall speak at large at an early date. I now take it for granted that the local bodies will be charged with the duty of making and maintaining the roads within their jurisdiction, and that upon these works the bulk of their expenditure will be made. The local bodies have other duties to perform, but if that part of the problem relating to roads and bridges can be satisfactorily solved, the rest will follow without much difficulty. This then is the great question for solution. How are funds to Ice provided for the construction and maintenance of onr roads and bridges ? And the question naturally divides itself into two branches. First, maintenance, and second, construction. But before proceeding further, let me say what in my opinion are the requisites of a sound local finance. These are that local finance should bo as distinct from and independent of our general finance as possible, and that the funds should be sufficient for the maintenance of roads and bridges. First, then, let us consider the means at our disposal for the maintenance of roads and bridges already constructed- With very little consideration it will bo ev.’-nt, 1 think, to every one that onr roads and bridges must be maintained for the future, with perhaps one or two exceptions, by local rates. The landed property in each district must, as a rule, maintain the roads and bridges of the district. This being so, it is evident that all land must pay rates. The Government, therefore, propose that Crown lands and Native lands shall be rated, with certain exceptions with which I need not now trouble the committee. This proposal is the same as that which I had the honor to submit last year, with one or two important alterations. The proposal is shortly this ; that within boroughs the property of the Crown,

[with certain exceptions, and of Maoris shall for the future be rated under the Eating Act, 1876, the Maoris being in this case placed on the same footing as Europeans holders of town property, and that country lands, both Crown and Native, shall be divided into two classes, agricultural and pastoral, and shall bo rated at £ I per acre for agricultural Und and Ca 8d an acre for pastoral land, which amounts for rating purposes will be taken as the value of the fee simple. Honourable members will observe that while last year it was proposed to estimate Native land at one-half the value of Crown land, it is now proposed to value them alike, and I cannot bnt believe that upon considering all the circumstances of the case, the committee will think this fair and reasonable. If the Crown and Native lands are to pay rates, the question arises who is to be responsible for their payment to the local bodies, and out of what funds are they to be paid ? We propose in every case that the Colonial Treasurer shall be primarily liable, and shall pay the rates to local bodies. The rates on Crown property within boroughs we propose to charge against the consolidated fund, the rates on country Crown lands against the land fund and the rates on country Native lands, we

propose to advance out of money appropriated by Parliament for the purpose, bnt to remain a charge against the Native land for which the rates are paid, and to be recovered without interest, as a duty under the Stamp Act from the purchaser or lessee of the land so charged. With regard to making the rates to be paid upon Crown property within boroughs a charge against the consolidated fund, I think all sides will_ agree that these rates are a proper charge against that fnnd. In respect to the rates upon country Crown lands, I hope it will need no argument to prove that they should be a charge against the land fund. Having determined that tha land shall maintain the roads, there can be no reason to make an exception in favor of the estates of the Crown, and it is from the proceeds of this estate that wo propose to make the payment, in charging the rates against the land fund. The proposal, however, to advance rates upon Native lands will require some explanation. As a matter of strict justice, there is no reason why our Maori fellow-subjects should not pay their share of the cost of local works, which, as they are undertaken and completed, improve their lands in common with i he lands of their European neighbors. But although this might not unfairly be insisted upon, there are reasons which will, I hope, induce this House to make snch provision as will, without unduly pressing upon the Maoris, deal fairly with the

local bodies who are charged with the maintenance of roads passing through the Native lands within their jurisdiction. The reasons are chiefly those of public policy. It would be a great mistake on our part, especially now that our relations witn the Natives have so greatly improved, to make demands which large numbers of them could only meet with great difficulty, if at all. The Maoris will, I think, at once recognise the fact that the time has arrived when we may reasonably ask them to charge their lands with rates for local works which greatly enhance the value of those lands ; the rates, without interest, to be payable only by Europeans when such lands are parted with to Europeans. I shall propose, if the House agrees to this plan, to charge these rates in the first place against the consolidated fund. Before leaving this part of the question there are two other important matters to which I must refer—the limitation of self-rating to ene shilling in the pound, and the cost of the yearly valuation. It is, sir, well known that in some parts of the colony a shilling rate is insufficient to maintain the roads. The i Government are unable to see upon what grounds, of either reason or justice, the local ; bodies can be called upon to maintain the roads, i while at the same time they are denied the power of raising enough money for that pur- i pose. We shall therefore propose to increase 1 the rating power to two shillings in the pound, a power already possessed by several of the local bodies, believing that that limit will ha

