FINANCIAL STATEMENT.

Poverty Bay Standard, Volume IX, Issue 958, 9 July 1881, Page 2 (Supplement)

FINANCIAL STATEMENT.

The Colonial Treasurer, the Hon. Major Atkinson, said Mr. Seymour, I have before me this evening a much more pleasing and satisfactory 0 task than that which fell to my lot when I last had the honor of addressing you. As, however, the Statement which I am about to make is far more succinctly conveyed than usual with its predecessors, I must ask permission to recall to the mind of the Committee the financial position of the Colony in November, 1879, and at the end of March, 1880. This is necessary, because our condition in 1879 was so unsatisfactory as to require very vigorous treatment on the part of this House, and it| is to the result of the action then taken that I have to call your attention to-night. Consolidated Revenue. In November, 1879, I estimated that the Consolidated Revenue, including receipts from land sales, for the nine months to 31st March, 1880, the date proposed for the termination of the financial period current, would not be sufficient to meet the expenditure chargeable to that date by the sum of £796,886, and in confirmation of that opinion I pointed out that the revenue between the 30th June, 1879, and the time at which I was speaking had already proved inadequate to meet the expenditure by about £600,000, which sum had been raised by deficiency bills, and these bills it was hopeless to expect to redeem out of current revenue. The causes of this deficiency were not far to seek ; it arose chiefly from the great falling off in the sales of land, and from a lavish and rapidly increasing expenditure at a time when New Zealand, in common with the rest of the civilized world, was suffering great commercial depression ; but although the difficulty was serious and embarrassing at the time, a comparison of the revenue of 1878-79 with that of former years proved conclusively that our receipts from “ taxation and for services rendered” had been steadily and proportionately increasing year by year, and that the check which we were then experiencing was temporary only. This House no sooner understood our real financial position, than it took immediate steps to equalise expenditure and revenue. A determination was made to rely no longer upon the proceeds of land sales as ordinary revenue ; a vigorous system of retrenchment was initiated, and measures were at once adopted for the imposing of additional taxation to cover the charge for interest, amounting to nearly £300,000 a-year, payable upon the New Loan and Treasury Bills created. As, however, one-half of the financial period of nine months had already passed, it was of course impossible to meet such a large and unexpected deficit as £796,886 by means of fresh taxation or retrenchment during that period, especially as every item of revenue was either declining or stationary. The only course open was to place the amount upon loan, which was accordingly done by passing “ The Treasury Bills Act, 1879,” in which provision was made for £BOO,OOO, but the actual deficit on the 31st March, 1880, instead of £796,886 as estimated, proved to be nearly £200,000 more, and it was found necessary to obtain further aid by the issue of Deficiency Bills for that amount, which sum by The Treasury Bills Act, 1880,” was also added to the public debt. It must be remembered, moreover, that this deficit has entailed on the Colony an additional expenditure of at least £50,000 a year for interest until the sum of £1,000,000 is paid. The committee will remember the proposal which I made in 1879, that in future the receipts within the year should be dealt with as the revenue of the year, and the payments made within the year as the expenditure of the year. It will also be in the recollection of the committee that it was. determined not to apply this new system of keeping the account to the financial period of nine months ending on 31st March, 1880, but that whatever Bum might be required to equalize the revenue and expenditure to that date should be provided for out ’of the loan, so that we might start clear of liabilities. In consequence of this determination, I estimated in making the Financial Statement last year that the liabilities of that period would exhaust the available assets with the exception of £9,918. This, however, has not proved to be the case, for after discharging all liabilities in respect of the period now being referred to, which came in course of payment to 31st March last, there remained a credit balance of £38,555, particulars of which will jbe found in Tbale No. 1, attached to this statement. The deficit therefore to 31st March, 1880, was £961,445, being the difference between the credit] balance of £38,555 and £1,000,000, the amount of the Treasury and Deficiency Bills issued in aid of the revenue.

Expenditure of the Ordinary Revenue of the Year 1880-81. In the statement which I had the honor to make to the Committee last year, I estimated the cost of the services for the year at £3,423,709 and the amount which would come for payment m the ordinary course of business within the year at £3,248,709. On the

passing of the estimates, these sums were modified to £3,348,889 and £3,123,889 respectively. The actual expenditure was £3,168,183 (Table No. 3) or £44,294 more than I thought would come in course of payment during the year. The Committee will not, however, look upon this fact with disapprobation, but rather, I venture to think, with satisfaction, when I tell them that it means simply that I took advantage of the opportunity of paying amounts which I estimated would remain outstanding at the end of the financial year, thus reducing these from £225,000 to £165,514. 1 may add that the total amount voted for the departmental services of last year, inclusive of lands and surveys was £1,929,807, and the actual expenditure was £1,754,041, or £175,766 less than voted, and if from this we deduct the outstanding liabilities, we find that the services of the year have been performed for really less than the vote, a result which, considering the searching revision to which the estimates were subjected by this Committee, will probably be thought very satisfactory.

