FINANCIAL STATEMENT.

Inangahua Times, Volume VII, Issue 1102, 19 June 1882, Page 2

FINANCIAL STATEMENT.

The Hon. the Colonial Treasurer said :— Mr, Hamlin : I am presenting the Budget thus early because the Government are anxious that the House should have^tunple opportunity of carefully considering and discussing the firancial position and requirements of the colony. In furtherance of the object, which I feel sure will meet with the approval of the Committee, I hope to place the Estimates in the hands of honorable members not later than tomorrow, and I venture to express the hope that the House will consent to the appointment of an early day for going into Supply, and not permit the postponement of so vital a question as ways and means until the end of the session, when honorable members are often unable from physical exhaustiorit to^give the gubjeot that attention which^its importance demand's. The Committee will be glad* to learn that the reports, which have been in circulation for some time past, to the effect that there is a considerable surplus standing to our credit, upon the transactions of the year, are substantially correct. I shall nqt, therefore, trespass to night to so large an extent upon the patience of hon. members, as I have been compelled to do on some former occasions. My Statement will be short, but I must still ask for the indulgence of the Committee, while submitting for its information, the somewhat dry detail of the financial results of the last annual period, and the proposals of the Government for the present year. Expenditure op the Ordinary Revenue op TnE Year, 1881-82. The expenditure for the year, under permanent Acts of the General Assembly, was estimated at £1,510,919, including £1,499,318 for interest and sinking fund, while 'the amount voted for departmental services, was L 1,757,, 757, 660. The total estimated expenditure sanctioned by Parliament was, therefore, L 1,328,579., 328,579. The actual expenditure was L 1,288,820, being L 49,759 less than the estimated amount — there are no items of this expenditure which appear to call for special remark. Hon. members, on referring to the Appropriation Account, presented to the House, pursuant to the Public Revenue Act, will be able to see the services in respect to which the expenditure has been less or more than the amounts voted. The outstanding liabilities on the 31st March, 1882, amounted to L 174,394 — at the close of the preceding financial year, the amount was LI 65,51 4, I may inform the Committee that included in the liabilities on the 31st March last, is a sum of L 24, 000 for sinking fund to the 13th March, 1882. In respect of theLßoo, 00Q unsold debentures of that portion of the loan of 1870, amounting to LLS9O#QO, which is guaranteed by Imperial Government. .Tig" Imperial Act provides for a sinking fund of 2 per cent per annum on the entire amount of the guaranteed portion of the loan, or so much of it as is raised for the time being, commencing at the date at which the whole of the loan is raised, or at the expiration of ten years from the passing of the Act, whichever date happens first When the first remittance of sinking fund was made, namely, for the half year to the 13th March, 1881, it was considered that provision was required only for the sinking fund, payable in respect of the debentures for L 200,000, which had been sold, and not also for the debentures for LBOO,OOO, which, though created, had not been placed in circulation. The question was, however, reconsidered upon the receipt of a despatch from the Secretary of State for the Colonies, to his Excellency the Governor, and the Government determined to provide sinking fund for the whole guaranteed loan of L 1,000,000 ; remittances have now being made accordingly to the Trustees of the fund. Ordinary Revenue op the Year, 1881-82. Table No. 4. The estimated revenue of the year, exclusive of the revenue derived from sales of land, was L 3,297,650; the actual amount paid into the public account, was L 3,488,170, being LI 90, 520 in excess of the estimate. Hon. members will find, on reference to the comparative returns .which will be appended to this Statement, that we are indebted to the ( ustouis revenues for the larger portion of this excess, L 125, 107 ha /ing been received from that source ; the revenue from stamp duties was LI 1,1 15 in excess of the Estimates ; miscellaneous receipts were also In excess L 34,243, while from depasturing licenses, rents, etc., we obtained L 56,852 more than we anticipated. On the other hand, the amount derived from the property tax fell short of the estimate by L 19,025. Of this sum, L 9270 has yet to come in ; L 2200 represents the amount estimated to be received from Building Societies, which wore afterwards rendered exempt, and L 7556 is an over estimate. The revenue from Railways proved to be L 25,266 less than the estimatp, but hon. members will be glad to learn that the net receipts from Railways, which were estimated at L 364,744, amounted to L 48,927, or L 4183 more than esti7nated, Land Sales of the Year, 1881-82. Tables Nos. 1 and 2. Following the course approved by Parliament in the session 1880-81, a separate account of the land snips has lippn kopt. The expenditure charged against the fund during the year amounted to 1/338,076, including £136, Bfil for subsidies, paid to local bodies. Tb.p amount votorl for departmental sarv'iQPS chargeable on the Land Fund