approved by the country, and bo found ample ] for the duty imposed. With regard to the valuations, experience has shown that they are • required by law to he made much oftener than 1 is necessary. With a view of easing the local j bodies entirely of this charge, and so saving them from an unprofitable expenditure of probably not less than .£16,000 a year, we shall ask the House to permit all local bodies to use : for rating purposes the valuation under the Property Assessment Act with annual correction. I have had a table prepared (No. 10) showing the valuation under the Act as compared with the valuations made by the local Denies, and when ' honorable members compare the two valuations, . the totals of which are remarkably near, the proposition will, I think, commend itself to their judgment. Construction of Eoads and Beidges, And this brings me, Mr Seymour, to the second branch of my subject, the construction of . roads and bridges. Now there are three distinct classes of roads with which we have to deal under thisbranch 0 f onr subject. First, there are main roads through Crown lands not yet settled; second, the main roads running . through the settled or partially settled dis- , tricts ; and, third, district reads both in . settled and unsettled districts. We will con- , sider the question of how money is to be • provided for roads through Crown lands not yet settled. My colleague the Minister of Lands has 1 given much attention to this subject during the . recess. Be has by means of roads cleared and , formed, with sufficient culverts to make them j passable, opened a large quantity of land for j settlement, and he will this year submit a •

DWCUiO UIVUIYIUg WUU OA|)6UUi*UiU AVI*. »u»o poae of £150,000 out of loan, the expenditure to extend over a period of three years at the rate of .£50,000 a year. This work, wherever practicable, will be done as hitherto by the local bodies, but everyone acquainted with the country must know that these provisional roads are enly the beginning of a necessary work and. settlement of small blocks of land cannot be successful without good roads. As a matter of sound policy a good road, if it does not precede, ought certainly to immediately follow settlement. Now there are only three ways in which money for this purpose can be obtained. It must be obtained —it must be got either from the proceeds of the land or from loan, or from both these sources. After carefully considering the subject, the Government have come to the conclusion that the necessary funds can be obtained from the land itself, not only without injury, but with advantage to settlement. We propose therefore that after the land has been surveyed and the roads marked out, au estimate of the cost of forming and metalling the main road through the block shall be prepared by the local body having charge of the district; that to the fixed upset price per acre of land to be served by the road shall be added a sum according to the situation sufficient to cover the cost of construction, and that the money so obtained shall be set apart and paid over to tbe local body under proper safeguards to be used for that purpose only. We further propose that when half the land in any block is sold the Government shall advance the money to complete the main road through the block, recouping itself from time to time as the rest of the land is sold. We now come to the roads of the second class, those unconstructed main roads running through settled or partially settled districts. Our proposals in respect to these are in substance the same as last year, but the machinery of the Roads Construction Rill, by which it is proposed to give effect to the scheme, is, I hope, an improvement upon that of the Local Public Works Bill of last session. The constitution of the Board, which was objected to by many hon. members, has been altered, and it is now proposed that it shall consist of the Minister for Public Works and three members to be appointed by this House. In order to provide for necessary work, I shall ask the House to make a grant to the Board of £1150,000 out of loan, and to cause to be paid over to it yearly a further sum not exceeding £150,000 out of the balance of the land fund. This fund will be applied in the following manner. Suppose a local body desires to construct a piece of main road, or build a bridge, which we will say is to cost £IOOO, it will prepare estimates showing the cost of the proposed work, and submit them to tho Board and ascertain if any money is available. If there is money available the local body will, after taking an affirmative vote of the ratepayers, strike such a special rate over that part of tho district benefited by the proposed work, including Government and Native lands, if any, as will in tan years repay without interest one quarter of the amount obtained from the Roads Construction Board. In a case supposed of a work costing £IOOO tho Board would have to strike a special rate which would produce £25 a year, or £250 in ten years, or if the local body bad £250 in hand which it could apply to