FINANCIAL STATEMENT.

Inangahua Times, Volume X, Issue 1564, 22 June 1885, Page 2

FINANCIAL STATEMENT.

■ ♦ The Hon. the Colonial Trepsi'-er delivered the Financial Statement on Friday evening. The statement was as follows :-*- --1 hay« too often addressed the Committee of Supply upon occasions li'ie this not to feel certain that I shall receive from hon. members a kindly and considerate hearing. 'Revenue and expenditure 1884-85. The general results of the year have already been published, and it is only necessary I should briefly recapitulate. The year 1884-85 was commenced with a deficit of £152,112 ; for £150,000 of this amount deficiency bills were authorised to be issued, maturing on the 31st March, 1886. The balance of £2,112 was discharged out of the years revenue. I proposed last year that the £150,000 should j>ot be funded with the permanent debt, and I still hold to the view we musfe?j>ay the amount off in the course of two or three years. The transactions bf the consolidated revenue for the year 1884 6, after digcharging the deficit of £2,112, and leaving outstanding the £150,000,

shows a credit balance of £19,891, or, < exclusive of the stilt deficit paid off, a 4 sin plus £22,093. The total consoliila- I ted revenue of the year amounted to ' £8,569,394. There was a deiiciency I in the item of stamps, principally i occasioned by an unexpected increase ] of postal revenue having by accident i been twice credited the estimate. The . ! lailways also showed some deficiency, while the customs exceeded to a small extent the estimate. The total deficiency iv the estimate was £23,016. The expenditure, on the other hand was less thfin the amount voted by £83,852, inclusive, of L 5.982 expended on services unprovided for, so that the result was the surplus in the year's transactions which I have al.eady stated. No:i. members will bear in utiu<! j that the surplus of £60,000 .uiliei pate* l in the budget last year was reduced subsequently by the snpp'etnentary estimates and votes. In the revenue was included an amount of £"247,700, the proceeds of del»entures under th« " Consolidated Stock Act, 1883." Hon. members are aware that this amount was issued to represent the equivalent of the increase of the sinking fund for the year. 1 shall, later on, ask the attention of the Committee to this subject. The expHiidituie for 1884-85 j includes the undischarged liabilities of i the . pre»icHs veav, accordiug to the, plan introduced in 1880 of bringing j only into the year's account the expenditure and receipts within that year. L am> Fund, 1884-85. The Lane 1 Fund account at the dose of the year 1883-84 showed a balance of £88,547 ; the revenue received do>ing tbe past year amonuted to £160,909, of which £92,432 was for cash from land,and£6B,s37 for sates on deferred payments. The expenditure amounted to £209,485, so that at the beginning of the present financial year there was a cedit balance of £21,931. Publ'C Works Fund, 1884-85, The balance at credit of the Public Works Fund at the end of 1884 was £488,912. From the instalments of the lotto one million negotiated in January, 1884, £339,000 caiue to credit after March of that year, and from the instalments of the million loan negotiated in January last £845, 000 came to credit before the end of Mavch 1885. There was also an amount of £10,900 on deooioucy bills authorised to be issued las? ye:vr in aid of the I'uhlic Woi-ks Fund, redeemable at the end of the present mouth, and we further obtained j£soo. 000 of temporary advances. The total amount placed At credit of the Public Works Fund daring the year 1884 85 £2,327.925. The expenditure amounted to £1,336,727, leaving £990,298 at tlie end of March last wii,h which to be^in the year. In addition thereto we had the balance of the third instaltnentof the three million loan to receive £155,000, also the new loan of £1,500,000, recently raised, amounting iii ail to £2,G45,298, subject however, to the redemption of deficiency bills £100,000, the repayment of the temporary advance, £500,000, and the advances to be accounted for in the hands of officers £500,000. The Public Debt.. Tha amount of the public debt on the 3 1st March, 1884, less the sinking fund account, was £29,57^,903. The amount of that debt on the Blst March, 1885, was £30,649,099. It was increased by fresh issues and conversions. The conversions from a higiier to a lower rate of interest, of comae, having a tendency to a large p"iocioal amount, but a less annual charge. The annual charge last year was L 1,570,987, whilst this year it is L 1,593,692, exclusive, of interest on annual deficiency bills, and on the million and a half Joan. The increased annual charge is to be accounted for by the interest on the additional million, and by L 64.000, which escaped coming into charge in 1884 85. In referring to this item last year I stated it about L 50.000 only, on the other hand there are reductions consequent on conversions, have not the particulars of the issue of debentures to take up the couverted drawing debentures estimate the interest these under the oJd he«»d, as also the sinking fund under the authority of "The Consolidated Stock Act 1884." We have issued debentures to the amount of