PUBLIC RECORD OFFICE
Reference :-
CO. 882
9
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
100
In anticipa one third by the Muncipality and one third by the riparian owners tion of the passing of this measure provision of $35,130 has been made in the Estimates, being one third of the cost of rebuilding the section which has collapsed The Government share of the cost of completing this work will amount approxi mately to a million dollars, and, though it will greatly improve the facilities for trade and the sanitary condition of the town, it will not be directly reproductive
It is not improbable that the Government may have to face further expendi ture in connection with the carrying out of the urgent sanitary improvements recom mended by Professor Simpson in so far as they affect the considerable area of the towni covered liv. Crown leases for 99 years, but any such expenditure will be recouped. if not entirely, at any rare toa hirge extent, by converting the leases into statutory grants.
"
9 In the case of l'enang the large expenditure recommended by Messrs Coode and Matthews will have to be faced unless the trade of the port is to be stifled for lack of facilities, and not only that of Penang, but also that of Perak and the Ultimately, as in adjacent countries under the protection or sovereignty of Sjam the case of the harbour works at Telok Ayer, the expenditure on Penang will ne recouped by the sale of the reclamation, but that will be spread over a long period. and in the meantime the Colony will have to find interest and sinking fund on the expenditure of some four milion dollars.
10. All this expenditure is absolutely necessary unless the trade of Singapore and Penang is to be sacrificed and handed over to their competitors. A good deal has already gone to Pulo Sabang, in Sumatra, where an up to date port has been establisind, fargely by the enterprise of the Netherlands Trading Society, which spares no expense to popularise it, and it is growing steadily and even rapidly Port Settenham is also increasing fast, and, unless further facilities are provided at Singapore and Penang, a large expenditure will have to be incurred there in the near future, though it is not so conveniently situated for ships calling as the ports of the Colony.
11 From the Estimates for next year, forwarded in my despatch, No. 454, of the 14th instant.* your Lordship will see that, after exercising the strictest economy, But for the fact that we hope we have to face a deficit on the year of $635,3-1
to receive during the year a sum of $275,000, due on account of the arrears of the rent of the late Singapore Opium Farm, that deficit would have been 8910,3×1
It is true that we hope to begin the year with balances amounting to four million dollars, and it is also proliable that there will be some savings on the estimated expenditure, but, on the other hand, our receipts from interesi on loan moneys in the hands of the Crown Agents will diminish as these are expended, while our liability for payment of interest will remain the same, and a further sum of -:160.000 will be required to complete the relaying of the railway
12. Taking a dispassionate view of all the circumstances it is impossible to regard without apprehension the financial future of the Colony The ports must remain, as they are at present, free ports, that freedom being an essential condition of their contimed existence, and, with the proposed Stamps Bill now before the Legislature, and upon the passing of which the estimate of revenue for the next year is based, direct taxation will be pushed as far as it is likely to be remunerative.
of the ultimate financial stability of the Colony I entertain no doubt, but for the next ten sears or so, when some return by means of land sales from the reclamations at Singapore and Penang may be expected, the ordinary services must he severely pinched, if not to some extent suspended, and there will be no margin for works urgently required in the public interest if the military contribution is to continue to be based, as at present, on gross revenue.
13
11 I cannot help thinking that the system of fixing the military contribution according to the gross revenue is one which is not in the interests either of His Majesty's Government or of the Colony This Colony is really a new country, in which the burden of the permanent charges for establishments and services increases and is bound to increase. The margin available for special services, public works and roads, streets and bridges, is now no larger than it was in 1901 or 1902, and. with the growth of our public debt and the probability of the Dock Board failing to meet the charges on its debt, it will steadily diminish, while the burden of military contribution continues to keep pace with our gross revenue. If it is remembered that, owing to the increase in wages and cost of local material, we have,
• 42801 not printed.
101
in regard to our expenditure on works, derived no advantage from the enhanced value of the dollar, which for local purposes does not go quite so far as it did five or six years ago, while the military contribution is expended in sterling and therefore derives full benefit from the rise in the value of the dollar, the dispro- portion between the sum available for works and the amount paid towards the cost of the garrison is still more marked.
15. These works are practically all in the nature of capital expenditure from which the Colony will ultimately benefit by the improvement of communications and the increased efficiency of its administration and population. But for every $100 spent on these works we have to pay $25 as military contribution, ie, for every $0 we spend we pay $20 to the War Department. It is true that under the arrangement made by your predecessor in 1904, when these works are directly reproductive, we are allowed to deduct from the net proceeds a sum equal to four per cent. on the capital expended, but, on the other hand, we have already paid 25 per cent of that capital in military contribution, and in the case of works which may really be of far greater benefit to the Colony and ultimately to its revenue, though yielding no direct and immediate return, we have to pay the full tax of 25 per cent. on the amount so expended.
16. If, instead of finding the funds for such works out of revenue, we borrowed for the purpose we should pay no tax either on the capital expenditure or on the revenue raised for payment of interest. I submit that such an arrangement, furnishing as it does little or no incentive to prevent the growth of establishments and permanent charges while exacting so heavy a tax on all monies devoted to improvements, is unsound and not likely in the long run to benefit His Majesty's
Government.
17. The arrangement was no doubt of considerable benefit to the Colony at the time it was made, especially as, at a time when silver was falling, it fixed the contribution in silver instead of gold. But it was made at a time when the financial outlook was gloomy and drastic retrenchment of expenditure had just been effected, so that the margin afforded by the revenue over the necessary fixed charges was exaggerated. In 1894 and.1895 the revenue was $3,904,774 and $4,048,359, the cost of establishments was $1,501,551 and $1,483,814, and of pensions $132,553 and $142,130 respectively. For 1908 the cost of establishments will be $4,545,979,
and of pensions $378,028, and the revenue $9,685,332. In 1894 and 1895 the total expenditure, including special services on works and buildings, roads, and bridges, &c., was works $198,472 and $216,251, and on roads, &c., $178,495 and $169,409; while for 1908 the annually recurrent expenditure alone is estimated at $229,390 for works and $396,900 for roads. I cite these figures merely to illustrate my contention that in a country like this the steady pressure for greater efficiency in the administration and for the undertaking of new services by Government tends to make the permanent charges increase more rapidly than the revenue and so to prevent the free margin for capital expenditure growing at the same rate as the revenue, and the military contribution being proportioned to gross receipts enhances this process of restriction. When the Government undertakes a new service, or extends an existing service, even when it is reproductive, unless it yields a net return of 25 per cent. it means a further encroachment on this free margin. Take, for instance, our hospitals, which are frequently made use of by officers and men of the garrison. We have recently extended at a heavy cost our hospital for Europeans, and are at present building a maternity hospital. These institutions are run at a loss, yet we have to pay 20 per cent. on the small sums paid in respect of officers and men of the garrison or their wives who have to avail themselves of these institutions.
18. An arrangement which thus penalises humanity and progress cannot but prove detrimental to everyone interested in the Colony, His Majesty's Government, as well as the inhabitants and Government of the Settlements.
19. We cannot claim revision of the arrangement as a matter of right, nor, though we have with great reluctance had to postpone many works that are urgently called for in the interests of the public, can we plead immediate financial strain. But that there will be such a strain in the near future when our balances are exhausted is indisputable, and it will be largely due to works which will prove of no less benefit to British trade and commerce than to the Colony. That financial strain must retard the progress and reduce the efficiency of the Colony, on which the vast. British trade with the East and its defence depend so largely. We do ask, therefore, that His Majesty's Government will take our position into consideration
24658
I
GA