Ordinary Revenue of the year 1880-81. I now come to the estimated revenue as compared with the actual receipts for the year, full particulars of which will be found in Table No. 3 attached to this statement. Ido not include herein the receipts from land sales. Of these I will speak presently. The estimated revenue was £3,238,000, while the actual receipts amounted to £3,123.961 being £14.039 less than my estimates. It will be seen upon reference to the Table to which I have referred, that the receipts from railways were less than the estimated amount by £111,377 ; but notwithstanding this fact, it will be gratifying to the Committee to know that through the economical management of my friend, the late Minister for Public Works, they have yielded about 3| per cent, upon the £9,228,000 spent in their construction. The Property Tax yielded £80,283 less than I had estimated, but of this sum £42,000 had yet to come in, being the amount outstanding and collectable on the 31st March. Of the remainder, £20,000 is accounted for by the alteration of the schedules which was authorised during the session, and £20,000 is an overestimate. I will, however, say no more about the Property Tax here, as I shall have to speak somewhat fully upon that subject presently. Telegraphs also yielded £12,562 less than estimated. On the other hand, customs and stamps (in the latter I include land deeds) produced more than was estimated ; the former by the sum of £57,684, the latter by £10,886. The increase in the customs and stamp duties is, I think, a subject for congratulation, as showing that the commercial depression under which we have been suffering is passing away, and that the spending power of the community is gradually resuming its normal condition.

Land Fund of the Year 1880-81. The estimated expenditure chargeable against the Land Fund was £158,706, exclusive of £51,648, representing onehalf of the proposed subdsidies to local bodies. Hon. members will doubtless recollect that when it was found impossible, from want of time to consider the Local Public Works scheme of the Government, it was determined to continue the subsidies at a reduced rate, and it was then thought that the Land Fund would not bear the whole of the subsidies, but 1 am glad to say that it has proved quite sufficient for the purpose. 1 have, therefore charged against the Land Fund the full amount paid on this account. The total expenditure, including £110,506 for subsidies, has been £266,793. The estimated revenue from land sales was £200,000, but through the successful handling of affairs on the West Coast of this Island by my hon. friends, the late and present Native Ministers, we have had most satisfactory sales of land in that district, which have brought up the receipts from land sales to £299,166, the expenditure having been £266,796, leaves a credit balance of £32,376. The liabilities outstanding at the close of the year amounted to £37,561 (Tables Nos. 1. 2, and 3.) The Public Debt. The gross public debt of the Colony, on the 31st March, 1880, amounted to £27,422,612 ; on 31st March, 1881, it was £29,165,511, or, deducting the accrued Sinking Funds, £2,057,241, the net public debt was £27,108,272 (Table No. Jf). It will be observed on a reference to the statement I made to the Committee last year, that the gross amount of the debt on 31st March, 1880, did not include £992,000 Treasury and Deficiency Bills taken up out of the moneys at the credit of the Public Works Fund, or the £BOO,OOO unsold debentures of the loan of 1879, guaranteed by the Imperial Government. As £560,100 of the bills referred to have been disposed of during the year, and advances amounting to £300,000 had been obtained upon security of the debentures, these sums have now to be added to the public debt as on the 31st March, 1880. The public debt has further been increased during the year by the conversion of £4,476,000 5-per cent, debentures into £5,371,200 4-per cents, under the option expired on 16th March last, given to subscribers to the

five million loan of 1879. This operation resulted in an increase of the debt by £895,200. Since 31st March, 1880, the following debentures have been redeemed and cancelled :—Nelson Waterworks Loan of 1864, £6,200 ; North Otago District Public Works Loan of 1872, £6,200. , The net increase of debt during the year, exclusive of the increase by conversion into inscribed stock, was therefore £847,700, but inclusive thereof it was £1,742,900. Adding to the gross debt on 31st March, 1881, the balance of the guaranteed debentures, £500,000, and the Treasury bills, £431,900, held by the Public Works Fund, the total gross public debt, when these securities are disposed of, will amount to £30,097,411, or, deducting Sinking Fund accrued to 31st March, 1881, £2,057,241, the net debt will be £28,040,170, in respect of which the annual charge will amount to about £1,543,000. I may add, that by the conversion of £4,476,000 five per cent, debentures into £5,371,200 four per cent., a saving of £8,952 interest per annum has been effected.

Public Works Fund on 31st March, 1880.

The total ways and means available, subject to liabilities, was £3,778,173. This sum includes cash in the Colony and in London, £862,410 ; advances in the hands of officers of the Government, £315,763 ; balance of the Five Million Loan, £751,000 ; guaranteed debentures of the Public Works Loan of 1870, £BOO,OOO ; amount advanced temporarily at interest, £57,000, and advances to the Consolidated Fund upon Treasury and Deficiency Bills, £992,000. During the past year, special receipts and recoveries, amounting to £43,174, come to the credit of the fund, making, with the balance of £3,778,173 at the beginning of the year, a total of £3,821,347. The expenditure, a summary of which will be found in Table No. 1, appended to this statement, amounted to £1,960,974, thus leaving an unexpended balance of £1,860,373 at the close of the year. The liabilities outstanding on 31st March last, including £997,725 for lapd purchase as certified to by the heads of departments, amounted to £1,585,512, particulars of which will be found in Table No. 6. Setting the amount of these liabilities against the unexpended balance of £1,860,373 there remains to be appropriated for new services the small sum of £274,861, but in arriving at this balance of £274.861. hon. members will observe that £997,725 is set aside as a liability on account of land purchase. Should, however, the policy in reference to such purchases enumerated by the Government be carried out, the sum which it will be necessary to reserve out of the existing balance will not exceed £200,000. The available balance for future appropriation will then be £1,072,586, instead of £274,861 as just stated.

