The Financial Statement

Taranaki Daily News, Volume LV, Issue 68, 7 August 1912, Page 5

The Financial Statement

AN ELECTIVE LEGISLATIVE COUNCIL. INCREASED GRADUATED LAND TAX. LOANS TO LOCAL BODIES. NEEDY DISTRICTS TO TAKE PREFERENCE. SECOND BALLOT TO BE ELIMINATED. PUBLIC SERVICE REFORM. CROWN TENANTS HAVE OPTION OF FREEHOLD.

Tn the House of Representatives last evening the new Ministry outlined its policy in a lengthy Budget, of which the following is a substantial digest:— The statement, as usual, opens with a statement of the details of revenue and expenditure and a summary of the year's operations, the figures, of which have already been made public. The actual rev-' enue is stated at £11,032,544 for the year 1911-12, and the estimated revenue was £10,420.010, leaving an excess over estimate of £003,534. The estimated expenditure for the same period was £10,004,677, and the actual expenditure £10,340,3(>8, leaving a balance unexpended of .£204.300. The increases in expenditure under various headings over the previous year amounted to £007,202, the principal increases being in Interna] Affairs (due to the general election and census expenses), working railways and education (ordinary expansion) and defence (owing to the introduction of the new system). . THE PUBLIC DEBT.' After dealing at length with the details of the public accounts as delivered to him by the outgoing Ministry, Mr. Allen refers to the public debt, which at the end of the financial year amounted to .-£84,353,013. . ' Opinions may differ as to how much of the total is self-supporting, but the amounts expended in the construction of railways (£26,154,070), in the purchase of native lands (£2,715,217), in the acquirement of lands for settlements (£O,315,438), are of this nature; and the amounts spent on telegraph and telephone lines (£1,001,757), loans to local bodies (£3,507,000), and reserve fund securities ( £800,000) must be considered as revenue-producing. Other amounts, such as those' expended in purchasing the Bank of New Zealand shares, £500,000, and for advances to settlers and workers, £0.203,815, bring in more income than is paid out in interest. - The net debt amounted to £82,241,990.

INCREASED INDEBTEDNESS. The public debt increased during the year by £3,275,791, of which £2,153,115 was for State-guaranteed Department, and £1,119,476 for Public Works and miscellaneous services. Referring to the new loan: "It is evident," continues the Statement, "that we have had of late to pay a higher rate of .interest for our loans, and that there is little prospect of the interest rate falling in the immediate future."

LOANS TO LOCAL BODIES, The present system was inaugurated by the New' Zealand State-guaranteed Advances Act. 1909. The superintendent was authorised to raise up to £1,000,000 a year for loans to local bodies. There was no restriction on the amount that could be borrowed 'by any local authority. The money was to be lent at the same rate as that at which it was harrowed, a charge of 10s per cent, commission only being made. The loans were to be repaid by instalments, including principal and interest.

The enormous demand for moneys by local authorities, as shown by the numerous applications to the Advances Office, makes it impossible that the State can find all tha.t is required. It is considered that the amount that can be raised by the Government should be reserved for the smaller and more impecunious local, authorities wTiich have no experience in raising loans. Accordingly, the Government has under consideration a modified system of loans to local bodies, somewhat resembling the old system, under which the smaller and weaker local bodies Would for urgent work connected with roads and bridges receive loans at a comparatively low rate, the State bearing a portion of the burden of providing for the interest and sinking fund; such a policy would, it is evident, relieve the roads and bridges votes on the public works estimates.

SUPERANNUATION FUNDS. Legislation will, if necessary, be introduced during the present session to increase the annual subsidy to the Public Works Superannuation Fund, in accordance with the Actuary's report. The subsidy for the Teachers' Superannuation Fund is to be increased by £IO,OOO per annum for the current triennium.