tbe proposed work, or chose first to raise tho money by a general rate, it could obtain from tho Boads Construction Board £750, the balance of £IOOO estimated to complete the work. In other words —for tho purpose of main road construction for every pound which the district finds three pounds is added from the land fund. In case more money should be applied for than the Board has at its command, grants pro rata would be made ; but all applications in cases where a main road or bridge has been destroyed or washed away by a flood, would take precedence. We have now only to consider the third class of roads, thatus district roads. To enable Road Boards to make their district roads we propose to ask tho House to make a free grant of £IOO.OOO to the Eoad Construction Board, and to permit it to borrow another £IOO,OOO at 5 per cent, from tho trust funds, thus making a fund of £200,000 available for this purpose. We propose that this fund should bo self*supporting, and it-should be dealt with in this way: Suppose a Road Board wishes to borrow £l6O for a small bridge or other work.it would submit an estimate of the proposed work to the Road Construction Board. On ascertaining that there was money available, and after taking an affirmative vote of the ratepayers, the Eoad Board would strike a special rate which would produce £9 yearly for thirteen and a half years. Tho produce of this would be paid over to th Board half-yearly, and by tbe expiration of tho period I have named, tho whole of the amount

[borrowed with interest at 3 per cent, per annum would bo repaid. So far I have only been dealing with Counties and Soad Boards, and it will have been observed by hon. members that my proposals do not affect the borongha, except to the extent of granting them the power of rating all Government property within their boundaries. I think with every desire to help the boronghs we must recognise the fact that the Barest and most effective method of helping them is to encourage successful settlement upon the land. With a well roaded and prosperous country the difficulties of the boronghs will end. In the above p-oposa!s, I conceive that we are in fact carrying out the idea of the Legislature in withdrawing the twenty per cent, of the produce of land sales from appropriation by County Councils. That fund was meant to be devoted to the opening out of the very districts from which it arose. Unfortunately the Councils, following suit to the Legislature itself, had treated it as ordinary revenue, applicable to any of the objects under their control, and the administration using it in effect to lighten load rates or dispense with them altogether. The result of the proposals I have submitted will not be, then, to reduce the proportion of the land fnnd locally expended, but in most eases and for some time to come to increase it materially. But jt will bo expended under such safeguards as will ensure its application to the colonising

uses to which this House desired to devote it. I think the warmest advocate of the localisation of .the land fund can desire no more. Before quitting this branch of my subject I will deal shortly with the suggestion that the Government should take over and maintain the main roads of the colony, a proposition which goes far beyond the centralising tendencies some times imputed to the present Government. "We are not ambitious to take charge of some thousands of miles of roads, and do not feel ourselves competent to undertake the task. The House will certainly not appropriate the needful funds out of ordinary revenue, nor will it invite an annual repetition on its floor and on a petty scale of the struggles for local appropriation which have impaired the success of the Public Works policy. In face of compliints which are abroad of the concurrent rating powers of county councils and road boards, the Honse is not likely to undertake itself the duties of a third rating authority, nor can it in the present condition of the general finance abandon any part of the proceeds of the property tax to local administrations. Snch then, Mr Seymour, is a brief sketch of the proposals of the Government with regard to local finance. It may be said that there is nothing new or startling about this scheme. That. Sir, may be true, bat tha question is, is it a plain workable scheme, easily understood, and will it give ns what we must have as rapidly as our means will permit—

roads throughout the country. I submit. Sir, with confidence that it will, and that it will also relieve both this House and Ministers from pressure to supply local wants, which cannot he ignored if settlement is to advance, but which it is very undesirable should be dealt with directly by this House. Ido not to-night intend to trouble the committee with elaborate arguments in support of it, because I believe hon. members desire upon such an occasion as this only a broad outline, to enable them to judge of the effects of the proposal upon general and local finance. That the scheme, if it becomes law, will make our local finance as distinct from, and independent of, _ our general luance as possible cannot, I think, be doubted, and that it will make as ample provision for the local bodies as onr means now permit is, I think, also certain. It has also this great advantage, that should it prove successful it can be expanded without difficulty to meet all the future wants of the locsl bodies, whether we enlarge them and multiply their functions or keep them much as they are. Estimated Expenditure from Ordinary Ee venue, 1881-82.

