The Deficit of 1883-4.

Te Aroha News, Volume III, Issue 156, 29 May 1886, Page 3

The Deficit of 1883-4.

The House last session did not appear to have any desire to seethe deficit of 1883-4 speedily extinguished out o! ourrenti revenue. Viewing the present condition of industrial occupations within the colony, it may be as well to follow the example that other countries are setting, and to hold the amount in suspense. It is not desirable to take £150,000 from the immediate uso of colonials ; but lam averse to permanently shirking the deficit, and I propose to provide for it by transferring it to five years' debentures, to be held within the colony. They can be taken up and extinguished as circumstances justify such a course.

Finance of Looal Bodies. It is essentially, necessary that I should explain to the Committee the views of the Government on the finances ot local bodies. The Government were not unaware that a substitute for the repealed Roads and Bridges Construction Act required to be found. It is clear that as the surplus of the land fund, on which the conception of the Act was based, had ceased to exist, the Act must have remained inoperative, unless, as was the case, it became a merely borrowing Act The present Government disapprove of the municipal point 9 of that Act. They doubt the necessity or expediency of drawing so broad a line between main and district works They think it unwise to. provide funds for local bodies out of loans raised for colonial purposes. They disapprove of the responsibility oast on the Public Works Department, or of requiring Parliament to determine the main roads. They do not see sufficient reason for applying to the two classes of works different plans of obtaining money, and they think a system of finance of a more liberal character should be accorded to local bodies. Shortly, their proposal is that on the ratepayers shall depend the responsibility of deiermining and accepting or of refusing works, and that, when ratepayers approve,money should be provided to the local bodies on very liberal term?. These terms are a payment of 2 per cent, per annum for 26 years, eecured on special rates, the colony to be responsible for the payment of the principal sum, and to meet it by setting aside yearly a sinking fund of 2 per cent, to redeem the debentures at maturity. I need not now enter into details, or explain how. in a measure, the 2 per cent, will be reduced by a part of the interest being available. Even wore it not 80, the Government hold that it will be advantageous to the colony tocontribute£2,ooo yearly for every £100,000 expended on local works, with the guarantee for their usefulness afforded by the willingness of the ratepayers to pay for a term of years the interest on their cost ; nor need I now explain why the machinery designed will free the proposed sinking fund from the evils inherent to that system. It is proposed that Parliament should determine from year to yet r the limits of the amount to be available to the local bodies, but that in the absence of any other provision the amount will atand authorised at not exceeding £200,000 annually. It is intended that these loan shall only be for country districts, and that the storage of .water for irrigating and mining purposes shall be amongst the abjecta that local bodies may carry out. I have thus explained to you the substitute For the Roads and Bridges Construction Act It will involve, in the course of time, a considerable charge on the consolidated revenue, but a charge which will be well repaid in kind by the increaped value of property throughout the colony. It is cvi Sent, however, "that, with this prospective 2harge, the Government cannot recommend ihe subsidies proposed last year, which in a large part were meant to provide a substitute for the repealed Act ; but they are reluctant to do away with subsides altogether. It was, in a measure, on the strength of them that the Chaiitable Aid Act was passed. With regard to that Act, I must in terpolate a few words. TLe object of the Act was not so much to save the colony from expenditure as to relieve it from duties it could ill discharge, and to cast them on the local bodies and private individuals who were well able to fulfil them. , The Act has answered on the whole. The management of the institutions will be improved, whilst a great many have attained to the highest condition of development, in the shape of separate incorporation. The feature least satisfactory is the disposition to raise special rates instead of leaning on voluntary donations. Reluctantly the Government yielded to the pressure exerted to give the same amount of subsidy on account of money raised by rates as on account of voluntary donations. They will propose now to slightly increase the subsidy on voluntary donations to arrest the tendency to which I have referred to, raising by special rates the money required. To return now to the subsidies. The Go verntnent propose to limit the annual sum to £150,000, of which half will come out of loan money. For the present it is not intended to make the appropriation pennant, although it is believed that the Government phould each year make a like provision. This amount, it is estimated, will provide, besides the liabilities, the same subsidies as were granted la3t year, viz , half the schedule rate 3 included in the Local Bodies Finance and Powers Act, but enly three quarters to be payable within the financial year, and the fourth quarter during the three following months.

