FINANCIAL STATEMENT.

Kumara Times, Issue 1785, 21 June 1882, Page 1 (Supplement)

FINANCIAL STATEMENT.

The Hon, the Colonial Treasurer delivered the Budget last Friday 16th.— Mr Hamlin, —I am presenting 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 the object which I feel sure will meet with the approval of the Committee. I hope 1 1 place the Estimates iu the hands of hon members not later than to-morrow, and I venture to express the hope that the House will conseht to the appointment of an early lay forgoing 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 oftsu unable from mere physical exhaustion to give the subject that attention which its importance demands. The Committee will be glad to learn that the 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 on some former occasions. My statement will be abort, but I must still ask for the indulgence of the Committee while submitiing for its information for the somewhat dry detail of financial results of the last annual period and the proposals of the Government for the present year. EXPENDITURE OP THE ORDINARY REVENUE OP THE YEAR 1881 82, The expenditure for the year under permanent acts of the General Assembly, was estimated at L 1,510,919, including L 1,499,318 for interest and sinking fund, while the amount voted for departmental services was L 1,757,660. The total estimated expenditure sanctioned by Parliament was therefore L 3,328,579, The actual expenditure was L 3,288,820, being L 49,759 less than the estimate. There are no items of this expenditure which appear to call for special remark. Hon members on referring to the appro* priation account presented to the House pursuant to the Public Revenues Act will be able to see the services in respect of which the expenditure has been less or more than the amounts voted. The outstanding liabilities on the 31st March, 1882, amounted t0L164,394. At the close of the preceding financial year the amount was L 165,514, I may inform the Committee that included iu the liabilities on the 31st March last, is a sum of L 24,000 for sinking fund to the 13th March, 1882. In respect of the LBOO.OOO unsold debentures of that portion of the loan of 1870, amounting to L 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 the 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 ra ; ssd, or at the expiration of ten years, from the passing of the Act, whichever date happens first. When the first remittance of the sinking fund was made, namely—for the half year to the 13th Maroh, 1881, it was considered that provision was required only for the sinking fund payable in respect of the debentures for L 200,000 which had been '&oId, and not also for the debentures for lißoo,ooo which, though created, had not been placed In circulation. The question was, however, reconsidered 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 L 1,000,000. Remittances have now been made accordingly to the trustees of the fund. ordinary revenue of the year 1881-82. The estimated revenue of the year, exclusive of the revenue derived from sales of laud, was L 3,297,650. The actual amount paid into the public account was L 3,488,170, being L 190,520 in excess of the estimate. Hon members will find on reference to the comparative return which will be appended to this statement that we are indebted to the Customs’ revenue for the larger portion of this excess, L 125,107 having bsen received from that source. The revenue from stamp duties was L 11,115 in excess of the estimates. Miscellaneous receipts were also iu excess L 34,243, while from depasturing licenses, rents, &i, we obtained L 58,852 more than we anticipated. On the other hand the amount derived from the property tax fell short of the estimate by L 19,025. Of this sum L 9,270 has yet to come in. L 2,200 represents the amount estimated to be received from building societies, which were afterwards rendered exempt, and L 7,556 is an over estimate. The revenue from railways proved to be L 25,266 less than the estimate, but hon members will be glad to learn that the nett receipts from railways, which were estimated at L 364,744 amounted to L 368,927, or L 4183 more. ESTIMATED LAND SALES FOR THE YEAR 1881-82. Following the course approved by Parliament in the session of 3880-83, a separate account of the land sales has been kept. The expenditure charged against the fund during the year amounted to L 338,076, including L 136,861 for subsidies paid to local bodies. The amount voted for depart* mental services chargeable on the land fund was L 354,510; the amount actually expended was L 137,297, being L 17,213 less than the votes. The liabilities outstanding on the Slat March, 1882, were L 25,188, as againat L 37,561 on the 31sfc March, 1881. The receipts for the year from land sales were estimated at L 333,000. The amount actually received and paid into the public account was L 317,063, of which L 282.136 was for lauds sold for cash, and L 34,927 cash instalments for sales on deferred payments. Adding to the receipts of the year the balance at credit of the land account on the 31st March, 1881, amounting to L 32,373, and deducting the expenditure, we have a balance on this account of L 11.360 at credit on the 31st March, 1882. PUBLIC works fund. The appropriations on this, account for the year ended the Slat March last, amounted to L 1,892,554 ; the actual expenditure, however, was only L 977,886, including L 454,224 for railways. Particulars of this expenditure will be found in the tables annexed to this statement, but fuller information than is there given will be laid before the House when my hon colleague, the Minister for Public Works, makes his annual statement.

