THE FINANCIAL STATEMENT.

Globe, Volume XXIV, Issue 2556, 17 June 1882, Page 3

THE FINANCIAL STATEMENT.

[By Tblbobaph.] WELLINGTON, June 16

The following is the financial statement delivered in the House to-night by the Colonial Treasurer

Mr Hamlin, —I am pietfenting the Budget thus early because the Government are anxious that the House should have ample opportunity of carefully considering and discussing the financial position and requirements of the colony. In furtherance of this object, which I feel sure will meet with' the approval of the Committee, I hope to place the estimates in the bands of hon. members not later than to-morrow, and I venture to express the hope that the House will consent to the appointment of an early day for going into supply, and not permit the postponement of so vital a question as Ways and Means until the end of the session, when hon. members are often unable from mere physical exhaustion to give the subject that attention which its importance demands. The Committee will be glad to learn that tho reports which have been in circulation for some time past to the effect that there is a considerable surplus standing to our credit upon the transactions of the year are substantially correct. I shall not therefore trespass to-night to so large an extent upon the patience of hon. members as I have been compelled to do so on some former occasions. My statement will be short, but I must still ask for the indulgence of the Committee while submitting for its information the somewhat dry details of the financial results of the last anneal period and the proposals of the Government for the present year.

Expenditure op the Obdinabt Bbtenub op thb Ybab 1881 82.

The expenditure for the year under permanent Acts of the General Assembly was estimated at £1,570.919, including £1,499,318 for interest and sinking fund, while the amount voted for departmental services was

£1,757,660. The total estimated expenditure sanctioned by Parliament was, therefore, £3 328,579. The actual expenditure was it £3 278.820, being £49,759 leas than the ostimated amount. There are no items of this expenditure which appear to call for special a remark. Hon. members on referring to the f aopropriation account presented to the i. House pursuant to tho Public Revenues i, Aot, will be able to see the services in s respect of which the expenditure has s been less or more than the amounts voted, f The outstanding liabilities on the 31st s March, 1832, amounted to £164,394. At the i close of the preceding financial year the s amount was £165,5 A I may inform the . Committee that included in the liabilities on tho 31st March last is a sum of £24,000 for t sinking fund to the 13th March, 1882. In t respect of the £BOO,OOO unsold debentures of [ that portion of tho lean of 1870, amounting [ to £1,000,000, which is guaranteed by the [ Imperial Government, the Imperial Act provides for a sinking fund of 2 per cent, per annum on tho entire amount of the guaranteed portion of the loan, or so much of it as is raised for the time being, commencing at the date at which the whole of the loan is raised, or at tho expiration of ton years from the passing of the Aot, whichever date happens first. When tho first remittance of sinking fund was made, namely, for the half-year to the 13th March, 1881, it was considered that provision was required only for the sinking fund payable in respect of the debentures for £200,000 which had been sold, and not also for the debentures for £BOO,OOO, which though created had not been placed in circulation. The question was, however, reemsidejed upon the receipt of a despatch from the Secretary of State for the Colonies to his Excellency the Governor, and the Government determined to provide a Sinking Fund for the whole guaranteed loan of £1,000,000. Remittances have been made accordingly to trustees of the fund. Ordinary Revenue of Yeas 1831-82. The estimated revenue of the year, exclusive of revenue derived from tho sales of land, was £3,297,650, and the actual amount paid into the public account was £3,438,170, being £190,520 in excess of estimate. Hon. members will find on reference to the comparative return which will be appended to this statement that wo are indebted to the Customs revenue for the larger portion of this excess, £125,107 having been received from that source. The revenue from stamp duties was £11,115 in excess of the estimate. The miscellaneous receipts also show an excess of £34,243, while from depasturing licenses, rents, &o.,wa obtained £56,352 more than we anticipated. On the other hand, the amount derived from the property tax fell short of the estimate by £19,025. Of this sum £9270 has yet to come in. £2200 represents the amount estimated to be received from building societies, which were afterwards rendered exempt, and £7556 is an over estimate. The revenue from railways proved to be £25,266 leas than estimated, but hon. members will gladly learn that the net receipts from railways, which were estimated at £364,744, amounted to £368,927, or £4183 more than estimated. Land Sales of the Year 1881-82. Following the course approved by Parliameat in the session of 1880 81, a separate account of the land sales has been kept. The expenditure charged against the fund during the year amounted to £338,076, including £136,861 for subsidies paid to local bodies. The amount voted for departmental services chargeable on the land fund was £154,510, and the amount actually expended was ( £137,297, being £17,213 less than voted. The . liabilities outstanding or, 31st;Maroh, 1882, were £25 188, as against £37,561 on Slat March, 1881. The receipts for the year from land sales 1 were estimated at £333,009, and the amount 1 actually received and paid into the public 1 account was £317,063, of which £282,136 was for lands sold for cash, end £34,927 cash 1 instalments for sales on deferred payments. Adding to the receipts of the year the balance ! at credit of land fund account on 31st March, j 1881, amounting to £32,373, and deducting the expenditure, we have a balance of this account of £11,360 at credit on 31afc March, 1 1882.

