THE COLONIAL TREASURER'S FINANCIAL STATEMENT.

West Coast Times, Issue 303, 12 September 1866, Page 5 (Supplement)

THE COLONIAL TREASURER'S FINANCIAL STATEMENT.

In the House of Representatives, on Wednesday, the sth inst., the Hon. Mr Fitzherbert made his financial statement. After some introductory observations, the hon. gentleman said :—: — The committee will have already gathered that the Government proposes to reduce the Defence Estimates, from the sum of L 109,000 to that of L 70,000 ; and it will, besides effecting this considerable saving, amounting to L 39,000, alter somewhat the character of these Estimates. Instead of a rudimentary army, as some seem to have imagined, we propose that the colony should content itself with the maintenance of an armed, constabnlary. It must not be supposed that a reference to this alteration is outside the limits of a statement like the present. Foi' it implies not mejely a change of name, but a reduction of expenditure, future as well as present, collateral as well direct. The precise bearing of this view of the case will perhaps be most readily appreciated by those who may have witnessed the effect produced on tradesmen's bill's by the promotion of the errandboy to the " youth in buttons," and the struggle between pride and poverty which ensues upon any proposal of reduction. Neither, on the other hand, ought it to be inferred tjiat any departure from the policy of self-reliance is contemplated. Under that banner, indeed, the most brilliant successes have been achieved by .our Colonial Forces and Native Allies ; and it has settled down into the policy of the colony. But, whilst the Government relies with confidence on the prowess of the colonists in the event of any emergency, it declines to incur thcexpense of a costly peace establishment. There is no other noticeable reduction in the Estimates proposed by the Government, and I may therefore proceed to state the estimated Expenditure for the financial year ending June 30, 1867, nearly thus, viz: — Permanent charges (in- £ terest and Sinking fund) . . . 266,889 Civil List . . . 27,500 Government House and Domain . . . 7,138 Public Departments . 36,560 Law and Justice . . 64,843 Postal . . . 143,150 Native , . . 29,986 Customs - . . . 46,320 Miscellaneous . . 30,922 Defence . . " . 70,000 Supplementary (including charges and interest on Treasury Bills, &c.) . . 15,000 Total proposed specific appropria- . tion by General Assembly for Colonial and Provincial Service 738,308 Total proposed .general appropriation by General Assembly to the Provinces for special appropriation by the several Provincial Councils . . . 318,750 Total proposed ordinary expenditure. . . • . £1,057,058 This result, showing the considerable amount of L 318,750 available for Provincial appropriation, has been attained, 1, By the reduction of the Defence Estimates to the extent of L 39,000 referred to above.' 2. By eliminating from the current Es- ■ timates for the year certain charges of a permanent character. I now proceed to state the ordinary revenue estimated as available to meet the current expenditure, a iz. :—: — Customs .. ...£850,000 Ordinary Miscellaneous 146,000 Stamp Duties • ... 50,000 ' Bonded Warehouse Duties : 4,500 Licensed Distillation... 1,000 Additional Postal Revenue 7,000 £1,058,500

That is to say, "the estimated ordinary revenue of New Zetland for the present financial year, as proposed to be supplemented by the new taxation, will be sufficient, after defraying the first charge for interest on loans, to provide for all the ordinary colonial and provincial services ; and also to make further provision to the extent of L 3 18,000 for the use of Provincial Governments.''

It must be admitted that it is very satisfactory to be enabled to make such a statement ; and it is satisfactory also to find, oir turning back a little upon the past, that the colony has for some time been working up to this desirable adjustment between revenue and expenditure (my remarks are simply confined to ordinary revenue and expenditure. This favorable tendency and result , I attribute to a combination of causes, viz.^' partly to the stimulus of the goldfields, partly to the increase of taxation effected in 1864, and partly to a prudent restriction of departmental expenditure, and may be traced in exact terms in the valuable returns which I have now before me.

Return No. 1 shows that, upon a comparison of a period of three years, viz., from 1863-4 to 1865-6— The growth of Revenue was 27* 15 percent Ditto Expenditure 26-1 per cent

[Return No. 2 exhibits comparatively the Departmental Revenue and Expendi- • ture, and affords some instructive lessons ; the following inter alia, viz. : — Customs. — That whilst the revenue has

largely increased there has only been a slight increase of expenditure. That the surprising increase in the Customs Revenue of Canterbury and its steady increase at Wellington and Nelson have more than outweighed the decrease at some other ports.

Postal.— That the great disproportion between revenue and expenditure is gradually diminishing.

Judicial. — That there -is an alarming and increasing disproportion between revenue and expenditure, particularly in Otago, owing possibly (I throw it out as a suggestion which I have not yet had time to verify) to the costly attendance of witnesses at trials, and to the diversion of fees to the Mayor's Court.

Rbgisthation. — That there is a very gratifying increase of revenue. I would merely take occasion to observe, sir, that it is by the study of returns such as these that we can alone ascertain the direction in which retrenchment of expenditure or increase of revenue (as the case may be) may be effected from time to time iriih safety.

