THE FINANCIAL STATEMENT.

Oamaru Mail, Volume IV, Issue 1302, 9 June 1880, Page 2

THE FINANCIAL STATEMENT.

"" WBtirNCTON, .Ttine 8. - In Committee Means, this;;■ 'evening, the Colonial Treasurer, the Hon. :■ 'Major Atkinson, said:—»-.-:•« > „-t•> ■ Mr. Seymour, iii v iroVember hist t I had the..honor %•-submit for the consideration of this Committee the usual Financial Statement, it was thought by many persons not, unfriendly to the Government 'thafc4n festimatihg' thfe prStiable ' deficit for ,which v it would- necessary to make provision "by "the "Ist April last at ' L 800,000," I had "fa,r" too J gl6"omy'a"' view of the financial.position;: I regret to,; say that my anticipations in this respect have beefi m°F? than and that the results of the last nine montlis have proved less satisfactory than, I ventured to predict as probable. I for one have not the least doubt that trie present check T,c. our prosperity (a check which has "been felt at the- same lime throughout tie civilised world) is temporary only ; yet, bearing in mind the effect this check and other causes which might have been controlled have had on our finances, and also the jtygQgnt pf publip debt as compared with our population, thp duty pf eponomy and retrenchment has become clearer and more pressing, It is, therefore, gratifying to know that the plain faots of our financial position, which I had the honor to submit to Parliament last, session, have fully awakened public attention'to this " vital subject and produced in the public njind a determination that %e apnual expenditure shall be bought within tlie annual revenue,. by reducing the one as. „ far as compatible with efficiency, and, if necessary, increasing the other-so far as may be needed. Government propose, sir, to ask Parliament to give practical effect to this determination. task, therefore, this even|ng, considering the extravagant habits into which we have fallen of late years, is one of unusual difficulty, in the execution of which I venture to nope for the same measure of consideration as : the Committee have kindly given me on "former occasions. Sir, in submitting with the Financial Statement the proposals of Government, in the last Budget, I said it wotjld be impossible to surmount the monetary difficulties, and escape, the dangers of our position without something like a complete remodelling of finance, both general and local; without careful administration by Ministers, and without the exercise of much thrift and self-denial on the part of all pf t|)g community. In accordance with the opinion so expressed, certain measures were introduced by the Government, and passed by the House last session, modifying very considerably our fiscal system but leaving untouched the system of local taxation and subsidies. \Jpon this subject I said, " The important question of local finance is far too large to go into this session ; therefore I will say no more upon this subject now, except, Sir, that Government fully recognise the fact that it is thtir duty to gubuiit to this House upon its first meeting next session a schenje whigh shall place local finance on a satisfactory and something like a permanent basis : and by satisfactory the Government understand placing local bodies in such a posi--1 tion as will enable them to obtain as far 1 as possible sufficient funds for all necessary ; works, while drawing a broad and distinct line between local and-general, finance ; | and such a scheme Government will en--1 deavor to mature before the next meeting of Parliament." To-night I shall endeavor to redeem this promise. I trust, however, the Committee will not expect too much. The subject is one beset on every side with difficulties, and_nothing but a strong 1 determination on the part of local bodies to rely more on theii? own resources and j less upon external help than hitherto, will render any satisfactory solution of this vexed-question possible. But before submitting to the consideration of the Committee the proposals of Government, it will be more convenient that I should place before them the results of transactions for the last financial period, which, through the changes in our financial year, comprises ninei instead of twelve months. I THE YEAR 1878-79. I will first explain the actual financial ■ result of the year, which ended 30th June, 1879. It will be remembered I ■ estimated that after payment of all 1 liabilities outstanding at the close of the year, and taking credit for assets of the year, there would be 1(131,824. 1 The actual deficit on the transactions entered up to 31st March last.in respect of the period now referred to, proved to ' be L 69,418. There remained unpaid, however, on that date liabilities to the 1 amount of L7Q,193, including L 50,000 ' owing to the Bank of New Zealand as the balance of tlje pyerdraft of the Provincial Government of Otago, ,iyhije on other hand further assets amounting to 1 L 5821 have been realised since 31st ' March ; so that the total deficit, including assets and liabilities to 30 th June last, was L 133,790, instead of L 131,824 as estimated,

EXPENDIBURB OF SHE BBRjCOp BJfDED 31ST MARCH, 1880.