Public Works Fund. The appropriations on this account for the year ended 31« t March last amounted to £1,892,554 The actual expenditure, however, was only £977.886, including £454,224 for railways. Particulars of this expenditure will be found in the tables annexed to this statement. Fuller information than is there given will be laid before the House when mj hon. colleague, the Minister for Public Works, makes his annual statement. The lisbilitiea outstanding at the close of the year amounted to £880,276, particulars of which will also be found in tables appended. During the year special receipts and recoveries amounting to £42,378 came to the credit of this fund, and on the 31st of March, 1882, the balance remaining unexpanded, subject however to the liabilities I have just mentioned, was £924,665, consisting of cash in the Bank of New Zealand, £647,646 ; advances in the hands of officers of the Government, £60,319j debentures of the loan of 1870, guaranteed by the Imperial Government, £135,300; amount invested in debentures of the New Zealand Government, £44,000 ; and temporary advances made on certain other securities, £37 500. Balance at credit of the fund on 31st March, 1881, was £1,860 373, and on 31st March, 1882, it was £924,865. The extent to which it was diminished during the year was therefore £935,508. These figures show that the fund has been carefully husbanded, so as to extend the expenditure over the time we had agreed not again to go upon the London market. Honorable members will observe that there was sufficient money in hand on the 31st March, 1882, to carry on public works without a break or stoppage until about the end of next February, at the same rate with which they have been prosecuted during last year. Included in the liabilities of the Public Works Fund at the end of the year is the sum of £338,876, for the purchase of Native Lands, particulars of which will shortly be placed before the House by my colleague the Native Minister, who will also state the proposals of the Government with reference to our future policy in the purchase of Native lands. In the meantime I may inform the Committee the amount which will be requited this year to complete the purchase of those blocks which the Government have decided to ac quire will probably not exceed £100,030. Public Debt, The gross public debt of the colony on the 31st of March, 1881, amounted to £29,165,511, subject to a deduction of £3.057,242 for accrued si king funds. On the 31st of March, 1883, the debt was £29,946,711, and the sinking fnnda had increased to £3 266 418, the net debt being thus £27.680,203, or £572,024 more than it was the previous year. This increase of debt is thus explained. Of the Treasury bills, which on 31st March, 1881 formed a portion of the public works fund, sales to the amount of £431,300 have taken place. These bills had been taken up in 18S0, with money standing to the credit of that fund, as there was then a large balance not wanted for immediate expenditure requiring temporary investment. They have now been sold, and the proceeds paid into the public works fnnd, as money was required lor the works authorised by Parliament. The debt has also been increased during the year by further advances, amounting to £364.700, obtained in London on the security of the debentures of the loon of 1870, guaranteed by the Imperial Government. With reference to the £BOO,OOO Imperial guaranteed debentures, I may, perhaps, remind the committee that although in speaking of tho amount of public works fund they are always treated as cash, as a matter of faot, they never have been sold, but are used to provide a working balance to save interest, by borrowing upon them from time to time only such sums as are required, according to tho state of the public works fund. 1 may mention on the other hand that the debt has practically been reduced during tho year by an addition of £209,176 to tho accumulated sinking fund, to which has to be added £14,890 for debentures of the North Otago District Public Work? Loan of 1872 redeemed. The net increase in the total amount of debt being thus, as I have said, £572,024.

Savings Banks and Qovkbnuient Insub ANOB DbPABTUENT.

Before I proceed, Mr Hamlin, to sum up the fina oial results of the year 18S1 S2 it may not ba out of place for me to state a few facts in connection with the Government Savings Bank and the Life Insurance Department by way of illustrating the steady progress of the colony, the rapid advance of these institutions, and the growth of habits of prudence amongst the people during the last ten years. In 1871, with a population of 266,986, the amount standing at the credit of the open accounts in the Government Savings

