THE BUDGET OF NEW ZEALAND.

New Zealand Times, Volume XXX, Issue 4432, 3 June 1875, Page 3

THE BUDGET OF NEW ZEALAND.

(Economist, March 20.) About three weeks ago the New Zealand Government succeeded in floating a loan of £4,000,000, bearing 4£ per cent., interest, in the London market, at the relatively low price of 94. The objects for which the money was required were, railways, public works, and immigration, in pursuance of a policy which New Zealand has been pursuing for a long time, and about which some doubts are naturally entertained by cautious monetary people here, when it is seen how large a debt New Zealand already has, and how high a price, compared with other colonies, it has to pay for what it borrows. In these circumstances a summary of the last annual account of revenue and expenditure of the New Zealand Government will be of use in forming au opinion as to the financial outlook of the colony. The accounts are somewhat complicated, owing to the number of "special funds,"'and numerous transfers from one to the other, but without going into much detail, a moderately accurate result may, we think, be arrived at. There appear to be three principal accounts to be looked at. (1) What may be called the account of ordinary revenue and expenditure of the Central Government ; (2) the similar account of the Provincial Governments, of which there are nine ; and (3) the account of the land fund, which is partly spent by the Central, but mostly by the Provincial Governments. Summarising the first of these accounts, we obtain the following statement of annual re- ' venue and expenditure in 1873 : REVENUE. Customs £o s?'si Stamp duties .. . • intiVo Posts and telegraphs .. .. .. •• 10M*» Other revenue, less £IIO,OOO transferred from provinces and special fund .. •. 100,220 Total £1,252,830 EXPENDITURE. Charges of the public debt £576,105 Governor, Judges, Legislative, and Executive salaries 74,139 Pensions ".024 Customs 37,439 Posts and telegraphs oo 11 o Public domains • • Jf ,11S Printing office, &c 24,72t> Militia and native expenditure .. .. 63,1.fiS Other expenditure, less Treasury bills redeemed and transfers 150,04 b Total £1,089,124 This shows a "surplus" of about £163,000, but the expenditure does not include a charge of £74,500 for interest and sinking fund of loans raised under Immigration and Public Works Loan Acts, 1870-73, while the account is of course liable to the observation that much may be included in extraordinary expenditure out of loans which ought to be included in the ordinary expenditure. Summarising in the same way the second account, that of the ordinary revenue and expenditure of the provincial Governments, we obtain the following results : REVENUE. Fees under provincial Acts and advances .. £20,736 Tolls on roads and bridges 30,942 Pilotages rates, harbor dues, wharfage, &c... 21,142 Sale of reclaimed land 3,000 Miscellaneous 30.00 S £151,737 Railway traffic receipts 106,045 Total.. £257,782 EXPENDITURE. Interest and sinking fund provincial loans.. £42,773 Executiv« and Legislative 33,609 Judicial Courts of Justice, &c °*'S?° Hospitals, &c 04,223 Harbors w.gof Steam and coach subsidies ~i'!2l Education 2'oia Immigration J-» Miscellaneous, &c. 8b,043 £421,585 Railway working expenses 63,273 Total .. .. .. •• £484,858 This shows a deficit of about £227,000, which thus far more than sets off, in a question of the aggregate resources of the colony, the surplus from ° the ordinary Budget of the central Government, as above explained. The third account, that of the land fund, is a little more complex, but its result can be briefly stated in a somewhat different form. The income is composed as follows : Land revenue £1,084,486 Goldfields revenue 43,454 Gold duty 'lln Recoveries 5(, ° Total £1,176,245 Out of this the Central Government seems directly to have spent about £71,000, including about £SOOO for salaries, and a charge of £61,000 for Timaru and Gladstone Board of Works, leaving about £1,105,000 for other purposes, the actual payments to provincial accounts being £1,101,000. And the expenditure of the Provincial Governments 'but of this amount, in addition to making up the above deficiency of £227,000 on the ordinary Budget, was as follows : Roads and railways and harbor works, &c. .. £393,234 Land and survey 15"5i? Goldßelds 2»,360 Road boards 79,171 Expenditure under Wellington Debts Act, 1871 9 - 3e9 Total £552,706 This makes a total expenditure out of the land fund of £623,641, exclusive of the amount applied to make up the deficiency of the ordinary Budget. The net result of all these Budgets is as follows :

Thus there is a deficiency of about £137,000 on the two ordinary accounts ; but when the land fund or extraordinary revenue is included this deficiency is converted into a surplus of £415,000, with the addition of about half a million spent on public works. And the question on these figures is whether, if the loans and extraordinary expenditure were to cease, or that expenditure should turn out unprofitably, the condition of affairs thus represented would be satisfactory. On this point we regret to say that far too much seems, in our view, to depend on the success of the speculative expenditure. There is already a deficit on the ordinary budgets amounting to £137,000, and the charge on the new loan is £IBO,OOO, making a total deficiency of at least £317,000 to be made good out of the extraordinary land revenue. No doubt that revenue was very large in 1873, and would be far more than sufficient if it were to be continuous at the same amount; but looking back, it is found to have'rather suddenly increased within the last two years. And if, as appears to bo the case, it is mainly derived from land sales, it will obviously be an asset on which little reliance can be placed if the now schemes of public works and immigration turn out unprofitably.. In the last event the position would undoubtedly be serious. A country with an ordinary revenue of 14 millions, raised from » population of 300,000 persons only, and with an annual deficit of £300,000, could not bo considered to be in a very prosperous state, and would require to attend very carefully indeed to its finances in order to escape disaster. This is without any reference to the more serious charge which has been made, that much of the extraordinary expenditure out of the loans, and which amounted to about £1,600,000 in 1873, is not really reproductive—an item of £144,414 for "Armed Constabulary and contingent defence" being specially challenged. At this distance from New Zealand, and without having all the facts before us, wo can hardly go into a question of that sort. We should think, taking a broad view of the

