FINANCIAL STATEMENT.

Wairarapa Age, Volume XXIX, Issue 8223, 29 August 1906, Page 5

FINANCIAL STATEMENT.

(Government Memo.) Last evening, in Parliament, the Colonial Treasurer (Sir J. G. Ward) submitted the Financial Statement, in the course of whlob he said:— In submitting the Brut Financial Statement of the present Administration I am not unmindful of the obligations we owe to our predecessors. When the Liberal Party took office under the late Hon. Mr Ballance, it was predicted by tnose opposed to him, and feared by some of his friends, that this legislation would be reckless and his finance unsouni?. ffc was the same when the late Rt„ Hon. Mr Seddon succeeded him. In both oases these propheoies and fears have been falsified by events. The policy that Mr Ballance started, and Mr Seddon so brilliantly exteuded, has made New Zeaiand prosperous at home, and noted abroad, as indeed I believe that in the secret recesses of their hearts and consciences many of the hon. gentlemen opposite are constrained to admit. Our former leaders have gone to their rest, and we have entered into their labours. It will be the aim of this Government to maintain the high traditions they established in showing that sound finance is not inconsistent with progressive legislation and vigorous administration. The abstract of receipts and expenditure of the public account, covering the transactions of the last finanoial year, have already been placed before honourable members, and they have been informed through the medium of the publio addresses of my lamented leader, the late Right Hon. Mr Seddon, of the successful results uf the past year's financial operations, so that it is stale news to tell them of the very handsome balance at credit upon closing the books on the 31st Maroh last, The transactions for the year were exceptionally large upon both sides of the ledger, a total of over seven millions and a half having been received and expended. Ido not intend to detain you at any great length concerning last year's transactions, but it is as well to set them down in their seauence.

Consolidated Fund 1905-6. Ordinary Revenue Acoount: The ordinary and territorial revenue for the year amounted to £7,584,359, and compared with the revenue of the previous year showed an increase of £301,489. The estimated revenue waß set down at £7,402,600. The increase of aotual revenue against the estimate was, therefore, £181,759. Comparing tbe principal items of revenue, the one year with the other, 1 find that receipts from railways open fortratfio exceeded the previous year's returns by £120,651, Customs by £65,4-7, stamps by £41,144, Land and Income Tax by £40,766, miscellaneous £25,433, and other smaller by £19,831. There was a decrease of £11,763 in the receipts from oash land sales. The aotual revenue from Customs, railways, stamps, and Laud Tax yielded £184,348 more than was anticipated, and wi*;h some other small items, £2,063, making a total of £186,411 in excess of the estimate. On the ether baud, the income tax registration and other foes and miscellaneous hail been over-estimated to tbe amount of £4,652. The result is a net increase over the estimate of £181,759. Turning now to the expenditure side, I find permanent charges and annual appropriations totalled £7,122,340, in addition to which £500,000 was paid over to tbe Public Works Fund. Comparing the expenditure of £7,122,340 with the figures of previous year (£6,635,902) an increase of expenditure of £486,438 is shown. Uuder permanent charges there was an increase of £199,135. As I have already stated the revenue proper, together with other receipts amounted to £7,650,099. To this amount the balance brought forward from provious year must be added, namely, £761,036, making a total on receipt of £8,411,135. The expenliture, including payments of surplus revenue to Publio Works amounted to £7,622,340, which amount, deducted from £8,411,135, leaves a balance of £788,795. This, I ooiisider, a very comfortahle sum to commenoe tbe current year with, and I may mention that it is the largest brought forward at any time in the colony's history. The Publio Works Fund. We opened last year with a balance of £861,670, and received £850,851 of loan moneys and £2,679 of miscellaneous receipts; £500,000 was also transferred from the surplus of the Consolidated Fund, thus making a total of £2,215,200 on the receipt sid« of the aooount. On the expenditure side the annual appropriations absorbed £1,722,590, and other charges £3ll, making a total expenditure of £1,722,901, and leaving a balance available of £492,299 to commence the current year with. In addition to this balance, £182,086 of the 1305 loan of one million had yet to bo reneived, which will give a cash balanoo for publio works expenditure of £674,385, irrespective of contribu tioua which may be made from the Consolidated Fund during tbe pretitmt year. The Laud for Settlements Account.—The acquisition of lauds for close settlement was , vigorously pusher! forward during tbe past year, with fcne result that, the purchase money of estates and incidental ex. peases relating thereto represent a total outlay of £820,652, or very nearly double the amount expended during the previous year. The position of the accouut at the close of the past year stood thus:—Balance brought forward SI 16,698, loan and other receipts £492,428, recoipts derived from optates £185,763, making a total of £1,394,889. The expflnditure was represented by purchase moneys as above (£820,652), management oxpenses £2,445, charges and expenses of raising loans £4,957 and £102,760 for interest, makiug in all £990,814, thus leaving available a balance of £404.075 at the close of the year. The Loans to Local Bodies Acoount.—Up to March 31st last the total amount of debentures created and carried into this acoount was £2,563,100. The total net disbursements have been:—To looal bodies £2,'146,023, to Land Survey Departmeufc towards the opening up 0 f blocks of land for settlement £426,493, and to the Pablic Wor^g