Bmk was £357.651. These accounts were 10,549 in number, and the average amount at the credit of each was £33 18s Id. In the •Wings Banks established under the Savings Bank Act, 1858, the total amount at the credit of depositors on the 31st December. 1871, was £97,312, distributed over 3726 accounts, the average amount at their credit being £26 2s 4d. There was thus a totsl sum of £454,967 in the Saving* Banks in 1871 at the credit of 14 275 persons, the average amount for each being £3l 17* sd. On the 31st December, 1881, the populatiou of the colony was 500,910; there were 51 008 open accounts in the O-overnment Savings Banks, aggregating the amount of £1 232,788, or an average ot £2l 3s 41 at the credit of each. In other Savings Banks there weio on the same date, 10,046 open accounts, the total amount at credit being £316,727, or an average of £3l 17s Id for each account. The total amount of deposit* in the Savings Banks in the colony at the end of the year 18SI was, theiefore, £1,549,515, belonging to 61,054 depositors, with an average of £25 7s 7d at the credit of each, as against £454,966 in 1871, and 14 275 depositors, with an average of £3l 17s sd, the population daring the ten years intervening having increased from 266,986 to 500,910. These figures are well worth the careful considsra--1 ticn of hon. members. They show the remarkable extent to which the advantage of the Savings Banks is being taken by the people for whose benefit they were established. The ponula'ion having barely doubled itself since 1871, while the number of depositors has inoreaeed nearly fivefold. Intimately connected with the subject of the prudential savings of the community are the questions ot Life Assurance and the growth of the Government Insurance Dspartmcnt, established in 1870, at a time when public confidence in many of the English assurance companies was severely shaken, and with the avowed object of giving to the assured the absolute security of the colony. The department has since exhibited a progressive advancement, which warrants the statement that the experiment sanctioned by the Legislature twelve years ago has now been proved a complete success. This scheme may be justly described as the only successful institution of the kind set on foot by any Government, and the example thus offered has attracted the attention of the various other colonial Governments, and also of the Indian Government. The premiums were from the first fixed at what were deemed their lowest rates, commensurate with a prudent regard to safety, and without any idea of profit or bonuses. But notwithstanding these low charges, careful management, together with the favorable influences of a healthy climate “ and comfortable social conditions, have produced results more satisfactory than was anticipated. The business of the department in the first ten ssarg of its existence produced a profit of £77,000, as shown by the valuation report of the London actuaries, which was laid before Parliament last session. The business done has increased from 460 polices issued up to June. 1871, insuring £206,000, to a total of 16,900 policies, issued, during the eleven years ending June, 1831, insuring upwards of £5,800.000, being equal to an annual average of 1600 policies, insuring fully half a million each year daring the period. The business of the year now approaching its close will, I am informed, considerably exceed that average, and probably reach £600,000. The growth of the assurance fund is not leas satisfactory than has been the progress of the annual business, From a sum of £SOOO in hand in June, 1871, the accumulated fund by June, 1881, has expanded to over £557,000, and now it has reiched nearly £650,000,

Agreeably to the wishes of Parliament, as expressed last session, an industrial branch, enabling persons to insure their lives for sums ranging irom £3 and upwards by moans o£ weekly payments, was opened in the early part of March last. During the thirteen weeks which have since elapsed, 2100 industrial policies have been issued, The average amount insured for all ages is about £25 per policy ; for adult lives about £55. As in the ordinary branch of the department, so also in the industrial .branch, any surplus profits which may arise will be divided amongst the assured, a provision which is quite a novel feature in what is termed industrial assurance. To facilitate the payment of small quarterly premiums there will be provided cards on which postage stamps can be affixed until the* amount of the quarterly premium is reached, and the cards can then be deposited in '.Le Post office, where credit will be given for the premium they represent. Arrangements are also being completed by which Post Office Savings Dank depositors may mate payment of premiums out of their deposits by means of an instruction to postmasters for that purpose, thus saving trouble and securing the maintenance of the policy. These facts and statistics show the remarkable growth and still increasing progress of the department, which is evidently supplying a great public want, and is now so far advanced that the Government, as I have on former occasions mentioned to the House, have decided to ask Parliamentto place it under the conduct of a Board. A Bill to carry this object has been prepared and placed before members. Before leaving the subject of life insurance, I may offer a few additional figures showing further the remarkable stimulus given to that form of family provision since the establishment of the Government scheme in 1870. The number of life policies in force in New Zealand in that year has been estimated at 2000, insuring about £1,000,000, Last year there were in force in round numbers 24,000 policies, insuring £8,300,000, of which more than one half is insured in the Government depart m:nt. This gives an increase for the period of 22,000 policies, and £7,300 000 in the amount assured, or eleven, times the number of persons, and more than seven times the sum insured in the colony eleven years ago.

Financial Eesultb of thbTbab 18S1-82. Tho Committee will remember that Parliament finally determined in the session of 1881 that in future the revenue of the year should be the actual receipts paid into the Treasury during the year, and that the year’a expend! uro should be the actual money paid away during the year, thus obviating tho necessity for keeping open the year’s accounts, in order that the assets might be realised, and liabilities paid before a final balance could be Struct.' The cow method was accordingly introduced in the accounts of the year 1831 82, and I venture to hope that the greater simplification of tho account which has been effected by tho change will commend itself to Parliament. H,on. members will find, on referring to the Financial Statement which I had the honor to make last year, that, excluding the laud sales from the Consolidated Fund, there was a deficit on the Slat March, 1881, of £5667, but that, including the land saku, there whs a surplus balance of £26,706 to the credit of tho colony upon the actual transactions completed within the year, if j. ;;ave stated already, the ordinary revenue of the Consolidated Fund for tho past year amounted to £3,438,170, and the expenditure to £3 278,820. The ordinary revenue, therefore, exceeded the expenditure by £209,350, and deducing from this sum the deficit of the previous year of £5667, we have a credit balance of £203,693 at the close of the financial year ISSI-82 on this division of account. But though, for reasons which have been frequently stated, it was determined that a separate account should be kept of the land sales, it must be borne in mind that tho revenue from that source still remains within tho consolidated fund, and is liable to meet tho charges of the public debt should it ever bo necessary to use it at any time for that purpose. But the colony now no longer relies u r on the land sales in any way as a means of cb-aining revenue to meet the ordinary services of tho Government, and has thus removed one condition which made sound finance impossible. When, however, sro come to consider the whole transactions of the year, it is clear that the proceeds of the land tales and their expenditure must appear in the account. We find then that the total moneys received and paid into the public account during the year, including land sales, woo £3,805,233 ; and the total expenditure, including charges on the Land dales Act, £3 616,895. The receipts were thus £188,333 iu ncess of the expenditure, and, adding to this sum the surplus at the close of :he year 1880-81, £20,706, we find ■ hat we have a credit balance on the 31st March. 1882, of £215,044. This result is one upon which I hope I may be allowed to congratulate the Committee. It fully bean out f o opinion expressed by the Government in 1879 tout the grave depression and deficit then existing were temporary and remediable, and shows us that the course then determined upon by Parliament of a rigid economy and sufficient taxation has restored the finances of the colony in a r< markably short time to a thoroughly sound condition. We may well, Mr Hamlin, be proud cf belonging to a people