was Lldi,4lo; the amount actually expended was L 137,297, being L17,21'3 less than the votes. The liabilities outstanding oft Hw 31st March, 1882, were L 25,188, as aga'nst I 37,561 on the 31st March, 1881. The receipts for the year from land sales were estimated at i 333,000; the amount actually received and paid into the public account, was 1.317,063, of which ■ 282, 136, was for lands sold for cash, and 134,927 cash instalment for sales on deferred payments — adding to the receipts of the year, the balance at credit of the I and Fund account on the 3 1st March, 1881, amounting to I 32,373, and deducting the expenditure, we have a balance on this account of I 11,360 at credit on the 31st March, 1882 Public Works Fund— (Tables Nos. 1 and 3.) The appropriations on this account for the year ended the 31st March last, amounted to 1 .1,892,554 — the actual expenditure, however, was only 1.977,886, including 454,224 for rail- ! ways, particulars of this expenditure will be found on the tables annexed to this statement, but fuller information than is there given will be laid before the House, when my hon. colleague, the Minister for Public Works', makes his annual Statement. The liabilities outstanding at the close of the year, amounted to I 880,266, particulars of which will also be found in the tables appended. During the year, speciaf receipts and recoveries, amounting to I 42,378, came to the credit of the Fund, and on the 31st March, 1882, t the balance remaining unexpended subject, however, to the liabilities I have just mentioned, was i 924,865 — consisting of, cash in the Bank of New Zealand, 647,646 ; advances in the hands of officers of the Government, L 60,319; debentures of the loan of 1870, guaranteed by the Imperial Government, I 135,300; amount invested in debentures of the New Zealand Government, L 44,000, and temporary advances made on certain other securities, I 37,500, the balance at credit of the Fund on the 31st March, 1881, was U,860,373, aud on the 31st March, 1882, it was I 924,865 ; the extent to which it was diminished during the year was, therefore, 1.935,508. These figures shows that the Fund has been carefully husbanded, so as to extend the time we had agreed not to again to go upon the I ondon market. Hon. members will observe that there was sufficient money in hand on the 31st March, 1882, to carry on public works without break or stoppage, until about the end of next February, at the same rate at which they have been prosecuted during the last year. Including the liabilities of the Public Works Fund at the end of the year, is a sum of 1.338,876, for purchase of Native F ands, particulars of which will shortly be placed before the House by my colleague, the Native Minister, who will also state the proposals of the Government with reference to our future policy in the purchase- of Native Lands, In the meantime, I may inform the Committee the amount which will be- required this year to complete the purchase of those blocks which the Government have decided to acquire will, probably, not exceed I 100,000. The Public Debt to the 31st March, 1881. The gross public debt of the Colony amounted to L 29, 165,11, subject to a deduction of I 2,057,242, for accrued sinking funds. On the 31st of March, 1882, the debt was T. 29,946,711, and the sinking fund had inincreaseto £2,266,418 the net debt being thus £27,680,293 or £572,024 more than it was the previous year, this increase of debt is thus explained. Of the Treasury bills, which on Mar. 31, 1881, formed a portion of the Public Works Fund, sales to the amount of £431,300 have taken place. These bills had been taken up in 1880 with money standing to the credit of that fund, as there was then a larger balance not wanted for immediate expenditure requiring temporary investment. They have now been sold and the proceeds paid into the Public Works Fund, as the money was required for works authorised by Parliament. The debt has also been increased during the year by further advances amounting to £364,700 obtained in London upon the security of the debentures of the loan of 1870, guaranteed by the Imperial Government With reference to £800,000 Imperial guaranteed debentures, I may perhaps remind the Committee that although in speaking of the amounts of the Public Works Fund, they are always treated as cash aud have never been sold, but are used to provide a working balance to save interest, borrowing upon them from time to time only surh sums as are required according to the state of the Public Works Fund. I may mention on the other hand that the debt has practically been reduced during the ypar by the addition of £209,176 to the Accumulated Sinking Fund, to which has been added £14, 800 for debentures on the North Ota<jo District Public Works Loan of 1872 redeemed, the net increase to the total amount of the debt being thus, as I have said, £572,024. Savings' Banks, and the Government Insurance Department. I proceed, Mr Hamlin, to sum up the Finanacial results of the year 1881---82. It may not be out of place for m« to state a few facts in connection with the Savings Bank and the Life Insurance Department, by way of illustrating the steady progress of the colony, the rapid advance of these institutions, and the growth of habits of prudence amongst the people during the last ten years. In 1871, with a population of 266,986, the amount standing at credit of open accounts in the Government Savings Banks was £352,654, these accounts being 10,549 in number, and the average amount at credit of each was L3B 18g Id. In the Savings Banks established under "The Savings Bank