Financial Results of the Year 1880-81. Hon. members will recollect that it was determined last year, that for the future the revenue of the year should be the actual sum paid into the Treasury during the year, and that the expenditure should be money actually paid away during the year, thus dismissing both assets and liabilities from the public accounts, the one being treated as a revenue of the succeeding year, and the other being provided for in its votes. I have said that the expenditure within the year was £3,168,183, and the receipts from revenue £3,123,961, exclusive of land sales, but, including the balance of £38,555, brought forward from last year’s account, the receipts amounted to £316,576, so that upon this division of the account there was a deficit of £5,667. The expenditure from land fund was £266,793, and the receipts £299,167 ; the surplus on this account being £32,373. The total expenditure therefore of the Consolidated Fund was £3,434,976, and the total revenue £3,461,862, thus leaving a surplus balance of £26,706 upon the actual transactions completed within the year. Now, if Hon. members will compare the position as first stated, with the state of things in March, 1880, they will at once see the financial position of the Colony by the Government has been borne out by facts. I then stated, and gave my reasons for the belief I expressed, that the check we were then suffering was only temporary, and that notwithstanding the very large deficit which had to be met out of the loan, the financial condition was thoroughly sound, requiring only reasonable self-sacrifice, and care, and prudence in the management of our affairs to restore us to renewed prosperity. At the close of the financial period ended 31st March, 1880, we had borrowed in aid of the revenue of that period £1,000,000 by way of Treasury Bills. After closing the accounts of the year ended 31st March, 1881, we can see our way to provide out of ordinary revenue for the liabilities outstanding at that date with every prospect of a fair margin of receipts in excess of expenditure at the end of the year, and this notwithstanding the fact that the interest we have to pay has been increased by some £300,000 a year. Local Finance. I now come, Mr. Seymour, to the consideration of that difficult problem Local Finance ; a problem difficult of solution, chiefly Jbecause of the restless pushing energy which still demands

more local works to open up the country, or this notwithstanding the fact that we have already borrowed so largely for these purposes that we are compelled in our general taxation to trench somewhat upon the funds which we should like to see left free to supply local wants. At the same time, it seems to be entirely forgotten that the localities themselves hava largely benefited by the Public Works scheme, and that by the construction of railways, roads, and bridges at the charge of the Colony they have been permanently relieved of much expenditure. It is, indeed, quite certain that if we are to people the waste lands, and make the country progress, as we have determined it shall Progress, we must find the means not only to keep in proper repairs our roads and bridges already constructed, but also to extend out road system throughout the colony step by step with advancing settlement. I propose to-night to speak only in relation to the financial aspect of the question without reference to the organisation of powers of the local bodies. Of these I shall speak at an early date. I now take it for granted that the local bodies will be charged with the duty of making and maintaining the roads within their jurisdiction, and that on these works the bulk of their expenditure will be made. The local bodies have other duties to perform, but if that part of the problem relating to roads and bridges can be satisfactorily solved, the rest will follow without much difficulty. This then is the great question for solution.—How are funds to be provided for construction and maintenance of our roads and bridges ? The question naturally divides itself into two branches, first, maintenance, and second construction. But before proceeding further, let me say what in my opinion are requisites for a sound local finance. It should be as distinct from and independent of our general finance as possible that the funds should be sufficient for the maintenance of roads and bridges. First then, let us consider the means at. our disposal for maintenance of roads and bridges already constructed. With very little construction, it will be evident. I think to every one that our roads and bridges must be maintained for the future with, perhaps, one or two exceptions, by local rates. The landed property in each district must pay rates. Government, therefore, propose that Crown lands and Native lands shall be rated with certain exceptions, with which I need not now trouble the Committee. This proposal is the same as that which I had the honor to submit last year, with one or two important alterations. The proposal is shortly this—That within Boroughs the property of the Crown, with certain exceptions, and of Maoris, shall, for future, be rated under “ The Rating Act, 1876,” —the Maoris being in this case placed on the same footing as European holders of town property ; and that country lands, both Crown and Native, shall be divided into two classes—agricultural and pastoral—and shall be rated at £1 an acre for agricultural land, and 6s 8d an acre for pastoral land, which amounts for rating purposes will be taken as the value of fee simple. Hon. members will observe that while last year it was proposed to estimate Native land at one-half value of Crown land, it is now proposed to value them alike, and I cannot but believe that upon considering all the circumstances of the case the Committee will think this fair and reasonable. If the Crown and Native lands are to pay rates, the question arises, who is to be responsible for their payment to the local bodies ? and out of what funds are they to be paid ? We propose in every case that the Colonial Treasurer shall be primarily liable, and shall pay the rates to the local bodies. The rates on Crown property within Boroughs, we propose to charge against the Consolidated Fund ; the rates on country Crown lands against the Land Fund ; and the rates on country Native lands we propose to advance out of money appropriated by Parliament for the purpose, but to remain a charge against the Native land for which the rates are paid, and to be recovered without interest as a duty under the Stamp Act, from the first purchaser or lessee of the land so charged. With regard -o making the rates to be paid up-n Crown property within Boroughs a charge against that funds, and in respect to the rates on country Crown lands, I hope it will need no argument to prove that they should be a charge against the Land Fund. Having determined that the land shall maintain the roads, there can be no reason to make an exception in favor of the estates of the Crown land. It is from proceeds of this estate that we propose to make the payment in charging the rates against the Land Fund. The proposal, however, to advance rates on Native land will require some explanation. As a matter of strict justice there is no reason why our Maori fellow subjects should not pay their share of the cost of local works, which, as they are undertaken and completed, improve their lands in common with the lands of their European neighbors. But, although this might not unfairly be insisted on, there are reasons .which, I hope, will induce this House to make such provision as will, without unduly pressing i upon the Maories, deal fairly with the