-and a country which can in such oireum•stances produce such results aa these in a period of two years. Local Finance. The question of local finance has been again carefully considered during tho recess, and the Government have thought it advisable to issue a circular to local bodies asking for their opinion upon the subject, and a'ao upon sumo important questions relating to the constitution of tho County Councils aud Road Boards I »hali shortly ask leave to introduce Biiln to give effect to ouch alterations ns the Gr-e-:;-ment think necessary in the constitution of these highly useful local bodies, and also to make sufficient provision for their financial requirements. I do not propose to trouble tho Committee with any particulars of the proposed Bills, as it will bo more convenient to do so when tho Bills themselves are under consideration. I might, however, say that tho principles which tho Government have taken for their guidance in preparing these measures are :—(1) That tho local bodies should be left as free as possible from central control ; (2) that they should have conferred upon them all powers which can be advantageously exercised by suoh bodies; (3) that their finances should be as distinct as possible from the colonial finances, and that their revenues saould be sufficient. The necessity of dealing with this subject during the preient session is admitted upon all side*. Tho question is not one which should be treated as a party question, and I venture to hope that the Government will receive the hearty support of both tides ot the House in providiog the country districts with means ot performing the important duties which have been imposed upon them of making and maintaining a large proportion of the roads of the colony. JSstimathd Expenditure pboii Ordinary Revenue, 1832 S 3. I now come. Sir, to the consideration of the estimated expenditure of the ordinary revenue for the current your. This may be conveniently divided, following tho usual custom, into two parts—the permanent charges and the annual appropriations. The permanent charges, amounting to £1,627,512, include pensions, payments under the civil list, and other aots, and tho lorga item of interest and sinking fund, which this year will amount to £1,554,848, Included in this, however, is the sum of £24 000 due for arrears of sinking fund upon the Imperial guarantee loan of £1,000,000 of 1870, to which I have already referred. Tho total present annual charge upon our debt is therefore £1,530,843, and not £1,534,848, as might be supposed from a casual inspection of the accounts without this explanation. It must also be horns in mind that of this £1,554,843 no less a sum than £270 000, or nearly one sixth, is for sinking fund. In other words, we shall pay this ye r £1,284,848 for interest, and £270,000 for redemption of debt. This point is often overlooked ■when wo speak of the annual charge of our debt. But, a* honorable members will sse, it is of some importance when wa wish to ascertain exactly our financial position. The estimated-annual appropriation for this year amounts to £1,831,127. This shows an apparent increase upon last year’s votes of £93,468. Isay apparent, because the services for which a large portion of this extra £93,468 is required were paid for last year out of loan. Honorable members will find, on referring to the public accounts, that the votes for militia and volunteers and police and constabulary for last year charged against the consolidated funds were only £142.015, whereas they are this year £214,009, a difference of £71,994, which previously was paid out of loan. This £71,991, then, is not an increase ot proposed expenditure, but really the transfer of a charge from loan to consolidated revenue of what, I regret to say, is for the presentneces■ary expenditure, although, happily, the cause for much of it is, aa we believe, fast passing away. This transfer, lam sure, the Committee will approve, for although such expenditure being temporary and extraordinary, may be considered a fair charge against loan, still it is very desirable to pay for suoh services out of revenue whenever the revenue will bear thorn, as is now the case. Of tho balance of £21,474, £IO,OOO is for abatement of tho rabbit nuisance, which lost year was provided for in the land fund estimates. The remainder may be said to be comprised chiefly of increased charges for working some newly opened sections of railways, for exchange on remittances to London to pay interest, and for some necessary increase in the smaller salaries of civil servants. I have been thus particular, Mr Hamlin, in calling the attention of tho Committee to this apparent increase, because the Government are anxious that a watchful eye should be kept upon any proposals for increased expenditure, which should not bo permitted unless shown to be absolutely requited in tho interests of good Government, for it is certain that unless we exercise great oare in this matter, the return of prosperity will again lead us to extravagant expenditure, 1 must hero, sir, point out the fact, which I hope honorable membersjwill bear in mind, that in this estimate of expenditure 1 have only provided £40,000 for hospitals and charitable aid, the amount voted lest year. Upon this important question I shall speak more fully presently. Estimated Revenue roe Year 1882 83.

