THE FINANCIAL STATEMENT.

Tuapeka Times, Volume III, Issue 189, 21 September 1871, Page 7

THE FINANCIAL STATEMENT.

(By Electric Telegraph.)

Wellington, .Sept. 13.

[The following telegram, for which we are indebted to the General Government, was received too late for insertion in our last issue : — ]

Mr. Yogel commenced his Financial Statement &t a qtz&vbet to jsiglit o'clock this evening. After referring to the exertions which had been necessary in order to bring down the Statement at so early a period after his return, and indicating the substance of the tables which will be supplied to members with the Statement, he showed that the position of affairs at end of 1869-70 was closely similar to that which he led the House last year to expect would be the case when he made his Statement before the conclusion of tbe financial year. A reference to the finance measures of last session followed. The Government consider that the loans have been very favourably negotiated, and that the arrangements by which the guaranteed debentures were practically converted into a reserve fund would be of great value to the colony. The short dated debentures under the temp:rary loan act had proved serriceable in enabling money to 08 obtained on favourable terms pending the negotiation of tbe loans. The payments to Eoad Boards had created very general satisfaction throughout the country. As to the revenue of the past year, there had been a decrease on every item ; that revenue had proved to be £116,000 less than was estimated, and £82,000 less than was received during the previous year.. The Government deplored this falling off, but disclaimed responsibility for it. The attention of the House was called last year to the condition of the country, and that condition was urged as a reason for hastening on measures for the construction of public works and the promotion of immigration. Tbe Government certainly had not expected so large an immediate reduction in the revenue, but that reduction had, amongst other things, proved the wisdom of the Asrembly in giving effect without delay to the immigration and public works policy. Many causes, doubtless, contributed to occasion the falling off in the revenue; amongst those causes was the fall in the price of wool, but he was glad to be able to congratulate the Committee upon the recent remarkable rise in the value of that article. The reduction in the value of property, and the comparative suspension of public works must be included amongst the contributory causes of the reduction in the revenue : they limited the expenditure of the people aud therefore diminished the Customs revenue. It was not, indeed, necessary that a reduction in the Customs receipts should be accepted, as a consequence of an unhealthy condition of the. country, since it might be attributable to the exercise of frugality, or might result from a desire to accumulate wealth. Indeed, the reduction might follow, wholly or in part, from a larger use of local productions throughout the country. The Government were of opinion that the depression which had overshadowed the colony for a long .period was in course of removal. Various causes had led to this change, such as the increased yield of gold, the rise in the price of wool and other products, and the prospects of largely increased settlement throughout the country, which would follow the introduction of immigrants and the construction of lines of communication. The Treasurer proceeded to compare the other branches o£*the revenue, and there showed the further assets available on account of the year beyond the receipts . up to the 30th June. Similarly he went through the expenditure during the year, and all the engagements and liabilities on account of the year which remained to be discharged. In respect to the Defence expenditure, he specially drew attention to the fact that instead of the amount provided having been exceeded there was a surplus on. - the year ; be- ! sides that, £10,000 had been spent on t ammunition, which was available for the future. After taking the assets [ into accoiint, and defraying all the liabilities and engagements of the'past year, there was a deficiency of £76,000. Hon. membsrs would remember that there was an overdraft of £60,000 which had remained unsettled for the' ! last two years, and he considered that it was necessary now to look at it in the light of a deficit. Adding the amount of that overdraft i o the amount of that deficiency before . stated, there would be a total of £136,000. He thought it was very important that this amount should not be added' to the permanent debt of the colony, but that it should be defrayed out of the revenue. Still, it would bo straining the resources of the country too muck to charge the whole amount upon the present year's revenue ; he proposed, therefore, that one-third, or £46,000, should be charged on this year's revenue, and the balance to the ' revenue of the succeeding years. There was a precedent for such a proceeding in the course adopted by the Assembly in 1860. In asking the Committee to consider the provisions to be made for the present year, it was worthy of observation that New Zealand did not stand alone as regarded a deficien y .