local bodies who are charged with the maintenance of roads passing through native lands within their jurisdiction. The reasons are chiefly those of public policy. It wonld be a great mistake on our part, especially now that our relations with the natives have so greatly improved, to make demands which large numbers of them could only meet with great difficulty, if at all. The Maories will, I think, at once recognise the fact that the time has arrived when we may reasonably ask them to charge their lands with rates for local works which greatly enhance the value of those lands; the rates, without interest, to be payable only by Europeans when such lands are parted with to Europeans. I shall propose, if the House agrees to this plan, to charge these rates, in the first place, against the consolidated funds. Before leaving this part of the question, there are two other important matters to which I must refer—the limitation of self-rating to one shilling in the pound, and the cost of the yearly valuation. It is, Sir, well known that in some parts of the colony a shilling rate is insufficient to maintain the roads. The Government are unable to see upon what grounds of either reason or justice the local bodies are denied the power of raising enough money for that purpose. We shall, therefore, propose to increase the rating power to two shillings in the pound, a. power already possessed by several of the local bodies, believing that that limit will be approved by the country, and be found ample for the duty imposed. With regard to the valuations, experience has shown that they are required by law to be made much oftener than is necessary, thereby causing the local bodies a large and useless expenditure. The Government propose to relieve the local bodies entirely of this charge, and so save them from an unprofitable expenditure of probably not less than £16,000 a-year. We shall ask the House to permit all local bodies to use for rating purposes the valuations under the Property Assessment Act, with manual corrections. I have had a table prepared (No. 10) showing the valuations under the Act as compared with the valuations made by the local bodies, and when hon. members compare the two valuations, the totals of which are remarkably near, the proposition will, I think, commend itself to their judgment. Construction of Roads and Bridges.

And this brings me, Mr. Seymour, to the second branch of my subject. Now, there are three distinct classes of roads with which we have to deal under this branch of our subject. Ist—There are the mains through Crown lands not yet settled ; 2nd—the main roads running through the settled or partially settled districts ; and 3rd—district roads both in settled districts. We will first consider the question of how money is to be provided for roads through Crown lands not yet settled. My colleague, the Minister of Lands, has given much attention to this subject during the recess. He has, by means of roads cleared and formed, with sufficient culverts to make them passable, opened a large quantity of land for settlement, and he will this year submit a scheme involving the expenditure for this purpose of £150,000 out of loan, the expenditure to extend over a period of 3 years, at the rate of £50,000 a year. This work, wherever practicable, will be done as hitherto by the local bodies ; but everyone acquainted with the country must know that these provisional roads are only the beginning of a necessarywork, and that settlement of small blocks of land cannot be successsful without good roads. As a matter of sound policy, a good road, if it does not precede, ought certainly to immediately follow settlement, Now, there are only three ways in which money for this purpose can be obtained. It must be got either from the proceeds of the lad, or from loan, or from both these sourcesAfter carefully considering the subject, the Government have come to the conclusion that the necessary funds can be obtained from the land itself, not only without injury, but with advantage to settlement. We propose, therefore, that after the land has been surveyed, and the roads marked off, an estimate of the cost of formation and metalling the main road through the block shall be prepared by the local body haying charge of the district, and that to the fixed upset price per acre of land to be served by the road shall be added a sum,according to situation, sufficient to cover the cost of construction, and that the money so obtained shall be set apart and paid over to the local body under proper safeguards to be used for that purpose only ; and we further propose that when half the land in any block is sold, the Government shall advance the money to complete the main road through to block, recouping itself from time to time the as rest of the land ie sold. We now come to the roads of the second class—those unconstructed main roads, running through settled or par-tially-settled districts. Our proposals in respect to these are, in substance, the same as last year, but the machinery of the Roads Construction Bill, by which it is proposed to give effect to the scheme, is, I hope, an improvement on the Local Public Works Bill of last session. The constitution of the board, which was objected to by many hon.