1 will now ask the Committee, Mr Hamlin, to turn its attention to tho consideration of the revenue for the year 1882 83. I anticipate, if taxation it to remain unaltered, with the property tax at one halfpenny in the £, that we shall receive a total ordinary revenue of £3,393,500, exclusive of land sales. I have thought it prudent to estimate only moderate increases in the several items of revenue, fall particulars of which, compared with the actual receipts of last year, will bo found in table Ho. 7 A, attached to this statement. It is possible that the revenue may exceed my estimate, but considering the circumstances of the colony, I think we had better not speculate upon increases which, although possible, may never arise. I estimate tiie revenue then at £3,393,500. To this must ha added the balance of £203,683, which stood to our credit on 31« t March, and wh then get the sum of £3,697,183 as the total amount available for the services of the year, How, if from this we take £3,478 639, the estimated expenditure to which 1 have already referred, there will remain a balance of £118,544 at the end of the current financial year. So far, sir, all has been plain sailing. We have had to deal only with foots and with estimated results, which approach to something like a certainty. But we are brought face to face with a problem by no moans easy of solution :—How can this surplus be dealt with to the greatest advantage to the community ? What relief, if any, can be given to the taxpayers of tho colony ? But before these questions can be answered satisfactorily it will bo necessary for no to revert ts the question of hospitals and charitable aid, as I promised to do. The total public and known private expenditure upon hospitals and in charity last year was in round numbers £BB,COO, and for practical purposes wo may assume that an equal amount will bo required this year. This sum was made up by a contribution from tho consolidated fund of £29,000; stoppages from subsidies from local bodies, £37,000; oontribntio's from local Boards and from tho public, £22,000. The present system, or want of system, I ought rather to say, of providing tho necessary funds is irritating and unfair to most, if not all, parties concerned in the charitable administration of the colony. And it is, I think, olear that tho time has como when this important subject will have to be dealt with upon some comprehensive principles. It may be taken for granted that tho indigent and the sick poor must bo fed and clothed and properly looked after by the community. Should private charity fail to make prope.provision—and that private charity will fail to make a sufficient provision, I fear, is only too evident—the State then, as the State, will have to undertake this business in some form. This being so, it would seem that there are practically only three courses open for us to follow. The indigent and the sick poor will have to be maintained by a poor rate supplemented by private benevolence, or by large grants from the consolidated funds supplemented by private benevolence, or by a system of national assurance. It may be impossible to deal with this large question during tho present session ; but as there is a great, and I believe a very general, repugnance to a poor rate, in which I strongly sympathise, and os grants from tho consolidated revenue are, to say the least, very undesirable, I propose to submit a scheme of national assurance for the consideration of the House, which I believe to be thoroughly practicable, within the means of our people, and which would make necessary provision for tho sick, the widow and orphan, and the aged. It is possible that my enthusiasm has carried me too far upon this subject; has made mo

too hopeful. But I have given the question much thought, and I am convinced that the scheme which I shall, at an early day, submit to the House is within the bounds of practical politics for us in this colony. Should,however, the proposal only lead to a dispsaiioovto discussion of this important matter we shall have advanced one step towards a solution of what, I venture to think, is one of the t;r at problems of the age—a problem which, though happily not *o urgently pressing upon us us upon older communities where the mstribulion of wealth is at present much m >ro unequal, is still one it behoves us, as the founders of a nation, to grapple with, and to the best of our ability solve without delay. I have said that it is very probable that we oannot deal with this question during this suasion. But whether wo do so or not, sufficient provision will have to be made for the expenditure of the year. The Government propose, pending further consideration of this subject, to take the whole coat of hospitals upon tbo consolidated fund, and for this purpose I shall have to ask for a vote of £50,000 for their maintenance. Should this be granted we shall ask the continued assistance of the local Boards or the local committees, as the case may be, in their management, for without careful local supervision abuses of a serious nature are sure to creep in. With regard to charitable aid, now costing about £40,000 a year, I shall ask for a vote of £20,000, and propose that this relief should be given as far as practicable through local institutions, the Government granting pound for pound. It this proposal should moot with the approval of the Committee, I shall have to in. crctv-e the £40,000 for hospitals and charitable aid, which I mentioned as included in ray estimated expenditure, to £70,000, thus disposing of £30,000 of the surplus The balance then of £118,544, which I said would probably be to our credit on the 31st March, 1883, will be reduced by this means to £83,544. I will now turn, Mr Hamlin, tothe concideration of the question what relief if any can be given to the taxpayers of the colony. We have now only a surplus of £88,544 as a margin—after making the temporary provision 1 have just proposed for the services of the year, which are not of a permanent character, amounting to about £IOO,OOO. With such a surplus we might, if we did not intend, as we do, to go upon the London money market early next year for a further loan to continue our public works scheme, safely reduce taxation by at least £50,000. But taking all the circumstances of tho caso into consideration,! do not think it would be prudent to reduce taxation at present. If it be determined to borrow more money to enable ui to complete our main lines of railway, it vrill obviously be neoessary to continue taxation at suoh a rate as will insure an amplo margin of revenue to pay interest on the money borrowed. Taxation must, as a matter of course, remain at a high rate, until the works now being constructed out of loan are completed and have had time to become productive. Sir, we feel assured that what tho House desires, and what tho country demands, is steady progress with our public works, that we should pay our way from year to year, and not again fall into debt for current expenditure. And although wo are apparently raising less revenue this year than will cover our expenditure, it must bo borne in mind that the temporary and extraordinary services which are this year being charged against revenue, amount to more than the difference between tho expenditure and the revenue, and that the use of a surplus for such a puiposeis quite legitimate finance, when there is no reasonable doubt that next yrar the revenue will bo ample to provide for tho services of the year. ESTIMATED EXPENDITURE AND REVENUE prom Land Sales, 1882-1833. The estimated expenditure chargeable against the land sales fund is as follows : For chargee fixed by Acts of the General Assembly, £41,500; for the Crown Laud, Survey, and Mines departments, £163,810. Tho receipts from land sales are estimated to roach £354,000f0r the current year. Adding to this sum the balance at the beginning u£ the year £11,360. and deducting the estimated expenditure £195,310, wo have a balance remaining of £170,050. The question of the disposal of this balance must be postponed for the present, until the Legislature has determined what form of aid shall be given to local government bodies. The proposals of the Government in reference thereto will be eubmitted, when I introduce the Bills which have been prepared for dea ing with this subject, Local Inscribed Stock.

