PUBLIC RECORD OFFICE
Reference :-
C.O. 882
278
5. I fully realize that the present position is primarily due to causes whicht are, in the present state of scientific knowledge, beyond human control. Surra and plague have largely increased expenditure, and have caused a diminution in the revenue. But in the case of a tropical Colony, dependent almost entirely upon a single industry which a bad season may cripple, and exposed to sudden and devas- tating calamites such as hurricanes or outbreaks of plague or surra, it is essential to provide against emergencies by prudence in dealing with the finances. In such a Colony it is most necessary to maintain substantial surplus balances, as a standing reserve fund; to refuse to allow them to be drawn upon except in times of disaster; and to refrain from encumbering the revenue with debt charges and drawing too heavily for ordinary works on its borrowing power. In short, a substantial sum should, as far as possible, be saved each ordinary year for use in grave emergencies. This policy has been to some extent adopted in other colonies in similar circum-
stances to those of Mauritius.
6. Faced with the financial position of considerable gravity, Sir Graham Bower proposed that the deficit on last year's working should be charged to surplus balances, which will thereby be reduced to the very moderate amount of about a quarter of a million rupees, and that the deficit on the current year should be met by additional taxation, which he estimated would produce Rs. 500,000 per annum. The unofficial members of the Council of Government have, however, declared them- selves opposed to fresh taxation, they have rejected the motion to suspend the Standing Orders in order to consider the two Taxation Ordinances which were presented to them, and, with one exception, they unanimously voted in favour of a proposal put forward by Mr. Leclézio, that expenditure already incurred or to be incurred, amounting to Rs. 1,115,474, should be met from a loan.
7. Of this expenditure, Rs. 239,384 (Savanne Extension Lines), Rs. 119,595 (Long Mountain Railway), Rs. 102,495 (Port Louis Tramway), and Rs. 255,000 (Dredger), or a total of Rs. 716,474 has already been paid out of revenue, and the remainder, Rs. 399,000, represents expenditure for which provision has been made in this year's estimates in respect of the balance of the Savanne lines expenditure (Rs. 64,000), the balance of the cost of the dredger (Rs. 255,000), and additional rolling-stock for the railways (Rs. 80,000). As you are aware the motion in favour of meeting this expenditure by a loan was defeated in the Council of Government by the casting vote of Sir G. Bower, and I could not agree to such a proposal. The larger part of the amount has been already met from revenue, and there is no justifi- cation for borrowing money in order nominally to increase the surplus balances of the Colony. If the remainder-that which is to be met from revenue during the current year-were to be defrayed from the proceeds of a loan, there would still be a deficit this year, and in view of the considerations to which I have referred in paragraph three of this despatch, further steps would still be necessary.
8. Moreover, as Sir G. Bower pointed out in Council, the whole of these services were sanctioned on the distinct understanding that their cost would be met without recourse to a loan, and they would probably not have been sanctioned on any other terms. The Town Tramway does not appear to be expected to pay, and the two railway lines appear to be of an unremunerative character. Neither of them can be regarded as more than temporary lines; they were laid in a hurry, with second-hand or inferior material, and are not of a character which would justify their cost being placed upon posterity. The cost of the dredger, also, is merely expenditure necessary for the proper maintenance of the harbour.
9. But apart from such considerations, the debt of Mauritius is already large, and has been considerably added to recently. The Mechanical Transport Loan, the Advances to Planters Loan, the loan for the Black River Railway, the Port Louis Drainage Works, and the Mare-aux-Vacoas Water Works, that is to say, loans amounting in all to over £465,000, have all been sanctioned since the surra outbreak occurred, and I am not in a position to approve further borrowing by Mauritius at the present time. The money market is unfavourable to borrowing on easy terms, and from the point of view both of population and of resources the debt of the Colony is already heavy. Moreover, it would be impossible to sanction further loans until there is assurance that due provision has been made for meeting the charges for interest and sinking fund. For these reasons the raising of the Re- afforestation Loan must be postponed until the financial position of the Colony is more assured.