Fund £89,800, in exchange for debentures under "JL'he and Bridges Construction Act, 1882," or iu all £2,562,316. The balance at oredit of the loans to Luoal Bodies Account on March 31st, 1905, was £5,521, on accounts loans were made to looal bodies £116,936', and towards opening up of blocks of land for settlement £38,801, leaving at the end of the year a balance of £784 to the oredit of the account. Public Debt.—On the 31st March last the gross public debt stood at £62,191,040; at the close of the preceding year the amount was £59,912,000, showing an iaorease of £2,279,040 for the twelve months. The net public debt shows an increase of £2,266,839 fur the same period. For public worka we raised £1,000,000, for the improvement of our working railways £197,660, for the purpose of closer settlement £607,750, for advances to looal bodies to enable them to improve their roads, build bridges and attend to their hygenio requirements £151,000, for advances to settlers £210,000. The above sums amount to £2,166,410, and with the exception of £1,000,000 fjr ordinary public works, the money borrowed should be deemed to be remunerative. Public debt 1891 to 1906: Land purchases, reproductive £5,619,016, nonreproduotive nil; railways, reproductive £6,340,214, non-repr oduotive nil; roads and bridges, reproductive nil, nou-reproductive £2,315,000; loans to looal bodies, reproductive £2,238,10U, non-reproductive nil; advanoos to settlers, reproductive £3,410,000, non-repr,oduotive nil; New Zealand consols deposits, reproductive £476,851, non-reproductive nil; Bank of New Zealand preference shares, reproductive £500,000, nonreproductive nil; coal mines, reproductive £140,00U, non-reprodnotive nil; telegraph, reproductive£l9s,ooo, non reproductive nil; goldfleld development, reproductive nil nonreproduotive £415,000; oharges and expenses, repoductive nil, non-repro-ductive £250,000; increase by conversion, reproductive nil, nonreproduotive £727,621; miscellane ous, reproductive £3,781, non-repro-ductive £730,107; total, reproductive £18,922,962, non-reproduotive £4,437,728; grand total, reproductive £36,142,962, non-reproductive £26,048,078; debt on March 31st, 1906, £62,191,040. The Million Loan. Concerning the raising of the million loan for public works purposes, authorised by "The Aid to Public Works and Land Settlement fict, 1905," I may inform hon. members that after careful consideration of the state of the London money market, it was decided that it would not be wise to place a loan there St the time. It became necessary to augment the publio works ways and means, more especially as at that janoture valuable offers of assistance were received from promiuent brokers and monied insitutions in Australia. As the result of these offers the Government was able to arrange for the floatation of a 4 per cent, loan of £500,000 at a premium of £1 Iss per centum. Upon Jopening the tenders it was found that £814,300 had been tendered for by tLe publio. The average price of the accepted tenders was £lOl 16s lid per centum, and as the cost of floatation was only £1 15s per centum, there remains a yield of something over par. 1 tbink our venture in the Australian money market may bo considered a pro nounced success, more especially as one of the State Governments issued a 3y z uer cent, loan of £1,600,000 at £97 about thejsame time, but which oost them £4 2s lOd per centum per annum. With regard to the balance of the million loan an offer of £500,000 at 4 per cent, at par was acoepted without commission or other oharges. I am lookiag forward to an early lowering of the Bank of England's discount rate, which when it takes place, will enable'us also to reduce our rate of interest on Government issues, and ' this may have the effect of lowering interest rates all round.