_ I now come, Mr Seymour, to the consideration of the estimated expenditure for the current year. It will be within the recollection of kon. members that last year the Government, with the assistance of this committee, made very large r Auctions in the estimates as sent down, and that after these reductions had been made, I stated to the committee that the net results for the year amounted to £197,009, and that if the Government succeeded in carrying out the retrenchments it had in view, the estimates for the annual appropriations for this year would be £252,000 less than those for -1880-81, as introduced last year. I am happy to say that my anticipations in this respect have been more than realised. The estimates as brought down last year for the twelve classes of services under the control respectively of the Speakers of both Houses, the Colonial Treasurer, the Minister of Justice, the Postmaster General, and Commissioner of Telegraphs, the Commissioner of Customs, the Commissioner of Stamps, the Minister of Education, the Minister of Native Affairs, the Minister of Mines, the Minister of Pnblic Works, and the Minister of Defence, amounted to £210,813, fall particulars of which will be found in table No. 7 attached to this statement. The estimates for the same services for this year was £1,774,312 only, or in ether words £334,001 less than those of last year. Hon. members will see upon reference to the table that upon every class without exception there is a refaction, and that in class XI, that of the Minister for Pnblic Works, there is a r eduction of £53,492, notwithstanding the fact that the estimates for the enrrent year are for an average mileage of 93 miles greater than was worked during the past year, and that ample provision is made for their efficient working maintenance. I should not, perhaps, include in this sum the item £52,500 for contingent defence, which has been removed fr*m the estimates, this being one of those cases in which it may he said that no reduction of expenditure has been made, because the item was placed on last year’s estimates to provide for a contingency merely, but I think we may in fairness claim to include the amount, in consideration of the fact that our being able to dispense with the item is due to better prospects of continued amicable relations with the Natives. Such a result then as the reduction of £281.501, or, including £52,500 for contingent defence, £334,001, in twelve classes of the estimates in one year, is a work upon which I think I am fairly entitled to congratulate the committee. These reductions have not hosn ac’omplished without much hard work and painful thought, and could certainly never have been made at all but for the hearty co-operation of this Committee with the Government in effecting these necessary economies. The total proposed votes for the year, inclusive of liabilities, which new appear as the ordinary votes, is £3,270,532 (table No. 8), divisible into two parts ; permanent charges, amounting to £ 1,570,919, and annual appropriation, amounting to £1,699,613, in which latter division alone can reductions be made at present. As I have said, great reductions have been made under this division during the last year, but, notwithstanding this fact, the Government believe that they can, during the present year, effect still further reductions. I cannot, however, do more on the present occasion than point out that the line in which the Government is moving is in the direction of the simplification of the services, the consolidation of offices, and consequently the diminution of the number of employes. There are, I think, no special items of expenditure to which I need call the attention of the Committee, except that the item of interest and sinking fund has increased by£46,157, while that of the constabulary has decreased (including the snm of £52,500 fpr contingent defence already referred to) by about £113,000, through the steady reductions the Government have been enabled to make in this force in consequence of our improved relation with the Maoris. This fact will, I am sure, h« heard by every honorable member with great satisfaction. Estimated Expenditure from the LahjdFund, 1881-82, I ought, sir, perhaps to have said before this, that in speaking of the ordinary revenue I have not included the proceeds of land sales. If the scheme which I have submitted for the consideration of the committee should be adopted by the House, the Government will propose that any balance there may be left from land sales, after payment of the charges it is intended to place upon them, shall by law be paid into the Public Works Tim'd, but without prejudice to the public creditors. The estimated expenditure chargeable againstland sales is as follows, as honorable member? will see upon reference to table, No. 9 For charges fixed by Acts of the General Assembly, £84,966; for the Crown Lands and Survey Department, £134,581'; for rates to local bodies, £27,000; for roads and bridges a