Act, 1858, " the total amount at credit of depositors, on the 31st of December, 1871, was L 97,312 distributed over 3,726 accounts, the average amount at credit being L 26 2s 6d, there was thus a total sum of L 454,967 in the Savings Banks in 1871 at credit of 14,275 persons, the average amount for each being L3ll 7s sd. On the 31st of December, 1881, the population was 500,910, there wti-e 51,008 open accounts in the Government Savings Banks aggregating in amount L 1,232,788, or an average of L 24 3s 4d at credit of each ; in other Savings Banks there were on the same date 10,046 open accounts, the total amount at credit being L 316,727 or an average of L3l 17s Id for each account, the total amount of deposits in the Savings Banks in the Colony at the end of the year 1881 was therefore L-1,549,515, belonging to 61,054 depositors, with an average of L 25 7s 7d at credit of each, as against £453,996 in in 1871, and 14,275 depositors with an average of L3l 17s sd. The population during the ten years intervening having increased" from 266,986 to 500, 910 these figures: are worth the careful consideration o|- honorable members. They show the Jjfemarkable extent to which advantag|&! the Savings Banks is being taken bpfche people for whose benefit they w£re established. The population having^barely doubled itself since 1871 while the number of depositors has increased nearly five-fold. Intimately connected with the subject of the prudential savings of the community are the questions of Life Assurance, and the growth^ of the Government Insurance Department established in 1870 at a time when public confidence in many English Assurance Companies was severely shaken, and with the object of giving to the assured the absolute security b£ the colony. The department has since exhibited a progressive advancement which warrants the statement that the experiment sanctioned by the Legislature twelve years ago has now been proved a complete success. This scheme may be justly described as the only successful institution of the kind ever set on foot by any Government, and the example thus offered has attracted the attention of various other Colonial Governments, and also the Indian Government. The premiums were from the first fixed at what were deemed their lowest rates commensurate with a prudent regard to . safety, and without any idea of profits or bonuses, but notwithstanding these low charges, careful management, together with the favorable influences of a healthy climate, and comfortable social condition, have produced results more satisfactory than was anticipated. The business of the department in the first ten years of its Existence produced a profit of 1.77,000 as shown by the report of the London Actuaries, which was laid before Parliament last session. The business done has increased from 460 policies issued up to June, 1871, insuring L 206,000 to a total of 16,900 policies issued during the eleven years ending June, 1881, Jhsuring upwards f. 5,800,060, bei^eq^fJ to an annual average of 500 jfolicite, insuring fully Half a million ekih year during the period. The buHnestfof the year now approaching its close will, I am informed, considerably exceed that average, and probably «saeh L 600,000.' The growth of the Assurance Fund is not less satisfactory than has been the pro gress of the annual business. From a sum of L 5,000 in hand i n June, 1 87 1 , the accumulated fund by June, 1881, had extended to over 1 557,000, and now it has reached nearly L 650,000. Agreeably to the wishes of Parliament as expressed last session, an Industrial Branch, enabling persons to insure their lives for sums ranging from T 3 and upwards, by means of weekly payments, wasopenpd in tho early part of March lasfe, and, durin? the thirteen weeks which have elapsed, 2100 policies have been issued, and the average amount insured for all ages being about I. 25 per policy, for adult lives about 55. As in the ordinary branch of the department, so also in Industrial branch any surplus profits which may arise will be divided amongst the assured. A proprovision which is quite o novel feature in what is termed Industrial A ssurance, to facilitate the payment of small quarterly premiums, there will be provided cards on which postage stamps can be affixed until the amount of the quarterly premiums are reached, and the cards can then be deposited in post offices when credit jivill be given for the premium they represent. A rrangements are also being completed by which Post Office Savings Bank depositors may make payment of premiums out of their deposits by means of instructions to Postmasters for that purpose, thus securing the rtjjgrtntenance' of the policy. These fact* and- statistics show the remarkable growth and still increasing progress of the department, which is evidently supplying a great public want, and is nowiso far advancpd that the Government, Aijil have on former occasions mentioned ffco the House, have decided to ask Parliament to plac^ it under the conduct of a u oard. A bill to carry this object into effect, has been prepared and placed before members. Before leaving the subject of Life Assurance I may offer a few additional figures, showing the further and remarkable stimulus rriven to that form of family provision. Since the establishment of the Government scheme in 1870, the number of life policies in force in New Zealand that year had been estimated at 2,000, insuring f . 1,000. ,000, last year there were in force, in -round -numbers, 24000 policies insuring L 3,000,000, which is more tliau half insured in the Government ..department. The receipts were thus L 188,338 in excess of the expenditure, and, adding to this sum th« surplus at the close of the year, 1880-81 1 26706, we find that we have a credit balance, on the 31st of March, 1882, of L 5 15,044, This result is one upon