LEGISLATIVE COUNCIL REFORM. The Legislative Council Act of 1801 provided that thereafter appointments which, under the Constitution Act had been for life, should be for a term of seven years. Of the members appointed' before IX9I, only seven now have scats, and then! are thirty-two members ap•pointea for fixed terms. After a trial of twenty-one years that method stands condemned. The alternative which the country now demands is the direct election of the second chamber by the vote of the people, and to ell'ect that change a Bill has been prepared, which will be introduced in the Council during the present week. The lllill ereates two constituencies—the North Island and the South Island, the latter including Stewart Island. The total number of Councillors to be ultimately elected is fixed at forty—twenty from each Island. The elections will he held on the same days as those for the House of Representatives, and at the same polliiig-liooths. separate returning ollktvs 'being employed as in the e.-.se of the licensing polls. Every elector entitled to vote in an election for ihe House of Representatives will be entitled to vote- in the election of Legislative Councillors, each elector voting for the latter purpose in ihe same electoral district in which he is entitled to vote for the election of the House. The electoral rolls for the House in each Island will thus constitute in the aggregate the elect oral roll for the election of Legislative 'Councillors in that Island. The

election of Legislative Councillors will .» l>e he'd under tin- proportional system. Each elected Councillor will hold his seat for the term of two Parliaments of the' House of Representatives, one-half of the total number retiring at each election. At the first election held under this system ten members only, from each Island will be elected, and at the second election a further number of ten from each Island; and the twenty elected at the first election will retire at the third or next election, and so on. Provi»lea will be made for the filling of casual t*eancies. The qualification for election to the Council will be exactly the same as that for election to the House. The present nominated members will continue to hold their seats until the expiration of the respective terms of their existing appointments. The continuance to this extent of the nominative system is necessary; but during the period which must thereby elapse before the expiration of the terms of members appointed 'by the Governor it is belfeved that the effective force derived from direct representation will have great influ. ence on the deliberations of the Council. The practical application of the system of proportional representation to electorates returning twenty members presents certain difficulties, the chief objection being the necessary diminution of the quota. The alternative is to subdivide each Island into several fairly large electorates, each conterminous with the aggregate, of particular electorates \ of the House. A definition of the sub- * divisions in such a manner as to secure real community of interest within the boundaries of each electorate is perhaps possible, but there is grave danger of failure if, at the first election, many electors should find themselves separated by a boundary from those whom they ought properly to be joined in the choice of their councillors.

ELECTORAL'REFORM. 'The Government is fully sensible of the "rent necessity for electoral reform, and in due course a measure will 'he submitted for the consideration oi members by which the system of second ballots will be repealed and another method of election substituted. . FINANCE BE'FfrRM. STATE-GUARANTEED ADVANCER ACT. An amendment of (he Advances .Act will be submitted, handing back to the office for investment the funds now held by the 'Public Trustee. The repayment, of tbe moneys borrowed by the office will be provided for in the same sinking fund as the rest of the public debt. The principal moneys repaid by instalments by present mortgagors, will thus be made immediately available for advances to new borrowers, and the necessity for further borrowing in London to supply the annual needs- of the Department will be considerably, lessened.

"LOANS FALLING DUE. During the next seven years, loans to the amount of £23,170,478 will fall due, and the Treasurer continues: "Of the. £3,298,066 falling due this year, I have arranged for the. renewal of £BOO,OOO (liife August 1 at 3% per cent, at par, and for the renewal of £1,744,066 due at various dates at 3% .per cent, at par, and I have every reason to believe that the negotiations for the remainder will be satisfactorily settled. The £9,83{F,865 due in 1015 includes £3,142,000 of the £5,000,000 loan" not yet converted. If further conversions take place, then the £9.830,866 will be correspondingly reduced."

LOAN CONSOLIDATION. Tlip consolidation of our short-dated debentures has given me grave concern. During the next seven years a very large portion of our public debt will require either to be renewed or to be paid off by fresh loans, and arrangements will need to be made accordingly. The Government does not approve of the issue of short-dated debentures lor tlfis country's loans, and is of opinion that a comprehensive scheme for converting them into stock is very necessary. At present there are,, three kinds of stock—4 per cent, maturing in 1929; 3»/ a per cent., maturing in 1940; ,3-pet tent., maturing in 1943. The Government proposes to provideifor the short-dated debentures soon to 'become due by creating -a further issue of stock at 3% percent., maturing in not less than twenty years' time.

