GOVERNOR GREY UPON NEW ZEALAND FINANCE.

New Zealand Spectator and Cook's Strait Guardian, Volume III, Issue 209, 31 July 1847, Page 3

GOVERNOR GREY UPON NEW ZEALAND FINANCE.

LIEUT.-GoVERNOR GrEY TO THE RIGHT Hon. Lord Stanley. Government House, Auckland, May 12th, 1846. My Lord, — One of the most important duties which has been imposed upon me by your lordship, is the enquiry into the sources from which a sufficient revenue may be most ! readily and beneficially raised in this country. I now propose to place before your loidship the principles upon which, I think, the future general financial arrangements of this country should be conducted, and the reasons which have led me to form these conclusions. In the first place, I have assumed the amount of the European population resident in these islands to be 12,000 souls, and the amount of the native population to be 120,000 souls : these estimates are not founded upon accurate returns, and probably are each of them, especially the latter, far below the real amount of the populations which they respectivply indicate ; they are, however, sufficiently accurate for the purposes of the present enquiry. So great a disproportion existing between the European and native population, one is driven to the inevitable conclusion, that if any attempt is made (as was formerly the case) to raise a revenue by direct taxation upon the property of the European population alone, from which the natives are exempted, it , will be found impossible to raise the funds requisite to provide the establishments required for the protection and good government of the natives ; indeed, it would be essentially unjust and ruinous to the European population to attempt to do so. Hence, in endeavouring to raise a revenue from taxation of this nature, the Government must either, as it has hitherto done, forego all intention of maintaining such establishments, or must look to the British Treasury to supply funds adequate for their support. It may be said that the former system should be amended, by subjecting the property of Europeans and natives alike to direct taxation ; but this would be to suppose that we were in actual occupation of the whole island; that establishments existed which could collect these taxes, and that there was a reasonable probability that the large warlike native population, who are as yet for the greater part ignorant of European laws and customs, and impatient ef control, would submit to taxes of this nature, every one of which suppositions is directly contrary to fact. Whilst these objections, and many others of nearly equal weight, exist to any attempt to raise a revenue from direct taxation, 1 en- , tertain no doubt whatever that a revenue which will amply suffice to defray all the charges (excepting those of military and naval protection) which need be incurred, in providing establishments, in all respects adequate for the good government and complete control of both races, can, iv the course of two or three years, be provided by indirect taxation : that is, by the imposition of moderate duties of customs upon all imported goods. Since the termination of the war in January last, the receipts of -customs have continued rapidly to increase, and a trade of great importance is rising between the European merchants and the native population. There seems no reason to doubt that this trade will very rapidly increase in extent and itiiportance. The natives are now very generally purchasing small vessels for the purpose of trading ; they are extremely anxious to procure articles of European clothing, and luxuries generally, and they possess abundant means of paying in produce foe all such articles as they may require. Indeed, the consumption of British goods in these islands will soon become so considerable as to be an object of importance to British merchants, whilst the valuable products which are given in exchange for them will also prove highly advantageous to British commerce and industry. In illustration of this I need only state, that the principal articles of consumption here are woollen goods, the wool for which is