LIOB,BOO to replace two amounts L 20,900 and L 87.900 respectively, issued under the General Purposes Loan Act, which had fallen in for payment, L 3,000 under •• The Milliou Loan Act, 1874." Early in January the third and last million of the three million loan of 1882 was negotiated with excellent results. The average rate obtained was L£9 10s Id for each hundred. Considering the quotations for consols and the Bank of England rate of interest ruling at the time the price was exceedingly satisfactory. The million and a half loan authorised last year had quite recently been negotiated at a still better price, viz., an average of £100 6s 5<J. As consols are lower in price than in January last this result must be considered still more gratifying, and as compared with the rates obtained for other loans, enhances the gratification. Hon. members are aware that within a few days of each other three loans, besides our own, were placed in the market, namely those of Victoria, Queensland, and South Australia. It is impossible to tell the exact rate yielded by a loan from the selling price, because there is always included more or less of allowances, in the shape of advantages of accrued interest and discount. I asked the Loan Agents to cable m« the netfc results of the four loans, and hon. members will be pleased, whilst the less items amongst will h« surprised to learn that the New Zealand loan fetched the highest price of all. This is the telegram received from the Agent-General, "Nett price, deducting interest and

3isconnt, Victoria, .£99 4s 6; Queens- j n land, *;97 3s 10J; New Zealand, £99 j Bs 2d ; Adelaide, £99 5s 6d. So that t we wt-ro nearly a tit't'u per cent, better c than Vioioiia, an eighth better than j boo tit Australia, and more than two i per cent. better than Queensland. It i is right, iiowf »-c-r, to say that the Vie- j t torian lout) was larger in ainouut, and < that during the few days interim the < market hail sooiewaat improved. Still, i we cannot avoid seeing that we are i fortunate in the judgment of our Loan ■ Agents, aud in the great stienguh of , the immediate issue of out loans lijvough the Bank <if E.i^Lvtd. In relation to the p»Kvs tor Colonial stocks that mled dining n portion oflast year, bon. raeuaWis .Miouki ieoollect tii.it there was a consult laMe fa'liiig in the value of Colonial securities after the failure of Mr Child*- f *s scheme to con vert consols became evident. Loan Conversions. The loan conversion transactions dm ing the year comprised amongst otheis tlie unconverted balance of 5 per cen . 4 30. We have also convetted L 8,642,100 of consolidated, | balance of 5 per cent 4 80, L75,fi00» I We have also converted L 5,642.100 of i | consolidated drawing debentures, but ; ! before I refer to this operati n I should ! i like to say a few words concerning ; j tlie Consolidated Stoc't Act of ta>t session, under whicli it was enVottrd". It will be remembered th*t the Alt., J which had for its object : he facilitating | the conversion of loans, and saving the couutry the lunden of the sinking t'ancJs wliilo contemporaneous fresh loans were being issued, met with considerable opposition There was, first, great difficulty in making the operations understood. J have seen it stated in newspapeis vi the Colony since last session that we had stopped 'payiug the sinking fund. A very general s.uteroent has aUo been wade that we were ruining the sinking fund, and I need not reiniud you of the unkind an ticipations which were indulged that the credit of the Colony would be inn jured. By this claim a triumphant answer to all the opposition the bill met with in the brilliant success of the operations, and in its having entirely failed «o do any injury to the credit of the Colony. Do not let it Ik? supposed that it escay>ed criticism. Some active enemy survived the session. A cable gram was even sent out from England which appeared in all the newspapers j in the Colony that the Stock Exchange j objected to the Act. On what this .' cablegram was founded we have not b**eu able to discover. I have heart! (if no objection taken by the Stock Exchange, nor ( -y any prominent membpis thereof, but the Act was well cousideved at Home, and lull explanation of it made to the Bank of England, through which great institu 1 tiou we emit our loans, and conduct our conversion operations, subject to the directions of the loan agents. ' The Agent-Gcne>-al also in the statistical paper with which it is usual to accompany a loan elaborately explained the effect of the Act On the sinking funds. That the Act and the operations proposed under it did not injure our credit is shown hy the negotiations of the loans to which I have already referred. That it has been a splendidly useful Act' is proved by the fact, that through its agency we have converted £8,642,100 of the £5,772,500 of consolidated (drawing) debentures left undrawn. This was the immediate action of the measure, for which I had to undertake an amount of personal responsibility last session, which at times almost frightened me, thoroughly convinced though I was, of its value. The majority of hon. mem bets whom I address are aware of the effect of the Act of last session. They know that it neither