In the statement- I had the honor to make to the. Committee last ; session I estimated - that the. expenditure would amount to 15,110,262, but this was increased to L3,139,53fJ by passing Supplementary estimates, The actual expenditure to 31st March last,i»cluding-a4vances in the hands of officers of the Government, amounted, to L 2,772,276. . . . In accordance with the provisions of the •Public Revenues Act, 1879, returns of liabilities outstanding at 31st March, certified by the several Under-Secretaries, haFe bsen laid before Parliament. The liabilities atn°Wt to L 342,966, from which, however, j deduct already referred to as belonging to the period of 30th June, 1879, leaving L 272,773 in respect of the period I am now reviewing. Adding this sum to the actual expenditure up to 3lst March, amounting, as I have said, 4o L 2,172,276, we get a total expenditure of L 3,045,049, as against L 3,139,539 the estimated amount, there being tjius #n apparent saving of L 94,490. . . . . I degire to ppinc out to the Committee that included in the apparent saving of L 94,490 there are several items arising merely from over estimates, and which 1 cannot be regarded as savings, such as interest, and tlie 20 per cent, of land, .fund payable to counties. Qn the other' hand there are payments for services not provided for, which reduce, pf cpurse, the amount of, the total net .saying for the period. 'tJnder 'the head'of annua}, appropriations,, where alone sayings pan really be effected, the expenditure in eight classes out of eleven, after including outstanding liabilities, was L 92,620 less than the estimated amount; or (including, as shown, L 130,100 for stores purchased for railway and unexpended) the amount was L 1,105,720. In the- remaining three classes the expenditure was L 9036 over the estimate. Hon. members recollect that six months of the nine had practically elapsed beforp Parliament rose, and Government think they m a y congratulate themselves in accomplishing so considerable a saving in go short a time. REYEITOE FOB NltfE MONTHS ENDED MARCH 30rg. The total revenue received during this period amounted to L 2,133,759, to which we add L 50,000 receivable Ist April from the, land tax, which the Committee will remember was included in the estimate, making together L 2,183,759, the estimated amount bejng L 2,445,200. The revenue, therefore, fell short pf that anticipated by L 261,441. . , . The reyanup frpm

customs did not reach the .estimate amount by 47.335. This, although, I fear, chiefly caused by general depression throughout the colony, has been partly caused, I believe, by awaking our population to the necessity for cultivating more thrifty habits, and practicing greater self-denial. i , Tho stamp duties produced

L 32,921 less than the estimate, jtmt this i large amount,doesnot represent an actual i i falling off to-thai extent in Receipts. :Hon. j ,members know, as stated by Ministers in ,-] ■returns made 'during the year that the i 'gross revenue from stamp duties during the i nine months ended 31st Match amounted : i to L111,057j and refunds to L 18,979 —an 1 altogether unusual amount; but ah estate < j which paid L 15,405 duty in the year ■ 1878-79 wa3 declared by the Supreme, i Gourt.not:chargeable, and-thesum there- > forehad,to be refunded in February last, 1 and is included'in-the refunds above men- i •tioned. • ; The -stamp revenue, but for this . unexpected occurrence,, would have i realised Ll4.sl6'less-than the "estimatej , instead of L|2,921. The falling off in this i instance is, I think, due to general de- ' pression, but this branch of revenue will, ' without doubt, recover with returning prosperity. The receipts from railways ; fell short of the estimates by L 113,072, • V.tit the loss is counterbalanced to some < extent by the not inconsiderable saving , of L 43,242 effected in expenditure by my , hon. friend the Minister for, Public Works. The land reyenue has, I regret : to say, produced only L155j108,-instead ; of L256,7Q0. The postal revenue has, however, exceeded the estimate by L 12,901, but of this sum L 6982 was profit of Post Office Savings Bank account, which; has heretofore been treated as incidental revenue. There were also small •excesses derived from several minor sources; of , revenue, tp \yhich I -need not particularly refer. EINANCIAI RESULTS OF THE PERIOD TENDED 31st march, 1880. In -my last financial statement I estimated that the deficit fo.r the period ended 31st March, 1880, would amount to L 796,886, which sum increased to L 826,163 by supplementary estimates. Hon. members will recollect that Parliament made special provision to this deficiency by passing the Treasury Bill . Act, 1879, authorising the issue of Treasury Bills to the amount of, L800,0(K), with the intention of adding the amount to the permanent debt. of the Colony, and thus starting clear* of floating debt from "31&t March, 1880. -.