It will be in tho recollection of some members that last year 1 intimated to the House tho intention of the Government to submit for consideration a Bill authorising the issue at par of a loan of £250,000, the principal and interest of which would be payable in New Zealand only. O'roumstancea prevented the Qovesuimnt from giving effect to that intention during the last session of Parliament, but steps are now being taken to prepare a Bill, which will be submitted for the consideration of the House in the current session. I Jhave drawn the attention of the Committee in a previous part of this statement to the very large accumulations of money in the savings banks in the colony and the Government think, as I remarked in the statement I had the honor to make last year, that many of tho depositors of this money, as well as the public generally, might be glad of a more permanent form of investment, if one can be provided, which is at the same time secure and easily convertible into cash. I propose, as before, that the loan shall bear interest at a rate not exceeding 5 per cent., and that the proceeds shall be paid into the public works fund, to be appropriated by Parliament. I also propose that the loan shall be issued in the form of inscribed stock, with tho right to the subscriber to obtain at any time when desired bonds payable to bearer of £lO and upwards. The Government believe that eeourities such as those I have described will find favor with the publio so soon as their nature is generally understood. Tho loan will be disposed of equally as it comes into favor, the object of the Government not being to obtain funds for expenditure, but to a class of security for the investment of savings which seems generally to be desired, and is likely to have a very beneficial operation. INCIDENCE OF TAXATION. I should now like, Mr Hamlin, with the permission of the Committee, to say a few words about a question which I think is well worthy of our attention at the present, namely, the incidence of our taxation. Does our present taxation press unfairly upon a particular class, and especially upon that class which is tho least able to bear it ? Because, if so, although wo might not be able to reduce the total amount, we might be called upon to shift tho burden from tho weak to other and stronger shoulders. I have, Mr Hamlin, been looking into this question of the incidence of taxation, in order to ascertain the amount borne by the different classes, so that relief might bo given, if necessary, to those upon whom tho taxes appeared to press the most heavily. I shall state broadly, for tho information of the Committee, the results of my inquiries, referring honorable members for particulars to table No. 9 published with this [statement. The results of my enquiries seem to mo to show that the taxation is upon the vrhole fairly distributed over tho community, although what is fair in such a case is > proper subject for discussion, and a question upon which there may be a great diversity of opinion. For the purpose of comparison I have divided the population into three classes, which, for the object I have in view, may be considered natural divisions. First, tho wage-earning class, which I shall, hereafter, for convenience, call tho industrial class, consisting of 312,436 soul?, exclusive of 11,903 domestic female servants. Second, the intermediate class, numbering 96,260 souls. This class is composed of all those who are known by the census as not belonging to tho industrial class, and who don’t pay property tax. And, third, tho class which pays property tax, consisting of 68,445 souls. The total taxation upon which my calculations are baaed for what we term taxation proper, as distinguished from what is paid for services rendered, is £1,717,748. This was made upas follows :—Customs, £1,276,199 ; stamps (not including postage stamps), £126,143; property tax, £257,600. From the customs duties, deduct the duties paid cn wines, spirits, foreign beer and tobacco, sugar used in browing (£3493), and tho amount (£5512) estimated to be paid by the Maoris on general customs, and also the duty paid on cotton piece goods which are now free. These amount in all to £683,704. I make these deductions because with the present information at my disposal it is impossible to apportion oaoh class the expenditure under the head of wines, spirits, and tobacco with any accuracy, and because tho other articles enumerated do not come within the scope of the enquiry.