■PUBLIC ACCOUNTS COMMITTEE. . I have, felt for some time that under the order of reference guiding its proceedings in the past the Public Accounts Committee has not been able to render that service tq Parliament and the country which ii, responsibleibody'wf men like those constituting that committee might bave rendered; I am pleased to say that the Government, will amend the order pf reference, so, as 'to give the Public Accounts Committee the power to call for persons and papers. The order of reference, vfith the aboye addition, will be sufficiently wide to enable the Minister ,of Finance to submit to the Committee the estimates of revenue and expenditure, both ( for the Consolidated Fund and 1 the Public Works Fund, for its advice. Indeed, it is the wish of the Government that the Public Accounts Committee should have much more responsibility than in the past. I have no doubt the members will accept this proposal in no party spirit, and that they will by tbeir advice render material assistance in the economical administration o,f the country's finances.

LOCAL GOVERNMENT. During tlie course of tliree weeks, and with so much to do, the Government has not had time to go into the details of a ' Local Government Bill. The measure drafted by the previous administration has many good points, but there are practical difficulties which prevented its adoption. During the recess it is intended to go carefully into the many difficult questions which must arise in the preparation of a well-thought-out scheme, and ' it is hoped that next year a satisfactory measure dealing with local government will be introduced. ' : It is so essential that something should be done at once to replace the present ! method of assisting local bodies to construct their roads and bridges by a sounder system of finance, that the Government has decided to introduce this year a short Bil ( l dealing with the financial aspect of the question. The Bill , , will provide that local bodies shall be classilied according to their needs, and according to the measure of their own to meet these wants. Government will propose, .out of piiblic works moneys raised for the purpose, to pay over to the local bodies sums which they themselves may spend on necessary works. » The sums allotted to the most needy will be larger than those :t)0 the next class, and:so on. These stibsi- j dies, it is hoped, will diminish the roads and ihridges votes on the public works estimates, and finally do away with them altogether. For some years past the proceeds of j the sales of land, 'both for cash and on

deferred payments, have been paid into , the Consolidated. Fund. That the landed estate of the Crown should lie sold, and the proceeds used as ordinary revenue is unsound finance, and 1 propose to reform this by transferring the proceeds of sales of land from the Consolidated Fund to the hind for (Settlement Account, which will thereby :be strengthened and rendered less dependent on borrowed money; the change should be welcome to those who believe that the practice of the past cannot be justified, and to those who are disposed to welcome any reform that will promote land settlement. THE PUBLIC' SERVICE. Legislation will be introduced which . aims, at tlie destruction of political patronage. It will provide for the adoption of the principle emlwdied in hhe laws which regulate the Public Service of the Commonwealth of Australia and of some of the Australian States. A Commissioner will be appointed who, with his assistants, will be responsible to Parliament for appointments to t>he service, for promotions in the service, and for the general organisation of the various departmental staffs.

Provision will be made for the encouragement of merit, and for the introduction of Some uniform principles governing promotions, increases of salary, holiday and sick leave, and other matters pertaining to the good government of the service.

The opportunities of advancement for young men of ability will be multiplied by extending the sphere within which promotions may take place. For instance, instead of an officer's prospect of promotion being limited to bis own department, he will be given greater facilities for becoming a candidate for advancement in other branches of the service.

The alterations which will be made by the proposed legislation will not necessitate cither dismissals from the service or reductions in pay, but they will have the effect of making it more attractive ti the youth of the Dominion, and of enabling the State to retain the services of many men who are tempted to leave because of superior attractions offered by a professional and mercantile life outside.