suspended the payment of sinking funds which we had engaged ts pay, nor enabled ns to use accrued sinking funds until thorough provision was made for the loans to which they belouged. The Act simply provided that we might create debentures to an amount commensurate with the growth of the sinking funds from and after the end of March, 1884, those deVntures to be extinguished by the proceeds of the sinking funds when they came to be relieved. Thus, if the sinking funds increased by a quarter of a million during the years 1884-85, we were to create debentnres to that amount. It could not be said that the creating of these debentures increased our indebtedness, it left it precisely where it was, and this was to be continued in anticipation of conversions. We issued under the provisions relating to the sinking funds a million of new bonds. A million in addition to j the accumulations to the end of March, 1884 would have to stand to our credit ii the sinking funds during the year. We issued debentures for £247,700, that being the amount which it was computed by the Treasury and Audit Department would represent the accretions of the sinking fund during the years 1884-85. If the matter were left there I should claim that we had successfully effected a legitimate operation of compensating the revenue to the amount of the years increase of the sinking funds, by issuing fresh obligations to be afterwards discharged out of those iucreases, but indeed, I have been able to go much further. No less that L 71.400 of- converted bonds came out for payment. Uader the March drawing the money for those is paid ns \»y the Crown Agents, and of the debentures issued the first year we extinguish at once L 71.400, so that within a few months of the Act passing we were enabled by conversion operations to extinguish nearly a third of the first years debentures. Of the debentuies remaining of last year and those we shall issue this year if the conversion proceed no further than it has aln ady we shall probably be able to extinguish LI OO,OOO from the result of the next drawing in March. Many <

nembers who opposed the Bill last reardidso conscientiously, and I appeal o their generosity not to u-I v s.Ue >piuions they then entertained to prevent them now admitting r!;-< the ueasare was a fair one, and calculated ■o legitimately assist the fi^.ws of ihe Colony. As regards tiir- :*-in% >f the conversion we give for the consolidated bond* bearing 5 cptit iuterest for seven years, wul.-.'t i Biuking foudat the end of sev-M y^r* we give 4 per cent, inscribed a to.:',. Cm--5 percent, deheotares, at the i tv of LlO7 for LHXX Practically the n*a!t means this— the same annual !.j, c for seven years less the sinkiu-r hy\h, aud thereafter a saving of a little owr £ per cent, on the annual eiu»-.*>, takiug into consideration the expends aod a sufficient annaai proviso: to extinguish additional capital stock. I may say in reference to the fiW^ia! Acts of the last session that WW.y^rt and Gieymoutb Harbor Acts] .^; >>d my expectations. It will be recollected that I contended ft would be U-tur- to guarantee the debentures and not borrow for boards. It proved at 1 expected when the Bank of England and the market asked t» to undertake not to borrow ftrther until the end of March 1886 they had no difficnltv in excepting from such engagement tUe guaranteed debentmes of the Ha.bor Board. The guarantee- de»*Jotursa realised a fair price. It was to, be expected that, not b?mg directly issued by the government, to say nothing of their not being inscribed stock, they would yield less Tlw Harbor Boards obtain their money oo splendid terms, whilst the Government ions no risk, since it is secured by funds of the # Boards accruing in itshands. Future Policies. Before proceeding to discuss the proposals of the present year there are certain broad features to be considered to which I most ask the attention of the Committee. We have arrived at a period of our history when it is necessary to carefully consider th« nature and effects of taxation of the Colony. The customs revenue which is the most important branch of tke revenue, requires to be revised by reason of several circumstauces which have come in the ordinary course to larger affect natural growth. I need only mention two or three circumstances, the one that th*» increase «f p-odnction in tb« Colony, m which I include manufacturing, has * tendency to visibly deminish the import duties on many articles wjich have yielded increasingly laiijy amounts in the past, and the other that alcohol ic beverages, from which the heaviest* enstoms retains have hitherto been received, are showing a diminished consumption. Both these facts are eminently gratifying, the latter from a moral and social point of vie w, the exceeding valo« of which it wouid be impossible to exaggerate. The fonn^r fir both utilitarian and social rwiso-.ja of only less importance. To pui ta« case bravely, a ootHimptiou of intoxicating drin ki means increase depression aud social well being, and large iarai productions means inoreased proaperity. It is clear that both tiif so cases argob an increased power to piy custom duties on whatever article* it is considered desirable they should