Railways.— With the completion of the North Island Main Trunk Bailway at of 1908, and the formation works of the Midland Railway finished by the same period together with the fact that the Otago Central Railway will have been carried to the present point of stoppage by the end of March next, honour able members will see that three of largest railway works in hand at present are now within sight of completion. I hope that the next few years will see a greater iupetus given to the construction of railways, and there ought not to be any difficulty in obtaining the necessary amounts required for this purpose without going upon the London money market. The worn of railway construction has been steadily proceeded with] throughout the year, the expenditure on new works under the •octroi of the Publio Works Department having amounted to £670,221. It will be possible to travel overland from Auckland to Wellington by the route of the North Island Main Trunk Railway by the end of 1908. Over-aoa Trade.—l am pleased to state that the Government, conjointly with the Canadian Government, has concluded a oontract with R. A. Alley and Co. for a direct bi-monthly, cargo service between New Zealand and Canada, the Company's steamers have already taken up the running, and it is anticipated that good results will follow, as the opposite seasons of the two countries excellent prospeots for tue export of our butter, frozen meat, etc. The possibilities of establishing export trade to the Far East is receiving the attention of the Governmen. It is now evident that our wool, frozen mutton and butter should there find a market. The Trade Commissioner, upon his return from the East, will be directed to proceed to Canada 1 in order to assist in the development of trade from New Zealand to that country. Scientific AgricultureMetbods. Following up the line of scientific development and the application of the most up-to-data methods to agriculture the Government intends tn establish at an early date in connection with the dairy industry a complete experimental station, and school of instruction. , Defence. and administration of the armj has been handed over to an Army Cuun oil. A similar council or board has been established in Australia, and tbe Government is considering tbe expediency of establishing a similar board in New Zealand for control of

defence affairs, but subject to the authority of the Minister of Defence. From numerous inquiries made, and interest evinced from all paits of the colony it is believed that another and larger training ship would soon be required. Workers and the Labour Laws.— In the best interest of ooth labour and capital it is essential that the work of the Arbitration Court should fce expedited, and for this purpose the Government propose that the President shall be relieved from judicial work on the Supreme Court. In other respects the labour legislation has been working satisfactorily, though one or two improvements are contemplated. National Pensions.—The Government hopes to be able to circulate a Hill crntaining matured pro visions for this laudable object. Postal Reforms. —My attention had for some time bebu given to anomalies in the postal rates under which inland letters are charged eight times as much as commercial papers and book packets. The method of charging for letters by VJoz Btages is a survival of a time when modern systems of traospor tations were unknown and there ia no reasou other than a traditional one why this should continue. I nave decided that while not interfering with the rate for book packets, and other articles not over 2oz in weight and for newspapers to abolish all other distinctions, and to fix a uniform rate of postage for inland letter ft Id for each 4oz. It is estimated that this will mepn an lmmmediate concession to the publio of £17,000. The fact that the number of letters increased in 1905 by nearly 7 per oent., and that the increase tor the ourrent year promises to exceed lust year's, make it apparent that the time is ripe for reform which will remove the present restrictions against transmission in closed en velopes all classes of postal matter. It is intended to bring the concession into foroeon November lst.next. It is intended that the weight of letters to places beyoud the colony be raised to one ounce, and that the postage rates to countiies whioh do not yet accept our penny letters be reduced after the first ounce. Thus a letter for Germany weighing two ounces, which at l present costs lOd, will, undetf the new arrangement oost 4a. The success of sixpenny telegrams has been so marked that I am justified in now announcing a reduction, as from November Ist next, of the rate charaed after the first twelve words. It is proposed to reduoe this from Id to making a uniform rate of V£d a word, with a minimum charge of 6d.

