THE NELSON EXAMINER. Wednesday, October 17, 1855.

Nelson Examiner and New Zealand Chronicle, Volume XIV, Issue 58, 17 October 1855, Page 2

THE NELSON EXAMINER. Wednesday, October 17, 1855.

Journtli become more neceuary m men become more equal and Indiridualiim more to be feared. It would be to underrate their importance to tuppoie that the/ terre only to lecure liberty: they maintain civiliiation. Da TocaoßViLLi. Of Democracy in America, vol. T., p. 330. ON THE STATE AND MANAGEMENT OF THE PUBLIC FINANCES. The interest excited by the proceedings of the' General Assembly during its late session centres chiefly in. the " Report of the Committee appointed to consider the State and Management of the public Finances," and in certain resolutions adopted by the House of Representatives, having special reference to that report. In perusing the report, with such of the appendices as have already been printed, and the memoranda of the soi-disant Auditor* General, we are .irresistibly led to the conclusion that the accounts of the General Government are in a miserable state. We propose (in three or four articles) giving to our readers as clear an outline of the proceedings, views, and conclusions of the committee as we possibly can ; for in these days, when any one of us may be called upon to exercise the functions of a legislator, it is indispensable that we should obtain a knowledge of the financial position of the colony, as a necessary preliminary to any careful or prudent management of the public revenue. We find that the committee divided the time between the Ist January, 1851, and the 30th June, 1855, into four distinct financial periods. The first, from Ist January, 1851, to 31st December, 1852; the second, from Ist January to 30th September, 1853 ; the third, from Ist October, 1853, to 30th June, 1854; and the fourth, from Ist July, 1854, to 30th June,: 1855. We find, moreover, that for the practical purposes of their inquiry, they assumed that it would be useless to go further back than the 31st December, 1852, when ' (according to the Auditor-General) there wad an excess of expenditure beyond appropriation, and of consequence a debt of "at least 362,000." This is shown in the memorandum, accompanying the financial statement sent down to the house by the Officer administering the Government. We quote the words of thie memorandum, as a •ample of that lucid language for which Dr. Knight has become proverbial. "It will be aeen on' reference to the account of 'Services in general,' that the balances in the colonial •heats, on the Ist January, 1853, amounted to £15,281 lla. lid. This sum was chargeable with the arrears of expenses undefrayed, amounting to £11,760 4s. 6d. — with- the New Zealand Company's 'fourths, 1 amounting to £6,318 12s. 2d., besides certain debosita lying in the Treasury chests. So that it i» founa, on making up the accounts, that the apparent turpUu was a real deficiency of at least £2,000." We shall find, in the progress of our inquiry, that from this little grain of debt (the marvellous result of an apparent surplus) a very large tree has grown up, under the fostering care of Dr. Knight. The committee were divided in opinion as to the rules to be applied in regulating the expenditure of the revenue during the financial periods from Ist January to 30th September, 1853, and from Ist October, 1853, to 30th June, 1854. In reference to the first of these periods, it was urged on the one hand (as re- 1 garded the ordinary revenue), and indeed a majority of the committee were of opinion,

that treating the Appropriation Act of 1853 as a pro tanto valid appropriation, the rule must be applied of considering the unappropriated surplus as the absolute property of, and therefore divisible amongst, the provinces. On the other hand, it was urged that the surplus revenue over the expenditure which would be actually covered by the Appropriation Act, was properly chargeable with any actual, though unauthorized, expenditure. The adoption of each view brings out a very different result — first as a principle, and secondly as regards the provinces. As regards the latter, if the view of the majority be adopted (and we are of opinion that it is the correct view), we find that the actual receipts for ordinary revenue (assuming the accounts of the AuditorGeneral to be correct in these particulars) amounted to 3657,393 ss. lid. ; that the sum expended in accordance with the provisions of the Appropriation Act was £34,076 2s. 9d. ; but that the actual expenditure was £5 1,731 9s. 5d., or a 617,655 6s. Bd. in excess of authorized appropriation. The question in difference between the majority and the minority of the committee was, whether this ss. Bd. should be charged against the surplus revenues beyond the pro tanto appropriation or not? If so chargeable, the provinces would receive so much less. If not so chargeable, the provinces had a claim against the General Government to that extent. The majority of the committee, and as we think properly, treated this sum as money illegally abstracted from, and therefore actually due to, the provinces. We conceive this to be the true and constitutional view of the provisions of the Constitution Act. The act (clause 66) says, "the surplus of such revenue, which shall not be appropriated as aforesaid, shall be divided among the several provinces for the time being established in New Zealand, under or by virtue of this act, in the like proportions as the gross proceeds shall have arisen therein respectively."

