THE FINANCIAL STATEMENT.

Marlborough Daily Times, Volume II, Issue 128, 11 June 1880, Page 3

THE FINANCIAL STATEMENT.

Tnrc Hox. Major Atktxsox, Colonial Treasurer, made his Financial Statement on Tuesday evening and a copy of it was telegraphed to all the newspapers in the Colony immediately after its delivery. It is a very lengthy document and our space will not permit us to publish it in full, hut the following summary contains the substance of it : . The Treasurer commences by stating that when, in November, he had estimated the probable deficit for which it would be necessary to make provision by the Ist April last at LSOO.OOO, it was thought by many persons that he had taken too cdoomy a view of the financial position. He regretted to say that his anticipations had been more than realised. He believed the check to the country’s prosperity was only temporary, but bearing in mind the effect this check and other causes, which might have been controlled, have had on our finances, and also the amount of the public debt as compared with our population, the duty of economy and retrenchment has become more pressing. The plain facts, as stated by him last session have drawn public attention to this vital subject and created a determination in the public mind that the annual expenditure shall be brought within the annual revenue by reducing the one as far as is compatible with efficiency, and, if necessary, increasing the other so far as may be needed. The subject is beset with difficulties and nothing but a strong determination on the part of Local Bodies to rely more on their own resources and less upon external help than hitherto will render any satisfactory solution possible. He explained the actual result the financial year ended 30th June, 1879, which comprised nine months instead of

twelve. He had estimated that after payment of all liabilities outstanding at the close of the year and taking credit for assets, there w< ild be a deficit of L 131,524. The actual deficit proved to be LG:),4IS, but there remained unpaid L 70,193 including L 50,000 owing to the Bank of New Zealand as the balance of overdraft to the late Provincial Government of Otago. On the ot.ier hand, further assets amounting to LSS2I had been realised since the 31st of March last. He had, last session, estimated the expenditure for the period ended 31st March, 1880, at L 3,110,202, but this sum was increased to L 3,130,53!) by passing supplementary estimates. The actual expenditure to 31st March last was L 2,772,270. The liabilities amount to L342,D0G from which L 70,133 is deducted as belonging to the period ended 30th J une, 1870, leaving L 272.773. Adding this sum to the actual expenditure up to 31st March there is a total expenditure of L 3,045,040 as against L 3,130,530. the estimated amount there being thus an apparent saving of L 0440, but lie desired to point out that in this there are several items arising merely from over estimates, which cannot be regarded as savings, such as interest and the 20 per cent, of Land Fund payable to the Counties, and on the other hand, there are certain necessary payments for services not provided for. The expenditure in eight classes out of eleven after including outstanding liabilities was L02.G20 less than the estimated amount, or including, as it should do, L 13,100 for stores purchased for Railways and unexpended L 105,720. In the other three classes the expenditure was LDO3G over the estimates. Six months of the nine hacl practically elapsed before the Parliament rose and Government think they may congratulate themselves on accomplishing so considerable a saving in so short a time.