Telephonic Communication.—This is a nratter of very great importance to oor outpost settlers. Authority will be asked for a special vote of £25,000 for provision of telephones in the more remote parts of the country, and in oases where the construction of telephone lines in the ordinary way is not warranted. Material will be supplied free to those willing to undertake the work. Arrangements will also be made ia all places for the connected telephune to be within communication of a medical man both day and night all the year round. Proposal to Establish a Sinking Fund.—l am aware that of

late years it has become an axiom that while a young coJony is borrowing for publio works [ana purposes it is uot sound finance to set aside moneys as fund for suoh loans. Be that a 9 it may, there can be no doubt that suob an axiom cannot be held to apply to loans of an absolutely non-re-munerative obaraoter, suob as "war" loans and moneys ontained for kindred purposes such asjthe defence of the colony. In my opinion we ought to set to work to absolutely pay off these non-produotive loans and not leave them indefinitely as a legacy to our successors. I shall therefore arrange to provide a sinking fund of 1 per oentuin per annum whioh ought to extinguish the liability in about thirty-five or forty years hence. In carryiug out the closer settlement polioy we borrowed sume £4,500,000, which is returning in rents a large income. No attempt has been made to establish a fund for the repayment of these loans at maturity. Under these circumstances I propose to make a charge upon the Land for Settlements Account to raise 1 per centum per annum a* a sinking tund. 1 Reform of the Land Laws.—The Government has given oareful consideration to the important question of land tenure. On the one haud the country caunot prosper unless settlors are prospering, and to that end they must hold their land in moderate areas and under liberal conditions. On the other hand, we of to-day are trustees of those who are to follow us, and we are not justified in reoklessly sacrificing the public estate. The problem is how to beat reconcile these apparently conflicting interest?. The Government is of opinion that reform is necessary on lines which I will briefly indicate. Members will recollect that as part of the scheme of laud reform, all existing wasvo lands and Crown lands are to be set aside as an endowment for education, old-age pensions, and hospitals, i So far as relates to land tenure the scheme extends to all Grown lauds, aud whilst sacredly preserving the existing cootraots wil», In the main principles, be as follows:—(a) Sale of Grown lauds to be discontinued except in oases specified below; (b) lease-in-perpet-uity system, 991) years, to be discontinued, and a term of 66 years to be substituted, with a valuation for improvements at the end of thi torm; (c) the tenant under 0b years lease to have power to pay capital sums to the extent in all of not more than 90 per cent, of the total capital value of the laud, the rent being reduced by the interest on suras so paid; (d) when 50 per cent, of tbe capital value has been so paid all restrictive coveuants to be removed, and the tenant to hold there after on terms of paying the abated rent; (e) all oapital sums so paid to be refunded at the end of the torm; (f) at the end of the term the land to be offered again for lease burdened with the value of improvements to He paid by the incoming to outgoing tenant; (g) tenants under 999 years' leases (including leases under the Land for Settlements Act) to have the option of converting into the new, and this at

either the original or the nroseufc value; ih) teuants under the old leases (not inciudiug leases under the Land for Settlements Actl to have the additional option of surrendering the leases when the land will be sold by public competition, hardened with the valuation for ituprovemects, the proceeds of all suoli sales to be paid into the Land for Settlements account, so as to be solely available for acquiring improved land for disposal under the Land for Settlements Act. This | means that the tenant of the land for settlement loase may convert, but csuuot surrender. They will receive the value of their improvements when the land is sold. Another modification of the law will be made enabling a persou to .*<l.s to his holding in cases where its arm does not exceed the statutory limit The Government is strongly of opiuion that the aggregation of areas in single hands is not to i:he advantage of the State. It t.hnr»jyfore proposes to fix a limit, any '£50,000 capital on unimproved value, beyond which it shall not be lawful for any Derson to hold laud, ivith a provision for tne gradual reduction, say, within ten years of areas now in excess of the limit. Tbe residential conditions of the land Act are essential to a satisfactory settkmunt of laud, but the Government thinks that they may be safely modified in favour of persons whoso avocations confine them to a town, but are desirous of taking up land as a provision for themselves or their families, Proposals will be submitted for granting this concession under regulations carefully framed to prevent abuse. 1 trust that in considering these proposals hon. members, whether favouring the leasehold or freehold system, will recognise that the Government is making an honest and straightforward attempt to meet defects which exist. With regard io Native lands the policy of the Government is:—(1) To set aside sufficient Native lands for the maintenance of Natives; (2) to aB far as possible give the Natives a start to farm these lands, and guide them in making the lands productive; (3) to throw the balance open for settlement, cultivation by the (Jrown, purchasing at the Government valuation, vesting it in boards for lease in limited are3S for terms not exoeed'ng 66 years, and allowing Natives to lease it them selves for such a term under the supervision of the boards; (4) to settle all disputes in Native titles, quickly and if possible by a Land Court; (5) where Natives cannot be dealt with individually by the Grown on aaoount of pending, appeals etc., that the Grown deal with them colleocively in the meintime, and open thtir land for settlement, so that wben the oases are disposed of by the Court they will get resulting revenue.