I observed just now that certnin charges of a permanent character arc proposed to be eliminated from the current estimates of the year ; and I should also state that it is proposed to remove the unexpended balance of the loan from the revenue side of the accounts. The advantages of this process of separation are sufficiently obvious, and I need not, therefore, occupy the time of the committee by dwelling on them, but will at once submit for consideration what I may style — A proposal for appropriations in liquidation of appropriations under the Three Million Loan :—: —

JC Military Settlers 207,000 Cook Strait Cable and Telegraph Extension to Auckland ... 38,000 Treasury Bills (removal of Seat of Government) ... ... 11,500 Liabilities on account of final ■ettlement of Military Settlers 50,000 £306,500 Unexpended balance of Loan ... 170,000 Balance to be provided for ... 136,500 £306,500 I take the opportunity of mentioning, for the information of the committee, that the LIOO,OOO in debentures advanced to Auckland forms part of the sum of Ll 70,000 just referred to as the unexpended balance of the loan. Before, however, preceeding farther, I must notice what might at first sight appear tO'have been an omis-ion, in any proposal purporting to have for its object, the winding-up of the colonising scheme of 1863. I refer to the sums of L 38,750 (Taranaki Loan Ordinance), and L 32.000 (Taranaki Land Purchase Fund). It is .sufficiently well-known, that these two amounts have been diverted from their original destination, and expended &y the General Government on other objects. It will be understood that I am not now canvassing the propriety of those transactions „• lam simply stating the case; and no one will dispute, that the good faith of the colony requires that these funds should be reinstated. With regard to the first item ; inasmuch as the interest is provided for ou the Estimates, and the debentures do not fall due till the year 1873, there is no immediate pressure ; and against this, I bring to account an asset of L 43,007 9s 9d, being the amount of debt due by the .Province of Southland, which, I have every expectation will be repaid before the period of maturity of the Taranaki debentures. It is, in my opinion, a perfectly good asrfet. With reference to the second

item, it is proposed to commute this liability by a cession of land ; an arrangement which, there is reason to believe, can be equitably effected.

It will ii)w be asked, how the Government propose to provide for the deficit of L 136,500 exhibited in this proposal? I I would first observe that the Government will bbrio'n o ' down a bill to indemnify for the

past expenditure of the Three Million Loan, and to appropriate the unexpended balance. The appropriation will consist of so much of the item " Military Settlers " as can be covered by the remnant of the loan, for that is a change specially pertaining to the loan. In the next place, the Government will propose a bill authorising the issue of Treasury bills to the extent of L 150.000, having a currency so regulated as to spread the charge on the

revenue over. a period of three or four years. With regard to the item " Cook Straits Cable and Telegraph Extension to Auckland," t would explain that the Government submits this proposal as the necessary complement of that great national undertaking which has already connected the shores of Cook Straits by means of the submarine cable, and completed telegraphic commuuication between the seat of Government and the extremity of' the Middle Island. I would also explain that, although it is true that one-sixth, or perhaps one-fifth, of the amount of this proposed expenditure of a permanent character may not be actually brought to charge within the present financial year, yet that almost the entire amount is an obligation already existing, and that the " Telegraph Exiensinn," if sanctioned by the committee, might bo. advantageously contracted for within the year. At any rate, it appeared only reasonable to include .those proposals in any scheme having for its object a final settlement of the Three Million Loan Appropriations. It is necessary that I should refer to the question of Provincial Surplus. It will be admitted, I believe, by those who have dispassionately considered the subject, that the present state of the law, as established by the Surplus Revenue Act, is unsatisfactory. It creates a partnership account, which complicates exceedingly, and delays the accounts of the colony, and throws an uncertainty over the amount available for provincial appropriation, which is very prejudicial t> ihe interests of the provinces themselves. It is a very old saying, " Societas esf matey discordiamm" — partnership bree.ds quairels ; and the truth of the sa} r ing has been amply exemplified in New Zealand ; for I believe that a large proportion of the differences which have from time to time occurred in this Legis- v lature, may be traced to the fact that the various Governments of New Zealand all dip their hands into a common purse. The Government, however, does not propose any amendment of the law this session ; but it nevertheless regards it as a question which has to be settled sooner or later. And it can scarcely be conceived, I think, that any sound and 'settled system of finance can be established for the colony until this partnership system has been abolished, the evils of which have, indeed, been successively shown by audit committees. If, then, the Government is not prepared with a measure this session, what does it propose to do? I have stated the amount for Provincial appropriation as estimated, at L 318,750 for the current year. This sum the Government proposes to insert iv the Appropriation Act, for the specific services of the provinces, by means of appropriation by Provincial Councils — to be issued to the several provinces in monthly instalments, proportioned to the gross Customs Revenue — an arrangement which will give a stability to provincial calculations which, I venture to affirm, has never hitherto existed. On the other hand, it must not be forgotten that our Estimates of Revenue may fall short ; Ido not anticipate it, but prudence requires that such a contingency should enter as an element into our calculations. It will have been perceived that the amount of the Treasury bills asked for somewhat exceeds the balance requisite for the proposed permanent appropriations; and it is intended that these bills may be m>ed in aid of current revenue, if necessary — a necessity