10. On the proposal for a loan being defeated, the Unofficial Members urged upon the Officer Administering the Government the view that the proper remedy
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for the position was not increased taxation but retrenchment in expenditure. That retrenchment is necessary there can, I think, be no question. The expenditure of Mauritius is very large compared with the number of inhabitants and the resources of the Colony, and it is remarkable on account of the excessive proportion which the charges on account of personal emoluments and pensions bear to the total expenditure. As Sir Graham Bower points out, the expenditure on these two items, together with debt charges, amounts to half of the total expenditure. The number of Government servants amounts to over 6,000 in a population of about 383,000, of whom about 4,888 are in the continuous employment of the Government. This means that a considerable proportion of the adult males of the island are civil
servants.
11. The expenditure from revenue on Public Works Extraordinary and on large permanent works generally has been, and is, very small as compared with similar expenditure in most other first-class Colonies, and it is accordingly peculiarly difficult to effect immediate reductions in expenditure in Mauritius. Reduction of expenditure must be the result of a consistent policy firmly maintained through a considerable number of years.
12. I am fully convinced that the time has come when it is imperative that such a policy should be initiated and carried out in Mauritius if the Colony is to escape from its recurrent financial difficulties, and it is only by rigorous reduction of establishments that any effective improvement can be produced. The dispro- portionate size of the Mauritius Civil Service has often been alluded to and deplored. There must be a large number of offices which could be dispensed with without loss of efficiency; and I must request that for the future no vacancy may be reported to the Secretary of State without a report as to the possibility of abolishing the post, azd that similarly no post should be filled by the Governor without careful considera- tion of the same point. I have already in my despatch, No. 211, of the 2nd instant,* conveyed to you my approval of the proposal to abolish one of the posts of second- class clerk in the Audit Office. It should also often be possible to effect a reduction in establishments when a vacancy occurs in a post which cannot well be abolished, by transferring to it an officer from another post which can be dispensed with. This question is already, as I observe from Sir G. Bower's despatch, No. 272, of the 29th of July,* engaging the attention of the Government. I trust that the Elected Members of the Council of Government, in view of their declarations in favour of retrenchment, will loyally co-operate with you in carrying out a consistent policy in this most important matter.
13. But I am afraid that during the interval which must elapse before the reduction of establishments can have any very appreciable effect upon the position, some other means must be found to make the revenue at least balance expenditure. The reduction of establishments cannot be effected quickly; and while exercising rigorous economy, you will, I think, find it necessary to have recourse to additional taxation. What form the new taxation should take will need further consideration, but before deciding to recommend any definite scheme, I would suggest that you should consider the question of imposing an income tax, as was proposed and pressed upon Sir C. Bruce by Mr. Chamberlain in 1898.
14. I cannot overlook the fact that Sir G. Bower's attempt to pass his taxation ordinances failed through the opposition of the Unofficial Members of the Council. They must, and I hope will, recognise that to make the revenue balance the expen- diture is one of the first and most important functions of Government, and that refusal to allow measures to be taken to attain this end must seriously compromise the well-being and credit of the Colony. It would be impossible for His Majesty's Government to allow the finances of the Colony to break down, and the Colony itself to become a charge upon the Imperial Exchequer because the Unofficial Members of the Council refused to allow the necessary measures to be taken to restore equili- brium between revenue and expenditure.
15. In his telegram of the 28th of June.† Sir Graham Bower made a proposal which, as I informed him in my telegram of the following day, I was unable to accept. It was to the effect that in order to obviate the necessity for fresh taxation the assets belonging to the Widows' and Orphans' Pension Fund of the Colony should be applied to meet the deficit on the current year. In my despatch, No. 48, of the 23rd of February last,* I approved the taking over of the fund by the Govern- ment under an Ordinance, by which the Government would accept a liability in
‡ No. 177.
• Not printed.
† No. 175.
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PUBLIC RECORD OFFICE, LONDON
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