Loans to Farmers on Mortgage. The Govemmsnt have not overlooked the report of the select committee last year on the subject of reducing the rates of interest farmers have to pay for loans on mortgage. Interesting information relating to the course of procedure in some European countries will be presented to Parliament. I regret to say I am not able to make a proposal on the subject If the Government were to enter the field as a lender of money it must obtain that money somewhere. In European countries where Governments do this sort of business there is a sufficient market for the securities that provide the money, but in the colony there is not at present, though I do not think that it will long be so. There is no sale for 4 per cent, securities at even large discounts, and 5 per cent, bonds hardly command par in small quantities, whilst considerable quantities could not be placed. To lenJ, by giving the borrower debentures which he would ba\e to sell at a discount, would mean togivehim less money than the loan purports. But there are some who say you can make these debentures worth par by legislation. You can insist on their being in the shape of bank notes, and making them a legal tender for the amounts they represent. It is quite true that you can for nil purposes of payment within the colony. You can declare that as such it will be receivable as revenue, and that for future debts contracted within the colony it shall be deemed the mode of payment. But those persons who sell goods or lend money may make their own bargains, and add whatever margin they please. What they ask a pound for in gold they can demand 30s in paper. The Government revenue, unless increased, would enormously suffer, but no legislation could compel anyone to give a golden sovereign for a paper pound. Therefore it is that legislation can no more make a paper pound, that is not redeemable in gold on demand^ worth a golden pound, than it can make 1001b of sugw weigh 1121b. The law mightmaketheterm "hundredweight" tore-

present 1001b instead of li2lb, but the value cf lowt would be proportionately reduced. There remains the alternative I have already mentioned of the f : overnment borrowing money in England and lending it out here This would be quite possible if it were deemed expedient, and recognised as a legitimate function of the State. I was once • inclined to see it tried, but I am compelled to say that I do not consider it would be desirable at present. It would overstrain the colony's credit. Within the last two years only, there has been a fall all round in the rate of interest of about 2 per cent. , and that fall is continuing, Doubtless it may not be felt so much by bo-rowers of small amounts, and were the Government going to do anything they should confine their operations to small loans. But even then they are not likely to j be able safely to much improve on what private competition will be able to do, and t h eir entry into the field, would drive away, a private competition to an extent that might ultimately prove more injurious to borrowers than would be repaid by any temporary advantages they gained

Estimated Expenditure, 1882-87. The estimated expenditure during the present financial year amounts to £4,070,208, which is £49,155 in excess of the estimates and rates, and £89,030 in excess of the expenditure of last year. The increase is fully accounted for by three items, viz. : On education, £20,978 is estimated to be required more than last year ; on subsidies to local bodies, £39 368 ; and on working railways, i' 67,225. The first of these increases is representative for the yearly growing educational demands ; the second has been already explained ; the third is consequent upon the larger mileage worked. The purchased district railways now appear in the Estimates on both sides. The increase in expenditure is compensated by the larger revenue received. The net profit on railways ia estimated at £38,471 in excess of last year. When the increases which I have explained on the three items are reduced the balance of the Estimate? shows a less total anticipated expenditure during the year than the actual one on last year of £35,540. I wish emphatically to state that the Government have reviewed the Estimates carefully, and reduced the expenditure wherever they considered it could be done with advantage to the public service. 1 do not mean to say that a less expenditure could not be adopted There have been the ueual additions to salaries undet £120. The proposed increases of salaries above that amount are very few. Each case of the kind has been most carefully considered by the Government, and they are prepared with the necessary ex planation. I entreat hon. members not to do old and tried officers the injustice of coming to a decision without hearing the reasons for each of the few increases submitted. No Government could be more anxious to reduce expenditure where we see it can safely and properly be done. Whenever there is any opportunity of amalgamating offices we are glad to seize it, and no effort has been or shall be wanting on our part to take advantage of ifc. This process ia also slow, but on it depends the beat hope of reduced expenditure. The Industrial Exhibition will require £500. The expenditure of last year's vote was considerably exoeeded. The Exhibition has cost £8,60 U net, a much larger amount than was anticipated. 1 attributed the chief increase of expenditure to the pleasing fact that the Exhibition had to be made more extensive than was expected, beeaußO of the liberal response made to the invitation for exhibits. Some of the additional cost is attributable to the Exhibition being opened every night instead of three evenings a week, as was first intended. The Government consider that the Exhibition did moat valuable service in the encouragement ifc gave to local industries, and the knowledge it im parted to those interested in them. It itproposed that the next Exhibition shall take place in Dunedin or Christchurcb about the end of 1887 in time to forward the exhibits, if it be so decided, to the Centennial Celebration Exhibition to be held in S3 dney in 1888. The Government are of opinion that an International and Intercolonial Exhibition should be held in Auckland about 1890 to celebrate the opening of the through railway. The Colonial and Indian Exhibition absorbs a large vote. There are few members who will not recognise that this colony should be adequately represented. On an occasion so momentous to all Her Majesty's dominions, New Zealand was called to assert the strength oi her resources in friendly competition with other colonies.