be levied. The result of cn&toms rfnties on spirits during the hut three financial years are suggestive. They are as follows,-— IBB2-8, £410.517 ; 1833-84, L403.5Q0; 1884-85, L 377.69 6; mt& for the first month of the present financial year the receipts have been at the rate of only L 366.613 a year. Those persons who refuse to soe in the conditions of a new country the special circumstances which render inappropriate their ranging themselves, under the old world banners of protection or freetrade, may at least meet on this comnon ground, tha 1 fiscal requirements are the primary objects of custom duties. I venture to go a step further, and say there it no taxation more fair, just, and logical. I ask protectionists to agree with n* in this. Although they may sec in increased custom duties an nlterior object in the encouragement tbet give to local production, and I ask* freetraders to render a like acquiesenct, although they may argue that the remission of duties tends to lighten the cost of living. In short, customs taxation is a national and obvious species of revenue, and the free-trader who would specially disminisb, or the protectionist who would specially increase it seek to modify natural conditions by artificial ones. lam far from saying that such a modification is necessarily unwise. It constantly falls within the range ot the duty of Parliament- to specially intensify or abate the application of recognised principle*, but I have yet to show why I chum for customs ditties the character I have assigned to them. They are fair, just and logical because it is reasonable that the producers of other countries should not come hem to enjoy all the benefits that the complicated machinery of Government affords to them, without contributing to its cost This position is in no way affected by the question el whether the ultimate charge fall oo the consumer rather than on the producer, jf it be admitted that it falls on the consumer alone, which is open to question. As at least to some extent it affects the lesser or greater profits of the producer. It is still clear that the consumer, who finds it desirable to consume" exotic prod actions, should on their behalf contribute something to the cost of the Government tl.o operations ef which enable those produetiou* to find a market. Custom* duties have in addition two great advantages of being cheaply collected and of falling on thorn who m greater or less proportions cteet to eonsoaie ' (jutiaiJe good*. The avenge- eatl at

collecting customs 'duties amounts to only L 2 14s 3d per cent, but it is undesirable that the whole taxation of the Colony should be eoucealed so as net to come home in a forcible manner to the taxpayers, hence together with indirect taxation should be taxation of unmistakeably direct character, as some of that ingenious medium between the two stamp duties supply. This leads me to state that together with the revision of the tariff, it is desirable to pass tinder review the direct and semi direct taxation of the Colony. These classes of taxation require to be con3id«> ed, if for no other reason than that they should be put upon an elastic footing in which the feature of nominal increase should have full play. It is necessary now to consider the character of the population, besides the very small number ef persons wbo live upou their mean 3, and tli9 larger nnm >er employed by the Government. The occupations of the people may be divided as follows : — Agricultural, pastoral mining, maritime, (in whioh I include fishing), manufacturing, commercial, and professional and domestic. Li «ach of these clashes, excepting th« last, there are both employers and employed, but for our present purpose we need make no distinction between them, because it is clear that the prosperity of any class means, or should mean, the prosperity equally of«the employers and the employed. Indeed , in a country with such a range of progress before it, it should be the ambition to see fiscal rites are open, the employed of to -day becoming the employers of tomorrow. If it be conceded that the Colony is not unduly peopled, or in ' other words, that there is room for a much larger population than at present, we m/iy eliminate from our consideration the expediency of promoting the survival «f the fittest. In densely peopled countries, concealed though it may be, the consideration that the survival of the fittest will in the end be the best test at the foot of the indifference with which the interest at the end of the separate classes forming the community are regarded. Here we can't with common prudence tolerate such indifference. It is essentially of the utmost importance to each class that each other class should prosper. This seems a business that you may consider I am trespassing on your patience. In leading up to and uttering as yet appears to me of such imraeasureable moment to our whole moral, social, commercial, and corporal system that I cannot proclaim to loudly. Iv the absence of a disposition to give and take the welfare of the country cannot be properly consulted. Those interested in any of the classes or occu pations must recollect that the progress of the other classes is the surest road to their own.