( which I hope I may be allowed to congratulate the Committee. It fully bears out the opinions expressed by the Government in 187.9 that the grave de- ! pression and deficit then existing were temporary and remediable, and shows us that the course then determined upon by Parliament, of a rigid and sufficient taxation has restored the finances of the Colony in a remarkably short time to a thoroughly sound condition. I now come, Sir, to the consideration of the estimated expenditure for the current year. This may be divided, following the usual custom, into two parts, Permanent Charges and Annual Appropriations. Permanent charges amounting to L 1,627,512 include pension payments under the civil list, and the large item of interest and sinking fund, I 1,554,848, included in this, however, is L 24,000, due for arrears of sinking fund upon the Imperial guarantee loan of L 1,000,000 of 1 870. Honorable members will find on referring to the Public Accounts that the votes for the Militia and Volunteers, Police and Constabulary, for last year, and charged against the consolidated fund were only LI 42,01 5, whereas th,ey are this year L 2 14,009, a difference of L 71,994, which was previously paid out of a loan of L 71,994. lam sure the Committee will approve, for although such expenditure being temporary and extraordinary, may be considered a fair charge against the loan, still it is very desirable to pay for such services out of the reserve whenever the revenue will bear them, as is now the ewe ; of the balance of L 21.474, LIO,OOO is for abatement of the rabbit nuisance which last year was provided in the land fund estimates. The remainder may be said to be comprised chiefly of increased j charges for working some newly opened sections of railways, for exchange on remittances to London to pay interest, and for some necessary increases in the smaller salaries of civil servants. I am thus particular, Mr Hamlin, in calling the attention of the Committee to this apparent increase, because the Government are anxious that a watchful eye should be kept upon any proposals for increased expenditure, which should not be permitted unless shown to be absolutely required in the interests of good Government, for it is certain unless they exercised great care in this matter the return of prosperity will again head us to extravagant expenditure. I must here, Sir, point out the fact which, I hope lion, members will bear in mind, that in this estimate of expenditure I have only provided the sum of L 40,000 for Hospitals and Charitable Aid. The amount voted last year upon this important question I shall speak of more fully presently. Estimated Revexite fob the Year 1822---83—Table No. 7. I will now ask the Committee, Mr Hamlin, to turn its attention to the consideration of the revenue for the year 1 882-83. I anticipate, if taxation is to remain unaltered, with the property tax at one halfpenny in the L, that we shall receive a total ordinary revenue of L,3,393,500, exclusive- of land sales. I have thought it prudent to Estimate only a moderate increase on the several items of revenue, full particulars of which compared with the actual receipts of last year will be found in table No. 7, A, -attached to the Statement. It is possible that the revenue may, Exceed my estimate, but having considered the circumstances of the Colony I think it better not to speculate upon increases, which, although possible, may never arise. I estimate the revenue then at L 3,393, 500 ; to this must be added the balance of L 203.683, which stood to our credit on the 31st of March, and we then get the sum of L 3,597,183 as the total amount available for the services of the ! year. Now, if from this we take j L 3,478,639, the estimated expenditure, to which I have already referred, there will remain a balance of LI 18,644 at the end of the current financial year. So far, Sir, all has been plain sailing. We have had to deal only with facts, and with estimated results which approach to something like a certainty, but we are brought face to face with a problem by no means easy of solution. How can this surplus be dealt with to the greatest advantage to the government ? what relief, if any, can be given to the tax payers of the Colony ? But before these questions can be answered satisfactorily, it will be necessary for me to revert to the questions of Hospitals and Chartiable Aid, as I promised to do. The total public and known private expenditure upon Hospitals and in charity last year was in round numbers LBB,OOO, and for practical purposes we may assume that an equal amount will be required this year. This sum was made up by contributions from the Consolidated Fund, L 29,00 0; stoppages from subsidies from local bodies, L 37,00 0; contributions from Local Boards and from the public, L 22,000. The present system, or want of system, I ought rather to say, of providing the necessary funds is irritating and unfair to most, if not all parties concerned in the Charitable administration of the Colony, and it is, I think, clear that the time has come when this important subject will have to be dealt with on some comprehensive principle. It may be taken for granted that the indigent and the sick poor must be foci and clothed, and properly looked after by the community. Should private charity fail to make proper provisions, and that private jharity will fail to make a sufficient provision, I fear, is only to evident, the State then, as the State, will have to undertake this business 1 in some form. This lw»in.sr so, it would seem ; ; there are practically only three courses : opon for us to follow. The indigent ' and sick poor will have to be main- ' tamed by a Poor Rate, supplemented, l>y large a grant from the Consolidated . fund, supplemented by private benevo- ; lonce, or by a. system of National As. 1