Interest and Sinking Fund. The other branches of the expenditure will be explained by the Ministers in charge if them when occasion serves, I have reserved for the last reference to the expend! ture on interest and sinking fund. The patimated amount required for these items is 1 1,654,500, showing a reduction of £34,846 on the sum actually expended last year. Besides that, the estimate includes Rome £46,000 more than last year for interest on loans newly raised or to be raised. Hon. members hoar a great deal about the saving effected by conversion, and doubtless they will like to know in what way it becomes apparent. I have carefully analysed the whole subject, and have prepared a table. The table will, I think, be readily understood, and it shows, after deducting interest on new loans, that the permanent charges have been reduced each year as compared with 1883-84 as follows :— ln 1884-85, £115,339; in 1885-86 £144,161, and estimated in 1886-87 at £240,524, or for the three years a total of £499,024, which I again say is a saving as compared with the loan charges of 1884-85.

Proposed Expenditure for the Current Year. I now give in tabular form the proposed expenditure for the year opposite the estimated and actual expenditure last year.

Summary of Services CHARaEABLE on the Consolidated Fund, 1886-87. Voted, Expended 1886-7. 1885-6. 1885-6. Permanent appropriation. Civil list.. £29,750 £29,750 £28.079 Interest: Sinking fnd 1,164,500 1,G67,873 1,689,347 Under special Acts of the Legislature .. 231,054 177,484 146,109 Total . . . . £1,915,304 1,875,107 1,863,445 ANNUAL APPROPRIATIONS. Class 1, Legislative.. £17,390 £17,870 £17,551 Class 2, Colonial Secretary 155,725 221,797 234,285 ClasB3. Colonial Treasurer .. .. 48,054 58,912 59,736 Class 4, Minister of Justice .... .. 117,194 117,703 113,666 Class 5, PostmasterGeneral and Commissioner of Teledjraphs .. 273,717 280,133 287,524 ass 6,Commissioner of Customs.. .. 88,997 88,434 77,968 Class 7,Commissioner of Stamps .. .'. 30,506 30,571 28,212 Class 8, Minister of Education .. 382,914 361,936 357,886 Class 9, Minister for Native Affairs ... . 20,104 20,222 22,243 Class 10, Minister of Mines.. . 31,713 34,102 22,730 Class 11,' Minister for ' i Works .. 799,660 737,654 726,676 Class 12, Minister of „ , Defence .., ..189,030,177,552 161,1- 7 .Total, ..- < u £2,164,904; 2,145,946 2,1.0.8,404 Total expenditure ,on .-,,,--, - „ ' t { ordinary revenue 7 .t 1 ' " ' '. - 1 " ' ' ! account „ ..£4,070,208 4,021, 1& 3,971,939