matter, that the New Zealand administration ought to be carried on, if necessary, even for a less sum than was spent on ordinary purposes in 1873, about £900,000 exclusive of charges for the public debt ; and if there is waste in the ordinary expenditure intended to be reproductive, that is always one of the dangers to which such expenditure is exposed, and one of the reasons why the course on which New Zealand has entered is apt to be hazardous. It does not show that the New Zeajand administration could not be carried on for the sum charged in 1873. Such appear to be the main facts of the case about New Zealand finance accounts. We should be very unwilling to say that the speculation now engaged in will not eventually succeed. New Zealand has plainly great resources, as is perhaps most directly shown for our present purpose by the large amount of the Customs revenue, about £3 per head. If a stream of immigration can be maintained, an augmentation of the revenue may be counted on, while the ordinary expenditure could probably be diminished so as to provide in part for the increased debt charges which are now to be borne as the result of the present loan. But the colony is certainly not prepared for any check to immigration or other misfortune, and in that view its financial position must be recognised as not altogether so sound as it ought to be. It would be better to proceed more‘slowly and avoid such heavy burdens. TO THE EDITOR OK THE ECONOMIST. Sir.—l ask you to allow me to make a few remarks on your article in last week’s paper on the Budget of New Zealand. I desire to thank you for the very temperate and fair nature of your observations, though there are one or two points on which I think you -will allow me to suggest a correction or explanation. The figures to which you refer are the annual statistics for 1873. I mention this not to take any exception to their correctness, but to explain that the annual Budget' deals with the returns from June to June in each year. If it were supposed you dealt with the last annual Budget, there would appeafto be a discrepancy between your figures and others which have been published. Without expressing an opinion as to whether the union of the General Government and provincial accounts leads to the most satisfactory way of examining the finances of the colony, I follow your own plan and figures. You -will find that joining the two accounts, and including the land revenue and expenditure, there is a deficiency of £137,000; whilst the land revenue shows a surplus of £552,000, after allowing for an expenditure of £552,700 on public works, and £71,000 on other purposes. Accepting these figures, I desire to show you that a considerable amount of the expenditure charged against ordinary revenue is properly a charge on the land revenue. You could not from the statistics have gathered this, but the explanation will, I think, remove your objection to the infringement on the land revenue as shown by the figures you marshal. The Consolidated Revenue is primarily liable for interest and sinking fund on the consolidated provincial loans ; but all provincial loans were made a first charge oil the land revenue, and properly so, for their object was for purposes to increase the value of the unsold lauds. In the Colonial Government expenditure, which you quote, there is included about £220,000 for interest and sinking fund on the consolidated provincial loans ; and in the provincial expenditure you quote, is included £42,700 for interest add sinking fund on provincial loans not consolidated. Together these make £262,700, and if you place the amount, as by law and reason you are entitled to do, as a charge on the laud revenue, you will, following out your own plan, reduce the surplus of the land revenue, and you will convert the deficiency of the other two accounts into a surplus of £89,700. You will then entirely detach the land revenue and expenditure from the ordinary revenue and expenditure, a most desirable thing to do, though in few, if any, of the other colonies, could such a result be worked out, for here the whole public debt is a charge on the land revenue. It is quite fair to consider that the construction of such large works, and the promotion of such a system of immigration as New Zealand is engaged in, involve great responsibility. But it is fair also to recollect the success which has even now attended our efforts, although but a very small distance of the railways is yet open. Next year we will have from 600 to 800 miles finished. During 1873 there was little over one hundred miles open, and yet the figures you quote show a return from this distance of £43,000 over working expenses;, When a comparison is instituted between the public debt of New Zealand and that of the mother country, it should not be forgotten that the Crown lauds of the colony equal all its public debt, and that in order to compare fairly that public debt with the national debt of the United Kingdom, there should be added to the latter the cost of all the railways, main turnpike roads, bridges, canals, hospitals, harbor works, jetties, wharves, piers, docks, &c., &0., scattered throughout Great Britain and Ireland. Circumstances have robbed New Zealand of its youth and of its power to be content with a slow growth. Wheu, five years ago, the Imperial Government retired from aiding the colony, and left it with a debt of about five millions expended on unproductive native purposes, with the heavy annual burden of that debt, besides continuing charges for native purposes, the necessity was absolute to increase the resources of the country. The clolce far niente of rich youthful communities was denied to the small community so heavily weighted. Out of adversity proceeded strength, and the neighboring colonies look with admiration, not to say envy, on New Zealand’s progress. You will see by the enclosed articles from the leading paper in all Australasia, the Melbourne Argus, what other colonies think of New Zealand.—Yours, &0., Julius Vogel. March 24, 1875.

(1) Ordinary Budget SUMMAKY. _ „ . . Expen- Sur- Deficineceipis junj.0, piu.,. ciency. £ £ £ & of Central Government 1,252,830 1,089,124 103,700 — Expenditure forintereat and sinking fond of 187073 loans.. (2) Ordinary Budget of Provincial Governments — 74,500 — 74,500 257,783 484,857 — 227,874 (3) Land fund Deduct 1,510 0131,048,481 103,706 301,574 1,176,245 023,041 552,604 — 710,310 301,574 301,574 — Total .. 2,686,858 2,272,122 414,736 j-