The majority of the committee treated " the right of the Provincial Legislatures to the surplus unappropriated revenues arising during each financial period, as a vested indefeasible right, which no circumstances would justify the General Government in disturbing ;" and they were of opinion that it was a proper constitutional practice, if not indeed strictly required by law, that the General Government should not, under any circumstances, disturb the estimate which, at the commencement of each financial period, it might have made of the amount of such surplus revenue ; but that any reasonable expenditure, in excess of appropriation, ought to be otherwise provided for. Assuming the views of the majority of the committee to be correct (and we consider them incontrovertible), on the 30th September, 1853, the debt, on account of ordinary rerenue alone, had increased to about «62 7,000, the whole of which was due to the provinces.

With regard to the second period (namely, from Ist October, 1853, to 30th June, 1854), another rule of adjustment was required. In reference to this period, Sir George Grey, without any legal authority to do so, made certain regulations for the expenditure and distribution of the revenue. These were acted upon in good faith by the provinces, and a majority of the committee were of opinion that they ought to be treated as final. On the other hand, a minority contended that they ought not to be acted upon at all, because they were illegal, and consequently void, ab initio. We agree with the majority. The result in this case would be the same as in the last. A large sum excessively expended, and therefore abstracted from the provinces, would have to be refunded by the General Government, swelling the debt of a 627,000 to nearly double the amount. It may be asked, why do we agree with the majority in supporting what was illegal ab initio ? Because we hold, that to upset all the arrangements made by the provinces on the faith of Sir George Grey's regulations, would be worse than to submit to an illegality in the commission of which we had no part ; because, by doing otherwise, we should not only disturb the financial arrangements of the provinces, but we should quasi sanction the reckless expenditure of an unprincipled and extravagant Government. In the foregoing remarks we have referred only to the ordinary revenue, as distinguished from that which is derived from the disposal of the waste lands. During each of the abovementioned periods, the appropriation of the territorial revenue was also subject to different rules. For all practical purposes, it may be taken that the Constitution Act came into force on the Ist January, 1853, although the proclamation was not made until the 17th. In March, 1853, Sir George Grey made certain regulations for the disposal of the waste lands, and amongst these regulations was the following, which, as will be observed, directs a mode of appropriating the revenue arising from such disposal.

" After the charges made upon the Land Fund by the Act of Parliament, 15 and 16 Vie. c. 72, have been defrayed in the manner prescribed bylaw, the remaining portion of the Land Fund will, until the General Assembly or the Provincial Legislatures may otherwise direct, be devoted to roads and public works, or to bringing out to New Zealand the friends and relatives of those persons who may undertake to defray, within twelve months after the arrival in the colony of the immigrants so brought out, one-half of the cost of their passage to this country, according to the following scale, &c."

This remained in force until September, 1853, when certain new arrangements were made by Sir George Grey, contained in two circulars, addressed to the several Superintendents, as follows : — " Civil Secretary's Office, « Wellington, August 8, 1853. " Srft~-I am directed by Governor Sir George Grey

to communicate to your Honor the following financial arrangements, which have been provisionally and temporarily made by his Excellency, with the view of enabling the Provincial Government efficiently to perform its duties until such time as the General Assembly shall have passed some enactment upon the subject. "It appears to his Excellency, from the nearest estimate Which, con be mads, with, tha means at bis command, that the Revenue of the whole colony of the islands of New Zealand, after the costs of collection and management have been defrayed, will, for the present, amount to £62,000 per annum, and that the charges upon account of the Civil List, or those imposed by ordinances of the General Legislature — such, for instance, as the interest upon public securities, the expenses of savings banks, the charges upon account of education, &c., &c., &c. — will amount to a sum of about £21,000 per annum, or one-third of the net revenue of the colony.

"The Collector of Customs will therefore receive instructions to make up hia account to the close of each week, and then, having first deducted the amount necessary to defray the expenses of that department, to pay over two-thirds of the balance remaining in his hands to the Provincial Treasurer, or to the Provincial account at the Union Bank of Australia, and to remit the remaining third of such balance to the Colonial Treasurer of New Zealand.

" This mode of adjustment will not, in every instance, bo perfectly accurate, as the revenue of the province will from time to time vary ; as will also the proportion which the Civil List, and the expenses Of the General Government, bear to the whole revenue of New Zealand, which may now be expected rapidly to increase; consequently, the above arrangement cannot be considered as being final. When, therefore, the accounts of the revenue of each quarter reach the Treasurer of New Zealand, a final account will be made out, showing the gross revenue of each province, the charges on account of collection, the proportion of the balance due to each province during the quarter : any balance which may then be found due to any province, in addition to the two-thirds of its revenue already paid, will therefore be paid over to tho Treasurer of the province, or to the Provincial account at the Union Bank of Australia.

"In like manner, if, from the anticipated increase in the revenue of the colony, it should shortly bo found that the proportion of the revenue to which each province is entitled exceeds two-thirds of the revenue collected therein, arrangements will immediately be made for altering the amount to be paid from two-thirds of such sum, as each province may be found entitled to. " I have, &c, (Signed) "Alfred Domett, " Civil Secretary. " His Honor the Superintendent, &c., &c, &c." " Civil Secretary's Office, ' "Wellington, Bth August, 1853. " Sib — I am directed by Governor Sir George Grey to acquaint your Honor that, until further provision is made by the General Assembly, the Land Fund will be appropriated in the following manner : — " One-fourth of the gross proceeds of land sold or let in the manner stated in the 74th clause of the New Zealand Constitution Act will be retained for tho benefit of the New Zenland Company.