The revenue of the Colony for the nine months ended March, 18S0, was L 2,133, /59 to which is added L 50,000 receivable on the Ist April from Land Tax, making together L 2,183,759, the estimated amount bemg L 2,445,200. The revenue, therefore, fell short by L2G1,445. The revenue from Customs fell short by L 47.335, which though, lie fears, was chiefly caused by the general depression he believed to have been partly caused by the awakening of the population to the necessity of the cultivation of more thrifty habits and practising greater self-denial, which is a matter for rejoicing although it may result in temporary inconvenience. The Stamp Duties produced L32/921 less than the estimate, but this does not represent an actual falling off in receipts to that extent. The revenue from Stamps for the nine months ended 31st March amounted to LI 11,057 and the refunds to LIS97, an estate which paid LIS4O 5s duty in 1878-0 being declared by the Supreme Court not chargeable. The receipts from Railways fell short by Ll 13,072 but under this head there is a saving of L 43.242 effected in expenditure by the Minister of Public Works. The Land Revenue only produced L155,10S instead of L24G,700. The Postal Revenue exceeded the estimate by L12.9G1, but of this sum LG9S2 was profit of the Post Office Savings Bank account. The deficit for the period ended 31st March, 18S0, estimated at L79G,BBohad been increased to LS2G.IG3 by supplementary estimates. Special provision had been made to meet this deficiency by Treasury Bills amounting to LSOO.OOO with the intention of adding the amount to the permanent debt of the Colony. It had become necessary to fall back upon the contingent authority to issue Deficiency Bills to the extent of L 200,000, making the total issue of the Treasury and Deficiency Bills during nine months L 1,000,000. Parliament will be asked to sanction a Bill to enable the Treasurer to carry this out. Taking the total revenue from the total expenditure there is a deficit of L 990,005, for which, as above stated, Bills have been issued for L 1,000,000, leaving a credit balance of L99IS to be carried forward. The gross Public Debt of the Colony on the 31st March, 1880, was L27,422,0i1, or deducting accrued Sinking Fund of L 1 ,805 ,495, L 25,017,113 exclusive of Bills for L 992.000 held by the Public Works fund anil the LSOO.OOO of the unsold debentures of the loan of 1870 guaranteed by the Imperial Government. The actual addition to the public debt by the new Loan Bills is L 5,008,000, and on the other hand there are guaranteed debentures of LBOO,OOO redeemed. L 7700 of North Otago Loan debentures have also been paid off, leaving the net increase of the public debt L 4,200 300. When the LSOO.OOO guaranteed debentures are sold and Bills now held by the Public Works Fund and representing advances to the Consolidated Fund to the extent of L 992.000 arc issued, the gross public debt will amount to L29,214,G11, or deducting accumulated Sinking Fund L 27.409,113, subject to an annual charge of about L 1,535,000. In this statement of the public debt the last Loan is treated as unsubscribed but should the whole of the debentures be converted on the terms offered the debt will be increased by L 1,000,000, but the interest will be reduced by Llo,ooo a year. Had the whole of the L 5,000,000 Loan not been floated the position would have been a very serious one. The Londonagents had felt themselves compelled to offer one Five per cent. Loan at 9/4, and to ensure its sale to leave it optional with the purchasers to exchange it for a lour per cent. Loan at Sl} and to undertake that the Colony should not for the next three years enter the London market. I he ( *overmnent had issued during the nine months ended March last L 3,599,551 as follows :—-Public Works, Immigration, and other Services, L 1,750,881, redemption of guaranteed debentures LSOO.OOO, temporary advances to Consolidated Fund m Bills L 992 200, advance on debentures of Wahnea Plains Railway Company L 40.000, Wanganui Harbor Board L 17.000; total L 3,599,881. Under the head of Public W orks the net expenditure from the beginning of the policy in 1870 to the 31st March last we have borrowed L 15,700,000, which amount has been supplemented to tfie extent of L3G4 794 by Stamp duties, &c., making a total'of Ll 9,004,704. The net expenditure for the same period has been L15,256,G21, to which is added advances in the hands of Government L315.7G3 and the estimated sum of L 200.000 for discount and charges for raising the last Loan, making altogether L 15,502,354, which being deducted from L 19,004,794 leaves a balance on 31st March of L 3,200,410. Since March it lias become necessary to take up a further sum of L 350.000 in addition to L 992,000 taken up under the authority of the Public Revenues Act, IS7B-9. The extent to which up to the present date this has been applied in aid of revenue amounts to L 1,342,000. The liabilities of the Public Works Fund on the 31st March last amounted to L 2,455,313, of which L9!0,50G came under the head of Railways, surveys of new lines LISOO, roads L150,69G, land purchases L 1,001,480, waterworks on goldfields L 10,704, telegraph extension L 1034, public buildings L 205.514, light-liouses Ll2O, miscellaneous L 73,309. To this is added further liabilities since March last LUO,OOO, contributions for current year to Colonial Defence Force on the saige scale

as for the past nine months L 140.000, Which, after deducting advances in hand leaves L 2,359,550 as the sum required to be set aside out of ways and means to the credit of the Fund. The liabilities will absorb the whole of the cash to the credit of the Public Works Fund and will necessitate the sale of L4G9,000 of Treasury and Deficiency Bills hypothecated. The means available for new works and Services will be represented by L 573,000 in Bills.