The liabilities outstanding at the close the year amounted to L 880,276, particulars of which will also be found in the tables appended during the year. Special receipts and recoveries amounting to L 42,378 came to credit of the fund ; and on the 31sc March, 1882, the biUnce remaining unexpended, subject, however, to the liabilities I have just mentioned, was L 924.865, consisting of cash in the Bank of New Zealand L 647,646; advances in the hands of officers of the Government, L 60,319 ; debentures of the loan of 1870, guaranteed by the Imperial Government, L 135,300 ; amount invested is debentures of the New Zealand Government, L 44,000; and temporary advances made on certain other securities, L 37,500. The balance at credit of the fund on the 31st March, 1881, was L 1,860,373, and on the 31st March, 1882, it was L 924,865. The extent to which it was diminished during the year was therefore L 935.508. These figures show that the fund has been carefully busbanded, so as to extend the expenditure over the time, we had agreed not again to go upon the London market. Hon members will observe that there was sufficient money in hand on the 31st March, 1882, to carry on public works without break or stoppage until about the end of next February, at the same rate at which they have been prosecuted during the last year. Included in the liabilities of the Public Works Fund at the end of the year is a sum of L 338,876 for the purchase of native lands, particulars of which will shortly be placed bafore the House by my colleagues, the Native Minister, who will also state the proposals of the Government with reference to our future policy in the purchase of native land. In the meantime, I may inform the Committee that amount which will be re* quired this year to complete the purchase of those blocks which the Government have decided to acquire will probably not exceed LIOO,OOO. THE PUBLIC DEBT ON THE 31SX MARCH, 1881. The gross public debt of the colony amounted to L 29,165,511, subject to a deduction of L 2,057,242 for accrued sinking funds. On the 31sc March, 1882, the debt was L 29,946,711, and the sinking fund had increased to L 2.266 418, the nett debt being thus L 27,680,293, or L 572,024 more than it was the previous year. This increase of debt is thus explained. Of the Treasury bills, which, on the 31st March, 1881, * formed a portion of the Public Works Fund. Sales to the amount of L 431,300 have taken place. These bills had baen taken up in 1880 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 Fund, as the money was required for works authorised by Parliament. The debt has also been increased during the year by further advances amounting to L 364,700 obtained in London upon the security of the debentures of the loan of 1870 guaranteed by the Imperial Government. With reference to the LBOO.OOO Imperial guaranteed debanlures, I may, perhaps, remind the Committee that, although in speaking of the amount of the Public Works’ Fund, they are always treated as cash. As a matter of fact they haye never 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 the state of the Public Works Fund. I may mention on the other hand, that the debt has practically been reduced during the year by the addition of L 209,176 to the accumulated sinking fund, to which has to be added L 14,800 for debentures of the North Otago District Public Works Loan of 1872, redeemed. The nett increase in the total amount of the debt being thus, as I have said, L 572.024.

SAYINGS BANKS AND THE GOVERNMENT INSURANCE DEPARTMENT.