sum not exceeding £150,000, to be paid to the Eoads Construction Board, the balance, if any, fafter payment of these charges, to be paid over to thePublic Works Fund. I Property Tax, I will now, Mr Seymour, in accordance with the promise made in the early part of this statement, again refer to the property tax. The Act, sir, although requiring some amendment, has been found, upon the whole, effective, and now that its provisions are generally understood, it is admitted throughout the colony that the tax'-is thoroughly fair in principle, and that it has generally worked satisfactorily. I do not mean, sir, to imply hy this that direct taxation is palatable, but I venture to say that in no country in the world has direct taxation bean accepted more- willingly or paid more readily than the property tax has ’ been by the people of ■New Zeals: d. I have had prepared, fpr the information ot the House, several very interesting tables (No 10), which will, I think, greatly increase onr knowledge with regard to the distribution of wealth, and especially in reference to the ownership of land. There are, I find, 21,761 freeholders inside boroughs, and 43,058 freeholders of Country land. The total number of freeholders in the colony is 60,658, being somewhat less than the aggregate of freeholders of borough and country land, because some owners of property hold land . under both designations. But the committee will, I think, expect from me here some particulars as to the cost of collecting the tax. The total expenditure made for last year, including outstanding liabilities, but exclusive

of land tax charges, was ,£31,000, being made ■np of the following items: —cost of valuation, .£16,000; salaries, £7275 ; preparing tables, £700; miscellaneous, including cost of collection, £7025. With regard to the valuation, I find it has cost about £3OOO more than the land tax valuation, the valuation under the latter being £13,000, and under the Property Assessment Act £! 0,000. But if the proposals of the Government are agreed to, and this valuation is used by tho local bodies as the basis for their ratinv, tho whole of the cost of this assessment will bo saved to the country du’ring tho next year, tho saving going into tho ooffora of tho local bodies. In fact, sir, if we make one triennial valuation do for both general and local purposes, tho cost ot it will bo so small aa not to amount to 1 per cent, upon the rates and taxes collected. If this snggestion should be accepted, it would not bo fair to charge more than £SOOO por annum for tho cost of valuation againit tho property tax for the three years during which the valuation continues in force. But admitting that tho whole of tho introductory expenses and tho triennial valuations are to be charged against tho property tax, oven then tho rate per cent, for levying and collecting tho tax. supposing it to be continued at the rate of one penny in tho pound for three years, will be very moderate. The estimated cost of tho property tax department for the next two years is £12,000 For this year I shall ask for £6OOO, exclusive of liabilities, so that tho total cost for three years will not, I think, exceed £44,000, and the total receipts for that period, provided the present rate of one penny in the pound be continued, will certainly roach £860,000, thus making tho total cost of the tax a little over 5 por cent upon tho amount actually paid into the Treasury ; and if a proportionate deduction is made from the triennial valuation on account of tho use made of it by the local bodies, it will he seen that the property tax can bo collected for leas than 4 per cent., a result with which I think we may be well satisfied. Of course, any alteration in the rate of the tax will necessarily increase or as the case may be, tho relative cost of collection. When the property tax was first imposed, a strong fear, perhaps not unnaturally, was expressed by many persons that one of the effects of the tax would bo to drive away foreign capital seeking investment in this colony. I have consulted gentlemen from all parts of the colony who are authorities upon this subject, and I have not found one who entertains tho opinion that the property tax hos had any appreciable effect npen the flow ot capital to the colony; and, as a matter of fact, daring few periods of onr history has more foreign capital como into tho country and found investments than during the last year at an equally low rate. Retssue fob the Ybae 1881-82. Before, Sir, I proceed to the consideration of the estimated revenue for the current year, I desire, with the permission of the committee, to refer to one or two important questions, which are doubtless occupying the minds of honorable members, and the first which presents itself to most of ns is, I think—will it bo necessary to ; impose fresh taxation this year ? I am happy to be able to inform the committee that I can answer that question with an emphatic negative. And then. Sir, that question having been