- . • In consequence, however,, of the revenue of . the, last financial periqd not realising the amount estimated by L 261,441, it became necessary to fall back upoh the contingent authority to issue deficiency; bills granted by the Public Revenue Act, 1878, and bills amounting to 1)200,000 were accord? ingly issued, making, a' total issue of L 1,000,00.6 of Treasury and Deficiency Bills during the nine months. Government propose to deal with this sum of L 200,000 in the same manner as the LBOO,OOO which I have referred to, and Parliament will be asked- tp sftngtion a Bill to enable them to do so If it were probable that the revenue of • the current financial year would be able to bear the charge of the liabilities outstanding on 31st March, this mode of providing for them would .not be suggested ; but it is altogether hopeless to expect it will., ... , For the convenience pf the Committee, I will summarise the results at which I have arrived. The deficit for 1878-79 has been shown to be L 133,790 ; the expenditure for the nine : months 1 ended 31§t Marqh last, { and liabilities on same date, L271,g74; making a total of L 3,178,840. The receipts for the period ended 31sfc March were L2i133,758 ; land tax due Ist April, L 59,000 ;■ assets, : L 5000; making L 2,188,758. Taking there- ' fore the total revenue for the total expenditure, we arrive at a deficit of LQ90,081 for the period ended 31st March, 1880, to 1 meet which, as I have already stated, ' Treasury and Deficiency Bills have been 1 issued to the amount of L 1,000,000, leaving a crgdit balance of to bp carried forward to next finanpial period. It is 1 perhaps convenient that I should here ' say a few words about the public ■ debt before referring to the Public 1 Works Fund. On 30th June, 1879, ■ the gross public debt of the colony 1 amounted to L 23,222,311; on 31st March, ' 1880, it was L27,422,6U, 1 accrued sinking fund, L 1,805,498 —the net public debt was L 25,616,113. This amount is exclusive of Treasury and ' Deficiency Bills for L 992,000 held by the : Public Works Fund, and the 800,000 - unsold debentures of the loan of 1870, t guaranteed by the Imperial Government. 1 Since 30th June, 1879, the loan of ! L 5,000,000, authorised last year, has been raised. On Ist March last, Treasury s Bills amounting to and forcing 1 part of the public debt, of £toth June, 1 1879, matured and were temporarily rei deemed out of the Public Works Fund, provision having been made under the ' Treasury Bills Act, 1870, for renewing 5 them tp §lst Deeember, 18§2, ■ changing them at that date for debentures 1 with a currency of\three years. ' the nine months ended 31st March ; last, additional Treasury and Defioi- ' ency Bills to the amount of L 1,000,000 > have been issued in aid of revenue. Of i these, Bills for L 550,000 have also been taken up temporarily by the Public Works • Fund, bp the addition tp tlje public debt by the new loan and these > Bilk amounts at present to L5i000,000t On the other hand, guaranteed debentures amounting to LBOO,OOO have been ■ redeemed, and debentures of tho North - Otago District Public Works loan for • L 7,700 have been paid, off,, making alto-, s gether L8Q7,700, which sum being de- • ducted from li§,pOO,oQ9, leaves g net in r crease publip debt of L4,5J00,3Q0. i When' the Imperial Government guaranf teed debentures for 800,000 are sold, and i the whole Treasury and deficiency bills i now held by the Publio Works Fund, and > representing advances to Consolidated 1 Fund to the extent of L 992,000,' are ' issued to the public, the gross debt, will f ampunt to L29,'214,611—0r, deducting ' accumulated sinking fund, L 1,805,493, the debt will be L 27,409,113, subject 'to • an annual charge of about 1(1,535,000. In t this statement of the.publio debt the last ' loan of L 5,000,000 is treated as unin- : scribed. . Should the whole debentures be > converted on the terms offered, the public debt will not be increased by L 1,000,000, '' but instead will be reduced, by LIO,OOO ; pep Parliament will be asked 5 during the present tp nf a }f e Pf°1 visions for extending to : 3J.st Decembepj ! 1882, the currency of certain Treasury • Bills amounting to L 390,000 partly falling within the current year, and to grant authority for exchanging them 1 at for debentures with a cur- ' rency of tljree years, as in the of • Biljs for L442,00(j provided for by the r Treasury IJills Act, 1§79. Similar pro- : vision, as I havp already said, will algo be. • required with respect to defigiency bills 1 for L 2,000,000, issued under the Public ! Revenue Act, 1878, forming part of the bills amounting to Ll>ooo,ooo issued 1 during the past financial period. Before 1 leaving the question of the public debt, ' the Committee will naturally expect some 1 account of the raising of the loan for. L 5,000,000. In last year's Budget I said Government had reason to believe from advices regeivcd from London that not, more than : L§,000,000 of the could be then successfully floated. When, however, the time arrived for placing the loan on the market, the loan agents considered it would be safe to ask for the whole amount at and the result proved they werp right; Had they supijeeded in placing L 8,000,000 only instead of the whole amount, our position at this moment would have been one of grave embarrassment. The ..Committee will understand this when I tell, them "that it has-been necessary up to the present time_ to use phe loan to upwards of L 3,060,000, of which L 1,818,000 wag for expenditure, and L 1,342,000 for advances- to the Qpnr solidated Fund on Treasury and Def|oiency Bills. Now that shese facts are before them, honorable members will easily appreciate tha anxiety ; pf Government last Session, irhen "it was considered,