The towns must not ask advantage from the Country districts if they are cot prepared to give one in return. Their colony cannot become wealthy without manufactories on a large scale. The multiform conditions of town life afford a market to country producers, but the denizens «of the towns cannot prosper unless they afford to country producers facilities for reaching markets and opening up lands. What I Wish to establish is that it is our duty to consider how all the claims of occupation can best aid each other, so that they may all equally progress and knit together a self-reliant supporting community^ The most important point which arises from this contention is, that if there are to be custom duties which will effect the cost of production by country producers, they must have assistance to open up their lands. This means the provinces afforded for open- . ing tip the land by roads and bridges 13 the foundation of the colony's progress. We have since gone in for f more ambitions system, but the time has oome round when we must consider as the complement of those systems the general opening of the country, and especially those parts in which the present means are small. To base the aid we render on the present means of the recipients would be to give to those who have, rather than to those who want, Ijence I am free to confess that I recall a great deal of what was said last session about each district depending upon its own taxation. Of course that this should be so in a measure cannot refuse the district which has prospered to prosper still, but we must go beyond this and remember ie the spirit of the old Provincial aid rendered to young districts, that the feeble requires Bpeetal sustenance. The assistance cannot be based on the means of each larger, and must be given in proportion to the poorer districts. Our proposal then is settled subsidies extending over many years, bat divided after a plan which will give greater consideration to the poorer districts. The scale will be based on a surer scale. This is nob the place to fully discuss the proposition. I must refer US it again to elucidate our financial proposals. As it is however, necessary to explain that the long term of years to which we propose the colony* should bind itself has for its object to settle the finance of local bodies, and enable tbem to borrow on the security of their subsidies. We are moreover -distinctly of opinion that the local bodies shonld be released from tutelage. The conditions under which the subsidies should be expended should be prescribed, and the Beard be held responsible for the proper expenditure of the money. But we don't approve making the expenditure flubject to the supervision of Government The expense of the Roads and Bridges Construction Act, and the enormous labor it has devolved on the Public Works Department show the fallacy of A system in -which the resfioasibititjr is divided. We- can never

. have a satisfactory system of local 1 government unless the ratepayers are made to feel that they have no one but themselves on whom to depend for advice in the expenditure of the corpoiate funds. Let the most interested absent the oa selves from the district or he indifferent to the proceedings of the local bodies, but let them understand that they do this at their own risk and that there is no tutelary watching over the iaterests they neglect. 0»e hears at times reproaches leveled at lecal bodies because of iheir great number, and of the many peopie engaged on them. If these bodies overlap and repeal each other's work, there is, of course, objection to them, but if they do distinct wovk, we not only s«« no objection to the local duties being divided amongst a great number of pei-sons, but much advantage iti it. A theoretically perfect local sysiieni would tie that in which nearly all the individuals, with the consent of their ! fellows, rendered each a share of la'ior I to the general good, although we may ! stop short of solid ad vision, the result J can be nothing *o take exception to. j A division of labor that, for example, wou'd give to some capable persons purely municipal duties, to others attention to tlie harbor, to the other the care of public libraries, and soon. It is, however, chiefly my duty now to deal with financial considerations, and [ have to say that the Government consider that from a fiscal point of view the proposed endowment of local districts is amply warranted from the contention 1 have submitted that it is for the well fare of the whole community that the several interests should reach over the expenditure proposals, investment, the opening up of couutiy by roads, and bridges enormously increases its value, I mean its intrinsic, not