8.—6

VII

Analysis of the Debt. Railways, £25,602,948. The railways pay more than the interest on the moneys borrowed for their construction. The general taxpayer contributes nothing to their upkeep, but indirectly benefits by their existence. Advances to Settlers and Workers, £7,939,700. This money is lent out at higher rates than those at which it was borrowed. The difference more than pays the cost of working the Department, and makes provision for a special sinking fund to pay off the loans, together with a reserve fund for all possible losses. A considerable profit will in all probability ultimately go to the State. Like the construction of railways, the lending of this money indirectly helps the taxpayer by increasing settlement and contributing to the Dominion's prosperity, and has conferred widespread benefit on the settlers, and indirectly upon the traders of the Dominion. Lands for Settlements, £6,303,485. Large estates have been purchased with this money and closer settlement so brought about. The rents and other income from the lands purchased more than pay interest on the money borrowed for this purpose. The expenditure indirectly helps the taxpayer, and without this system being in operation a number of peop'e in the Dominion now in good positions could not have enjoyed the happiness they now experience. Telegraph and Telephone Lines, £1,431,647. This sum, too, finds its own interest, and provides necessary and efficient public conveniences, and we have undeniably a most efficient telegraph and telephone system in the Dominion, and which I hope to see still greatly improved. Bank of New Zealand Shares, £500,000. The money for the purchase of these shares was borrowed at 3J per cent. The State has to pay £18,133 per annum interest on this £500,000 and on the expenses of converting it into stock. But it receives in dividends much more than £18,133 per annum. Since 1904 the State has paid in interest £125,900, and has received in dividends £262,500, giving a net profit of £136,600 .in seven years. If the shares were now sold they would bring much more in the open market than the half-million paid for them. I think you will agree with me in saving that, apxrt from this being a profitable investment, the attachment of the Bank to the D.im'nion is as a matter of public policy a wise one. Loans to Local Bodies, £4,882,000. This money was borrowed to help local authorities. The interest is paid by the borrowing authority for twenty-six, thirty-two, or forty-one years, according to the rate of interest paid—4|, 4, or 3| per cent, per annum. The loans have been no burden to the taxpayer, although the principal will have to be repaid by the State, and not by the local bodies. The indirect benefit to the State has, however, been substantial. Local authorities can now obtain a sufficiency of funds to enable them to carry on with reasonable activity local works of great value and convenience to those whom they serve. Under the old system the work of the local bodies was cramped and restricted. Reserve Fund Securities, £800,000. This amount was borrowed, and as soon as possible invested in England in undoubted securities which can at any time be easily realized. The interest received almost equals that paid. The investment was created to form a reserve which can be drawn upon in case of some great emergency, peril, or national disaster. The creation of this reserve has the approval of the greatest experts in finance. I hope in the years to come that an additional £200,000 may be added to the present sum, making £1,000,000 in all. The advantage to this country by so doing would be very great.