members, has been altered, and: it is now proposed that it shall consist of the Minister of Public Works and three members, to be appointed by this House. In order to provide, for the necessary works, I shall ask the House to make a grant to the Board of £150,000 out of loan, and to cause to be paid over to it yearly a further sum not exceeding £150,000 out of the balance of the Land Fund. This fund will be applied for in the following manner :—Suppose a local body, desirous to construct a piece of main road, or build a bridge, which we will say is to cost £I,OOO, it will prepare 'estimates, showing the cost of the proposed work, and submit them to the Board, and ascertain if there is any money available. If there is money available, the local body will, after taking an affirmative vote of ratepayers, strike such a special rate over that part of the district benefitted by the proposed work, including Government and Native lands if any, as will in ten vears repay without interest onequarter of the amount obtained from the Roads Construction Board. In the case supposed of the works costing £I,OOO the Boards would have to strike a special rate which would produce £25 a year or £250 in ten years. If the 'local body had £250 in hand which it could apply to the proposed work, chose to first raise the money by general rate, it could then obtain from the Roads Construction Board £750, the balance of the £I,OOO estimated to complete the work. In other works for the purpose of main road construction for every £ which the district finds, £3 is added from the Land Fund. In case more money should be applied for than the Board has at command, grants pro rata would be made, but all applications in cases where a main road or bridge has been destroyed or washed away by flood, would take precedence. We have now only to consider the third class of road ;’ that is, district roads. To enable Road Boards to make these distinct roads, we propose to ask the House to make a free grant of £IOO,OOO to the Roads Construction Board, and to permit to borrow another £IOO,OOO at 5 per cent, from the trust funds, making a fund of £200,000 available for this purpose. We propose that this fund should be self-supporting, and that it should be dealt with in this way. Suppose a Road Board wishes to borrow a £IOO for a small bridge or other works, it would submit an estimate of proposed work to the Roads Construction Board, - ascertaining after taking an affirmative vote of ratepayers, the Road Board will strike a special rate which would produce £9 a year for thirteen and a half years. The produce of this rate would be paid over to the Board half-yearly, and by the expiration of the period I have named, the whole of the amount borrowed, with interest at 2 per cent, per annum, would be paid. So far, I have only been dealing with Counties and Road Boards. As will have been observed by Hon. members my proposals do not effect the Borough, except to the extent of granting power of rating - all Government property within their Boroughs. I think with every desire to help the Boroughs, we must recognise ’ the fact that the surest and most effectual method of helping them is to encourage successful settlement upon land. With a well roaded and prosperous country, difficulties of Boroughs will end. In the above proposals I con- - ceive that we are, in fact, carrying out the idea of the legislature in withdrawing the2o percent of the produce of land sales from appropriation by County Councils. That fund was meant to be devoted to opening out of the very districts from which it arose. Unfortunately the Councils (following suit to the Legislature itself) had treated it as ordinary revenue applicable to any of the objects under their control and administration, using it in effect to lighten local rates - and dispense with them altogether. The result of proposals I have just submitted will not then be to reduce the proportion of Land Fund locally expended, but in most cases, and for some time to come, will increase it materially but it will be expended under such safeguards as will insure its application to the colonising uses to which this House desire to devote it. I think the warmest advocate of the localisation of the Land Fund can desire no more. Before quitting this branch of my subject, I will deal shortly with the suggestion that the Government should take over and maintain the main roads of the colony, a proposition which rose far beyond the centralising tendencies sometimes imputed • to the Government. We are not ambitious to take charge of some thousands of miles of roads, and do not feel our- . selves competent to the task. The House will certainly not appropriate the needful fund out of ordinary revenue, Nor will it invite annual repetition on its floor, and on a petty scale of the struggles for local appropriation, which have impaired the success of the Public Works policy. In the face of the complaints which are already abroad of the concurrent rating power of County Councils and Road Boards, the House is not likely to undertake itself the duties of a third rating authority, nor can it in the present condition of the general finance abandon any part of the proceeds of the Property Tax to local administration. Such then, Mr Seymour, is a brief sketch of the proposals of the Governmen with regard to local

finance. It may be said that there is nothing very new or startling about this scheme, and that, Sir, may be true; but the question is, is it a plain workable scheme easily understood, and will it give us what we must have as rapidly as our means .will permit, roads throughout the country ? I submit, Sir, with confidence, that it will, and that it will also relieve both this House and Ministers from pressure to supply local wants, which cannot be ignored if settlements are to advance, but which it is very undesirable should be dealt with directly by this House. Ido not, to-night, intend to trouble the Committee, who desire upon such an occasion as this, only a broad outline to enable them to judge of the effects of the proposal upon general and local finance. That the scheme, if it becomes law, will make our local finance as distinct from, and independent of, any provisions for the local bodies, as'our means now permit is, I think, also certain. It has now this great advantage, that should if proved successful, it can be expanded without difficulty to meet all future wants of the country, and is equally suitable to our local bodies whether we enlarge them and multiply their functions, or keep them much as they are.

Estimated Expenditure from Ordinary Revenue, 1881-82.

I now come, Mr. Seymour to the consideration of the estimated expenditure for the current year. It will be in the recollection of hon. members that last year the Government, with the assistance of this Committee, made very large reductions in estimates as sent down, and that after these reductions had been made, I stated to the committee that the net result for the year amounted to £197,000, [and that if the Government succeeded in carrying out retrenchment it had in view the estimates for the annual appropriations for this year would be £252,000 less than those for 1880-81. As introduced last year, I am happy to say that many anticipations in this respect have been more than realized. The estimates as brought down last year for the twelve classes of services under control, respectively of Speakers of both Houses, Colonial Secretary, the Colonial Treasurer, the Minister of Justice, the Postmaster General, aud Commissioner of Telegraphs, Commissioner of Customs, the Commissioner of Stamps, Minister of Education, the Minister of Native Affairs, the Minister of Mines, the Minister for Public Works, and Minister of Defence, amounting to £2,103,613, full particulars of which will be found in table No. 7, attached to this statement. The estimates for the same services are for this year £1,754,612 only, or in other words £334,001 less than those of last year. Hon. members will see upon reference to the table that upon every class without exception there is a reduction, and that in class 11 that of the Minister for Public Works, there is a reduction of £53,492, notwithstanding the fact that the estimates for the current year are for an average mileage of 93 miles greater than was worked during the past year, and that ample provision is made for their efficient working maintenance. I should not perhaps include in this sum the item £25,500 for contingent defence, which has been removed from estimates, this being one of those cases in which it may be said that no reduction of expenditure had been made, because the item was placed on last years estimates to provide for contingency merely. But I think we can in fairness claim to include the amount in consideration of the fact that our being able to dispense with the item is due to the better prospects of continued amicable relations with the Natives. Such a result, then, as the reduction of £281,501, or, including £52,500 for contingent defence, £334,001 in twelve classes of estimates in one year, is a work upon which, I think, I am fairly entitled to congratulate the Committee. These reductions have not been accomplished without much hard work and painful thought, and could certainly never have been made at all but for the hearty co-operation of the Committee with the Government in effecting these necessary economies. The total proposed votes for the present year inclusive of liabilities, which now appear in ordinary votes, is £3,270,532 ('Table No. 8) are divisable into two parts, (1) permanent charge, amounting to £1,570,019, and (2) Annual appropriation amounting to £1,699,612, in which latter division alone can reduction be made at present. As I have said, greater reductions have been made in this division during the past year, but notwithstanding this fact, (Government believe that they can during the present year effect still further reduction. I cannot, however, do more on the present occasion than point out that the line in which the Government is moving is in the direction of the simplification of the services, the consolidation of offices, and consequently the diminution of the number of employes. There are, I think, no special items of expenditure to which I need call the attention of the Committee, except that the item of interest and sinking fund has increased by £46,158, while that of Constabulary has decreased (including a sum £52,500 for contingent defence already referred to) by about £ll3‘ooo, through the steady reductions the Go-

vernment have been enabled to make in this force in consequence of our improved relations with the Maoris. This fact will, I am sure, be heard by every hon. member with great satisfaction. Estimated Expenditure from Land Fund, 1881-82.

