D.—l

II

expenditure reached £7,781,000. Included in this Statement is a most interesting diagram showing, in the form of a graph, the annual expenditure on public works since 1872 up to the end of last financial year, and also the annual expenditure per head of population for that period. It will be seen from this that, apart from the period of unusual activity during Sir Julius Vogel's railwaybuilding policy when there was a very small population in New Zealand, the expenditure from 1882 to 1920 —a period of thirty-eight years —has varied round about £2 per head of population. Since that date it has increased, and in the two years immediately following 1920 it reached £5 10s., and since then has averaged nearly £5. I suggest that a study of the particulars set forth in the graph under mention should be a valuable aid in assisting honourable members to consider the economics of the present position in regard to public-works expenditure. The necessity of paying due regard to the economic aspect of the various works proposed is most necessary, and the ability of those works to produce an adequate return or to assist in increasing production must be carefully reviewed. A continued programme of expenditure of borrowed money on services that are not likely to prove productive will probably in the end result in a serious condition in the public finances of the Dominion. It is not desirable that the additions to our national debt should become entirely the burden of the taxpayer for annual charges of interest and sinking fund, but insofar as public works are unproductive such annual charges will have that effect. In respect to external debt, where the interest goes out of the country, it is essential that for the expenditure of moneys borrowed abroad, the Dominion should show such increased development and productive capacity for the creation of additional taxable wealth that the interest payments will not be found burdensome, although they may require to be met partly out of taxation. It is for this reason that the economic aspect of prospective railway extension must be seriously considered. The statement tabled by the Hon. the Prime Minister, which, on the motion of the Hon. the Acting Prime Minister, has been referred to the special Committee, gives the estimated cost of railways under construction, including cost to the end of June last, and the estimated total annual loss thereon, as follows:— £ Estimated total expenditure when completed .. 13,631,000 Estimated total annual loss .. . . .. 737,553 I leave out of consideration individual lines referred to in that Statement, but must draw attention to the fact that heavy standing charges, represented principally by interest, will be borne by the Consolidated Fund until such time as the various sections of line are handed over to the Working Railways Department. It is not necessary to stress the fact that the Working Railways are finding it increasingly difficult to carry additional burdens. I desire to state the urgent necessity that exists for a complete evaluation of the lines under construction in regard, -inter alia, to community value for increased settlement, increased production, and those services to the public which are not easy to assess in terms of money. It must be admitted that while certain factors in the problem are definitely assessable there are others of a tangible character that may be grouped under the heading of services and public conveniences which in prosperous times do not impress the public mind, but are serious items in the balance-sheet during periods of depression. I am convinced that such an investigation should be our first duty, and that upon the conclusions reached a programme of railway-construction must be largely controlled. In regard to the high cost of many of the lines at present under construction it should be remembered that, as in the case of roads, the lines that presented no great engineering difficulties were built years ago, while those remaining are for the most part through difficult country and have to be constructed at an enormously increased cost, and the modern standard is much higher. As illustrative of this point, it can be mentioned that the main line across the Canterbury Plains, and also other lines in similar country, were constructed years ago at as low a figure as £3,800 per mile. The lowest estimated cost of lines under construction is £26,000