FINANCIAL STATEMENT

Waikato Argus, Volume V, Issue 326, 11 August 1898, Page 4

FINANCIAL STATEMENT

The Financial Statement was delivered on Tuesday cveniug in Committee of Supply by the Colonial Treasurer, the Right Hon. R. J. Seddon, as follows : Mr Guinness,—ln accordance with the announcement made last week, it gives me very great pleasure to place before you the much-enquired-after and longedfor Financial Statement. For some years past the reference in the Budget to matters uot directly relating to finance has given rise to prolonged debates. To {obviate this I have made a departure by eliminating from the Financial Statement this year all reference to extraneous matters not bearing directly on the finances, and seeing that the statements and reports from the several Departments give more complete and elaborate information on the several subjects than was contained in the necessarily condensed reports in previous Financial Statements, it will be an advantage not to have the Budget loaded with references to departmental and abstract policy questions. A SUBSTANTIAL SURPLUS. It is pleasing to me on this, as on former occasions, to relate to honourable members that there was another substantial surplus at the close of the financial year. The exact figures of the balance with which the year concluded were £521,144, after the payment of £IO,OOO for the patent rights of the cyanide process and the transfer of £300,000 in aid of public works. This last-named sum completes a total of £1,330,000 which has been, during the last few years, contributed to the Public Works Fund out of the balances of the ordinary revenue account of the colony. This very substantial aid has been obtained without entailing hardship or incouvenience to the public at large. The annual interest on the £1,330,000 at 31 per cent, is £16,550. That would otherwise have been Bent out of the colony, which would have been poorer by that amount. receipts 1897-98. The estimate for the year 1897-98 was £1,793,000. The actual figures reached £5,079,230, producing an excess of £286,230 over the estimate. A glance at table 2, which accompanies my Statement, shows how the excess is made up, btxtl may briefly mention the largest amounts, namely—£6l,4oo from Customs and beer duties, £59,200 from stamps, £95,400 from railways, £13,300 from territorial revenue, and £34,800 from Land and Income Tax and other heads of revenue. In last year's Budget I anticipated an increase of £61,000 for Customs revenue over the actual receipts of 159697, and I expressed a hopc_ that I was not too sanguine in adopting such increased figures. I had two things in view—first, that importers were very fully stocked at the time ; and, secondly, that the Northern goldmiuing activity having suffered a relapse, it. was only reasonable to suppose that general trade would be proportionately affected. I may probably be blamed that my pessimistic views were not fulfilled. Personally I am pleased to find a different result; for the iucrease of revenue, from this source and from our railways, goes far to prove that the spending power of the people has improved. A much larger amount of succeasiou duty was received than could be estimated for, and this, with other substantial amounts, has swollen the stamp revenue. The Land and Income Tax came in well. The last-named tax has ' reached a record amount, and very fairly indicates the general prosperity of the colony. From our railways have received, as I have s said, some £95,500 in excess of the estimate supplied by the Department. . There is no special feature in this to comment upon, for it is the evident result of increased commercial business, which has more than compensated for the loss of revenue from the floods and from the drought iu Southern Canterbury. Other heads of revenue have shown a gratifying increase. The Advances to Settlers Office was able to repay to the Consolidated Fund £22,000 of the arrears of advances made from time to time from that fund. I am happy to mention that during the current year I think the office will be able to repay the balance of tlieae advances, as well as to provide for the due payment, within the year, of the half-yearly amounts of interest upon the one million and a-half loan, borrowed for the purpose of lending upon mortgages. ,- s EXPENDITURE, The ' actual expenditure reached £1,912,372 and the estimate was set ' down as £1,979,074, resulting in a saving 0f.£66,702. The table I have already referred to shows, at a glance, the various items over or under spent. The working railways vote was exceeded by £25,796, but I do not imagine much exception will be offered to this when it is taken into consideration that nearly £IOO,OOO of excess revenue was at the same time obtained, for it is evident in railway business that increased revenue means also increased expenditure. Among the underspent amounts (which totalled to £108,173) the item of £27,709 represets principally a saving of interest payable on Treasury Bills and inscribed stock. Other items are of the ordinary departmental character aud call for no special mention. SUMMARY 1897-98. The result of the transactions of the revenue account for the financial year, ended 31st March last, may be set down thus:—Actual receipts £5,079,230, less actual expenditure £1,912,372, balance £166,858, add the balance at the beginning of the year, viz., £354,286, gives a surplus at the end of the year of £521,111. THE CHEVIOT ESTATE. The separate account for 'the Cheviot Estate for 1897-9 S, shows receipts from rente, etc., amounting to £16,277, and this money was expended in payment of interest on the special loan in roading, surveys and other charges. LAND FOR SETTLKMENT. For the purpose of acquiring laud for close settlement duriug 1897-9 S, debentures amounting to £135,000 were created and sold. In addition to this amount £27,667 was received "from rents leases and fees making, with the balance brought forward (£1711) a total of £167,381. Purchases were made to the amount of £147,990 and £10,595 was expended in roading, surveys aud other expenses, leaving a balance of £8796 at the close of the year. CONVERSION ACCOUNT. At the beginning of the year this acs count had a balance of £1573, and during the year,£551,390, 3 per cent, stock was inscribed for conversion purposes and £BIB of premium was received on a portion of the same. On the other hand £330,916 of debentures was converted, at different rates, into £361,392 inscribed stock and £185,216 of various debentures was redeemed. The expense amounted to £4663 aud the balance, at the close of the year, was £2512. LOANS TO LOCAL K.ODIES. The balance in hand to the credit of this account at the commencement of last year was £1 and during the year £lll,lOO debentures were created and issued under " The Government Loans to Local Bodies Act, ISS6," and refunds of £4601 were made to credit of the account under the provisions of Section 8 of " The Government Loans to Local Bodies Act Amendment Act, 1596." These sums, amounting in all to £116,005, have enabled loans to be made during the year to the amount of £75,257 to local authorities, and £18,770 towards opening up for settlement blocks of land, leaving a balance of £21,979 to the credit of the account at the end of the year. The total amount raised and carried into this account by the creation and issue of debentures up to the 31st March last, was £1,165,500 ; (1) for granting loans to local authosities, £879,069 ; (2) loans to open up blccks, of land for settlement

under Section 2 of " The Government Loans to Local Bodies Act Amendment Act, 1891." £19G,G31 ; and (3) for the payment of £89,800 to the Public Works Fund, on account of the debt of £80,878 8s 9d, due to the said fund for debet) tnres issued under " The Roads and Bridges Construction Act, 1582," and converted and inscribed as debts under Part 11. of " The Government Loans to Local Bodies Act, 1886." The total disbursement up to the 31st March last had been :—(1) To local authorities, £557,091 ; (2) to Lauds and Survey Department towards opening up new blocks of land for settlement by construction of roads and bridges, to give access to such blocks, £196,631, and by transfer to the - credit of the Public Works fund £89,800, leaving a cash balance of £21,978, as above stated, at the end of the financial year. I am glad to be able to state that the local authorities, whose districts were overtaken by the severe flood disasters of last year, have apparently been able to make good the damages without being compelled to increase their loan obligations by borrowing under the Government Emergency Loans to Local Bodies Act of last session. Members will, I am sure, join with me in expressing the hope that their self-reliance will be rewarded by the increased prosperity of their districts. NEW ZEALAND CONSOLS. During the year £58,850 of deposit has been inscribed under the New Zealand Consols Act. THE PUIiLIC DEBT. The gross debt 31st March, 1897, and £44,963,424 on the 31st March last, producing an increase of £596,806 during the year. Additional debt must take place as long as Parliament sanctions the policy of acquiring land for settlement, the purchase of native lands, the construction of railways, roads and works, and authorises assistance to local bodies to enable them to make roads and build bridges, etc. for the purpose of opening up the splendid land of' the Colony in various districts. To enable this policy to be given effect to, £246,400 of debentures under "The Land for Settlement Act, 1891," and "The Government Loans to Locpl Bodies Act, 1896," were created, and £58,780 was inscribed as New Zealand Consols deposits. The interest on these sums is more than recouped to the Consolidated Fund. In addition, £69,600 was issued against the accretions of Sinking Funds for the year, and £225,000 was raised on account of the half-million, authorised under the Aid to Public Works and Land Settlement Acts of 1896 and 1897. A further inscription of 3 per cent, stock took place, to the amount of £554,392, for the purpose of redeeming and converting previous loans to the amount of £545,932, producing a nett increase to the debt of £5,460. Two small parcels of loans were paid off, namely. £6,934 under the " Consolidated Stock Act, 1884," and £1,500 of the Lyttelton and Christchurch Railway Loan. 1860. The net debt on the 31st March. 1897, was £13,552,321. On the 31st March. 1898, b was £44,051,521. CUSTOMS REVENUE. The Customs revenue has shown great elasticity during the last three yCars, as will be seen by the following figures:— 1895-96 : £1,649,344 ; 1896-97 :1,818,593; increase, as compared with previous year, £169,549. equal to 10'3 per cent; 1897-98 : £1,935,352, increase as compared with previous year, £116,359, equal to 7'05 per cent. COMPARISONS. Referring to. the general prosperity of the country, I may be pardoned" for introducing here a few tig"tees from the Savings Bank returns, which very strikingly show how substantial our prosperity has become. I will contrast the Saviugs Bank figures of the 31st December, 1897, with those of 1890. In 1890 the number of deposits received was 162,938, and the amount £1,658,543., while at the close of last year deposits numbered 267,615, and in value reached the large sum of £3,187,219. The number of accounts remaining open in 1890 was 97,208, as against 159,331 last year. Since 1890 the total amount standing to the credit of all open accounts, inclusive of iuterest, has very nearly been doubled, the respective figures being : in 1890, £2,411,576, and in" 1897 £4,744,924. The average amount standing to the credit of each open account has increased from £25 2s 4d to £29 15s 7d. Such figures as these are in the very highest degree satisfactory, and prove, without doubt, that the prosperity of our people is real, and that their earning-powcr must have largely increased. FOTURE PROSPECTS. Enquiries which have brien made in different branches of trade give good reason for anticipating a fairly prosperous year. At" all events, at present there are no signs of any check. I have also consulted the Agricultural Department, aud am assured that the prospects for this year are good. The mining industry is, perhaps, not so promising on the whole. THE TARIFF. 