Reniprooity with the Commonwealth.—As the hon. members are awaio the late Prime Minister (Mr Seddon) made a provisional agreement with the Commonwealth Government for reciprocal concessions of Customs duties in oertain cases. The agreement is subject to ratification by Parliament, and will be submitted accordingly. Its operations will have very important results to New Zealand, both financially and otherwise. Moneys Required For Advances to Settlers. -The policy of making advances to settlers has proved a great boon to numbers of our worthy culonists, enabling them to improve their holdings at small cost to themselves, and with absolute security to the Government. The alteration of the law enabling the office to invest its own profits has had effect of lessening the amount required to be borrowed to lend out to settlers, and I do not anticipate that it will be necessary to find more than about £400,000 per annum, which can be arranged for through the Post Office Savings Bank. Meanwhile there has been no falling off in the amount and the number of advanues made; indeed, last year showed a reoord for the largest amount of business done by the office. It may be welt to mention that cumulative authorities amounting to £4,000,000 for borrowing purposes are almost exhausted, and will have to be extended to £5,000,000. 'ln order that our settlers may have the benefits of the cheap money scheme a Bill to give effect to this will be introduced.

Estimated Expenditure (1906-7). — The estimated expenditure for tbe fiuanoial year ending March 31st, 1907, I have set down at £7,575,972. Therefore, as the actual expenditure last fiuanoial year amounted to £7,122,340 (uot including tbe transfer of £500,000 to the Publio Works Fund) the increase ot' expenditure for tbe current year is estimated at £453.632, Revenue.—Tbe estimated revenue for tbe current year may bo stated at £7,867,000, or £217,641 in excess of tbe aotual receipts during tbe previous financial year. Suoh figures as these are startling when it ia remembered that our popuiatioa does not yet reach a million, and it is proved in every direction that our revenue is paid by oar people without being a burden upou them individually. Further Loan for Publio Works Purposes.—We come now to the question of the necessities of the Publ iio Works Fund. It is our polioy to vigorousy push on with the works in , progiess. The large undertakings in hand runs!; bo as rapidly as possible brought; to completion in oraer to reaah n remunerative point. To enable this to be done we must, ask the Parliament for further borrowing powers, which will, 1 am sure, be recognised as necessary where tbe life-blood of the couuiry is so dependent provision of railways, roads, telegraphs, telephones, and othor public facilities. The Government has therefore decided to usk for authorts to rise £1,000,000 in aid of publio wcrks. At the same time it in not proposed to go to London for tbe loan as there is little doubt but that it can bo easily raised locally at a reasonble rate of interest.

Conclusion.—The policy of this Government is » progressive development of what haa always been the policy of the Liberal party—to advance—but on safe lines, sparing no effort to further the sooial, industrial, and commercial welfare of the oolouy, and taking care to keep on lines that are financially and eoouo mioally sound. The propoals 1 hav e

indicated include, amongst other important matters, sinkiDS fuuda to redeem unramunerbtive loans, earmarked endowments for education Hnd other specified purposes, national annuities for the enouragemeut of thrift, reductions in postal and telegraph rates, and increases in postal and telegraph conveniences vigorous "prosecution of railways roads, and other publio works, reform of the land laws, and settlement of native lands. 1 feel confident that with the help of our friends on this side of the House, and not being deprived of the benevolent orit<cism of hon. members opposite, these proposals will be given effect to in such a way as to further promote the prosperity of New Zealand and the happiness of her people.