for the same difficulty had just occurred in England, in Victoria, and in New South Wales. It was clear that apart from, the defficiency of £l<(>,000, which he proposed to charge upon tho year, if- the ordinary expenditure of the country was kept up to the present style, there would have to be heavy taxation. The first- duty of Government when the expenditure exceeded the revenue was to consider -whether the expenditure could not be' reduced. The main feature of the present Budget was a material reduction in the expenditure of the country. It would be easily understood by hon. members that in determining to make such reduction, the Government could not fail to look in the direction of that expenditure which related to so large a proportion of the public service : he meant the money put apart for provincial purposes and provincial services. It was fair to consider how far the colonial contribution to provincial revenue should be reduced on account of the colony undertaking duties which otherwise would have to be performed by the provinces ; and also; seeing that what was now proposed involved a reduction of provincial duties, how far provincial institution's could be made less costly than they nad hitherto been. Much of the expenditure of last session came under the head of expenditure which it was originally contemplated should be borne by the provinces. It was right that a corresponding reduction should be made in the contribution from the general revenue for provincial purposes. The Government had plainly declared last year that if the existence of the provincial system interfered with the carrying cut of the policy of" Public Works and Immigration, then provincial institutions would have to be modified ; but at the same time, until it was proved to be necessary to take action in that direction,' they had desired not to do so. Experience had now shown that in some respects the legislation of last session required amendment. He entirely denied that either on his part or on the part of any of his colleagues there vyas any indifference on the" subject of immigration. The whole plans of the Government depend upon the encouragement given to immigration ; they felt, however, that it was due to the provinces to give them an • opportunity of cooperating ; now it had been proved that the plan of co-operation did not answer. He did not say that this was so because of any fault on the part of the provinces, but the Government were convinced that it was necessary that they should take* into their hands the management of nnmigration, and that with that assumption, of management they should also relieve the provinces of the expense. Hon. members would recognise that by taking the management of immigration might be meant a looking after the immigrants on their arrival as well as a defraying of the whole or part of their passage money. Other modifications whie.li the Government might have to propose in the policy of last session would probably tend to alleviate the ordinary burdens of the • provinces. There was one ' feature of the policy of last session, i;he .success of which could • not be exaggerated. He meant the system of subsidising Eoad Boards. The expenditure necessary from the adoption of such a system was one which the Government considered might fairly be defrayed out of the loan. The adoption of that course would be by the proposal to increase the amount of the subsidy from, £50,000, as paid last year, to £100,000. By taking charge of immigration, and, to a large extent, of public works, together with the pay"ment of the' subsidy to Eoad Boards, the provinces would be saved. a large large proportion of their expenditure. The question arose, therefore, whether it was fair to the taxpayers that additional taxation should be imposed in order to maintain the provincial revenues at their present rate, whilst much of the provincial expenditure, and some of the principal provincial responsibilities, were assumed by the Government of the colony. The answer must clearly be, " No." The Government had decided further to relieve the provinces of the cost of the services hifcbertq held by the Assembly, as provincial services, and charged against the particular allowance made to each province. After making these provisions, the Government proposed to pay the provinces, as capitation allowance,- 15s per head of population, and to reduce by onehalf the special allowance paid last year to the North Island provinces and to the County of Westland. The aggregate result of these modifications would be to give to the provinces £25,000 less than they received last year. In that calculation, allowance was made for the payments on provincial accounts already explained, but the expense pf immigration from which the provinces would be relieved was not taken into consideration. Supposing the provinces would have been prepared to expend a proper amount on immigration, they would be great gainers by the change, or perhaps more correctly those who live in the respectable provinces would be great gainers, although so much money would not filter through the provincial authorities. When the effect of these proposals upon the provinces singly was examined, it would be found to be somewhat unequal, Auckland appeared proportionately to be