1 feel justified iu estimating the Customs revenue at a similar sum to the amount actually received last year, viz., £1.935,000. The beer duty revenue I have estimated at £71,000, the re/enue last year having been £72,179. The elasticity of the revenue derived from indirect taxation may lead members to unthinkingly urge for a revision of the tariff, and under a misapprehension to press for a reduction on the necessaries of life. Under the item tea, which is a necessary of life, we have lost in revenue £75,000. Who have received the benefit ? Is it the consumers? If I were to answer in the affirmative, by far the largest number of persons would say it was wrong and'that it was the middleman who had profited. Again, it must not be forgotten that the £200,000 payable as old age pensions is practically a remission. True it is only payable to a section of the people, but they are deserving, and, being a humane and proper charge, few will challenge the call made upon them for this purpose. Now, on broad lines of general policy, I submit that it would be unwise, impolitic, and injurious to the colony to attempt to materially interfere with the tariff under existing conditions, and it would be indefensible as great injuries would accrue which would uot by any means be counter-balanced by any remission that might be made. As yet there has not been sufficient time to gauge accurately the position. We have had two years of prosperity. Can we absolutely" and accurately say how long this will continue ? Should there be a change in the tariff let it be made on the broad lines that there was too much indirect taxation and, accordingly, too little from direct taxation. Tinkering with the tariff should be avoided. LAND AND INCOME TAXES. The revenue derived from the land aud income taxes during the past year was £382,197, or £17,497 over the estimate* and about £SOOO over the receipts of the preceding year. The steady increase in the income tax receipts has been maintained and affords the best possible evidence of the prosperity of the colony. The Consolidation Bill considered by the Public Accounts Committee last session, will be re-intro-duced. This measure, though not absolutely essential for taxation purposes, deals with anomalies which it is considered advisable to remove and presents the law relating to direct taxation in a clear and more concise form. Certain concessions which it is thought equitable to make all tind to a reduction of the income tax receipts. The purchase by the Government of estates under, the Lands for Settlement Act also tends to decrease the land tax receipts, but it is expected these reductions will be more than compensated for by an iucrease in the land tax receipts resulting from the new valuation. I do not, however, place the estimate for the year above £300,000,

which moans an increase on last year's lecoipts of about £7500. ESTIMATED EXPENDITURE FOR ISOS-90. Turning now to matters which concern the present hour and afteet the remaining months of the financial y»ar, I propose to give, honourable members some idea of the estimated ways and means of our revenue Recounts. The estimated expenditure for the year of our Consolidated Revenue Account amounts to £4,713,876, excluding £350,000 in aid of the Public Works Fund, which latter amount is provided out of the surplus of last year. The actual expenditure last year amounted to £1,612,873 ; therefore the current year's estimate totals £131,504 in excess of that of last year. £53,599 of this arises from the extra provision for interest required on the new loans raised or authorised during the past and curtent year. There has been a consensus of opinion that our permanent force and volunteers should be strengthened and made more efficient. These improvements cannot be effected without additional cost; consequently the estimate of the Defence Department will be found to be increased by £25,806. The PoUce Department shows an increase of £7,554. It has been apparent for some time past that the police force of the colony was numerically weak. On the present estimate we are therefore providing tor the engagement of some fitly extra men. The services I have just named really provide for the expenditure of an exceptional nature arising from causes which do not influence the expenditure of other departments. The amount I acknowledge is large, nearly £IOO,OOO, but I do not think hon. members will gainsay the necessity of providing for the services and this will be plainly demonstrated when the estimates are under discussion. The estimated ordinary expenditure for 1597-98 was £4,669,071, as against £1,743,876 for the current year. ESTIMATED REVENUE 189899. Very careful consideration has been given to the figures finally adopted as estimates of the accruing revenue cf the current year. The figures I have set down for this year amount to £5,023,300, which is £230,300 more than I estimated for last year and £33,930 less than outactual receipts. Contrasting the present estimates with the actual receipts of last year, the increases amount to £30,871, and the decreases to £61,801. I have adopted, as an estimate