Subsidies to Local Bodies will be discontinued, the Treasury being unable to pay them without imposing fresh taxation. Sections 5 and G of the Financial Arrangements Act, 1577, which authorise subsidies and grants of 20 per cent, of Land Fund to Counties are to he repealed, and the proceeds from the land sales are not to he used for ordinary purposes of Government. A Bill will be introduced to permit Local Bodies having the right to make rates to levy them to any extent they may deem necessary for local requirements not exceeding 2s in the £, or beyond that amount, if passed as a special rate, it will authorise Boroughs and other Local Bodies to borrow at any rate of interest ratepayers may choose to give, and to any amount, subject to the following restrictions : —Principal and interest to be paid in New Zealand ; before raising any loan a special rate to be levied to cover interest and sinking fund. Another Bill will be introduced requiring that any Local Body which has already borrowed upon its general revenue shall, before entering the money market, levy special rates to cover interest and sinking fund upon the existing loan. It is proposed that all Government property, including waste lands of. the Grown, and, subject to important qualifications, Native lands also shall be liable to rating with the exception of the Government House at Wellington and at Auckland, the General Government Buildings, Wellington, railways, and wharves. The Government considers that all Maori property in Boroughs should be subject to the same taxation as that of their fellow citizens. It is proposed to limit the amount of ordinary rates leviable on Maori country lands to one-half the rate levied on the ordinary land in the district, but not to exceed sixpence in the £ and upon waste lands of the Crown Is upon the annual value. Maori land will be divided into “pastoral” and “agricultural” valued at Gs Sd and 20s per acre respectively. The total estimated value of Maori land is LG,370,000, of which La,200, 000 is in Counties, in which the Counties Act is in operation. A Board will he appointed to pay rates on Waste Lands of the Crown, and on Maori Country lands, and to make grants in aid of main roads, and to make advances for the construction of District Roads. Parliament will be asked to set apart the proceeds of land sales for these and other special purposes. The unsold lands in the Colony are estimated as worth £12,500,000, and may reasonably be expected to realise £300,00 a year for some time to come, which, after deducting charges, will leave a credit balance of at least £IOO,OOO. The cost of administration is set down at £150,000, leaving a balance available this year of £50,000. Itls proposed to ask the House to grant to the Board £150,000 out of the loan. Mam Roads will be defined by proclamation, £50,000 will be asked for a grant for starting a fund for district roads. The rates in all Government property, it is proposed to charge on the Consolidated Fund. The scheme is based on the principle that the proceeds of Land .Sales should be applied to the opening up and settling the country, and that the landowners must for for the future practically find the means to maintain the roads of the Colony. The Estimates will show a large reduction when compared with last year amountin" in the gross to £541,000, and bntfor the increase in expenditure of £109,000 for interests, and 23,000 for education would have been £073,000. There will be a net saving of expenditure from the Consolidated Fund of £341,000. At present £1,000,000 a year, is i>ein" paid for Civil Service, salaries, and wages,°and £IS, 700 for pensions. A. Royal Commission has been appointed to inquire into the subject and to report on the whole organisation of the system. The Government has already made a commencement in the work of reduction. The Minister of Public Works has reduced the expenditure of his department by £30,000; the Native Minister his by £10.202; and in the Land Purchase Department the salaries have been reduced from £IO,OOO to £O,OOO. It is proposed that 20 per cent, be deducted from Ministers’ salaries for the current year. It is proposed that 5 per cent, or L 50,000 be struck off from Civil Service Salaries, wa«cs etc. The receipts under the head of Land Fund, are estimated at L 335.000, of which L 200,000 is sales, and L 135,000 pastoral rents, and it is proposed to hand over the balance under this head—L49,777 to the Local Public Works Board. It is proposed to slightly increase the charges on railway freight. It is proposed to exempt personal effects, furniture, books, etc., from assessment under tlie Property Tax Act, in accordance with what the Government believes to be the wish of the taxpayers on the subject. By this it is estimated that the revenue will lose L 40.000 a year, which, together with a deficit of L 5.700 has to be made good. I fear, says the Treasurer, there are only two practicable courses open to us—that we may reimpose the duties on tea and sugar, or we may tax beer. The Government, Sir, have carefully considered which of these two courses to follow, and have determined to ask Parliament to impose a tax on colonial beer of Gd per gallon, and also to increase the duty on imported beer Is 9d per gallon. The estimated produce of the beer tax is LSO,OOO. This, with LIO,OOO added from Stamp Duties will give a credit balance of L 41.291. In conclusion the Treasurer said,— Mr Seymour, the Committee will permt me to recall to their minds some of the main facts of our position, and to sum up shortly our proposals : —I would first call attention to one fact of cardinal importance, which, more than any other, has embarassed our finances for some time past —the fatal mistake —(as pernicious in practice as it had been in theory), of treating proceeds of Land Sales as Ordinary Revenue. This, and our unexampled prosperity for some years, led us greatly to over-estimate our resources, and so completely to misunderstand our financial position ; and to such a length had this gone, that the House was content in IS7B-9 to vote one million of the proceeds of the Land Sales as Revenue for the year, and adopt a scheme of Public "Works requiring a yearly receipt from Land Sales of £750,000 more. When, therefere, Land Sales suddenly fell to less than £200,000 a year, our difficulty became great and pressin", for it was manifestly impossible to stop innnediately the enormous expenditure then in full progress, based upon the assumption that the Land Fund would reach something like two millions a year. The Government, Sir, of which I have the honor to be a member, have been blamed, both by the House and Country for stopping expenditure too suddenly, and thereby intensifying the depression under which we are suffering, but when I tell the Committee, that during the nine months ended 31st of March last, we actually spent on the ordinary services of Government and Public Works in band, cash ; notwithstanding our