certain that not more than L 3,000,000 < of the loan could be raised at once , and the remainder not for a year at fltsSst. Thereafter they will also under- , stand how necessary it was that our agents : should offer the loan at such a price as j .would insure its sale. ■ There is no doubt that the price obtained was low and terms of conversion at the option of investors J very favorable to purchasers, but hon. ' members who are disposed to think the termatoo favorable mtist bear in mind on the one hand, that investors would naturally look on the large amount of our " already existingpublic debt, and the un- 1 usually large sum asked for, whilst; on •the ] other ; hand our agents had "'to' consider the serious complications which would 1 have arisen had they-failed to . obtain the ' loan. It is an unpleasant truth, but one 1 which we shall do. well to recognise in ! regulating our expenditure for the'future, - that our financial agents in London felt themselves compelled to offer c>ur five per cent, loan at 91%, and to insure its sale j even at that price, to leave it optional with the purchaser to exchange it for a 1 four per cent, loan at 81£, and (using an ! authority given them in case of need) ] to undertake that the Colony should not ■ for the next three years again enter ■ the London money market. In the 1 absence of the loan agent'a accounts, .which' have not vet been received in the Colony, am unable to state the precise net price realised: for the loan, but, after, allowing for discount, commission, and accrued interest on the bonds, the price will be about 95J for 5 P© r cent, debentures, and L 79 7s 0d for those converted into 4 per oents. At the close of 1878-79 the balance to the credit of the Public Works Fund amounted to L506,5J05, of which sum L 298,543 represented advances in the hands of the of the Government, the oash balance in the public aocount being. L 207,662. During the nine months for 30th June, 1879, to March 31st last, we received on account of the proceeds of the five million, loan L 4,249,000, and certain special receipts and • recoveries, amounting to L 22,849, making with-the balance at the beginning of the a total of L 4,778,054. On the 31st Maroh the cash balance in public account, after providing for outstanding orders on the bank, was in the Colony and. in London together, L862,41Q, and the advances in the hands of the officers of the Government amounted to L31D,763, making together L 1,178,173. We had then issued during nine months ended 31st March last L 3,599,881 as follows: On public works, immigration, and other services, H,78Q,8§1; redemption of guaranteed debentures of loan of 18?Q—which are of oourse available fdif "'reissue, 1 LBOO,OOO ; temporary advances to consolidated fund on Treasury . and Deficiency Bills, L 992,000; temporary advances on debentures of Waimea Plains Railway' Company, L 40,000 ; and Wanganui Harbor Board, L 17,000; total, L 3,599,881. I have had prepared the usual statement of the total ways and means of the Public Works Fund and total net expenditure to 31st March last from the beginning of the Publio Works policy. Jt wiU be seen that statement is on the table that since the beginning of that policy in the year 1870 .we have borrowed for public works to the extent of L 18,700,000, which amount has been supplemented 'to the extent of L 364,794 by stamp duties and other receipts, making a total of 19,064,794. Our net expenditure , during the same period fin services permanently charged against the fund has amounted to | L 15,286,621. To this sum I add advances in the hands of the officers of Government the 31st March last, L815>763, an d the estimated, auin of L 200.000 for discount and oharges of raising the last loan, making altogether L 15,802,384, which, being deducted from L 19,064,794, the total ways and means, leaves a balance on : the 31st of March of L3,264,41Q— pouaistr ing of cash in hand, public accounts in the Colony and in Londpn, L 862,400 ; balance of five million loan tp. be received (estimated), L 551,000 ; guaranteed der ! bentures unsold, L57,Q00 j temporary ad--1 vanoes at interest, L 67,000 ; temporary advance to Consolidated Fund, L 992,000; [ total, L 3,262,410. With regard to Treasury and Deficiency Bills of the Consolidated Fund to the amount of L 992,000, ; taken up under authority of the Public Revenue Act, and the Treasury Bills Act, ; 1878, out of the moneys ftt credit of the Publio Wori?s Vund—l re-: t gret to inform the Committee that 1 since the 31st March it has become ■ necessary to talce up out of the same fund a further sum. of L 350,000. I'll us 1 the extent tp which at the present date ' the Public Works Jfwd has been applied ai(i of revenue arflfliints to L 1,342,000. [ It will, of course, be apparent to hon. 1 members that "we can reooup moneys sio 1 applied from funds available for expendi- ' ture on public works and other services . kept