But 1 have no doubt that if wo could make now a true distribution of tho amount paid under the head of wines, spirits, and tobacco, we should find that the intermediate and property classes pay a large share, and that the relative proportion between tho throe classes which I am about to give would be but little, if at all, changed. I assume, of course, a moderate use of these articles. If used in excess it is impossible to say which class may pay most, but I think it will be generally admitted, or at any rate ought to be admitted, that those who use spirits or tobacco or any other article in excess, to whatever class they belong, aro fair subjects for heavy taxation. Now, I have received from sixteen of the chief towns in the colony trustworthy information as to the actual expenditure of a largo number of mechanics and laborers. I have oompsred the expenditure so obtained with the expenditure of the same classes in England, and find only such differences as the change of circumstances would Isai one to expect. I think, therefore, wo may take these returns as approximately accurate for practical purposes. I believe that further information which I am collecting will generally bear out the results now given, and that any error which may be found in my estimates will be in the direction of a slight overastimate of tho amount paid by the industrial class. The returns to which I have alluded show that the average amount paid to the State by families of the industrial class averages 16s 6d per member, or a total of £214,623 for the various families, This estimate is made from the actual expenditure of fifty-six typical families, resident in all parts of the colony. But to this amount wo must add the duty, £51,246, paid by 49,355 single men, equal to £1 0s 9d per head, and the duty £3983, paid by single women over eighteen, having occupations, equal to 19s per heiid. Tho aggregate of these amounts is £269,751, thus giving an average over the whole class of 17s 31 per head. But to this amount we must add £10,311, being the duty paid by the 11,903 domestic female servants for drapery at 17s 33, equal to 9d per head, thus giving a sum of £280,062 as tho total taxation paid by the industrial class, exclusive, of course, of tho duties on spirits, wines, &0., tobacco, colonial beer. I have included all tho domestic male servants and tho married couples at service as paying in the industrial class, although probably the chief part of their consumption ought to be credited to the intermediate and property classes. This, I need hardly remark, makes no difference as to tho average rate per head, but only in tho total paid by the class. 1 have, following the beat authorities on this subject, included the duty payable upon articles consumed by domestic female servants, except wearing apparel, in the amount paid by the intermediate and property classes. I have said that the whole amount paid by the industrial class is £280,062, and that this amount is ascertained by means of the actual expenditure made by fifty-six families in various parts of the colony, and that these returns have been carefully checked by comparison with tho expenditure of the same class in England, proper allowance being made for the difference in the circumstances of the two populations, and also by the due consideration of what it is possible for this class to spend on dutiable goods after providing from their earnings for the other necessaries of life and for house rent. If we now deduct £280,062, the amount paid by tho industrial class from the total duties which we are now considering, we get £312,343, as the custom* duties paid by the intermediate and property classes. This amount, after careful consideration, I have divided at an equal rate per head between the two classes last named. This will give per head for each of the classes £1 17s lid. The total revenue collected for stamps, exclusive of postage stamps, is £126,148. This I have also divided at an equal rate per head between the intermediate and property daises. It gives for each member of the intermediate and property classes 15a 43 per head. I think there can be no doubt that the stamp duties are paid by these classes. It is possible that a small amount may bo paid by the industrial class, but so small that it oould not appreciably affect tho results as between the various classes. Wo find then that the stamp duties paid per head by the intermediate class is 15s 43, and the customs duties £1 17s lid. This gives £2 13s 33 as tho total sum per head paid by the intermediate class, andjaTotal for thejclassof £256,272. The property class I have assumed pay an equal amount per head with the intermediate class for stamps and customs. They, however, paid, with the property tax at a penny in the £, which it was at the time to which my calculations relate, £3 15s 3d per head for that tax, making a total per head of £6 9s 6d, or a total for the class of £439,819. With the property tax, however, at one halfpenny in the £, the amount paid per head by the property class would only be £4 10s 10id, or a total for the class of £310,719. To summarise, then, wo find that the industrial class, consisting of 312,436 souls, exclusive of 11 903 domestic female servants, pays £269,751, being at the rate of 17s 3d per head, or including the drapery duties paid by those domestic servants, £280,062. The intermediate class, consisting of 96,260 souls, pays £256,272, or £2 13s 3d per head; and the property class, consisting of 68,445 souls, pays £439,819, being at the rate of £6 8i 63 per head ; that is, with tho property tax at one penny. But if we take that tax at one halfpenny they pay £310,719, or at tho rate of £4 10s IOJd per head. These amounts are, as I have already said, exclusive of the duties upon spirits, wine, tobacco, colonial beer, and do not include for obvious reasons that part of our so-called taxation which is paid for by each class in proportion to use for services rendered by tho State, suoh as post office, telegraph, court fees, &c. Honorable members will, I hope, understand that in speaking of tho expenditure at per head, I only use a form of expression so far as the intermediate and property classes are concerned, individual expenditure being widely different, according to means and habits. But with the industrial class the difference is not so wide. With taxation it is of course impossible to meet individual cases. In apportioning the taxation of the community we must take a wider view, and deal with classes considering their circumstance* and numbers. It is difficult to exaggerate the importance of thi# subject, for badly adjusted taxation means undue exaction from some class or classes, which oannot fail to bo detrimental to the community as a whole ; while, on the other hand, fairly adjusted taxation mean* that the public burden* are borne with as much ease as their extent will admit, I will express the hope that this question will receive the careful attention of hon. members and of all interested in the public welfare throughout the colony, so that when our financial position permits, we may deal with the subject on broad and intelligible principles. Proposed Loan. I have now, Mr Hamlin, only one more subject to deal with. But although last, it is by no means least in importance. I refer, of course, to the question of a new loan. Wo have first to consider whetner a new loan is advisable this year; and secondly, if the first question is answered in the affirmative, how much will it be desirable to borrow. Now, with regard to tho first question, we must, in order to arrive ot a reasonable conclusion, consider the state of the public works fund, and the amount we can prudently expend per annum. I have already said the balance in the public works fund on the 31st March last was £924,865, with outstanding liabilities at that date ef £541,400, exclusive ot liabilities on the land purchase account, for which we must add at least £IOO,OOO ; so that in addition to the £541,400 which is in course of expenditure under existing contracts and authorities, there only remained in hand at the beginning of the financial year about £283,465 for tho continuation of the works already begun, and for now works for which liabilities have not been incurred or appropriations made. We thus see that if no authority for another loan is granted this year our spending power on public works for one year and three-quarters, after paying for the outstanding contracts and engagements to which I have referred, will only amount to £283,465, because if a Loan Bill were passed next session the money oould not be raised before about December, 1883 ; and the Government are quite determined not to enter into engagements in anticipation of raising money at a particular date. The question then narrows itself to this : Is it prudent at this preient time, and under the present circumstances ot the colony, to borrow again, or ought we to be satisfied with a total expenditure of £924,865 in the twenty-one months commencing with the current financial year ? Sir, the Government are fully aware of tho responsibility they incur in placing before the Committee their answer to this question. They ro cognise clearly tho principle that before the