Before I proceed, Mr Hamlin, to sum up the financial results of the year 1881-82, it may not be 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 iiabits of prudence amongst the people during the last ten years. In 1.871, with a population of 266,986, the amount standing at the credit of open accounts in. the Government Savings’ Bank was L 359,654. These accounts were 10,549 in number and the average amount at the credit of each was L 33 IBs Id. In the Savings Bank established under The Savings Bank Act, 1858, the total amount at credit of the depositors on the Slst December, 1871 was L97,3L2, distributed over 3726 accounts, the average amount at credit being L 262, 6d. There was thus a total sum of L 454,967 in the Savings Bank in 1871, at the credit of 34,275 persons, the average amount for each being L3l 17s sd. On the Slst December, 1881, the population of the colony was 500,910, There were 51,008 open accounts in the Government Savings Banks, aggregating in amount L 1,232,788, or an average of L 24 3s 4d at the credit of each. In the other savings banks there were on the same date 10,046 open accounts, the total amount at credit being L 316,727, or an average of L3l 17a 13. For each account the total amount of deposits in the savings banks in the colony at the end of the year 1881 was therefore L 1,549,515 belonging to the 1054 depositors, with an average of L 25 7s 7d at the credit of each ; so against L 454,966 in 1873 , and 14,275 depositors, with an average of L3117s sd, the population during the ten years intervening having increased from 266,986 to 500,910. These figures are well worth the careful consideration of hen. members. They shew the remarkable extent to which the savings bank is being taken advantage of by the people, for whose banefit they were established, the population having barely doubled itself since 1871, while the number of depositors has increased nearly five fold. Intimately connected with the subject of the prudential savings of the community are the questions of life assurance, and the growth of the Government Insurance Department established in 1870, at a time when public confidence in many 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 experi* ment 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 various other colonial governments, and also 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 ot profits or bonuses ; bat not withstanding these low charges, careful management, together with the favorable influences of a healthy climate and comfortable social conditions, have produced results more satisfactory than were anticipated. The business of the department in the first ten)|years of its existence produced a profit of L 77,000, as shown by the report of the London actuaries, which was laid before Parliament last session. The business done has increased from 460 policies issued up to June, 1871, insuring L 206,000, to a total of 16,900 policies issued during the eleven years ending June, 1881, insuring upwards of L 5,800,000, being equal to an annual average of 500 policies, insuring fully half a million each year during the period. The business of the year now approaching its close will, I am informed, considerably exceed that average, and probably reach L 600,000. The growth of the assurance fund is not less satisfactory than has been the progress of the annual business. From a sum of L 50,000 in hand in June, 1871, the accumulated fund by June, 1881, had expanded to over L 557,000, and now it has reached nearly L 650,000.

1 Agreeably to the wishes of Parliament, as expressed ’ last session, an industrial branch, enabling persons to insure their lives for sums ranging from L 3 upwards by means of 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 L 25 per policy ; for adult lives about L 55. As iu 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 post offices, where credit will be given for the premium they represent. Arrangements are also being completed by which post office savings banks depositors may make 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 debt, which is evidently supplying a great public want, and is now so far advanced that the Government, as 1 have on former occasions mentioned to the House, have decided to ask Parliament to place it under the conduct of a board. A bill to carry this object into effect has baen prepared and placed before members.

Before leaving the subject of life assurance, I may offer a few additional figures showing further the remarkable stimulus given in that form of family provision since the establishment of the Government scheme iu 1860. The number of life policies in force la New Zealand that year had been estimated at 2000, insuring L 1,000,000. Last year were in force in round numbers 24,000 policies, insuring L 8,300,000, of which more than onehalf is insured in the Government Department. The receipts were thus LJ.88,338 in excess of the expenditure, and adding to this sum the surplus at the close of the year 1880 81, L 26,706, we find that we have a credit balance on the Slst March, 1882, of L 215,034. This result is one upon which I hope I may be allowed to congratulate the Committee. It fully bears out the opinion expressed by Government in 1879, that the grave depression and deficient 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 remarkably short time to a thoroughly sound condition.