in view. Deducting the sum of ' L 1,342,000 from L 3,262,410, the balance 1 of ways.and on 31st March last, we [ have left a sum of L 1,920,410 available [ for public works and other requirements ! until we oan sell the Treasury and Deficiency Bills referred to. Having stated the ainount of ways and means available, 1 I shall now inform the Committee what J. are tHe liabilities, to meet which funds must be set aside before the question of enter- ' ing upon new works can be entertained. | According to returns certified to by the of the several departments, the liatiilitiea of the Public Works Fund on 31st March last amounted to L 2,455,318, made up as follows : Immi--1 gration, LIO,OOO ; Publio Works Depart- [. ment, L 64 4; railways, L 910,506 ; surveys _ of new lines, LISOO ; roads, L 180,696 ; : land purchases, L 1,061,406; waterworks . on goldfields, L 11,704 ; telegraph extension, L 1034 ; public buildings, 1^05,§14 ; ! lighthouses, LlgQ j miscellaneous public ' works, L 73,509. To this sum I add i further liabilities incurred by Public ' Works Department sinoe 31st March, LIIOjOOO, and contribution for ourrent ! year towards the cost of defence ! . force on the same scale as the past | nine months, L 140,000. These sums I amount to L 4,705,313, from which I 1 deduct. advances in the qf the officers of the government on 81st March, ; L 316,763 ; leaving L 2,389,550 as the sum required to be set aside out of Ways and Means at the credit of the fund on 31st March, amounting, as I have informed ' the Committee, .to L 3,264,410. Hon.. i members will, however, bear in mind that of th|s sum 1 represented by Treasury and Deficiency Bilte issued in ?tid of the Consolidated Fund. It will be seen that the lftrge | amount of the liabilities to whieh I have ' referred will absorb the whole of the cash at credit of the Public Works Fund, and will necessitate the sale of L 469,000 of Treasury andDeficieiicy Bills hypothecated to that fund. Means available for new ■ works and services will therefore be represented by L 873,000 in Treasury and : Deficiency Bills, being the of L 1,342,000 now held bv the Public Wprks •Appount, §o then, SJir, for the history of the past. I will now submit fot the consideration, and I hope the approval, of the Committee our aoheme of LOCAL FINANCE AND PROPOSALS FOR ORDI- - . NARY SERVICES Of the current year. It will be within thg recoljecfciqn qf hpp. members that I said last session that (Jovernineßt this t year recommend the - discontinuance of subsidies. This warning was given because it was then generally admitted that the system of subsidies was not working satisfactorily, that without further taxation the consolidated fund cpuld no longer bear this expenditure, owing to the annual charge on our public debt'haying become so large ; and in order that the local bodies themselves might'have reasonable' notice -before any change i?as made-: The Goyerameat ■ hold finaljr to the

opinion that this question of loCal finanoe, affecting as it does the vital interest of the whole country, is olio of paramount importance which must not be dealt! with piecemeal, but as a whole. To propose the abolition of grants in aid to local bodies, without substituting a workable scheme in their place, would' be trifling with the subject in a manner which I venture to think Would not meet with the . • approval of Parliament. Our aim is .twofold, our duty being first to place our . general finance Upon a sound- footing; second, to.,put. our local bpdies in such a . position as will enable them to do the work which rightly devolves upon them, and which must be done by them .if the* country is to be prosperously settled. I may point out to lion, members that the system of subsidies operated unequally. It has largely helped the rich and populous districts, while giving little assistance to those which are poor and thinly peopled. It must aIBO be remembered that they were proposed as part of a scheme to which full effect, lias never been given, for the Land Fund has been generally used, instead of being localised in provincial districts ; and expenditure upon public works, instead of being limited in amount, and confined to arterial undertakings, has been lavishly extended to works of all descriptions. Tho magnitude of this expenditure will be evident when I say that we have increased our debt for publio works within the last three years and a-half (the time during which subsidies have been paid) by L9,000,000j. which means an. annual, mortgage of L 450,000. The circumstances of the Colony having greatly changed since tho system of subsidies was introduced, and it being evident that the Treasury cannot continue to pay them without the imposition of fresh taxation, the case for the reconsideration of the whole question is • complete, for it is oertain that Parliament will never consent to levy additional taxation for suoh a purpose without full enquiry and full deliberation. In : the return,, Mr. Seymour, which I am about to submit to 1 the Committee, I must ask hon. members to bear in mind that I take it for granted—first, that sections 6 and 6 of the Financial Arrangements Act, 1876, Amendment Act, 1877, which authorise