surance. It may be impossible to deal with this large question during the present session, but as there is a great, and I bolieve, a very general repugnance to a Poor Rate, in which I strongly sympathise, and as grants from the Consolidated Revenue are, to say the least, very undesirable, I pro- j pose to submit a scheme, ti the House which, I believe, to be thoroughly practicable, within the means of our people, and which would make necessary provision for the sick, the widow, and orphan, and the aged. It is possible that my enthusiasm has carried me too far upon this subject ; has made me to hopeful, but I have given' the question much thought, and am convinced that the scheme, which I shall at an early day submit to the House, is within the bounds of practical politics for us in this Colony. Should, however, the proposal only lead to a dispassionate discussion of this important matter, we shall have advanced one step towards a solution of what, I venture to think, is one of the great problems of the age — a problem which though hopefully not as urgently pressing upon us as upon older communities when the distribution of wealth is at present much more unequal, it still behoves us, as the founders of a nation, to grapple with, 'and to the best of our ability solve without delay. I have said it is very probable we cannot deal with this question during this session, but whether we do so or not, sufficient provision will have to be made for the expenditure of the year. The Government propose, pending further consideration of this subject, to take the whole cost of Hospitals upon the Consolidated Fund, and for this purpose I shall have to ask for vote of L 50,000 for their maintenance. Should this be granted, we shall ask for the continued assistance of the Local Boards, or the local Committees, as the case may be, in their management, for without careful local supervision abuses of a serious nature are sure to creep in. With regard to Charitable Aid now costing about L 40,000 a year. I shall ask fora vote of L 20,000 and propose that this relief should be given as far as practicable through local institutions, the government granting pound for pound. If this proposal should meet with the approval of the committee, I shall have to increase the £40, 000 for Hospitals and Charitable Aid, which I mentioned as included in my estimated expenditure to L7O 000, thus disposing of L 30,000 of the surplus. The balance then of LI 18,544, which I said would probably be to our | credit on the 31st March, 1883, will be reduced by this means to £88,544. i ! will now turn, Mr Hamlin to the consideration of the question, what relief, if any, can be given to the t axpay ers of the ! Colony. We have now only a surplus of £88,544 as a margin. After making the temporary provision, I have just proposed, for the services of the year, which are not of a permanent character, amounting to about £100,000. With such a surplus we might if we did not intend, as we did, to go upon the London money market early next year for a further loan to continue our i Public Works Scheme, safely reduce our taxation by at least £50,000. But taking all the circumstances of the case into consideration, I do not think it prudent to reduce taxation at present. If it be determined to borrow more money to enable us to complete our main lines of railway, it will be obviously necessary to continue taxation at such a rate as will ensure an ample margin of revenue to pay interest on money borrowed. Taxation must, as a matter of course, remain at a high rate until the works now being constructed out of loan are completed, and have time to become productive. Sir, we feel assured that what the House desires, and what the country demands is steady pr«>gress with our public w<>rks ; ; that we should pay our way from year to | year, and not again fall into debt for cur- | rent expenditure, and although we are ! apparently raising less- revenue this year than will cover our expenditure, it must \ be borne in mind that the temporary and extraordinary services which are this year being charged against revenue amounted to more than the difference between expenditure and revenue, and that the use of a surplus for such a purpose is quite legitimate finance, when there is no reasonable doubt that next year the revenue will be ample to provide for the service of the year. Estimated Expenditure and Revenue from Land Sales, 1882-3. (Table 8.) The estimated expenditure chargeable against the Land Sales Fund is as follows : — For charges fixed by Acts of the General Assembly, £41.500; for the Crown Land, Survey, and Mines Departments, £153,810. The receipts from land sales are estimated to roach £354,000 for the current year, and adding to this sum the balance at the banning of the year, £11,360, and deducting the estimated expenditure, £195,310, we have a balance remaining of £170,050. The question of the disposal of this balance must be postponed for the present, until legislation has determined what form of aid shall be. given to local government bodies, proposals of the Government in reference thereto will be submitted when I introduce Bills which have been prepared for dealing with this subject. Local Inscribed Stock. It will be in the recollection of hon. members that last year I intimated to the House the intention of the Government to submit for consideration a Bill authorising the issue at par of a loan of £250, 000, the principle and interest of which would be payable in New Zealand, only circumstances prevented Government from giving effect to that intention during the last session of Parliament. But steps are now being taken to prepare a Bill, which will be submitted for tho consideration of the House in the current session. I have drawn the attention of the Committee in a previous part of this Statement to the very large accumulation of money in the Savings Banks in the Colony, and Government thinks it, as I remarked in the Statement I had the honor to make last year, that many of the depositors of this money, as well as the public generally, might be glad of a more permanent f«»rm of investment, if one can be provided, which is at the same time secure and easily convertible into cash. I propose, as before, that the loan shall bear interest at a rate not exceeding 5 per cent., and that the proceeds shall bo paid into tho