however, which need n->t 1) pnnided for if tho " Surplus Revenue Act, ' !>e simply adhered to, and the hum of L 318,750 be included in the Appropriation Act. Before leaving this subject it may be desirable to ascertain the amount aud proportion which the provinces received during the last financial year. The return I hold in my hand (Return No. 3) shows that during the' last financial year the provinces received L 288,991 or L 10,253 less than three-eighths of the Customs. The committee will probably desire to ascertain the views of the Government on the question of consolidation of loans. This i:i a very large subject, and, has necessarily engaged the attention of Government. It presents itself in two aspects, viz. : — The consolidation of Colonial and that of Provincial loans. That it would be most desirable for all interests to consolidate all the different loans,' yariable as they are at present in character, and frequently conflicting with qach other in the market, no one, I imagine, who has bestowed any attention on the subject, can entertain a doubt. For my own part I am confident that the operation, if skilfully conducted, would prove highly profitable ; and that the conversion of the various kinds of securities into one common stock, to be known thereafter as " Now Zealand Stock," would be of the greatest advantage, both to the colony and the provinces. But anew Government could notintroduce such a subject at the close of the session, even if the state of the money market were favorable. So far, however, as relates to the conversion of a pootion of our colonial securities, I may state that it is the intention of the Government to introduce an Enabling Bill during the present session.

I now approach the subject of the new taxation proposed. The Government may perhaps encounter opposition to this measure, but it does not, therefore, shrink from the responsibility. It believes that a considerable number of thinking men throughout the colony are prepared to accept the method of taxation, by means of what are called " Stamp Duties-," as a less objectionable mode than most others. They believe that a certain mixture of direct with indirect taxation, represents a sound principle ; and they recognise that taxation by means of stamps, partakes of the advantages, both of a property and income tax, whilst it is free from some of their disadvantages. They recognise further, thi§ sound principle in the proposed form of taxation, viz., that the incidence of the burthen is, in the main, there where it can be best borne. And if it should be contended (which Ido not think it can with reason) that this tax will realise a much larger amount of revenue than has been estimated, then, sir, I submit that a very favorable opportunity will present itself next session, after such a fact shall have been fairly established, for the Government to relieve the pressure from off the shoulders of those who contribute to the revenue according to the present rates of duties levied on the necessaries of life. But, besides these arguments, I draw attention to a very practical view of the case, viz., the necessity of keeping up the revenue, if, indeed, it is desired to make the various provisions proposed by the Government. For I scarcely imagine that any one would be found to recommend that we should go into the market to borrow in order to provide funds for the ordinary services of the provinces, to be appropriated by the different Provincial Councils. For that is what it would amount to. I simply observe that an operation of that kind would not be calculated to improve our credit. Before concluding, I desire to thank the committee very much for the ]>atience with which they have listened to a statement, when the monotony of the subject has not, I am quite conscious, been relieved by that clearness of style and arrangement which, ought to characterise it and recom mend it to attention, and the only excuse for the absence of which lies in the fact, that I have had, a? the committee is awaro, but a brief space allotted me. I beg, sir, to move the following resolution :—": — " That theve bo levied, in aid of the supplies granted to Her Majesty, certain Stamp duties."

Mr Moorhouse rose to contend that this tax would not be necessary, as a very small addition to the sum to be raised by Treasury bills would make it up, and these bills could easily be met ; for, while the expenditure of the colony was gradually decreasing, the revenue was increasing every year. The honorable member also alleged, at some length, that the tax would Le a mo.st distasteful one throughout the colony, and would prevent immigration. The Government seemed to fee trying to teach the country to bear unnecessary burdens. The Treasurer had .said that it would be most rash for the General Government to raise a new loan to give money to provinces, but many persons held a contrary opinion, for nearly all the money was wepended by the Provincial Governments in a profitable and reproductive manner. The Provincial Governments were the colonising bodies, and could act better in certain matters than the General Government : and the.Provin-, cial Council in the province he had the honor to belong to would compare favorably with the House". He regretted to see the Ministry take their present course,for itwas a childish one under the presen^circumstances of the colony. They said to the .people at home, " Here we are taxing ourselves to the extent of L 50,000, ain't we honest 1" " Why did not you tax yourselves a little more 1" He believed that it would be good policy for the General Government to borrow money and give it to the provinces, for Jhe latter did all the useful works, and the establishments of the former should therefore be reduced. There was a lot of high sentiment rolling about on the floor of the House, but the people of the country did not care so much about .sentiment, as freedom from taxation especially when they could avoid it by borrowing. The commerce of the country w.i^ increasing wonderfully. Auckland, having got rid of false supports, was standing on its own legs, and was becoming a c immercial town ; Wellington and Nelson were progressing, and so were Canterbary and Ou^o. so that the money could bo easily repaid by Treasury bills. He must object against the course praposed. ♦ The Hon. W. Fitzhirbjrt rose to reply to Mr MoorhdiiMj when Mr Dillon JWI said he hoped that no discussion would be raised on the statement that evening. This view b.-ing generally acquiesced in the House uoiimSti after a few desultory remarks from various members, and shortly afterwards adjourned.