I ought, Sir, perhaps to have said bofore this, that in speaking of the ordinary revenue, I have not included the proceeds of land sales. If the scheme which I have submitted for consideration of the committee should be confirmed by the House, the Government will propose that any balance there may be left from the land sales, after payment of charges it is intended to place upon them, should by law be paid into the Public Works fund, but without prejudice to the public creditor. The estimated expenditure chargeable against the land sales is as follows (as hon. members will see upon reference to table No. 9): —For charges fixed by Acts of General Assembly, £84,966; for Crown Lands and Survey departments, £134,584; for rates to local bodies, £27,000 ; for roads and bridges, a sum not exceeding £150,000, to be paid to the Roads Construction Board. The balance, if any, after payment of these charges is to be paid over to the Public Works fund. Property Tax.

I will now, Mr. Seymour, in accordance with a promise made in the early part of this statement, again refer to the Property Tax. The Act, Sir, although requiring some amendments, has .been found, upon the whole, effective, and now that its provisions are generally understood, it is admitted throughout the colony that the tax is thoroughly fair in principle, and that it has generally worked satisfactorily. I don’t mean, Sir, to imply by this- that direct taxation is palatable, but I venture to say that in no country in the world has direct taxation been accepted more willingly, or paid more readily, than the Property Tax has been by the people of New Zealand. I have had prepared for the information of the , House several very interesting tables, which will, I think greatly increase our knowledge with regard to the distribution of wealth and especially in reference to owners of land. There are, I find, 21,761 freeholders inside boroughs, and 43,058 freeholders of country land. The total number of freeholders in the Colony is 60,658, being somewhat less than the aggregate of freeholders of borough and country lands, because some holders of property hold land under both designations. The Committee will, I think, expect from me here some particulars as to the cost of collecting the tax. The total expenditure made for the last year including outstanding liabilities, but exclusive of , Land Tax charges, was £31,000, being made up of the following items : Cost of valuation, £16,000 ; salaries, £7,275 ; preparing tables, £7OO ; miscellaneous, including cost of collection, £7,025. With regard to the valuation, I find it has cost about £3,000 more than the Land Tax valuation, the valuation under the latter being £13,000, and under the Property Assessment Act, £16,000. But if the proposals of the Government are agreed to, and this valuation is used by the local bodies as the basis for their rating, the whole of the cost of their assessment will be saved to the country during the next year, the saving going into the coffers of the local bodies. In fact, Sir, if we make one triennial valuation do for both general and local purposes, the cost of it will be so small as not to amount to 1 per cent, upon the rates and taxes collected. If this suggestion should be accepted, it would not be fair to charge more than £5,000 a-year against the Property Tax for the three years during which the valuation continues in force ; but, admitting that the whole of the introductory expenses and the triennial valuation are to be charged against the Property Tax, even then the rate per cent, for levying and collecting the tax —supposing it to be continued at the rate of one penny in the pound for three years, will be very moderate. The estimated cost of the Property Tax Department for the next two years is £12,000, For this year, I shall ask for £6,000, exclusive of liabilities, so that the total cost for three years will not, I think, exceed £44,000, and the total receipts for that period, provided that the present rate of Id in the £ be continued, will certainly reach £86,000, thus making the total cost of the tax a little over 5 per cent, upon the amount actually paid into the Treasury. If a proportionate deduction is made from triennial valuation on account of the use made of it by local bodies, it will be seen that the Property Tax can be collected for less than 4 per cent., a result with which, I think, we may rest satisfied. Of course, any alteration in the rate of the tax will necessarily increase or diminish, as the case may be, the relative cost of the collection. When the Property Tax was first imposed, a strong fear, perhaps not unnaturally, was expressed by many persons that one of the effects of the tax would be to drive away foreign capital seeking investment in this Colony. I have consulted gentlemen from all parts of the Colony who are authorities upon this snbject, and I have not found one who entertains the opinion that the Property Tax has had any appreciable