Public Works Fund, to bo appropriated by Parliament. I also propose that the loan shall be issued in thd form of inscribed stock, with the right to the subscribers to obtain at any time when desired, bonds i>ayable to boarer of £10 and upwards. Government bolicve that securities such as those I have descriiied will find favor with the public, so soon as their nature is generally understood. The loan will be disposed of equally as it comes into favor, the object of the Government not being to obtain funds for expenditure, but to provide a class of security for the investment of savings, which seems generally to be desired, and is likely to have a very beneficial operation. Ijtcidbwob of Taxation. I should now like, Mr Hamlin, with the permission of the Committee, to say a few words about a question which, I think, well worthy our attention at the present time, viz., the incidence of our taxation. Does our present taxation press unfairly upon any particular class, and especially on that class which is least able to Dear it I Because if so, although we might not be able to reduce the total amount, we might be called upon to shift the burden from weak to other and stronger shoulders. I have, Mr Hamlin, been looking into this question of the incidence of taxation in order to ascertain the amount borne by the different classes, so that relief might be given, if necessary, to those upo* whom the taxes appeared to press most heavily. I will state broadly, for information of the Committee, the results of my inquries, referring hon. members for particulars to table No. 9, published with this Statement. The result of my enquiries seems to me to show that taxation is upon the whole fairly distributed over the community, although what is fair in such a case is a proper subject for discussion, and a question upon which there ' may be a great diversity of opinion. For the purpose of comparison, I have divided the population into three classes, which, for the objecb I have in view, may be eon* sidered a natural division. First : the wage earning class, which I shall hereafter for convenience call the industrial class, consisting of L 312,436 souk, exclusive of 11,903 domestic female servants. Second : the intermediate clam, numbering 96.260 souls. This class is composed of all those who are known by the census as not belonging to the industrial class, who don't pay property taxes, and third, the class which pays property tax, consisting of 68,445 souls. The total taxation upon which my calculations are based, for what we term taxation proper as distinguished from what is paid for services rendered, is £1,717,748. This was made up as follows : — Customs, £1, 276,199; stamps (not including postage stamps), L 120.14 8; property tax, L 857, 600. From the Customs duties, deduct the duties paid on wines, spirits, foreign, beer, and tobacco, and sugar used in. brewing (L 31,493), and the amount (L 5,512) estimated to be paid by the Maories in general customs, and also the duty paid on cotton piece goods, which are now free — these amount in all ta L 653,794. I make these deductions because with the present information at my disposal, it is impossible to apportion each cla33 the expenditure, um'.er the head, of wines, spirits, and tobacco, with any accuracy, and because the other article* enumerated do not come within the scope of the inquiry, but I have no doubt that if we could make now a true distribution the amount paid under the heads of wines, spirits, and tobacco, we should find that the intermediate and property classes pay a large share, and that the relative proportion between the three classes, which lain about to give would be but h'tfla, if at all, changed. I aamtae, of course, a moderate use of these articles.* If used in excess, it is impossible to say which class may pay most, but I think it will be generally admitted, or at any rate ought to be admitted, that those who use spirits or tobacco, or any other article, in excess, to whatever "Class they belong, are fair subjects for heavy taxation. Now, I have received from sixteen of the chief towns in the Colony, trustworthy information as to the actual expenditure of a large number of mechanics and laborers. I have compared expenditure «>f the sane classes in England, and find only such differences as the change of dreamstances would lead one to expect I think, therefore, we may to*ke these returns as approximately accurate for practical purposes. I believe that further information, which I am collecting, will generally bear out the results now given, and that any error, which may be found in my Estimates, will be in the direction of a slight over-estimate of the amount paid by the industrial class. The returns to which I have alluded, show that the average amount paid to the State by families of the industrial class, averages 16s 6d per member, or a total of L 215,522 for the various families. This estimate is made from the actual expenditure of fiftytypical families resident in all i»arts of the Colony, but to this amount we must add the duty of L 51,240, paid by 49,355 single men, equal to LI 9s. 9d. per head, and the duty L 3.983 paid by single women, over 18, having occupations equal to 19s, l£d. per head. The aggregate, of these amounts is L2Go, 7sl— thus giving an average over the whole class of 17a 3d per head. But to this amount, we must add L 10,311, being the duty paid by the 11, 953 domestic female servants for drapery; at 17s 3d, equal 9d per head, thus giving a sum of L 280,062, as the total taxation paid by the industrial class, exclusive, of course, of the duties on spirits, wines* colonial beer, tobacco, &c. I have included all the domestic male servants, and the married couples at service as paying in the industrial class, although probably the chief part of their consumption ought to be credited to the intermediate and property classes. This I need hardly remark makes no difference as to the average rate per head, but only in the total paid by the class. I have followed the best authorities on this subject, including the duty payable upon articles consumed by domestic female servants, except wearing apparel. ,In the amount paid by tho intermediate and property classes I have said that the total amount paid by the industrial class is L 250.062, and that thfe amount is .ascertained by means of actual expenditure made by fifty-six families in various pai-ts of tho colony, and these returns have been carefully checked by comparison with expenditure of tho same class in England, proper allowance beiii.? made for the difference in circumstauces of the two populations, and also by duo consideration of what is possible for this class to spend on dutiable goods, after providing from their earnings for t\\e other necessaries of life and for house-rent. If we deduct £280,062, the amount paid by the industrial class from the total duties, which we are now considering, we get £312,348 as the Customs duties paid by the intermediate and property classes. This amount, after careful consideration, t have divided at an equal rato per ho.i<i Ijetwccn the two classes last named. This