answered satisfactorily, comes its fallow—can taxation bo reduced this year ? The answer must depend on the view the House may adopt of the action to be taken in the early future com. pleting the great arterial communications of the colony. The Government after the last year’s study of the condition of the country under circumstances of exceptional depression, have decided to assume that the Legislature will require the finance to be shaped in the sense of continuing itsgreatnndertakings. Tho experience ot the past will enable us to do this on a snror bases of calculation than hitherto. Thu general reasonableness of the expectations, as well aa the dangers of the policy of 1870 are fully exposed in the revenue returns and trade and population statistics of the last ten years, and these justify me in recommending that whilst avoiding what I will call high pressure finance, we should arrange for the construction of all the defective links in the trank lines of railways, necessarily at a reduced speed, but without intermission. While this recommendation forbids ns to propose any very imposing reduction of taxation, it need not prevent us diminishing to an appreciable amount our demand on the taxpayer. Returning to tho property tax, it will be in the recollection of the committee tha£ when the Act was passed it was determined on grounds of public policy not to include foreign capital as liable to taxation. On a fuller consideration the Government have determined to ask the Legislature to bring this excluded capital within the Act this year. Wa shall therefore shortly ask leave to introduce a Bill to amend the Property Assessment Act in the direction indicated, and for the purpose of correcting some faults and unfairnesses which have appeared in the working of tho Act. Should the Act be amended aa proposed, I estimate that the taxable property under it will bo increased by no less than £11,600,000, of which estimate particulars will he furnished when the Bill is under consideration. This amount, at Id in the £. would yield, say £45,000, and in the present condition of the revenue, will enable ns to provide—first, a reduction in the Customs duties; and second, a diminution of the property tax. Wo propose to admit free of duty calicoes, white and grey, moleskins, corduroy, colored cotton shirts (all in the piece), axes, spades and shovels, and to admit free or reduce the duties on a variety of other articles which I need not detain the committee to enumerate. All these remissions and reductions tend to encourage local manufactures. With respect to the property tax, we shall ask for the continuance of the penny rata till September next, to be reduced after that date to one half-penny for the remainder of the year. Ordinary Revenue. Wo have now, Mr Seymour, to consider on the above bases the ways and means for the current year. I estimate that the total receipts of tho year from all sources in the ordinary revenue account will amount to £3,297,550, full particulars of which hen. members will find in table No. 8 attached to this statement, of services rendered, &o. Speaking, then, first of tho amonnt raised by taxation, we find that the Customs duties last year yielded £1,307,635; this year I have estimated them at £1,360,000, or at an increase of about £53,000, which, considering the steady _ and satisfactory improvement in the circumstances of the colony will, I think, be fully realised. But from this amonnt it will be necessary to deduct £15,000 if the remissions which I have just suggested are agreed to, thus leaving the Customs duties for the year at £1,315,000, The property tax I have estimated to give £270.000, npon the supposition that the amending Bill of which I have spoken becomes law, but of this amonnt £42,000 is from that part which remained uncollected of last year’s tax npon the Slat March last, so that the tax is estimated to yield this year £228,000. When first proposed it was estimated that the beer tax of 6d a gallon would yield £IOO,OOO, and when the duty of 3d per gallon was imposed I estimated it to produce £60,000 a year. The actual receipts for the ten mout' a in which the Act was in operation daring last year was at a rather leas rate than the estimate, but I think we may notjunroasonably expect to receive from beer duty £60,000. I have therefore estimated to receive that amonnt during the year. With regard to the stamp duties, I estimate they will produce £150,000, if the Deceased Persons’ Estates Duties Bill becomes law. iThia Bill is substantially the same as the one which passed this House last session, and then was thrown oat in another place. I hope it may become law this session, as the Bill is a great improvement upon the present law, and the duties charged under it are certainly moderate. There is not, I think, a more legitimate tax imposed than that npon property at the death of its owner. The Bill, as it passed last session, wonld have increased the revenue by about £IO,OOO a year, but, as now