Some means must be found to make the public service permanently more attractive to young men, and it will probably be found necessary to increase the salaries at present paid during the first ■year of service. The Government has invited the advice and co-operation of the heads of departments, and records with the greatest satisfaction the spirit in which its invitation has been met. The heads of aJI the unclassified departments of the public service iave held meetings, and have joined in recommendations to the Government, the general effect of which will he laid before Parliament during the present session if legislation is proposed on the .subject. Advantage has been taken of t*Ms conference of the heads of departments to arrange a method by which the increases of salaries proposed to Parliament for the officers of unclassified departments in the current year shall .be uniformly dealt with. Hitherto each head of department has .submitted independently to the Minister of that department I'foy proposals for the increases of salaries in his own department. Such, proposed increases have been considered in tire past—first, l>y the . Minister of the department, and then by Cabinet, before submission te Parliament; but it is manifest frliat under that method the personal equation' was too largely involved, and, rightly or wrongly, the officers of some departments considered that in their claims to increases they had not, in comparison with the officers of other departments, equal advantage, of advocacy. The heads of all unclassified departments have now agreed to nominate a small advisory committee, the members of which have already conferred with the Minister upon all proposed increases, which are to he adjusted, if necessary, iii accordance with their advice. By this means it Is intended to effect uniformity in the presentation to Parliament of the claims of officers of the service to increases, and thereby effectually remove whatever discontent in this respect has been hitherto felt ia the seCTiee.

OIL-BORING MACHINERY. In the Financial Statement of 1911" the Government promised to admit free of duty machinery for the development of the oilfields, or to make provision on the estimates for the remission of the duty on such machinery. No definite indication was giv\m as* to the time during which free admission was to continue, nor was the nature of the articles to be embraced by the term "plant" definitely specified. This promise the Government desires to announce will be carried out so far as it relates'to aid machinery and all plant declared for oil L boring purposes, provided it can be shown to the satisfaction of the Collector of Customs to listvc been ordered 1 since the Bth September,, 1911, and orioar to the 2<3th July, 1012;

INCREASE IX THE GRADUATED; LAND TAX.

The Government has no desire ta> inflict upon any individual taxation which would be confiscatory, but is determined to bring about a oloser settlement of 1 the 'land, and makes this the most important plank in its policy. To, carry this out the graduated land tax will be amended by altering the present method of graduation, which is deemed inequitable: it will be replaced by & system which will lessen: the graduated' tax on estates of £5000; unimproved value, and which will provitife that the graduations shall be regular and increasing with every £1 increase in unimproved value, while increasing the tax. payable on estates over £30,000 unimproved value. That the present system is inequitable will be plain ts-zm the following table: 3 2 ?E £§ -s ?S -2? %% c 1? * "■ sb go t * a£ « S *■* £ .£ ». 51. £ s. d. 34,90!) 158 7 1* 109 7 r, 35.000 158 7 3* 118 9 9 30,999 212 4 5* 135 8 3 40,000 212 4 9* 200 0 0* includes 25 per cent, additional. The total amount of graduated tax derivable from estates of an .unimproved

value of less than £30,000 will not be increased; llio amount raised from estates which are in excess of that value will be considerably in excess of the amount hitherto paid liv those estates. The Rill will provide 'that the 25 per cent, additional graduated tax which i* now imposed pu' estates of £40,001) or more in value .sball ho made to apply to estates of £30,000 or more in value. ; Advantage will be taken of this opportunity to grant a concession to iwidowri 'who are in indifferent circum- [ stances and who are maintaining families, so that in future they may be relieved within certain limits of payment M land tax". The graduated land tax i< not considered by the Coyemment the only means of producing closer settlement, and the Land for' Settlement and Land Settlement Finance Acts will be utilised to aid the great work of settlement. The Government has also had under consideration the advisability of in- , dueing closer settlement by encouraging the large landowner to break up bis estate, and hopes next year to bring in j further legislation to effect this purpose. I VALUATION OF LAND. It is the. intention to Introduce amendments to the Valuation of Land-Act in the direction of securing greater accuracy in distinguishing between the value I of'land and the value of improvements; | under the •existing law it is found unIpossiblo in practice to do so. . The ■amendments' which will be proposed will 'enable the land .value and the value, of j improvements to be apportioned in an equitable manner so as to ensure an assessment fair to the State and to the individual owner, and will apportion, more fairly than at present, the burden ,'"' of taxation between ■owner and tenant.