effec t upon the flow of capital to the Colony, and, as a matter of fact, during few periods of our history has more foreign capital come into the country and found investment than during the last year at an equally low rate. Revenue for Year, 1881. Before, Sir, I proceed to the consideration of the estimates of revenue for the current year, I desire, with the permission of the Committee, to refer to one or two important questions which are doubtless occupying the minds of hon. members. The first which presents itself to most of us is, I think—Will it be necessary to impose fresh taxation this year ? lam happy to be able to inform the Committee that I can answer that question with an emphatic negative. That question having been answered satisfactorily, comes its fellow —Can taxation be reduced this year ? The answer must depend on the view the House may adopt of action to be taken in the early future towards completing the great arterial communications of the Colony. The Government, after past year’s study of the condition of the Colony under circumstances of exceptional depression, have decided to assume that the Legislature will require finance to be adopted in the sense of continuing its great undertakings. Experience of the past will enable us to do this on a sureT basis of calculation than hitherto. The general reasonableness of the expectations, as well as dangers of the policy of 1870, is fully exposed in the revenue returns and trade and population statistics of the last, ten years, and these justify me in recommending that, whilst avoiding what I will call high-pressure finance, we should arrange for the construction of all defective lines in trunk lines of railway, necessarily at a reduced speed, but without intermission. While this recommendation forbids us to propose any very imposing reduction of taxation, it might not prevent us diminishing to an appreciable amount our demand on the taxpayer. Returning to the Property Tax, it will be in the recollection of the Committee that when the Act was passed it was determined on grounds of public policy not to include foreign capital as liable to taxation. On a fuller consideration, the Government have determined to ask the Legislature to bring this excluded capital within the Act this year. We shall, therefore, shortly ask leave to. introduce a Bill to amend the Property Assessment Act in the direction indicated, and for the purpose of correcting some faults and unfairness which have appeared in the working of the Act. Should the Act be amended as proposed, I estimate that the taxable property under it will be increased by no less than £11,000,0000, of which estimate particulars will be furnished when the Bill is under consideration. This amount, at Id in the pound, would yield say £45,000, and. in the present condition of revenue, will enable us to propose, first, a reduction in Customs’ duties ; second, a diminution of property tax. We propose to admit free of duty— Calicoes, white and grey; moleskins, corduroy, colored cotton shirting (all in the piece), and to admit free or reduce the duties on a variety of other articles which need not now detain the Committee to enumerate. With respect to the Property Tax we shall ask for the continuance of the present penny rate till September next, to be reduced after that date to one halfpenny for the remainder of the year.

Ordinary Rvenue. We have now, Mr Seymour, to consider on the above basis Ways and Means for the current year. I estimate that the total receipts of the year from all sources in ordinary revenues account, will amount to £3,297,650, full particulars of which hon. members will find in Table No. 8 attached to this Statement. Of this, £1,826,000 is to be raised by taxatiou, and £1,471,650 is receiveable for rendered, etc. Speaking, thAn, first of the amount raised by taxation, we find that of this, custom duties last year yielded £1,340,650 ; this year I have eetimated them at £1,346,000, or an increase of about £5,350, which, con sidering the steady and satisfsetory improvement in the circumstances of the colony, will, I think, be fully realized ; but from this amount it will be necessary to deduct £lOOO, if remissions which I hove just suggested are agreed to, thus leaving the Customs duties for the year at £1,345,000. The Property Tax I have estimated to give £270,000, upon the supposition that the Amending Bill of which I have spoken becomes law ; but of this amount £42,000 is from that part which remained uncollected of last year’s tax upon the 31st March last, so that the tax is estimated to yield this year £228,000. When first proposed it was estimated that the beer tax at 6d per gallon would yield £lOO,OOO, and when a duty of 2d per gallon was imposed,! estimated ii to produce LOO,OOO a year. The actual receipts for ten months in which the Act was in operation during last year, was a rather less rate than estimated ; but I think we may not unreasonably expect to receive from beer duty LOO,OOO. I have, therefore, estimated to receive that amount this year. With regard to stamp duties I estimate they will produce L 52,000, if the Deceased Persons Estates Duties Bill becomes law. This Bill is substantially the same as the one which passed the House last Session, and' was thrown out in another place. I hope it may be-

come law this Sessisn, as the Bill is a great improvement upon the present law, and duties charged under it are certainly moderate. There is not, I think.a more legitimate tax in the colony than that upon property at the death of its owner. The Bill as it passed last Session would have increased the revenue by about LlO,OOO a year, but as now proposed, the increase to the amount is not estimated at more thap L5OOO. There is, I think, only one item in the revenue estimated to be received for services rendered calling for special remark, and that is the Railways. I have estimated receipts from railways for the year at L 910,000 ; the actual receipt for last year were L 838,622. As we have now about 93 more miles open for traffic, and prosperity is steadily returning, the estimate may, I think, be considered not excessive. There is no other item, of revenue to which I need call the attention of the Committee. I have said that the estimated expenditure is to be made within the year, and hon. members will understand that this now including outstanding liabilities is £3,270,532, to which I add deficit at end of last year £5,667, making a totai of £3,276,108, and the estimated revenue is £3,297,650. Deducting this estimated expenditure from estimated revenue we have a surplus of £21,442, a result which, if attained, will I think be extremely satisfactory. 'As showing the steady progress of the Colony, and the wonderful elasticity of our own resources, the Land Fund receipts from sales of land are estimated at £333,000. My hon. friend, the Minister of Lands, has given great attention to the subject of selling land in small holdings, and has opened blocks of land upon this principle throughout the Colony with marked success during this year, and if the proposals of Government are agreed to with regard to road-making, I have no doubt that still more settlement will take place during the current year, and that it is probable that my estimate of £333,000 may prove to be exceeded. But if it should it shall not under our proposals be absorbed in ordinary charges of Government, but be set apart for Public Works. Adding balance at credit of Land Fund on 31st March, £32,373, to estimated revenue from land sales we got a total of £365,372, and deducting therefrom expenditure, £246,551, there remains a surplus of £118,822, which will be payable under our proposals to the Roads Construction Board.