speculative, shall thus by means of the subsidies be constantly adding to the amount of property available for direct taxation. The unequal expenditure during the last 3 years on roads &c, is analogous local works is a striking plea iv favor of the more regular system now sub mitted. A statement of past expenditure is furnished with the usual tables. We propose to repeal the Roads and Bridges Construction Act, but to fulfil the obligations incurred under it we propose that part of the charge of the subsidies shall for live yearn come out of loans, but the sum proposed from this source will be very much less than we have grown into the practice of taking for these purposes from borrowed money. The amount of subsidies to local bodies we shall submit is not exceeding £400,000 per annum for 25 years, of which one half for 5 years shall be provided for by loan. We propose that in this amount shall be contained some special subsidies to goldfields counties, and we intend still to continue the rating of Crown Lands, but the Crown liability not to extend to rates beyond fd in the L. We shall submit a power to the Governor to arrange with local bodies for making roads specialty required to open lands newly sold, or about to be sold. I cannot refrain from adverting to one special power, which we desire to place at the optional disposal of local bodies; a power which is as beneficial as it is likely to be proß table. I allude to provide dwelling houses, with small areas of land attached for laborers, all over the country, at moderate rents on terms easy of purahase by instalment. Suppose to take example that a local body puts up a house at a cost £80 on a piece of land of th« value of £30 or £40. The total cost would yield a good return at 4/- a week, with a right to the fee simple in about 14 years, or 5/- a right to the fee simple in about ten years. We propose to except these dwellings whilst nnder lease from seizure for debt. They may be created by hundreds all over the Colony. They will give to laborers resources and means of comfort the want of which has been apparent in this colony, and is painfully apparent in older countries. The local bodies will run no. risks, for these properties will constantly acquire additional valne, and be good security for the liability upon them. As to the properties themselves. I am supposing lands to be used in the vicinity of towns and county townships. They will become within the period mentioned of great value. It is intended the subsidies shall only be one half for the present year and the reason is this. It is necessary to fulfil all the engagements for Roads and Bridges Construction Act The amount required for this purpose is very large, and a half years subsidy for the present year seems sufficient The amount of AKK),OOO, which I have mentioned is the maximum amount which will be allowed, based in terms estimated according to the present rates it will amount to about £200,000, and for this year one half of that will be £125, 000. We submit that for this year the consolidated revenue shall contribute £75,000 of that amount and that £50,000 shall be contributed from the Public Works Fund, The subsidies will include still contributions to towns and larger one* to road districts and counties. This is irrespective of the treatment which we propose to adopt with charitable institutions and hospitals. I will ask hon. members to suspend their judgment on the subject until all the measures are before tbem. We will, if acceptable to the Bouse, at once bring down the Local Government and Charitable Aid measures. They are three in number. We will move the secaud reading, and explain the nature of each and then adjourn the debate until all of the measures are discussed. Hon members will then be able to amply consider them as a whole, and take such course concerning them as commends itself to their judgment. I am aware that by this mode of proceeding' we shall not be running our pursuit on what are considered good party lines, but I consider one of kind insignificant compared with the great advantage, memben will enjoy in having before them the

measures in their entirety with their nature fully explained. We consider that beside* the assistance which through local bodies we render to the cultivators of the soil by opening up the country with roads and bridges, special aid is necessary to the goldfields districts. We also are of opinion that particular encourat'oirient snould be given to the establishment of fisheries all round the coast. The advantages of a hardy maritime population are too patent to need comment. It only need be said that New j Zealand seems eminently designed for such application. „ (To be concluded).