TENSIONS. i | It is proposed that in future thead rninistration of all New Zealand pensions shall be placed under one_ .head. In accordance with the promises made by the' Government in. the past, an amendment to the Old Age Pensions Act providing for the payment of pensions to [women at the age of sixty years will be circulated thia session. Commencing at the age of sixty years, pensions would be paid on the following scale:. Maximum pension at age 00 years, £2l; at 01 years, £22; age 02 years,' £23; age 63 years, £24; age 04 years, £25; age G5 years, £26. The total number of women who will be afforded relief under this new proposal is estimated at about 10,300. In addition to the above proposal the Government has under consideration an 'invalids Pensions Bill, which is designed for the purpose of assisting those unfortunates who 'have been permanently incapacitated for work either by accident or by reason of being invalid-, and who are not in receipt of either an old age pension or a. widow's pension. | An amending Bill will be introduced 'extending the benefits conferred by the [Widows Pensions Act of last year' to I any woman whose husband is an inicate I of a mental hospital within the meaning of the Mental Defectives Act, 1911. PayI ment on account of children born out of New Zealand, but whose parents were, [at the time of their birth, domiciled inNew Zealand, will also be provided for. Strong feeling having been evinced in connection wit'i the Military Pensions Act of 1911, which compelled many of the old soldiers desirous of obtaining a military peasion to comply with the conditions of the Old Age Pensions Act as well as the conditions of the Military Pensions Act, the matter is being carefully inquired into by the Government, and legislation will be submitted during this session to remedy the present condition 01,o 1, affairs.

An important amendment to the Na,ti ixj,l I'rovident Fund Act is also under tonsid-'iition making specific provision foi cli-; co-operative action of employers and e? J loyees for the purpose of insuring writers in groups.

INDUSTRIAL MATTERS. It i* very much to be regretted that at tAo pi f sent time there is fir New Zealand a certain amount of industrial unrest, and strikes are much more frequent than was the ca.se some years ago._ New Zealand is, of course, no exception in this'respect, many other countries having similar troubles. The strikes at ,Waihi and Reef ton have, however, been very serious not only for those districts, but also on account of the, loss to the' Dominion as a whole; an<E the loss is not only in money, but in; population; quite a 'number of people from the localities immediately concerned having taken their departure for Australia and other ;placcs. Experience has shown how difficult it is to provide a remedy for such 'disputes, but no effort is being spared 'by the Government and the Labor Db'partment to bring about & satisfactory land honorable settlement of the troubles that have occurred. It is intended by :the Government to introduce this session an amendment of the Industrial Conciliation and Arbitration Act which will go lin the direction of altering the constitution of the Arbitration Court, so that [instead of one judge of the Arbitration I Court each Supreme Court Judge will preside over the Arbitration Court in district iin which he is resident, in: cases where Dominion awards are aslcod' for or are being dealt with.. Instead'of making permanent representatives ..of the employers' associations or industrl*!' workers' unions members of the court; as _at present, it is intended to provide for expert representatives from each side in the trade or irtdustry"affected, who will sit with the president in the hearing of cases corning before tjhe ; court. Another important amendment will be a provision for a secret l»llot : 'for the decision of important questions by industrial unions of workers or by employers' associations. , '!• "i

LAND LEGISLATION. It will not be possible this session _ to deal with all the policy matters arising out of the land question, but a- Land [Bill will be introduced, which, among 'other proposals, will include a new ! method of acquiring laud for. settlement purposes and of settling sucih land on the deferred payment system. There will be no increase of the Dominion's indebted ne'ss; the settlers will have security of tenure on easy terms, and land- ' owners will receive a fair price for the land required for closer-, settlement. The Government is of opinion that the 'experiment referred to will be wefll worth trying, and may lead to a more satisfactory method'of breaking up large estates ' than either of the systems in operation at present. There will also be provision for an amendment of the ballot system, so as to check speculation

and give preference to those who have failed in two or more ballots.