the greatest loser, because its services had been uniformly on a lower scale | than those of the southern provinces. | Wellington, on the other hand, was a large gainer, because it had hitherto defrayed tho cost of services, which lately belonged to the General Government and the Assembly. The Government bad it under consideration, by way of adjustment, to make to Auckland a special allowance of £2,500. A comparison with last year did not result altogether unfavourably, and last year, it must be reineinb:red, was the provincial leap year, their year of jubilee, on account of unprecedented receipt .from the colonial chest. Comparing the results of the proposals now made with the circumstances of the year before last, the provinces gained £28,000 irrespective of the expenditure to be devoted to immigration. The Government believed that the time had arrived when provincial institutions should be made less costly. - It was intended to propose that the Superintendents should be ex-officio members of their respective councils, and that the number of members of the councils should be very much reduced, and in certain cases, where the provinces were unable to fulfil their functions, it was intended to propose that the General Government should take charge of their affairs. If the Assembly desired ifc, these reforfcns, or some of them, couM be made to depend upon the option of the existing superintendents and councils. A special management as to the County of Westland would be submitted to the House. The object of all these would be to simplify provincial institutious, and to reduce their cost. The Assembly would have submitted to its consideration the •question what railways should.be constructed. The Government thought that when that question had been prepared there would be no difficulty in deciding to what extent the arrangements with Messrs. Brogden could"be taken advantage of. If it were desired that those arrangements should be converted into separate arrangements for the construction of particular railways, the Government were of opinion there would be no difficulty in doing so. The whole question would be loft to the Assembly. A Board for Public Works and Immigration for the whole colony would be proposed, with as far as possible powers independent of the Government, so as to make it a nonpolitical body. It would be the duty of the Board to take charge of the construction of Public Works, and the management of Immigration. It was to be hoped that the Board would assist in preventing the House from acquiring too much -.of a provincial character as regarded members deeming it to be their duty to scramble for public money to be expended in their own- districts. The Government hoped that in the constitution of the Board it ' would be 'provided that recommendations for the construction of public works should come through the Board, instead of being originated in the House. The question how the cost of railways should be charged was one of a very different nature, and some modifications in the proposals of last session would be submitted. Unlike other colonies, it was necessary in New Zealand that railways should be commenced in several different localities at once, as otherwise the various portions of the colony would not agree to any lines being constructed. It became, therefore, necessary to consider the different features of the country. Two principles, however, the Government has quite determined upon. One was that no railways should be constructed which did not at once promise to pay working expenses, and the other was that in order to prevent an indiscriminate scramble for railways, a power of local rating should under certain contingencies be provided. T*he Government had also concluded • that for the construction of railways in parts of the North Island, the only course to be adopted was to acquire land representing the value of those railways ; but in parts- of the Middle Island such a course was not desirable, as it might interfere too largely with with existing laws. As regarded the Middle Island, therefore, the GroVernraent would propose to change the cost of construction of railways upon the land fund. It was not proposed to interfere in any way with the Middle Island railway (land?) fund, and while powers were given to the Government to take lands for the purpose of settling immigration on, it was proposed that where the land revenues of a province were burdened with the cost of railways, a fair provision should be made to give compensation for the land.s so taken. Until a railway was completed, no charge was to be made against a province. When a railway completed, ' the interest due on its 'construction anti upon its cost up to the .day of its completion was to be capitalised. If the revenues arising from the railway, together with the receipts from special contribution, were not sufficient, the balance was to be recovered from the province within which the railway was constructed ; or, if necessary, a special rate was to be levied upon all the persons in the vicinity of a railway who derived benefit from its construction. It was proposed to keep the Public works, and Immigration fund^ entirely distinct ; and that all revenues from the lands acquit ed, as well as all recoveries from the provinces or from