will give per head for each of the classes £1 17s lid- The total revenue collected for stamps, exclusive of postage stamps, is £126,148. This I have also divided at an equal rate per head between the intermediate and property classes ; it gives for each member of the intermediate and property classes 15s 4d per head. I think there can be no doubt that the Stamp duties are paid by these classes. It is possible that a small amount taay be paid by the industrial class, but it is so small that it could not appreciably affect the results. As betweon the various classes we find then that the Stamp duties paid per head by the intermediate class is 15s 4d, and the Customs duties £1 17s lid ; this gives £2 13s 3d as the total sum per head paid by the intermediate class, and a , total for the class £256,272. The property class, I have assumed, pay an equal sum per head with the intermediate class for Stamps and Customs. They however paid with the Property Tax at a penny in the pound, which it was at the time to which my calculations relate, L 3 15s 3d per head for that tax, making a total per head of L 6 9s 6d, or a total for the class of L 439,810,. With the Property Tax at one half penny in the pound, however, I find the amount paid per head by the property class would only be L 4 10s lO&d, or a total for the class of 1/310,719. To summarize then, we find that the industrial class, consisting of 312,436 souls, exclusive of 11,903 domestic female servants, pays L 269,751, being at the rate of 17s 3d per head, or, including the drapery duties paid by these domestic servants, L 280,06?. wifhe intermediate class, < consisting of 96,2W souk, p4y» L3s6^?fi, or L 2 13s 3d per head, and the property class, consisting of 68,445 souls, pays L 439,819, being at the rate of L 6 8s 6d per head. That is with .the Property Tax at Id, but if we take that tax at one half penny they pay L 310,719, or at the rate of L4 los lOfd per head. These amounts , «re as I have already said, exclusive, of duties on spirits, trine, tobacco, and Colonial ate and beer, and do not include, for obvious reasons, that part of our so called taxation which is paid for by each class in proportion to use, for services rendered by the State, sttch as postoffice, telegraph, Court fees, Ac. Hon. members will I hope, understand that in speaking of the expenditure at per head I only we a form of expression, so far as the intermediate and property classes are concerned, tike industrial expenditure being widely different, according to means and hajbit But with the industrial dam

-tiie difference is not so wide with taxation. It in, of course, impossible to meet individual cases. In apportioning the taxation of the community we must take * wider view, and deal, with classes, oonflideringtheir circumstances and numbers. It is difficult to exaggerate the importance of that subject, for badly adjusted taxation means undue taxation from some <claas or classes, which cannot fail to be detrimental to the community as a whole ; while on the other hand fairly adjusted taxation means that public burdens are borne with as much ease as their extent will permit, and I would express a hope that this question will receive careful attention of hon. members, and of all interested in the public welfare throughout the Colony, so that when our financial position permits, we may deal with the subject on broad and intelligible principles. Thk Proposed Loav. I have now, Mr Hairilin, only one more subject to deal with, but although last, by no means least in importance, I refer, of course, to the question of a new loan. We liave first to consider whether a new loan is advisable this year, and secondly, if the -first question is answered in the^ affirmative, how "much will it be desirable to Twrrow ? Now, with regard to the firat -question, we must in order to arrive at a reasonable conclusion consider the state of the Public Works Fund, and the Amount we can prudently expend per Annum. I have already said that the balance in the Public Works Fund on the 31st March last was L 924 ,866, with outstanding liabilities at that date of L 641, 400, exclusive of liabilities on the Land Purchase Account, for which we must add at least LlOO,OOO, so that in addition to theL541,400, which is in courtfe of expenditure under existing contracts and Authorities, there only remained in hand at the beginning of the financial year about L 283,465 for the construction of the works already begun, and for new works for which liabilities have not been incurred, or appropriations made. We thus see that if no authority for another loan is granted this year, our spending power on public works for one year and three qaarter.tfter payingfor the outstanding contracts and engagements to which I nave referred, will only amount to L 283,495. Because if a Loan Bill were passed next session the money could not be raised before about December, 1883, And the OoventflMnt are quite determined not to enter into engagements in anticipation of raising money at