the subsidies and grants of 20 per cent, of the Land Fund to Counties, are to be repealed ; and second, that proceeds from land Bales are not to be uaed for ordinary purposes of Government. The ground being thus cleared, I will now endeavor to describe in sufficient detail the scheme we propose. To give effect to our proposal, we shall have to ask authority to introduce two Bills. The first will be an Amending Bill. It will remove the present restriction upon rating—thais is to say, it will permit local bodies having tlie right to rate to levy ratea to any amount they consider necessary fop looal requirements not exceeding two shillings in the pound or beyond that amount if passed as a speoial rate. It will authorise boroughs and other local bodies to borrow at any rate of interest the rate* payers may choose to give, and to any amount, subject only to these reatrio* tions : (1) That the principal and interests of all new loans Bhall be payable in New Zealand. (2) That any local body desiring to raise a loan shall, before doing so, levy a speoial rate sufficient to oavep the interest and sinking fund upon the money proposed to be borrowed, suoh rate to be continuous until the debt has been Repaid. The Bill will also require that any local body whioh has already borrowed upon its general revenue shall, before again entering the money market, levy a speoial rate to cover the interest and ginfc* ing fund upon the existing loan or loans as well as providing by special rate tor the'new loan. This afld other powersgiven by the Bill are apparently very large, and will, I fear, b,e considered dan. gerous by some. But, Sir, I would point out that if lo.cal bodies ar§ to be really useful, they must be made independent | and responsible, The one precaution to Ibe taken is to see that the ratepayers I spend their own money and not the money of other people, and this will be carefully provided for in the Bill. I now, Sir, come to a further and still more radical provision of the Bill—a provision whioh, however, I venture to hope will receive general approval, for it may be said to be the very foundation at this part of our i scheme. It is clear that all who benefit by the expenditure of rates should contribute towards them, and carrying out this principle to its legitimate conclusion, we propose that all Government property (including waste lands), and, subjeat to an important qualification, native lands shall be liable to rating j all Government property, with the exception of Govern* ment Houses in Wellington and Auok. land, the Parliament House and grounds, the General Government buildings in Wellington (by whioh I mean the large building upon the reclaimed land), and , the rauwaya and Whatever" may b.P thought of this proposition at srst sight, it yuUj I am sure, on mature consideration, and when it comes to be discussed in all its bearings, commend itself to hon. members as fair and reason* able. I will, Sir, first state how we pro's pose to deal with native lands within counties in which the Counties Act is in force. It is a fact; which I think should be recorded that some eleven million of }and in the North Island are st;H held by , less than 41,300 Maoris fanep, women, and children), and that not one half-penny in the way of rates has ever been imposed upon the natives by tlie House for the construction of the roads and bridges which are being throughout the Colony, and hywhiph their lands are being enaripfiously ihQreapd in value although $ is true, and ought to be noted to their credit, that many of them have voluntarily paid rates, and contributed from time to time towards the oost of the public works. All Maori property, too, is exempt from taxation under the Property Assessment Act. Sir, the Government think the time has arrived, and we hope and believe our Maori friends will agree with us in Qpiqion that henceforth aU Maori property in boroughs shall be subject to taxation to the same extent as the property of their fellow-citizens. But, sir, further this we do not propose to go, think, after a careful o£ all the circumstances of the gase, that, on grounds o| public policy, we may reasonably exempt pwners of native country lands from the payment of rates, It is clear, however, if this is done, that some equivalent must be found to enable those counties co'ntaiding a area of Maori land to carry out the duties we are imposing upon them. Therefore we are compelled, by considerations of publio polioy, to depart in this way from th§ principle of the Bill. It is clear that the cost of exemptions should fall upon t)iQ Colony at large, and not upon the localities on whiqh Onrdgns are imposed. Upon the assumption all the land will contribute its fair, share of the local taxation, it is prop, ip litnit the amount of ordinary rates leviable upon Maori country landg to one-half the rate levied on the ordinary land in the distriot in. which . they lie, but not exceeding 6d in the £, and upon waste lands of the Crown I 3 in the £ upon the annual value—thesfl lands being practically unrepresented ify thes local gqverflwg fcwes. This limitation is not, I think, unreasonable, To simplify matters, and avoid expense and dispute,' it is further proposed to atkaoh two schedules to the Bill—one showing, for •ating purposes, the estimated aoreage and ralue of the Qrown land in each County ind B,oad Board distriot, and the >ther affording similar information with regard to Maori land. Tho land in each sase; will be divided into two ol asses—pastoral atad' agricultural—valued respectively at ,6s 8d and 20s per acre, These tihedulea will always enable tho rateable