proposed, the increase to the revenue is not estimated at more than £SOOO. There is, I think, only one item in the revenue estimated to be received for services rendered calling for special remark, and that is tho railways. I have estimated the receipts from the railways for this year at £910,000. The actual receipts for last year were £833,622, and as we have now about ninety three more miles open for traffic, and prosperity is steadily returning, the estimate may, I think, be considered not excessive. There is no other item of revenue to which I need call the attention of the committee. I have said that the estimated expenditure to bo made within tho year—and ;hon. members will understand that this now includes outstanding liabilities—is £3,270,532, to which I add the eficit at tho end of last year, £5667, making a total of £3,276.198, and that the estimated revenue is £3,297,650. Deducting, then, the estimated expenditure from the estimated revenue, we have a surplus of £21,-153, a . result which, if attained, will, I think, be extremely satisfactory, as showing the steady progress of the colony and the wonderful elasticity of our own resources. Land Fund. The receipts from the sales of land are estimated at £333,000. My hon. friend tho Minister of Lands has given great attention to tho subject of selling land by small holdings, and has opened blocks of land for settlement npon this principle throughout the colony with marked success daring the year, and if the proposals of the Government are agreed to with regard to road making, I have no doubt that still more settlement will take place during the current year, and that it is probable that my estimate of £333,000 may prove to be exceeded. But if it should it will not under onr proposals be absorbed in the ordinary charges of Government,_ but be set apart for public works. Only adding then the balance at the credit of the land fnnd on March Slat, £32,273, to the estimated receipts from land sales we get a total of £365,373, and deducting therefrom the expenditure' £246,551, there remains a surplus of £118,822, which will be payable under onr proposals to the Roads Construction Board. I will now, Mr Seymour, with the permission of the committee, auk: the attention of bon members to a subject

which has been floating in the minds of many people in a more or less definite shape for some time past. The feeling has been gradually growing of late years, not only here but in the Australian colonies, that the several Governments might with great advantage to the community give some further facilities for the investment of local capital in small amounts than is afforded by the Post Office Savings Bank. That institution has been a great success in putting within the reach of thrifty people a place for the safe keeping of small savings, and it is satisfactory to know that, notwithstanding the hard times we have had for the last eighteen months, the deposits have steadily increased. It is also a gratifying fact, well worthy of note, that no loss than five-sixths of the deposits ore for sums of less than £SO. Tho Government think it possible that many of these depositors, as well as tho public generally, might be glad of a more permanent form of investment, it one can ho provided, which is at the same time secure and easily convertible into I shall therefore submit lor tho consideration of the House a Bill authorising the issue at par of a loan of £250,000, the principal and interest of which will be payable in New Zealand only. We propose that the loan shall boar interest at a rate not exceeding 5 per cent, and that it shall bo issued in the form of inscribed stock, with the right to the subscriber to obtain from time to time bonds payable to bearer of £lO and upwards. The advantages of each a form of investment will doubtless require sometime to be generally understood, but if a local market can bo once created, as I think it may be with judicious the stock would be found a great public convenience aa a meana of temporary as well as of more permanent investment. Xt is possible, Sir, that the time for such 5 per cent stock has not arrived, and if so tho proposal will tall to the ground, and we shall have learned at any rate negatively something about our powers of obtaining money locally. The time for making the experiment is very opportune, because thomoney market iseasy, and we are not dependant for money upon its success. Tho Government, sir, do not propose in anyway to force this loon, recognising that with tho object in view—that of supplying a local want—the time necessary for the (proposal to bo understood by a wide class must be aUowed; but they think the offer should be made, and they will use all strenuous endeavors to familiarise the public mind with its nature. The proceeds ot the loan it is proposed to use for public works, and authority will therefore bo asked to pay them into the public works fund to be dealt with in due course by Parliament. Progress of Colony since 1870.