I will now, Mr. Seymour, with the permission of the Committee, ask the attention of Hon. members to a subject which has been floating in the minds of many people in more or less definite shape for some time past. The feeling has been gradually growing of late years not only here, but in the Australian Colonies that the several Governments might, with great advantage to the community, give some further facilities for investment of local capital, in smaller amounts than is afforded by the Post Office Savings Bank. That institution has been a great success in putting within the reach' of thrifty people a place for safe keeping of small savings, and it is satisfactory to know, that natwithstanding the times we have had for the last 18 months, deposits have steadily increased. It is also a gratifying fact, well worthy of note, that no less than five-sixths of the deposits are for sums of less than £5O. Government think it possible that these depositors, as well as the public generally, might be glad of a more permanent form of investment if one can be provided, which at the same time would be secure and easily convertible into cash. I shall, therefore, submit for the consideration of the House a Bill authorising the issue at par of a loan of £150,000, the principal and interest of which will be payable in New Zealand only. I propose that the loan shall bear interest at a rate not exceeding 5 per cent, and that it shall be issued in the form of inscribed stock, with right to the subscriber to obtain from time to time bonds payable to bearer of £lO and upwards. The advantage of such a form of investment will doubtless require some time to be generally understood, but if a local market can be once created as I think it may be, with judicious management, the stock would be found a great public convenience as means of temporary as well as of more permanent investment. It is possible Sir, that the time for such 5 per cent, stock has not arrived, and if the proposal will fall to thp ground, ye shall have learned, at any rate negatively, something about our power of obtaining money locally The, time for making the experiment is . very opportune, because the money market .js easy, land we are not dependent for money , upon its success. The Government, sir, do not propose in any way to force this loan, recognising that with the object in view, that of supplying a a local want, time necessory for the proposal to be understood, by a wide class must be allowed. They think the offer should be made and they will use all serious endeavours to familiariase the public mind with its nature. The proceeds of the loan it is proposed to use for public works. Authority will therefore be asked .to pay them into the Public Works Fund to be dealt with in due course by. Parliament, Before concluding it may .be desirable to ManeZ briefly jat.the. ;; ° UUCe PrO'UßesSj-of t.m-e -Colony since 18 f ~O ;i!ftrttVVonipitrd’'i» With that of our meat neighbors in these seas. The population

in 1870 was 248,400 ; it is now 489,700, that is it has almost doublecl in ten years, and what, Sir, have our two < powerful and attractive neighbors— 1 Victoria and New South Wales—done during the same period ? In 1870, the population of Victoria was 726,699 ; of New South Wales, 602.861. It is now 858,582, and 750,000 respectively, thus ■ showing an increase in Victorian popula- j tion of 18 per cent., and in that of New South Wales of 40 per cent., while in New Zealand the increase has been 97 pet cent. Then let us look at the value of our imports and exports in 1870. They were respectively, £4,639,006 and £4,822,726. Last year, that is for the year 1880, they were : Imports, £6,612,011; exports, £6,352,691. Showing an increase in imports of LI ,522,996 and in exports, of L 1,429,936, a not unsatisfactory result when the universal commercial depression of the year 1880 is remembered. Lastly, let me compare the net revenue of 1870-71, exclusive of land sales and revenue appropriated to local bodies, with that of 1880-81. In the former year it was L 1,057,218 ; in the latter, L 3,123,960, a difference which is ample to cover all additional interest we have to pay, and with a good margin to spare to provide for the increased cost of Government. It may, however, be said that this increased income does not arise from natural growth, but from far heavier taxation under which the country now labors than it did in 1870 ; but is this so l Are we in truth more heavily taxed now than in 1870 ? I venture to think we are not taxed more than in 1870. The taxation per head then was L 3 4s 6d. It is now L 3 11 9 ; but education is now paid for by the State, an additional charge since 1870. If, therefore, the rate per head of cost of education in 1869-70 is deducted from taxation of 1880-81, we find that it is less now by 2s 6d per head than it was in 1870. For these and other reasons we may claim that our immigration and public works scheme has been fairly successful. Had, however, the purposes of the loans of the period been more precisely defined and more strictly adhered to ; had the amount of those loans been' limited as originally proposed, aed had economy prevailed from first to last, we would have been able now to affirm without fear of contradiction that they had been an eminent success. With a clear view which is now open of dangers we have escaped, and of their sources, the legislature may, if it is resolute make future operations more thoroughly matters of business. With that resolve, it will define and fix with all exactness objects of future loans and determine their amounts, not by of the revenues of the most prosperous years, bnt by reliable averages of a considerable period. It has other considerable advantages for the abolition of the Provincial system has more administrative experiences in the service of the Colony atjlarge and the general agitation to make the produce of the Land sales wholly available for greater and lesser public works. Whilst we start with a steadily increasing revenue from the railways already constructed which is an unimpeachable basis for our continued operation the spontaneous immigration to the shores. Natural increase of present population with extension of manufactures already planted, not to speak of others which will spring up of themselves which must alone insure growth of revenue adequate to support charges of moderate loans necessary for our purpopose. We should all appreciate the blessing of our climate and of our soil. If we did we could confidently anticipate the birth of other most important rural industries under advantages which our daily improving system of communication affords and by means of capital which continually flows to our land by an attraction as certain as that of gravitation itself. There is another consideration, one of mere justice, which should decide as to do all that prudence will allow to complete our arterial system. I mean claims of those districts which have patiently awaited the fulfilment of the pledge of legislature in the schedule of the Act of 1870. It is not yet the time, nor is it my place to submit a specific proposal for carrying out works I have here suggested, but I trust the Committee will agree with the Government in these opinions, and that the finance of the Colony should be so shaped as to make a definitive proposition practicable on the meeting of next Parliament. In conclusion, I must warmly thank the committee for the patient attention with which they have heard my statement. The circumstances of the time have not permitted me to offer proposals which can excite much enthusiasm, but I believe they are of a practical nature, resting upon a solid basis and such as will reasure the country and enable it to look forward to the future with sober confidence.