•alae of Crown and Maori lands in any strict to be ascertained, notwithstanding ♦hat sales go on from time to time, by amply deducting from the amount fixed schedule—-fe 8d or 20s per acre, as the case may be, for all lands sold, accordfog to its class. The total estimated yjae of Maori land is L 6,370,000, bat of this L 5,200,000 is situated in countries iQ which the Counties Act is in operanp. All lands, then, being subject to •», with the exceptions I have just the Committee will naturally wish {a fcnow out of what fund the rates on Crown land and property and Maori lands are to be paid. Bat, Sir, these are by no means the only objects for which money jus to be provided. In any satisfactory aclienie of local finance, means mast be found to construct oar main roads throughout the Colony. Some provision on3 t be made to repair damage done by goods and tempests to our roads and bridges, and some help must be extended, if possible to our district roads. This, then, brings me to the second Bill, to which I referred as necessary to give effect to our proposals. LOCAL PUBLIC WORKS BtLE.

The title of the bill will be " The Local public Worts Bill." It provides for the constitution of an unpaid Board, consisting of the Minister of Public Works, the En"ineer-in-Chief, the Surveyor-General, and the Public Trustee. The duties of the Board will be to pay the rates on all waste lands of the Crown, to pay the rates on the Maori country lands, to make grant 3 in aid of the construction of main roads, to advance money to construct district roads. This will be done from funds the constitution of which I will now describe. As I have before said, we shall ask Parliament to set apart the proceeds of land sales for special purposes, n ot permitting it to be used for the ordinary expenses of Government, charging against it only thecost of its administration, including survey. Now, I think that after this year we may fairly estimate the annual receipts from land sale 3 for Borne years to come at not le3s than 1300,000. I believe honorable members will agree with me that this is a moderate estimate, looking at the fact that onr unsold lands are estimated at a low average as worth L 12,500,000. I think we may therefore reasonably expect to realise not feus than L 300,000 a year for some time to come. The charges on the land revenue a&ould not exceed L 140,000 a year; so that should we only get from land sales 1,300,000 a year, there will be a balance to credit of at least L 160,000. The bill with which I am now dealing provides that out of the balance of the land jales, after paying the expenses of administration, there shall be paid to the Board each year the sum of L 150,000. If, however, the land sales should not in any year produce a surplus of L 150,000, then inch a less amount only as the sales may produce will be paid to the Board. I have estimated the land sale 3 thi3 year at only 1200,000. 'lt is possible that they may produce more ; but I have not, after careful consultation with the department, thought it prudent to estimate it at more amount. The cost of administration and charges is set down at about L 150,000. The balance, therefore, available this year, should my estimates not be exceeded, would be only L 50,000. Sir, it seem 3 to the Government that in starting such a scheme as we have under consideration it would be unwise to launch it without sufficient funds to enable the Board to make a good beginning. The prospects of the surplus land fund for this jwr reaching L 150,000 being but small, itt. t proposed to ask the House to make a pant to the Board of L 150,000 out of the loan, so as to place it in funds for the workof nextspring and summer. The fund thu3 created i 3 to be applied to the following purposes (1) The payment of the rates oit the waste lands of the Crown and Maori country lands; (2) Grants in aid for constructing main roads and repairing damage done by floods or tempest. The rates estimated at a shilling in the pound, gupposing every Road Board and every County to levy a shilling rate, would amount to about L 60,000, or to about LT^,OOO if rates on Maori land 3 are included, but I much doubt if the amount of rates payable by the Board will often reach L 50,00© a year. The balance remaining, whether it be LBO,OOO or LIOO,OOO, wDJ be applicable to main roads, and main roads only. The main roads, I should have said, will be defined by proclamation. I have had a sketch map prepared for the information of hon. members showing the roads it 13 proposed io declare at once, power being given in the Bill to proclaim others from time to time is circumstances may require. The grants fn aid will be limited by the funds at the disposal of the Board, and will be made in this way : I will suppose, for