I now come, Sir, to the consideration of the estimated expenditure for the current year. This may be divided, following the usual custom, into two parts—permanent charges annual appropriations; permanent charges amounting L 1,627,512, including pensions, payments under civil list, and the large item of interest and sinking fund upon the Imperial guaranteed loan of L 1,000,000 of 1870. Hon members will find on referring to the public accounts that the votes for militia andvolunteers, police and constabulary, for last year charged against the consolidated fund were only L 142,035, whereas there are this year L 214,009, a difference of L 71,994, which was previously paid out of loan, L 71,994. I am sure the Committee will approve, for although such expenditure being temporarily and extraordinary, may be considered a fair charge against loan. Still, it is very desirable to pay for such services ont of reserve whenever the revenue will bear them, as is now the case. Of the balance of L 21,474, LIOOO is for abatement of rabbit nuisance, which last year was provided in the land fund estimates. The remainder may be said to be comprised chiefly of increased charges for working some necessary increases in the smaller salaries of civil servants. I have been thus particular, Mr Hamlin, in calling the attention of the 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 be permitted unless shown to be absolutely required in the interests of good government ; for it is certain unless we exercise great care in this matter the reiurn of prosperity will again lead us to extravagant expenditure. I must here, Sir, point out the fact, which I hope hon members will bear in mind, that in this estimate of expenditure I have only provided the sum of L 400,000 for hospitals and charitable aid. The amount voted last year upon this important question. I shall speak more fully presently. ESTIMATED REVENUE FOR THE YEAR 1882-83. I will now ask the Committee, Mr Hamlin, to turn its attention to the consideration of the revenue tor the year 1882 83. I anticipate, if taxation is to remain unaltered, with the property tax at one halfpenny in the L, that we shall receive a total ordinary revenue of L 3,393,500 exclusive of land sale. I have

thought it prudent to estimate only moderate increases on the several items of revenue. It is that the revenue may exceed my estimate, but considering the circumstances of the colony, I think it better not to speculate upon increases which, although possible, may never arise. I estimate the revenue then at L 3,393,500. To this must be added the balance of L 203,683, which stood to our credit on the 31st March, and we then get the sum of L 3,597,183 as the total amount available for the services of the year. Now, if from this we take L 3,478,639, the estimated expenditure to which I have already referred, there will remain a balance of LI 18,644 at the end of the current financial year. So far. Sir, all has been plain sailing—we have had to deal only with facts and with estimated results, which approach to something like a certainty; but we are brought face to face with a probability by no means easy of solution. Bow can this surplus be dealt with to the greatest advantage to the community? What relief, if any, can be given to the taxpayers of the colony 1 But before these questions can ba answered satisfactorily, it will ba necessary for me to revert to the questions 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 LBB,OOO, and for practical purposes we may assume that an equal amount will ba required this year. This sum was made up by contributions from the Consolidated Fund L 29,000 ; stoppages from subsidies from local bodies, L 37,000 ; contributions from local boards and from the public, L 22.000. The present system, or want of system, I ought rather to say, of providing the necessary fund is irritating and unfair to most, if not all, parties concerned in the charitable administration of the colony ; and it is, I think, clear that the time has come when this important subject will have to be dealt with upon some comprehensive principle. It may be taken for granted that the indigent and the sick poor must be fed and clothed and properly looked after by the community. Should private charity fail to make proper provision—and that private charity will fail to make a sufficient provision I fear is only too evident—the State then will have to undertake this business in some form. This being so, it would seem there are practically only three courses open for us to follow. The indigent and sick poor will have to be maintained by a poor rate, supplemented by private benevolence, or by a system of national assurance. It may be impossible to deal with this large question during the present session, but as there is a great, and 1 believe, a very general repugnance to a poor rate, in which I strongly sympathise; and as grants from the 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 the sick, the widow, and the orphan, and the aged. It is possible that my enthusiasm has carried me too far upon this subject, has made me too hopeful, but I have given the question much thought, and 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 dispassionate discussion of this important matter, we shall have advanced one step towards a solution of what I venture to think is one of the great problems of the age, a problem which, though happily not so urgently pressing upon us as upon older communities where the distribution of wealth is at present much more unequal, is still one it behoves us, the founders of a nation, to grapple with, and to the best of our ability solve without delay. I have said it is very probable we can’t deal with this question during this session ; but whether we 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 the Consolidated Fund, and for this purpose I shall have to ask for a vote of L 50,000 for their maintenance. Should this be granted we shall ask the continued assistance of local boards or 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 L 40,000 a year, I shall ask for a vote of L 20,000 ; and propose that this relief should be given as far as practicable through local institutions, the Government granting pound for pound. If this proposal should meet with the approval of the committee, I shall have to increase the L 40,000 for hospitals and charitable aid, which 1 mentioned as included in my estimated expenditure to be L 70,000, thus disposing of L 33.000 of the surplus. The balance, then, of L 118,544, which I said would probably be to our credit on the 21st March, 1883, will be reduced by this means to L 88,544. I will now turn, Mr Hamlin, to the consideration of the question what relief, if any, can be given to the taxpayers of the colony ? We have now only a surplus of L 88,544 as a margin. After making the temporary provision, I have first proposed for the the services of the year, which are not of a permanent character ; they amount to about LIOO,OOO. Witn 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 L 50,000 ; bat taking all the circumstances of the case into consideration, 1 do not think it would be prudent to reduce taxation at present. If it be determined to borrow more money to enable us to complete our main lines of railway, it will obviously be necessary to_ continue taxation at such a rate as will insure an ample 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 the loan are completed and have time to become productive. Sir, we feel sure that what the House desires, and what the 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 we are apparently raising less revenue this year than will cover our expenditure, it must be borne in mind that the temporary and extraordinary services which are this year being charged against revenue this