" Tho remaining three-fourths of such gross proceeds, together with the proceeds ariaing from the rents of Crown lands, from the fees on Crown grants, &'c, &c., &c., will be subject, in tho first place, to deductions for the cost of the Land Department, surveys, &c., as also for such proportion of the Land Fund as the Commissioners may be directed to deduct for the payments to the aborigines for the purchase of their lands.

"After these deductions have been made, the balance remaining is to be divided into two equal parts, one of which is to be retained by the Commissioner for emigration purposes, while the other part will be paid over at the close of each month to the Provincial Treasurer, or to the provincial account at the Union Bank of Australia.

"The General Government will, for the present, apply the proportion of the Land Fund applicable to enug'ration purposes in accordance with the terms of the proclamation of the 4th March, 1853 ; but if the Provincial Council of the Province of would prefer having any alteration made in this arrangement, the Governor will be prepared to consider any representations which you may, in "behalf of that body, make to his Excellency upon the subject. "It must, however, be understood that, if any portion of the province is proclaimed a hundred, nothing contained in the foregoing paragraphs will prevent the Governor, under the authority of the Eoyal Instructions of the 12th August, 1850, from authorizing the application of any proportion not exceeding [ one-third of the gross proceeds of the sales of Crown lands within such hundred, to such purposes as shall be signified to him by the wardens of that hundred. " I have the honour, &c., (Signed) " Alfbed Domett, " Civil Secretary. "His Honor the Superintendent," &c., &c., &c. Thearrangements contained in these circulars were acted upon by the Provincial Governments in perfect good faith, and ought, in. the opinion of a majority of the Committee, to be considered as final for the same reasons as those which obtained in relation to the ordinary revenue, and for the like reasons we coincide with them. But a difference of opinion existed as to the interpretation of the arrangements. A majority of the Committee maintained that it was clearly Sir George Grey's intention to charge the sums required for the purchase of native lands on the Provinces where the lands were purchased, and not on the General Territorial Revenue. They adduced in support of their views a circular to the Superintendents of Auckland, New Plymouth, and Wellington, of the 24th December, 1853, which contained the following passage — " One-fourth of the gross proceeds of land sales in the Province of , is to be paid into the j colonial chest, to the credit of the Land Purchase j Deposit Account. A separate Land Purchase Deposit j Account will be open for the province. Moneys issued from the Colonial Treasury for the purchase of lands are to be repaid from the Provincial Deposit Account. If the advances are issued from the Land Fund Deposit Account of other provinces, you xoill be required, after defraying the first charges on the Land Fund, to remit the monthly balance of the proceeds of land sales to the Colonial Treaswy at Auckland, or SubTreasury at Wellington, as the ease may be, until the whole of the advance from the Land Purchase De~ posits of the other provinces has been repaid, making in the interim no payments to the Provincial Treasury, nor making any apportionment either on account of the province or immigration." And the intention of this circular is further confirmed by the fact that the despatch respecting the appropriation of the Land Fund in the Province of Nelson does not make any mention of a "Land Purchase Deposit" account, nor does it require that any portion of the proceeds should be remitted to the Colonial Treasury, but directs that if the Provincial Council should determine to make provision for immigration purposes, the whole proceeds are to be paid over to . the Provincial Treasurer, which was accordingly done till the 30th June, 1854.

The committee further pointed to the financial minute sent down by the Officer administering the Government in Message 5, Session ii., in which his Excellency,

"After laying before the house reasons for abstaining altogether from active negotiations for the purchase of native lands, stated his intention to adjust a payment on that account made from the Land Fund of the Province of Nelson by a contributary deduction from the Land Fund of Canterbury ; and also stated that the sum of £7,200 borrowed from the Commissariat chest (and applied for the purchase of native lands at Wellington), was a loan to be repaid out of the first receipts of Land Fund of Wellington,"

They contended, and truly, that the financial arrangements of the provinces were all based on this view of the case.

The answer was, " that the Constitution Act made the cost of purchasing native lands a General and not a Provincial charge ; that the Provinces of Canterbury and Nelson had received an undue share of the public revenue ; and that it was only just to the other provinces that they should be made to refund. That no surprise was practised upon them, as it must have been known to them that their Territorial Revenue was liable to contribute, with that of other provinces, to the purchase of native lands."

We conceive the answer to be insufficient. We agree with the majority of the Committee in their view of the natural effect of the documents in question, and we are distinctly of opinion that, upon a final adjustment, effect must be given to that view. The existing confusion in the accounts is absolutely frightful ; but that confusion would become worse confounded were the past bonafide financial arrangements of the provinces to be disturbed.