a particular dace. The question then narrows it«etftothis: Is it prudent at this present time, and under the present circumstances ot the Colony to borrow again ; or ought we to be satisfied with a total expenditure of L 924,866 in the twenty-one fnonths commencing with the current financial year ? Sir, the Government are fully aware of the responsibility they incur in placing before the Committee their answer to this question. They recognise clearly the principle that before the pubtic debt is increased the gain to the Colony shall be seen to be more than commensurate with the increased liability, and they believe that a case within this rule has now arisen. They think that our ordinary finance being restored to a satisfactory condition, and our main trunk line of railway being still incomplete, it is now prudent to raise a fresh loan for the purpose of completing these railways, or carrying them a stage nearer to completion, and for certain other definite and important public works. In this opinion the Governmeut are strengthened by the fact that the railways already made are now paying practically 4 per cent, annually on the amount expended in their con- , struction, and that they are steadily improving in this respect. The Government therefore recommend that a loan should be raised, but only if the money can be borrowed at a reasonable rate of interest, and the authority of Parliament will be asked to empower the Government if necessary, by postponing works so as to arrange the expenditure as to enable them to wait for a favorable market. We have now to consider what amount should be raised, and this must be /decided by two considerations. (1.) The amount which can be profitably expended on necessary, or directly reproductive public works, (2-) The amount upon which we can afford to pay interest withnlacing undue burdens upon the people of the Colony. Now, I am afraid that there are so many necessary or directly reproductive public works, only waiting to be How for the want of cash to do

them, that we shall find no practical limit in that direction, and in this fact lien, no doubt, the cause of our far too lavish expenditure in the past. We should take warning and proceed at a very much more moderate pace than we have been doing upon the average for the last ten years. We must confine ourselves for the future in the expenditure of borrowed money to works of necessity, or to works which are directly reproductive, and strictry limit the amount spent yearly upon such works by our capacity to pay the interest with tolerable ease. It Is in the opinion of the Government of great importance that the Colony should steadily pursue a progressive policy, and that our main trunk lines should be pushed on as vigorously as is compatible with the means at our disposal. The Government, then, taking into consideration all the cireustances of the Colony, and acting upon the principle which I have just laid down, have determined, .Sir, to propose to Parliament a loan of L 3,000,000 to be raised, and expended at a rate not exceeding L 1,000,000 per annum. Mylion. colleague, the Minister of Public Works, when he makes the Public Works Statement, will inform the Committee in detail of the items of the proposed expenditure, and of the mode by which we hope to confine. the expenditure to specific works, as determined upon by Parliament before the money is borrowed. The Government attach great importance to this provision of the proposal. It is, I think* clear, looking at the experience of the past, that future borrowing is to be governed by that prudetOkntmch ia essential. We must carefully consider what works we are justified in considering, at what rate of speed these should be constructed, and at what cost to the State. When we have determined the conditions we are then in a position to decide upon the amount to be borrowed. Upon tn§se rules of conduct in this matter, which I am sure will meet with the hearty approval of the Committee, the Government have acted in arriving at the amount which they propose shall be borrowed, and now, Mr Hamlin, I have done. The Committee, I am sure, will not be disappointed at the shortness of my Statement, , when it remembers that this is the natural and appro priate result of the simplicity in keeping the Colonial accounts which we have been enabled to adopt. I will only add one word. In 1879 I stated to the Committee fully and fairly the position of the Colony, neither Concealing nor exaggerating the grave difficulties which had then to be met, and I pointed out the obvious remedies. That Statement has often been characterized, especially by those who had taken the least trouble to master it, as too darkly shaded ; as giving too gloomy a view of things, though it has never been attempted to disprove the facts* and the figures which I then adduced. Sir, I venture to say that except so far as the gloom was in the facts themselves, it never had any existence. It certainly was not of my importing. It was prudence, not folly, to look our difficulties right into the face. It would have been folly and not prudence to doubt that we could overcome them. The Government, and this House had full confidence, not only in the abounding vitality and vast resources of the Colony, but, which is no less important, i~ the willingness of the Colonists to make the necessary sacrifices, and that confidence has been amply justified by the facts I have just had the honor of laying before the Committee, and as prudence and economy, and a cautious and well considered advance in public works, as j funds became available, was our rule then and has since, so it should be now, and in the future I have full confidence, sir, that, following that rule faithfully, we shall not only maintain, but as the resources of the country become developed, we shall steadily increase the present satisfactory state of our finances.