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The Legislative Council, July 25th.
188
IMPORTANT PROCEEDINGS. Jaily Press
PRESENT.
His Excellency the Governor.
The Hon, the Acting Chief Justice. The Acting Colonial Secretary.
The Hon. the Attorney General. The Hon. the Colonial Treasurer.
The Hon. Mr Whittall.
The Hon. Mr. Dent.
The Hon Mr Gibb,
The new unofficial members, Mr. Gibb and Mr. Dent were sworn in by the Governor. The minutes of the last meeting having then been read, and confirmed,
His Excellency laid on the table an Ordinance for incorporating the Hongkong and Shanghai Bank.
MR. WHITTALL without opposing the motion drew attention to the state of the law in this colony with reference to banking, particularly as illustrated by a recent decision by Mr. Whyte in an action for the recovery of money on notes of the Agra and Masterman's Bank. The ordinance now proposed would confer upon the Hongkong and Shanghai Bank, power not only to issue notes up to an amount bearing a certain relation to the capital but to carry on exchange operations to an unlimited extent, for the only restriction was that assets and liabilities should be equal while the quality of the assets was not regulated in any way.
His Excellency promised to give the subject his attention before the ordinance came on for second reading and on this understanding it was read a first time.
THE BUDGET.
His Excellency then addressed the Council as follows
In laying before you the estimates for the year 1867 and moving that the Bill voting the requisite supplies be read a first time, I think it better not to defer to the second reading certain explanations, which if given early are more likely to assist your deliberations than if withheld to a later period.
The Colony is approaching a new and peculiar phase in its history and it will require the exercise of much prudence and forethought on the part of this Council to pilot the vessel of the state safely through the difficulties that are gathering round it. One thing at least we can do, viz., ascertain the present exact financial state of the Colony, and though enquiries of that nature lead often to unpleasant surprises nevertheless a fearless scrutiny of the position is the most effective commencement for solving such difficulty.
I propose we undertake that scrutiny, and the more thoroughly to understand the position of the Colony, I invite you to go back a few years and ascertain the proportions borne by the Revenue to the Expenditure.
Taking the six years from 1860 to 1865 we find the following amounts received and expended.
YEARREVENUEEXPENDITURE 1860$452,063$147,475 1861810,757526,233 1862631,260597,634 1863376,204586,395 1864637,948763,308 1865843,414937,805 TOTAL$3,748,650$3,751,874Thus in six years whilst we find the Revenue steadily increasing till from $452,000 it had risen to upwards of $843,000 or nearly double its amount in 1860, we also find the expenditure increasing so nearly in the same proportion, that at the end of these six years there was only the slight difference of $3,724 in favour of the revenue over expenditure for that period.
Looking first to the Revenue you will find that a large portion of its increase was derived from premiums realised by the sale of Land, and that out of the total amount $670,273 received as premiums for land sold, since the foundation of this Colony, no less than $102,956 were received during these six years from 1860 to the close of 1865. Those premiums however constituted a large portion of the capital of the Colony, which unlike our great Australian and American colonies, has but a very limited capital in land, so much so, that although only 827 acres have been sold, nevertheless it is true that comparatively very little valuable land remains undisposed of.
The Colony had, however, on the 1st January 1860, a surplus accumulated of $207,229 and consequently on the 1st of last January, with the slight addition above mentioned of $3,721, there should have been a surplus of available assets amounting to $210,953. From difficulty in collecting arrears, and other causes, the surplus assets at the beginning of the current year was only $184,000.
At the beginning of last year 1865, however, though we started with a surplus of $293,000, yet at the beginning of this year, that surplus was only $184,000. Therefore in the year 1865 our expenditure had exceeded our revenue by $111,000, and I fear our financial state is not improving, even by taking the most favourable view of matters, and the subject is one into which I have gone very fully. There was, according to the Auditor General, at the end of last year a surplus of only $108,000, and at the close of the current year there will probably be only a nominal surplus of Assets amounting to $85,000, including therein all arrears of taxes, and a large sum of £17,000 sterling which the Colony holds in bills on the Agra and Masterman's Bank.
Thus during the first six months of this year we shall have exceeded our Revenue by $75,000, and it is probable that during the last six months we shall exceed it by $23,000, or nearly $100,000 during the whole year. In reasoning thus I have accepted a calculation of the Auditor General that from the 30th June to 31st of next December the Colonial Revenue will be $380,000, and the Expenditure $403,000, but I am nevertheless bound to say that I have received more unfavourable computations from others, and I certainly think the views of the Auditor General go to the extreme of the favourable aspect of our affairs, which it would be prudent in this Council to adopt as the basis of any Legislative policy or action.
Moreover it would be unsafe to suppose that even the above nominal surplus consists of assets readily available, as part of those assets is in England, some, like the subsidiary coins expected are or may be in transitu when wanted, and part consists of arrears of taxes, consequently it is quite a possible contingency that the Colony although having nominally available assets, may be obliged to borrow money in the course of the next few months to enable it to meet its engagements.
The really important point however to consider is the fact that during the last six years, despite much elasticity in minor branches of Revenue, the Colony has expended more than half a million dollars of its capital in the shape of Premiums received for land, and though its Revenue otherwise has largely increased during the same period, it nevertheless is certain that the time is approaching when the whole of the surplus capital will have been used up, and if the expenditure be continued on the same scale, there will be a considerable deficit.
I agree with the Auditor General in ascribing this great and progressive deficiency in the assets of the Colony to the heavy expenses attending the establishment of the Mint together with the heavy annual cost of the same. The capital sunk in the Mint, including ground, machinery, buildings, &c., has already exceeded $350,000, and the annual cost including wear and tear of machinery and interest on capital is nearly $130,000. For all this outlay the Colony has hitherto received nothing in return, nor is there any immediate prospect of the experiment paying its expenses. The latter are in this country and climate found by experience to be so much heavier than at home in proportion to the amount of work done that the experiment is in various particulars more hazardous here than elsewhere. Nevertheless I consider the progress recently made by the very zealous and hard working staff of the Mint is so encouraging that I have felt justified in putting down $60,000 as likely to be earned by the establishment next year, and to diminish so far the present annual expense, leaving, however, the Colony still a probable loser of more than $60,000 by the speculation in 1867.
As it is impossible to permit the continuance of an annually increasing deficit we must devise a remedy. This may be done in two ways.
1st by diminishing your Expenditure.
2ndly by increasing your Revenue.
I presume no member of this Council would wish to vote for the shutting up of the Mint till it be more clearly ascertained whether the experiment may not succeed better, especially when all the subsidiary coinage is provided for by the establishment. Yet the Mint has been the principal cause of recent deficiencies.
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