year accounts to more than the difference between expenditure and revenue, and that the use of a surplus for such a purpose is quite legitimate finance when there is no reasonable doubt that next year’s revenue will be ample to provide for the service of the year. ESTIMATED EXPENDITURE AND REVENUE FROM LAND SALES 1882 1883. The estimated expenditure chargeable againat the land sales fund is as follows ; For charges fixed by acts of the General Assembly; L 41,500 ; for the Crown Lands, Survey, and Mines Department, H 53,810. The receipts from land sales are estimated to reach L 254,000 for the current year, adding to this sum the balance at the beginning of the year, L 11,360, and deducting the . estimated expenditure, L 195,310, we have a balance remaining of L 170,060. 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. Proposals of Government thereto will be submitted when I introduce bills which have been prepared for dealing with this snbject. LOCAL INSCRIBED STOCK. It will be in the recollection of hon members that last year I intimated to the House the intention of Government to submit for consideration a bill authorising the issue at par of a loan of L 250,000 the principal and interest of which would be payable in New Zealand only. Circumstances prevented Government 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. 1 have 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 Government think, as I remarked in the statement I had the honor to make last year, that many of the 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. 1 also propose that the loan sha’l be issued in the form of Inscribed Stock, with the right to the subscriber to obtain at any time when desired bonds payable to bearer of LlO and upwards. Government believe that securities such as those I have described will fiud favor with the public so soon as their nature is generally understood. The loan will be disposed of equally as it comes into favor, the object of Government not being to obtain funds for expenditure, but bo provide 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 well worthy of our attention at the present time, viz—the Incidence of our Taxation. Does our present taxation press unfairly upon any. particular class, and especially upon that class which is least able to bear it ? —because, if so, although we might not be able to reduce the total amount, we might be called upon to shift the burden from the 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 be given if necessary to those upon whom the taxes appeared to press most heavily. I will state broadly for the information of the Committee the results of my enquiries. The result of my enquirieas seem to me to show that taxation is upon the whole fairly distributed over the community,' although what is fair in such a case is a proper subject of 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 1 have in view, may be considered In natural division?—lst—The wage-earning class, which shall hereafter for convenience call the industrial class, consisting of 312,436 souls, exclusive of 11,903 domestic female servants. 2nd—The intermediate class, numbering 96,260 souls. This class is composed of all those who are known by the census as not belonging to the industrial class, and who don’t pay property tax. 3rd— That class which pays Property Tax, consisting of 68,445 souls. The total taxation upon which my calculations are, based for what we term taxation proper, as distinguished from what is paid for services rendered, is L 1,717,748. This was made up as follows :—Customs, L 1,276,3 99 ; Stamps (not including Postage Stamps) L 126,148 ; Property Tax, L 267,600. From the Customs duties deduct the duties paid on wines, spirits, foreign beer and tobacco, sugar used in brewing, L 3493, and the amount, L 5.512, estimated to be paid |by the Maories in general Customs, and also the duty paid on cotton piece goods, which are now free—these amount in all to L 674.794. I make these deductions because, with the present information at my disposal, it is impossible to apportion to each class the expenditure under thejhead of wines, spirits, and tobacco with any accuracy, and because the other articles enumerated do not come within the scope of the enquiry ; but I have no doubt that if we could make now a true distribution of the amount paid under the heads of wines, spirits, and tobacco, we should find that the intermediate and property classes pay a large share, and that the relative proportion between the three classes which 1 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, are 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 large number of mechanics and laborers. I have compared expenditure so obtained with expenditure of the same classes in England, and find only such differences as the change of circumstances would lead one to expect. I think therefore we may take these returns as approximately accurate for practical purposes. I believejthat further information which I am collecting will