our strenuous endeavors to retrench, no less a sum than £4,523.257, of which £2.741,903 was borrowed money, they will fully appreciate what I have said as to the difficulty of bringing expenditure within reasonable limits, founded as it was upon an exaggerated assumption of our means, and will, I think, fully acquit Government of undue parsimony. To meet this serious difficulty, and to retrieve our position, Government at once set to work to reduce expenditure in every direction, but this must necessarily be a 'work of time, our committments being so large both by habit and engagement. We propose to separate Land Sates receipts from Revenue, and impose additional taxation to raise a sufficient sum to to meet our necessary expenditure. But although all this so far as could be done was done promptly, it was impossible to bring it into effective operation during the last financial perixl, the time being far too short; and as a consequence of want of forethought through our years of prosperity, we have now to add one million to our funded debt, that is a permanent charge of £50,000 a year as a result of the deficit outstanding against the Consolidated Fund on the 30th March last. Of the necessity of funding this, no one who considers our engagements and and our heavy taxation, will, I think, entertain any doubt; and if only we learn the lesson of economy and thrift, tliat our difficulties should teach, we shall not have passed through our trouble in vain; if, however, we are to come successfully through the present crisis, we must make up our minds to three things —to a greatly reduced expenditure, both on Public Works and Government Consolidated Fund; to a complete separation of out Local from General Finance; and te> submit to increase 1 taxation for years to come. And I would also emphatically point out that we ought to connect far more closely than we have ever done, the idea of additional taxation without further borrowing. As soon as this is actually realised by the people of the Colony, not only that each new loan has to be raised, but that until repaid it imposes a yearly burden, which must be met, if not by the increase of the tax paying population, then by increased taxation itself, as soon as this is fully realised, I say fresh loans will be much seldomer,called for, and much more carefully spent. That some further borrowing will be necessary is evident, but I trust that it will be only very moderate sums, and for specific objects. I also hope that the time is not far distant when, through the restoration of real economy in our finance, we shall see our way to addressing ourselves seriously to the task of reducing the large Public Debt; and I trust that the proposals of Government in power, already sanctioned by Parliament, will at least tend toward making such course possible. I sincerely thank the Committee for the kind attention with which it lias listened to my Statement —and would add, before resuming my seat, that I have no doubt of the thorough soundness of the Colony, and of the great future before us, now that people have awakened to the real facts of our financial position, and the responsibilities it involves. The Treasurer concluded by moving— That towards raising the supply to be granted to her Majesty, there shall be levied and charged on and after the 9th day of June, one thousand eight hundred and eighty, an excise duty of fid per gallon on alf ale, beer, porter, or other malt liquor brewed or made in New Zealand, before removal from any brewery, cellar, warehouse, or other place in which the same may be stored, such duty to be levied, collected, and paid in such manner as the Commissioner of Customs may direct. That in lieu of the duties of the Customs now charged on the undermentioned articles —the following duties of Customs shall, on and after the 9th day of June, one thousand eight hundred and eighty, be charged there on on importation into New Zealand, or on being cleared from any warehouse for home consumption, viz., ale, porter, beer, of all sorts, cider and perry in bottle—-the gallon Is 9d. Ale, porter, beer of all sorts, cider, and perry, in bulk —the gallon Is fid. The resolution was agreed to, after a long discussion, and the House adjourned at midnight.