Before concluding it may be desirable, Mr Seymour, to glance briefly at the progress of the colony since 1870, and to compare it with that of our neighbors in these seas. The population in 1870 was 284,440 ; it is now 489,700. That is it has almost doubled in ton years. And what, sir, have onr two powerful and attractive neighbors Victoria and New South Wales dona daring the sameperiod ? In 1870 the population of Victoria was 726,599, of Now South Wales 502,861. It i". now 858,582 and 750,000 respectively, thus showing an increase of 18 per cent, in the Victorian population, and 40 per cent, in that ot Now South Wales, while in New Zealand the increase has been 97 per cent. Then, sir, let ns look at the value of our imports and exports. In 1870 they were respectively £4,639,015 and £4,822,726. Last year, that is for tho year 1880, they were, imports £6,162,011, exports £6.352,692, a not unsatisfactory result when the universal commercial depression of the year 1880 is remembered. And. lastly, let me compare the net revenue ot 1870-71, exclusive of land sales and the revenue appropriated to local bodies, with that of 1880-81. In tho former year it was £1.057,218 ; in the latter, £3,123,960, a differenoe, sir, which is ample to cover all tho additional interest we have to pay, and with a good margin to spare to provide for the increased cost of government. It may, however, be said that this increased income does not arise from natural growth, but from the far heavier taxation under which the country now labours than it did in 1870. Bnt is this so P Are we in truth more heavily taxed now than we were in 1870? I venture to think we are not taxed now more than in 1870. The taxation per head was then £3 4s 6d. It is now £3 Its 9d. Bnt education is now paid for by the btate —an additional charge since 1870. If, therefore, the rate par head of the cost of education, 9s 9d, is deducted from the taxation of 1880-81, we find that it is less now by 2s 6d than it was in lb7o. For these and other reasons, Sir, we may claim that onr immigration and pnblio works scheme has been fairly successful. Had, however, the purposes of the loans of the period been more precisely defined and more strictly adhered to; had the amonnt of those loans been limited as originally proposed, and had economy prevailed from first to last, we should have been able now to affirm without fear of contradiction that they had been an eminent success. With the clear view which is now open of the dangers we have escaped, and of their sources, the Legislature may, if it is resolute, make the future operations more thoroughly matters of business. With that resolve it will define and fix with all exactness the objects of fatare loans, and determine their amounts, not by the flush of the revenues of_ the most prosperous years, bnt by the_ reliable averages of a considerable period. It has other considerable advantages for the work. The abolition of the provincial _ system has placed more administrative experience at the service of the colony at large, and the generalisation of tho land fnnd makes the produce of land sales wholly available for the greater and lesser public works, whilst we start with a steadily increasing revenue from the railways already constructed, which is an unimpeachable basis for our continued operations. The spontaneous immigration to these shores and the natural increase of the present population, with the extension of the manufactures already planted, not to speak of others which will spring up of themselves, must alone insure a growth of revenue adequate to support the charges of the moderate loans necessary for onr purpose. And we should ill-appreciate the blessings of onr climate and soil if we did not confidently anticipate the growth ot other moat important rural industries under the advantages which onr daily improving system of communioation affords, and by means of the capital which continually flows to onr land, by an attraction as certain as that of gravitation itself. And there is another consideration—one of mere justice—which should decide ns to do all that prudence will allow to complete onr arterial system. I mean the claims of those districts which have patiently awaited tho fulfilment of tha pledge of the Legislature in the schedule of the Act of 1870. It is not yet tho time, nor is it my place, to submit a specific proposal for carrying out tho work I have here suggested. Bnt I trust the committee will agree with the Government in this opinion that the finance of the colony should be so shaped as to make a definite proposition practicable on the meeting of the next Parliament. In conclusion I must warmly thank the committee for the patient attention with which they have listened to my statement. The circumstances of the times have not permitted me to offer proposals which can excite much enthusiasm, but I believe they aro_ of a practical nature, resting upon a solid basis, and such as will reassure the country, and enable it to look forward to the future with sober confidence.