generally bear out the results now given, and that any error which may be found in ray estimates will be In the direction of a slight over estimate of the 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 L 214.522 for the various families. This estimate is made from the actual expenditure of fifty-six typical families residing in all parts of the colony, but to this amount we must add the duty (£51,246) paid by 49,355 single men, equal £1 0a 9d per head ; and the duty £3,983 paid by single women over 18 haying occupations, equal to 19s l£d per head The aggregate of these amounts Is £269,751, thus giving an average over the whole class of 17a 3d per head. But to ihis amount we must add £10,311, being the duty paid by the 31,903 domestic female servants for drapery, at 17a 3d, equal to 9d per lead, thus giving a sum of £280,062 as the total taxation paid by the industrial class, exclusive of course of the duties on spirits, wines, etc, tobacco, colonial beer. I have included all the domestic male servants find the married couples at service as paying in the industrial class, although probably the chief part of the consumption ought to be credited to the intermediate and property classes. This, I need hardly remark, makes no

difference as to the average rate per head, but only in the total paid by the class. I have, following the best authorities on the subject, included the duty payable upon articles consumed by domestic female servants, except wearing apparel, in the amount paid by the intermediate and pro* petty classes. I have said the total amount paid by the industrial class is £280,062, and that this amount is ascertained by means of actual expenditure made by 56 families in various parts of the colony, and these returns have been carefully checked by comparison with the expenditure of the same class iu England, proper allowance being made for the difference in circumstances of the two populations, and also by due consideration of what is possible for this class to spend on dutiable goods after providing from their earnings for the other necessaries of life and bouse rent. If we now deduct L 280,062, the amount paid by the industrial classes from the total duties which we are now considering, we get L 312,343 as the Customs 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. Tnia will give per head for each of the classes LI 17s 13 d. The total revenue collected for stamps, exclusive of postage stamps, is L 126,148. This I have also divided at an equal rate per head between the intermediate and property classes. It gives for each member of the intermediate and property classes 15s 4i per head. I think there i can be no doubt that the stamp duties are paid by these classes. It is possible that a small amount may be paid by the industrial class, but it is so small that it could not appreciably affect results as between the various classes. We find then that that the stamp duties paid per head by the intermediate class la 15s 4d, and the Customs’ duties LI 17s Hd. This gives' L2 13s 3d as the total sum per bead paid by the intermediate class, and a total for the class of L 256,272. The property class 1 have assumed pay an equal amount per head with the intermediate class for

stamps and customs. They, however, paid with the property tax a penny in the pound, which it was at time to which my calculations relate L 3 15s 3d per head for that tax, making a total per head of L 6 9s 6d, or a total for the class of L 439,819. With the property tax, however, at one halfpenny in the pound, the amount paid per head by the property class would only be L 4 10s 10|d, or a total for the class of L 310,719. To summarise this we find that the industrial class consisting of 312,436 souls, exclusive of 11,903 domestic female servants, pays L 269,751, being at the rate of 17a 3d per head ; or, including the drapery duties paid by these domestic servants L 280,462. The intermediate class, consisting of 68,445 souls, pays L 439,819, being at the rate of L 6 8s 6i per bead, that is with the property tax at one penny ; but if we take that tax at one halfpenny, they pay L 310,719, or at the rate of L 4 10* per head. These amounts are, as I have already said, exclusive of duties on spirits wines, tobacco, and Colonial and English 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 the State, such as post offices, telegraphs, court fees, &c. Hon members will, I hope, understand that in speaking of the expenditure at per head, I only use a form of expression so far as the intermediate and property classes are concerned, industrial 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 circumsiances and numbers. It is difficult to exaggerate the importance of this subject, for badly abused taxation means undue exaction from some class or classes, which cannot fail to be detrimental to the community as a whole. On the other hand, fairly adjusted taxation means that public burdens are borne with as much ease as their extent will permit, and I would express the hope that this question will receive careful attention of hon members and of all interested in public welfare throughout the colony, so that when our financial position permits we may deal with the subject on bnroad and intelligible principles; PROPOSED LOAN. I'have now, Mr Hamlin, only one more subject to deal with, but although last, by no means least in importance. 1 refer of course to the question of a new loan. We have first to consider whether 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 the first question we must, in order to arrive at a reasonable conclusion, consider the state of the public works fund and the amount we can prudently expend per annum. 1 have already said that the balance in the public works fund on Slat March last was L 924.865, with outstanding liabilities at that date of L 541,400, exclusive of liabilities on the land purchase account, for which we must add at least LIOO,OOO ; so that, in addition to the L 541,400 which is in coarse of expenditure under existing contracts and authorities, there only