im migrants should be paid directly into ifc ; as also should one-half of the Stamp Duties, in accordance with the determination arrived at last year. On the other hand, it was proposed tit\it all costs and charges, including interest and sinking fund, shall b« paid out of the Public Works and Immigration fund. It must not be considered that this was to be done in order torerieve tlie revenue ; on the contrary the,- the payments into the Fund this year out of the Stamp Duties would cover interest and sinking fund which had to be paid (as had already been explained). Deficiencies after any railways had been completed were to be I'ecovered from the Provinces. A plan would be proposed by which the Board would be able to construct feeder branches of railway under a system of partial guarantee from the persons benefited by their construction, to be recoverable if necessaiy by a special rate. This, however, would only be done at the request of a majority of the residents in the vicinity of the railway, representing a majority of votes according to therateable value of the lands in the district. The proposed" expenditure for the year showed an immense reduction. Last year ho estimates, were for an expenditure of ,£1,050,000, includinw £50,000 for Road Boards, and * £34,000.- was subsequently added for supplementary estimates. This year, the total estimates irrespective of the £100,000 for Road Boards which would be chargeable to the loan, was £896,000, to which would have to be added £40,000, the money of the Stamp Duties to be paid to the Public Works and Immigration Fund', and £46,000 on. account .of 'the deficiency from the past year; making in all £982,000 to be provided for. This showed a large saving, and the.Go-

vernment desired that the present Budget should be known as the Retrenchment Budget. A comparison of the various services showed a considerable savins? in most of them. The Post-office Department, including provision for the Californian Service, showed, a saving of*JSILB. He would ask hem. members to recollect that allhori,gh there was a very "great re■trenchment it was on unproductive services ; that out of the revenue large provision was made on account of the deficit of the past year, and that ono half of the amount of the Stamp Duties was proposed to be paid m aid of public works. He would now ask the Committee to consider the question of providing for the estimated expenditare of £982,000. The Government were averse to proposing fresh taxation, but they consider that the Stamp Duties should be brought* up to the amount which it was promised they would yield last year. The Government would, therefore, submit some addition to those duties; but those additions would be such only as they really believed ought to have been included when the duties were fii'at proposed. The House would, also be naked to impose a moderate duts* upon cereals, rice, and timber. He mentioned this although he did not intend to take credit in the ways and means for the amount of such duties, but those ways and means would make apparent so small an excess that, taking into account the possibility of there being supplementary estimates, and also of some unauthorised expenditure during the year, he considered the excess shown would be insufficient; therefore the House would be recommended to impose duties on all cereals, rice, and timber, bo as to raise thereby an estimated amount of £7500. " Whilst that recommendation would be made on strictly revenue grounds, it might with propriety be urged that the fiscal policy of neighbouring colonies forced such a proceeding upon New Zealand. The various items of estimated revenue showed on the whole a reduction of £61,000 upon the revenue estimated last year, and £55,000 more than the actual receipts during-that year. The operation of the Distillation Act was producing a Targe loss- to the revenue. Government did not wish to show any harshness towards those who had embarked their capital in this investment, plill, the result was very unsatisfactory that the revenue should lose £25,000 on account of the spirits already manufactured in the- Colony, which manufacture had led to the consumption of 53,000 bushels of grain. Such a loss was rather a large one to be expended by way of encouragement for such a production of cereals. In 1867 the Custom duties amounted to £3 16 7f per head of the European population, whilst, at the present rate now proposed, it would amount to only £2 18s 6d per head. The Government would be glad when the time arrived for making an absolute reduction in the Custom duties ; besides the reduction in the contribution per head, consequent upon the increase of the population. The surplus on the year would be £7,500, and it must be recollected that this result was arrived at without the imposition of furtler taxation, unless the addition which ifc was proposed to make to the Stamp Duties could be considered in that light, and the esti-

nrites'it would be remembered provided for a payment of £46,000 out of revenue in aid of public works. He believed that this result was very much more favourable than the majority of Hon. members expected. The Treasurer concluded by expressing bis opinion that the depression which had overshadowed New Zealand would do it very ranch

good, if that retrenchment which that depression made necessary this year became the rule of the colony in the future.