chiefly grown in Australia, carried to England in British vessels, manufactured there, and brought to New Zealand in British ships, where it is exchanged for timber, flax, copper, and wool in its raw state, which are again carried in British vessels to England ; thus, in each stage of these employments an impetus is given to some branch of British trade. The extent to which British commerce may be carried on here is limited, in the fin>t place, by the amount of the population, which I believe has been under-estimated by nearly onehalf; and secondly, by the extent to which life and property are rendered secure. The short period of tranquillity which the northern portion of the country has recently enjoyed, has already given a considerable impetus to trade, and a large augmentation to the revenue which, being raised from duties of customs, augments in the same proportion as the commerce of the country, and, with its inci easing prosperity, affords tJ:e Government the means of still further securing the future tranquillity and order of the colony. It is difficult to see on what grounds this mode of raising a revenue can be objected to. The natives benefit largely by obtaining those at tides which they value highly, and which contribute to their comfort, respectabi'iiy, and civilization ; they also are now, for the first time, beginning to feel the ail vantages of security of person and property ; in point, therefore, of abstract justice, there appears no reason why they should not pay for those advantages. Whilst upon the ground of discontent, no objection at present exists to the payment of customs' dv ies, as the native chiefs are very generally beg'nning to understand that the Government cannot be conducted without money ; they are also generally anxious to enjoy the advantages of a good government, and several of the principal chiefs have stated, that they see that so long as the duties of customs are the payment made to the Government, so long will the wealth of the Government depend upon their being rich enough to buy clothing and articles of luxury; that it will thus be the object of the Government to see them wealthy, and they therefore entertain no fear of their lands and property being taken from them. I have, therefore, no imention of attempting to raise a revenue by any other means than the imposition of duties of customs on all imported goods ; and, as 1 have before stated, 1 feel quite satisfied that within a very few years from the present time, the revenue "realised from this source will be found am> pie to defray the whole of the colonial expenditure. The presen? condition of the colony, in reference to its financial state, is different ftom all other portions of the empire. It is not in the ordinary position of a young country, the establishments of which could grow in extent, in the same proportion as its population, revenue, and C( mmerce. The fact is, that a large population lapidly becoming civilized, and capable of affording a considerable commerce and revenue, already exists here ; but no establishments have been 'formed for the protection of life, property, or commerce, or for the collection of revenue ; or, indeed, for the control and government of this large population, who, if their energies are not directed into proper channels, and if they are not governed and kept under control, will certainly attempt to set up the government of various ambitious chiefs, and will keep the country in a constant state of disturbance and war. It appears, therefore, absolutely necessary that a considerable annual expenditure in excess of the revenue should be sanctioned for a few years by the British Parliament, to provide for the formation of the public buildings, roads, arid establishments which are absolutely requisite for the assertion and preservation of British supremacy, for the control of the turbulent, the protection of life, property, and commerce, and the security of the revenue which the country can at once yield. The advantages which justify such an expenditure are, the impetus which will be given to the interests of humanity and civilization, the ultimate saving which will be effected to the country by the prevention of expensive internal wars, which would require the consfant presence of a large naval and military force ; the extension afforded to British commerce and industry, and the great increase of the revenue of the colony, which will shortly enable it to defray the whole of its own expence. The amount of such expenditure in excess of the revenue need not at any time be very great. It may, I think, be fairly deduced from the following estimate :—: — Probable general ordinary annual expenditure of Local Government £27,000 0 0 Probable extra expenditure on account of natives, police, roads, &c, &c ...31,000 0 0 Total expenditure.. £sB,ooo 0 0 Probable revenue from this date, but rapidly increasing in amount 22,000 0 0 Immediate annual deficiency, year- . ■ ly decreasing in amount £36,000 0 0

Thus, leaving the sum of about £30,000, in addition to the present parliamentary grant, to be provided from some extraneous source. It should, however, be observed, that this additional grant would decrease in amount from year to year, exactly in proportion to the progress of the colony. I beg to assure your lordship that, after having now visited almost all the important portions of the colony, I feel quite satisfied that the Government cannot be efficiently conducted for a lower amount than that which I have above stated, and that any attempt to do so will ultimately only result in great disaster, and eventually in a much greater expense to the British Treasury than that which will be incurred under the system I have detailed, and upon which I intend to act until your lordship's further instructions can reach me. It is probable that I may have stated the estimated revenue at too small an amount, and I think that I have done so ; but 1 have thought it better to incur the risk of erring upon this side than of leading your lordship to form too favorable an opinion of the present financial state of New Zealand. The next question that arises for consideration is the probable expenditure that must ultimately be incurred for the naval and military protection of this colony. So soon as there is an adequate military force in the country, I think that the naval force can be very considerably reduced, possibly to one steamer and one vessel of war ; but the presence of a steamer will certainly be always indispensable upon these coasts. I will, upon the arrival of a sufficient military force, lose no time in communicating with the senior naval officer upon these subjects, and in reporting my final determination to your lordship. I propose to a Idress another despatch to your lordship upon the subject of the military force which I at present think requisite for the maintenance of, British supremacy in these islands. But I may state here that I have no doubt that the local revenue will shortly aftbrd the means of supporting so considerable and efficient a police force, partly composed o^ natives, that it will be in the power of the local Government in three or four years to dispense with the presence of a considerable portion of the military force which recent occurrences have rendered it necessary temporarily to station here. — I have, &c. (Signed) G. Grey. The Right Hon. Lord Stanley, &c.