the sake of illustration, that a county wishes to construct, and construction means forming and metalling roads, or building bridges on. a section of main road over which it has control, or to repair damage done to * main road by flood or tempest. The Council must obtain an estimate of the cost of the work proposed to be executed, which I will suppose amounts to L6OOO. The Cunncil will then make application to the Board for a grant-in-aid. But before the Board can make the grant the Council must show that it has onequarter of the L6OO0 —that is, LISO0 — at itg disposal, which it undertakes to ipand upon the work, or the ratepayers of the County must impose upon them-. ieWe3 a special rate, which will repay one-fourth of the L6OOO, viz., LISOO, in 20 half-yearly instalments without interest. Jn other words, three-fourths of the cost of the construction of the main roads will be paid by the Board, and one fourth by the county, either in cash or by way of a special rate extending over 10 years. Hon. members mast bear in mind that wast 3 lands of the Crown and Native lands are subject to the special rate as well #8 private lands. The reason for making Bo grants unless the county is prepared to Contribute a fair proportion of the outlay *3l be obvious to the Committee. Hon. members will, I think, admit that the Contributions have been made as small as is compatible with prudence. I now turn to the proposed assistance to be given to district roads—that is, to all roads other than main roads. The Bill provides that the board of local public works may borrow from time to time at five per cent, interest, of the Postmaster-General or Government Insurance Commissioner, any *um not exceeding in the whole LIOO,OOO, tie Colony being liable for its repayment, Md lending it to the local bodies for the pwposeof constructing district roads. The terms upon which grants are to be made *re that a special rate is to be levied by the local bodies desiring to borrow, which (hall produce nine per cent, per annum °pou the proposed loan. The interest charged is to be four per cent so that nine Per cent, paid half-yearly will cover Both interest and sinking fund, and will extinguish the loan in 15 years. It will be observed that the rate of interest is very w, and the terms of repayment easy. I wink, however, hon. members will approve substantial assistance beiog given to local bodies for the purpose of constructing roads throughout the Colony, if only * e keep within our legitimate means, the Committee will say, " How can Board borrow money at five per cent. Interest and lend it at four?" Sir, this difficulty can only be got over by the same Cleans as is proposed in the case of the Jttad for the construction of main roads—by making a grant from loan to start the fund. I a hall therefore ask for L 50,000 to be granted for the purpose. The Board *3l then be in a position, should the pant be made, to lend L 150,000, or any «ss sum, at four per cent, interest, and at *®e game time'pay five per cent, upon ■Qch sums as it may borrow up to a limit « U50.000, with a safe margin for contagwicxea.

BOROUGHS. So far, Sir, I have not yet directly mentioned an important branch of my subject. I refer to Boroughs. Ido not desire to make light of the present loss to these bodies of the subsidies. My proposals will no doubt necessitate for a time a reduced expenditure, but there will accrue to the Boroughs the permanent right to tax Government and native property of not much less than one million in value. I say permanent, for I think no one can doubt that if once the principle of taxing Government property is admitted by this House, it will never be possible to retrace that step. The rates on all Government property it is proposed to charge upon the Consolidated Fund, as being properly included in ordinary expenses of Government. I trust, Sir, that the proposals which I have thus briefly sketched will commend themselves to hon. members as at any rate the basis upon which this important question of local finance may be ultimately settled. We are all of opinion, X think, that the subsidies should cease if means to a reasonable extent for carrying on the necessary works can be provided in a better way, and I submit that our proposals are better in every respect. The scheme is sound, because it is based upon two principles which are now unanimously accepted in this House. First, that the proceeds of land sales should be applied to opening up and settling the country; secondly, that the landowners must for the future practically find the means to maintain the roads of the Colony; and it has, moreover, this great additional advantage—that it will enable us to complete the separation of general and local finance. The one will in future be in no way dependent upon the other—an advantage which, I venture to think, will be of incalculable benefit to both the Government and the local bodies should our proposals meet with the approval of Parliament. I shall also ask for authority, where necessary, to permit local bodies to receive directly every tax or rate which belongs to or has been made over to them.

[The conclusion of the Statement will be published to-morrow.]