remained in hand at the beginning of the financial year about L 283.465 for construction of the worka already begun, and for new works for which liabilities have not been incurred or appropriations made. Wo 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 engage* ments to which I have referred, will only amount to L 283.465; because if a loan bill were passed next session the money could 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 narrows itself to this : Is it prudent at this present time, and under the present circumstances of the colony, to borrow again ; or ought we to besatisfied with a total expenditure of L 924,865 in the twenty<*one months, commencing with the current financial year? Sir, (he Government _ are fully aware of the responsibility they incur in placing before the Committee their answer to this question. They recognise clearly the principle, that before the public debt ia increased the gain to the colony shall be a sum to be more than commensurate with the increased liability, and they believe that a case within this rule has now arisen. They think that our ordinary finance being restored to a satisfactory condition, and our main trunk lines .of railway being still incomplete, it is now prudent to raise a fresh loan for the purpose of completing these railways or carrying them a step nearer to completion and for certain other definite and import* ant public works. In this opinion the Government are strengthened by the fact that the railways already made are now paying practically 4 per cent annually on the amount expended in their construe* lion, and that they are steadily improving in this respect. The Government there* fore, Sir, recommend that a loan should be raised, but only if the money can be borrowed at a reasonable rate of interest; and 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 two considerations—(l) The amount which can be profitably expended on necessary or directly reproductive public works ; and (2) The amount upon which we cad afford to pay interest without placing undue burdens upon the people of the colony, blow, I am afraid that there are so many necessary, or directly reproductive public works, only waiting to be done for the want of capital 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 ten years. We mast confine ourselves for the futare in the expenditure of borrowed money to works of necessity, or to works which are directly reproductive, anl 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 onr main trank lines should be pushed on as vigorously as is compatible with the means at onr disposal. The Government then, taking into consideration all the circumstances of the colony, and acting upon the principles which 1 have just laid down, have deter* mined, Sir, to propose to Parliament a loan of L 3,000,000, to be raised and expended at a rate not exceeding L 1,000,000 per annum. My hon col« league, the Minister for Public Works, when he makes the Public Works State* meat, will inform the Committee in detail of the items of the proposed expenditure, and of the means by which we hope to confine the expenditure to specified works determined upon by Parliament before the money is borrowed. Tho Government attach great importance to this provision of the proposal. It is, I think, clear, looking at the experience of the past, that in future borrowing is to be governed by that prndence which is essential. We. must carefully consider what works we are justified in cons tract* ing, 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 npon the amount to be borrowed. Vpon these rules of conduct in this matter which, 1 am sure, will meet with the hearty approval of the Committee, the Government have acted, in arrivins at the the amount which they propose hall be borrowed.

And now, Mr Hamlin, I have done. The Commitfee, I am sore, will not be disappointed at the shortness of my State* ment, when it remembers that this is 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, folly and fairly, the position of the colony, neither concealing nor exaggerating the grave difficulties which had then to be mat, and I pointed out the obvious remedies. That State* ment has often been characterised, especially by those who had taken leas trouble to master it, as too darkly shaded, as giving too gloomy a view of things, though it has never 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 la the facts themselves, it never had any existence; it certainly was not of my importing. It was prudence, not folly, to look at our difficulties fully and no prudence to donbt that we oonld over come 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 confidence 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.oaattena and well-considered advance in pnbllo works as funds became available was our rule then, and has been since, so it should be now and in the future* I have foil ' 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 out finance.