public debt il increased the gain to the colony ehall be seen to be more then commensurate with the increased liability, and they believe that a case within this rule has now arisen. Thoy;think that our ordinary finance being restored to a satisfactory condition, and our main trunk line of railway beieg still incomplete, it is n>w prudent to raise a fresh lo in for the purpose of completing these railways, or carrying them a stage nearer to completion, and for ositain other definite and important public works. In this opinion the Government are strengthened by the fact that railways already made aro now paying practically 4 per cent, annually on the amount expended in tkeir construction, and that they are steadily improving in this respect. The Government, therefore, sir, recommend that a loan should be raised, but only if the money can be borrowed at a reasonable rate of interest, and the authority of Parliament will be asked to empower the Government, if necessary by postponing works, so to arrange the expenditure as to enable them to wait for a favorable market. We have now to consider what amount should be raised, and this must be decided by the considerations. (1.) The amount which can be profitably expended on necessary or directly reproductive public works, (8.) The amount upon which we can afford to pay interest without placing undue burdens upon the people of the colony. Now, I am afraid that there are so many necessary or directly reproductive public works only waiting to bo done for the want of cash to do them that we shall find no practical limit in that direction. And in this fact lies no doubt the cause of our far too lavish expenditure in the past. From the past we should take warning and proceed at a very much more moderate pace than we have been doing upon the average for the last ton years. Wo must confine ourselves for the future in the expenditure of borrowed money to works of necessity, or to works which arc direoily reproductive, and strictly limit the amount spent yearly upon such works by our capacity to pay the interest with tolerable ease. It is, in the opinion of the Government, of great importance that the colony should steadily pursue a progressive policy, and that our main trunk lines should be pushed on as vigorously as is compatible with the means at our disposal. The Government, than, taking into consideration all the oi'cumstanocs of the colony, and acting upon the principles which I have just laid down, have determined, sir, to propose to Parliament a loan of £3,000,000, to be raised and expended at a rate not exceeding £1,000,000 par annum. My hon. colleague, the Minister for Public Works, when he makes the Public Works Statement, _ will inform the Committee in detail of the items of the proposed expenditure, and of the mode by which we hope to confine the expenditure to specific works determined upon by Parliament before the money is borrowed. The Government attach great importance to this provision of the proposal. It is, I think, clear, looking at the experience of the past, that if our future borrowing is to be governed by the prudence which is essential, wo must carefully consider what works we arc justified in constructing, at what rate of speed they should be constructed, and at what cost to the State. When we have determined these conditions, we are then in a position to decide upon the amount to be borrowed. Upon these rules of conduct in this matter, which I am sure will meet with the hearty approval of the Committee, the Government have acted in arriving at the amount which they propose shall be borrowed. And now, Mr Hamlin, I hove done. The Committee, I am sure, will not bo disappointed at the shortness of my statement whan it remembers that this ie the natural and appropriate result of the simplicity in keeping the colonial accounts which we have been enabled to adopt. I will only add one word. In 1879, I stated to the Committee fully and fairly the position of the colony, neither concealing nor exaggerating the grave difficulties which had then to be mot, I pointed out the obvious remedies. That statement has often been characterised, especially by those who had taken least trouble to master it, as too darkly shaded, as giving too gloomy a view of things. Though it has been attempted to disprove the facts and the figures which I then adduced. Sir, I venture to say that, except so far as the gloom was in the facts themselves, it sever had any existence, It certainly was not of my importing. _ It was prudence not folly to look our difficulties fully in the face. It would have been folly, and not prudence, to doubt that we could overcome them. The Government and this House had full confidence, not only in the abounding vitality and vast resources of the colony, but (which was no less important) in the willingness of the colonists to make the necessary sacrifices ; and that'oonfidenoc has been amply justified by the facts I have just had the honor to lay before the Committee. And, as prudence and economy, and a cautious and well-considered advance in public works as funds became available, was our rule then, and has since been, so it should be now and in the future. I have full confidence, Sir, that, following that rule faithfully, we shall not only maintain but, as the resources of the country become developed, 'we shall steadily increase the present satisfactory condition of our finance.