The Government i.« also impressed wiili iJie importiiiK'-e of purchasing land, wlietlicr European or Native, in those localities where it is intended to construct railways or where; they are aJready in course of cons'lniction. In the past railways .shave in* many eases been carried j through largo areas of unimproved and : unoccupied land, and the consequence | has been to increase greatly the value of such land, even though'the owners had done little or nothing in the wnv of improvements. This has been the." experience on the North Island Main Trunk railway, and it will undoubtedly be the experience in other similar eases. It behoves the State, therefore, to secure a sufficient area to enable it to properly participate in any increase of values that may arise from public works expenditure. If this is done it may be possible from the profits of such transactions to return to the Government a very large proportion of the expenditure incurred in.opening up the oountiy by railways or even, bv roads. The sites of the towns of T'e Kuiti and Taumarunui, or any of the •other towns in the so-called King Country, might have been purchased before the coming of the railway for only a very small proportion of "their present values. Such lessons should not he lost sight of, and they will not be tost sight of by, the Government now in power, which, without interfering unnecessarily with, the enterprise of individuafls, intends to see that the rights of the community are provided for and safeguarded. The Government may not he able to place the whole of its land policy before Parliament during the present session, but it does not intend to depart in the very slightest from the principles it has advocated on this very important subject—namely, settlement., closer settlement, and absolute security of tenure for the settlers.

Parliament will be asked next session to give the Crown tenants, holding land under leases in perpetuity the option of purchase. The tenants on settlement lands whose tenure is .renewable lease are in a different position to tenants whose tenure is lease in perpetuity, but \i\ey will also be given the option of purchase at a price to be fixed, by actuarial calculation. The money received in this way will be paid into" the Land for Settlement Account and used for the purchase of other land-f of-settlement purposes, thus reducing the amount of ■ oan money which otherwise it would be necessary to raise. It is not intended to interfere in any way with endowment lands.

SETTLEMENT OF CROWN" LANDS. As the prosperity of the Dominion depends very largely upon the successful settlement and subdivision of its land, it is intended both by'legislation and energetic administration to do everything possible to provide land for all who desire to occupy and use it. thereby increasing the number of our producers and consequently the value of our exports. With that object instructions have been given to the responsible officers of the departments concerned to prepare returns of the Crown land available and suitable for settlement in each county of t»he Dominion, showing separately ordinary Crown land" and land set apart as national endowments. These returns slvow that there should be available 2,809,098 acres of ordinary Crown land and 1,524:927 acres of endowment lands. Ae it is necessary and in the interests of the Dominion that all lands at present unoccupied should be made productive at the earliest possible date, surveys will be pushed on and everyiihing done to expedite the opening of such lands to industrious bona J(cl.o settlers, so helping to meet the demand which undoubtedly exists, and making it •unnecessary for- young New Zealanders to leave the country of their birth in their search for land on which to settle and make homes for themselves.

A WARNING. In conclusion, the Statement reads:— It is my plain duty to warn honorable members and the people of New Zealand that the continued borrowing of large sums of money to provide for the expenditure of the year and for six months only of the succeeding year—which has been the practice in the past—ds not a safe method of finance. There are four courses open, viz., to raise more money by taxation; or to decrease expenditure out of the Consolidated Fund in order to .h&K'e more ordinary revenue available ;for public works, or to increase the iamount of borrowed money, or lastly to ; bring within reasonable limits the" expenditure of (borrowed money. In .these i»imss, when loans cost its "so much to raise,' it is, an my opinion, urgently necessary that we should curtail our borrowing. This requires some sacrifice on the part of the people of this country, but surely the •exercise of tine necessary self-restraint and the reliance upon pur resources will assist to make our national character strong and' self-re-liant. It is the earnest desire of tihe Government to foster the spirit of selfreliance . and to encourage ■'. a healthy; strong, and vigorous career for all our people. Home life should be encouraged' and exalted, and made the foundation of our nationality. More should be done to build up. settlement in the country districts, to open up lands, and to attract not only the farmer but also the

worker to settle down under the more healthy conditions of country surroundings: Relying on such principles, and rendering that proper assistance which ought to be rendered to the Ifess fortunate to use the opportunities which the State should give for their education- and sound upbringing, the Government rests assured that our country will 'progß's* and' our people be happy and content.