THE BUDGET OF NEW ZEALAND.

New Zealand Times, Volume XXX, Issue 4435, 7 June 1875, Page 2

THE BUDGET OF NEW ZEALAND.

New Zealand finance has become a question of more than passing interest in England. The recent call upon the money market for four millions sterling has directed attention to the financial position of the colony in a very significant way. We have already detailed the circumstances connected with the floating of this loan, and copied extracts from tho London Press on the subject. We have reprinted an article on the last New Zealand Budget, from the Economist of March 20, together with Mr. Vogel’s reply. The article and its rejoinder are suggestive. The Economist, as is well known, is the highest authority on financial and com : . mercial matters ; but it is not absolutely infallible. Neither does it profess to understand the method of making up the public accounts of New Zealand, and it states the result of its calculation as a near approximation to the truth. Mr. Vogel accepts it as such, but points out the discrepancies. He likewise defends our colonising policy from the charge of involving a hazardous speculative expenditure, which the Economist made. This policy was forced upon New Zealand by the desertion of-- the Mother Country, which withdrew from the colony, leaving it saddled with a debt of five millions for an unproductive native expenditure, while the expenditure for native purposes necessarily continued. Under these circumstances, New Zealand was forced to make a heroic effort to recover lost ground, and hold its own with the other Australasian colonies; and tho fact that so far the railways have paid a considerable amount over working expenses, is adduced as evidence of the probable success of the entire scheme. Mr. Vogel puts this defence of the colony in forcible language ; but after all, mere sentiment is unavailing against the hard logic of facts. What Mr. Vogel justly characterises as harshness and neglect by the Imperial Government, is a constant theme of jubilation by the Times, and other “leaders of public “opinion” in England. Indeed, so satisfied were British statesmen that abandoning New Zealand to its fate was a highly meritorious proceeding, that they rewarded Mr. Weld, the reputed author ofthe self-reliant policy,” with the Government of Western Australia, for finding them a decent pretext for withdrawing tho troops. While, therefore, Mr. Vogel is quite right in what he has written to the Economist, it is of no practical value as a factor in the argument. Nor is it likely to be acceptable in high places. Nevertheless, we are by no means displeased that the naked truth should be told at Home by one who is empowered to speak for New Zealand. Reverting, however, to tho subject matter of the Economist’s leader, it will be seen that the writer hits tho blot in New Zealand finance. And that blot consists in having provincial budgets independent of the Colonial Budget and of each other, as well as tho practice of treating the proceeds from land sales as revenue. The Economist evidently does not understand the beauties of our fiscal system. Mr. Vogel might havo explained tho first point, namely, that the Colonial Parliament could not control tho expenditure of the Provincial Legislatures, and that any argument founded on provincial expenditure and deficits did not in reality affect tho financial position of tho colony, so far as tho public creditor is concerned, which, ns we understand the Economist, is the point of its article. Tho colony is responsible for tho entire public debt, with a trifling exception which need not be mentioned ; and in addition to its general security of Consolidated Revenue, it possesses collateral security in tho territorial and ordinary revenue of tho provinces. Of course, when a province runs riot in expenditure as Canterbury has done, and shows a largo deficit, or becomes functus officio like Auckland, outsiders are

alarmed, because they do', not understand the wonderful complexity; of our administrative system. They suppose that a part is equal to the whole, and infer that because one province is indifficulties the entire colony is embarrassed. This is not necessarily the case. ■ On- the ' other hand, neither must we encourage the supposition that because one or other province shows a largo credit balance at the close of the financial year, the state of the Colonial Treasury is equally satisfactory. By no .means ; the provinces might be revelling in surplus cash, while the General Government was driven to every shift to make ends meet. This has not exactly happened, but under our wonderfully complex fiscal system it is not only possible but probable. And this brings us to the second point, the huge fiscal blander which we are never tired of repeating in New Zealand, namely, treating the proceeds from land sales as revenue. The writer in the Economist puts his finger on this blot. He remarks :—“ No doubt the land revenue “ was very largo 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 be the “ case, it is mainly derived from land “ sales, it will obviously be an asset on ‘ ‘ which little reliance can be placed if the “ new schemes of public works and immi- ‘ ‘ gration turn out unprofitably. In the last “ event tho position would undoubtedly “bo serious. A country with an ordi- ‘! nary revenue of one and a-half millions, “ raised from a population of 300,000 “ persons only, and with an annual de- “ licit of £300,000, [this conclusion Mr. “ Vogel disproves,] could not be con- “ sidered to be in a very prosperous state, “ and would require to attend very care- ‘ ‘ fully indeed to its finance in order to “ escape disaster.” The truth of these observations cannot be gainsaid. They are self-evident, as are also the succeeding remarks by the Economist on the necessity for a less costly system of administration. While we have frequently given offence within the colony for protesting against our costly system of administration, it will be seen that the subject has not escaped the vigilant eyes of British eapitalists, as represented by the Economist; and when we hear the unwelcome order, “ Gentlemen, re- “ trench !” from lips which command the purse-strings of money-lenders and thus control the credit of the colony, it is full time to set our house in order. No timid hand must take up the retrenchment broom. No half-and-half measures wi]l do. It is quite clear that wo have come to the end of our borrowing for some considerable time ; and we must find ways and means within ourselves to complete the great colonising scheme which was initiated in 1870, but which will take yet another half - dozen years to consolidate. There need be no apprehension, however, for the future of the colony, if we “ attend very carefully to “ our finances,” and economise in our administration. Mr. Vogel says in his reply to the Economist that ‘ ‘ the whole public * debt is a charge on the land revenue and so it is technically, but if theBASTiNGSFish Executive of Otago, and other provincial executives we might name, had their own way for a couple of years or so, what tangible security would the land revenue be? It would not be in itself sufficient to pay interest on provincial loans, raised on tho security of the territorial revenue, and provide for local institutions. The remedy appears to us to be simple. Absolute security is within the grasp of the Government if it will but act firmly and energetically. As Mr. Vogel very fairly remarks, ‘ ‘ the Crown lands of the “ colony equal all its public debt it is imperative, therefore, that the Crown lands should in some sort be conserved. But the new Otago Executive coolly propose to “increase the revenue by “£50,000” this year, by forcing Crown lands into the market. Considering the remarks upon New Zealand finance which have appeared in the Economist, and other English newspapers of influence, we think it is incumbent on those who are charged with the administration of the affairs of the colony to see that while Provincial Government exists it does not quite run riot to the embarrassment of New Zealand.