for this year, the figures representing last year's actual receipts from Customs duties in accordance with remarks I have previously made. SUMMARY. Bringing the estimates of expenditure and revenue together, the position at the close of the current financial year, on 31st March, 1899, may be set down as follows:—Balance brought forward to begin the year with £521,114, less to be transferred to the Public Works Fund £350,000, balance £171,111. Estimated expenditure 1898 - 99, £1,743,876 ; estimated revenue 1898-99, £5,023,300; excess of revenue over expenditure, £279,421; total, £450,568. From the above amount I proposed to set aside £IOO,OOO for Old Age Pensions and to transfer to the Public Works Fund £25,000 in aid of harbour defence works and defence services, £25,000 in aid of the additional requirements of lunatic asylums, new methods, etc., and inclusive of the amount already expended and liabilities incurred ; £25,000 to defray the cost of the erectiou of our Parliamentary Library and the central part of the Legislative Buildings. PREFERENTIAL DUTIES. Reference has already been made in His Excellency's speech to the important question of preferential duties on goods manufactured in the Mother Country. I think the time has now come when we might with advantage make a substantial concession in the shape of granting a remission of 5 per cent, on the duties now imposed on this class of goods. This remission, if made, will probably amount to £50,000. The appropriation of the sums here above indicated will reduce the above total to £225,568, from which amount further deductions will also require to be made to provide for the usual supplementary estimate, and for the proposed additional grants to local bodies, and to ensure the amount required next year for the payment of Old A ge Pensions. AID TO THE PUBLIC WORKS FUND. The total ways aud means of the Public Works Fund, unexpended on the 31st March last, amounted to £326,492. I hope to be able to transfer from revenue this year, in aid of the Public Works Fund, the amount of £350,000, thus bringing the total ways and means under this fund up to £676,492, against which there were liabilities amounting to £394,427. As the expenditure, including £156,731, spent on additions to open lines, amounted last year to £865,543, and will probably amount to about the same sum again this year, it will be evident to honourable members that the available ways and means are not sufficient to meet our requirement, even up to the 31st March next, and it is very desirable that we should be able to see our way a little beyond that date. It is contended, and with some torce, that we should not burden those now in the colony with the cost of the construction of railways and works of a national and permanent character, lasting for all time and being for the benefit of future generations. All this class of work is not a reasonable charge upon the revenue. As will be seen from my summary of expenditure, we propose to take from the revenue £425,000, and we further propose to obtain this year in aid of the Public Works Fund, aud more particularly for the class of work previously mentioned as national and permanent, the sum of £500,000. It does not, however, follow that we intend to raise or appropriate the whole of it this year, but I do consider it necessary, so as to avoid complications, to place the Public Works Fund in a more favourable position than it was on the 31st March last, when there only remained a balance of £51,492. CONCLUSION. I have now almost concluded, aud although this is, perhaps, the shortest Financial Statement that has been delivered for many years past, still it is concise, treats solely of finance, gives sufficiently the state of the finances of the colony, is instructive, aud I hope not uninteresting. The continued prosperity of the coloDy leads me to the conclusion that we are on safe lines, and that there is nothing ephemeral. Land values are maintained, there is no sign of decrease in our revenue, our population is increasing, and the same can be said of our imports and exports. The settlement of people on the land is progressing satisfactorily, the output of gold aud coal mines is steadily improving, the labourer scouring the country for work, commonly known as the " swagger," is now becoming a thing of the past, and the employment of nearly the whole of the workers, privately and publicly, has proved beneficial to the colony. As a whole, labour saviug machines have, it is true, thrown out of employment many men and these will continue ; but although this entails individual hardship for the time being, with the changed condition, other avenues must be open and the private employer and the State can, aud should, assise the utilising of the surplus labour. The safest and permanent solution is to place such of them as are willing upon the land. As to the future outlook, being neither pessimistic nor optimistic ; but desiring calmly and dispassionately to gauge correctly the position, I feel confident that with .strict ecouomy and reasonable expenditure on reproductive works, thus providing for those who are willing aud able to labour, the settlement of the people on the land, with proper regard paid to the development of our v;jst mineral resources, with due provision made to ensure the export of our principal pro ducts iu good condition and increased

markets therefore together with the continued energy and enterprise of our colonists, we have a bright and prosperous future before us and I shall look forward with hope to be able, in my next Financial Statement to again congratulate the people of our rolony on their improved position, to announce that my expectations have been fully realised, and that the wisdom of maintaining a strong finance has been fully justified.