8.—6

VI

This increase of our public debt is undoubtedly large, but I venture to assert that upon an intelligent analysis of the purposes for which these loanmoneys were obtained, honourable members will not be inclined to find fault with myself and colleagues. I propose to classify the loans, as I have done before, into two classes—namely, reproductive (that is, interest-bearing) and non-reproductive (that is, not immediately interest-bearing). Under the first we raised £923,070, including £150,000 for payment to the Midland Eailway bondholders, and under the second class we obtained £758,026, or a total together of £1,681,096. On the other hand, we redeemed £55,900 of " Consolidated Loan Act, 1867," bonds at the annual drawing, and £2,000 of debentures created for the Government Accident Insurance Department were written off as being no longer required. I have no desire to advocate, or even defend, a large borrowing policy, but I must be pardoned if I look back with pride to the immense amount of good which has been done to our hard-working and often struggling settlers by our judicious borrowing, which has enabled large areas of land to be purchased at a fair price and to be cut up for close settlement. Where once the lonely shepherd was looking after his widely scattered flock there are now hundreds of smiling homesteads, and thousands of willing and prosperous settlers. Who shall say that such money was not prudently raised to be prudently spent ? As I have said, however, I am not going to advocate a large borrowing policy. Quite the reverse —I am going to warn honourable members that although in some directions the London money-market is in an easier condition than when I last had the honour to deliver my Budget statement, I am quite observant enough to appreciate the fact that the purse-strings are, so far as colonial loans are concerned, still tightly drawn, and will only relax when we prove ourselves self-contained and reduce our borrowing ; and it will therefore be necessary for the Government to proceed only with its most urgent public works, and to endeavour to make our available ways and means last as long as we can, and in this direction I do hope honourable members on both sides of the House will assist me. Comment is often made upon the large dimensions of our public debt compared with our population. Ido not think a proper consideration of the subject has been given it by individuals who ought to know better. Our political opponents are quick to seize the public-debt table as a vehicle for attack upon the Government finance. A proper consideration of the subject is therefore, I think, of sufficient importance to delay you a few minutes while I endeavour to place before you a few figures and results which may surprise you, and cause honourable members on both sides to agree with me that, when properly explained, the volume of our debt is not so very large after all for a young progressive country. In the first place, it must be remembered that in the early days of the colony's history we were, unfortunately, often at war with the Maori population, and to provide for the sinews of war several millions had to be raised. This imposed a burden of debt to be deplored, but which could not be helped. In 1870 a progressive or public-works policy was inaugurated, which has resulted in the advancement of the colony by leaps and bounds. Of course, in carrying out such a policy mistakes have been made in the past, and it is possible may be made in the future ; but I challenge any honourable member to deny that the progressive policy has not effected much enduring good to our people. To carry out the policy of making railways from one centre to another, and of opening up arterial roads, and building bridges over rivers which were otherwise often death-traps, necessitated frequent appeals to the money-market, with the result of large additions to our public debt. Well, you cannot make bricks without straw, and it was and is likewise impossible to build railway-tracks and make roads without money. It is, however, to the increase of our debt by reason of the making of our railways that I desire to draw your attention. In the older countries such work is done by capitalists, who find the money, and the public debt is not increased one penny.