8.—6

VIII

It will on this as on former occasions be contended that I have taken a somewhat gloomy prospect of the outlook, that I ought rather to believe that the reduction on railway charges will conduce to an increased traffic, that the concessions in the Customs duties will lead to an increased consumption, and that the penny-postage system will result in more letters being written. This may happen, but it would not be prudent on my part to base my calculations on such slender grounds, for, on the other hand, there are dark clouds in the Eastern horizon, and, whilst all may end well, still it is desirable to keep on the safe side. In my last Budget, apropos of the adjustment of taxation, I said, " The form of such adjustment will depend upon the result of the investigation that is to be made, and it will be for the next Parliament to determine whether any material alteration in the system and reduction of taxation is to be effected." Good faith has been kept, inquiry has been instituted, comparisons made, and by remissions and reductions in taxation, and by large concessions, the very considerable sum of .£300,000 has been conceded to the people of the colony. The oft-repeated fallacy that by underestimating receipts and overestimating expenditure the Colonial Treasurer creates a surplus is, of course, pure nonsense, for the surplus is simply the difference between the actual receipts and the actual expenditure, added to any credit balance brought forward; and at the close of this year, as in every year since the present Government took office, I expect a surplus, but, so far as I can forecast, it will be the smallest we have ever had. ESTIMATED EESULTS AT THE CLOSE OP THE OUEBENT YEAE. The estimated expenditure being £5,441,523 and the revenue £5,463,000, we have an excess of revenue over expenditure of £21,477. We commenced the year with a balance of £605,351, of which amount we propose to transfer £500,000 to the Public Works Fund, leaving £105,351 available in the Consolidated Fund. This amount, added to the surplus of £21,477, will provide £126,828 for supplementary estimates and unforeseen contingencies. ADDITIONAL FUNDS. For the more vigorous prosecution of our public works a larger expenditure will this year be required out of our Public Works Fund. It is only necessary to mention some of the larger items in our programme (my colleagues will supply the details) in order to show that our proposed expenditure will be considerably in excess of the amount spent last year, which reached very nearly a million. This year a larger expenditure is necessary if the main trunk lines of railway are to proceed at a more expeditious rate, if our working railways are to be furnished with the Westinghouse brake and safety appliances, if the necessary rolling-stock is to be increased and the lines are to be equipped to meet the increased business, and if reasonable public convenience is to be met. We must, in justice to the settlers and Crown tenants, proceed expeditiously with roads and bridges ; and roads on goldfields, the development of our mines, telegraph extension, and public buildings must be provided for. Besides these works we must also take into consideration the fact that it cannot reasonably be expected that we shall be able to transfer, as hitherto, any sum from the Consolidated Fund to assist in providing for the expenditure for the first six months of next year, and we must therefore have sufficient moneys to carry us on until Parliament can be again consulted. To provide the ways and means in the Public Works Fund for the present year we had £139,749 of cash in hand, and £700,000 was available out of the loan of last year, also £500,000 coming from the Consolidated Fund derived from the surplus at the close of the year. These assets make up £1,339,749. Taking into consideration, therefore, that the expenditure for the current twelve months will be very considerably increased, as I have already indicated, and that we must have sufficient loan-money left to last us for at least six months of next year, I am of opinion that it will be necessary to ask for authority to raise a loan of one million so as to carry on our public-works policy successfully.