}
Appendix No. 50, para. 21.
Ibid, No. 7h.
8
augmentation to the burden of defence charges due to this cause of late years has given rise to much discontent and friction in the Colonies, a discontent which finds an echo in this country, and which tends to some extent to jeopardise the contribution. On this ground, therefore, the proposal that Colonial Military Contributions should be fixed in local currency and should not vary during the period they remain in force is not unworthy of consideration. Loss, or occasionally gain, to the Imperial Government from fluctuations in the value of silver, would be limited in duration to the few years intervening between the periodical revisions of the contributions."
40. This suggestion was not approved, and in one respect fell short of what is required to bring about a satisfactory settlement. A contribution fixed at a given number of dollars might become excessive if the Colonial revenues fell, and inadequate if they largely increased, while, as in the case of sterling contributions, any readjustment would necessitate periodical discussions with the Colonies as to the necessary augmentation, or decrease, in the contributions.
41. The Governor of the Straits Settlements, in bis despatch of 29th December last, says--
"I conclude by expressing an earnest hope that it may not be too late to deal with this question on the basis (perhaps) of a fixed proportion-say 20 per cent.of the Colonial revenue being taken as its contribution for military and naval defence. I am aware that such a system, by rouson of the fluctuation in the dollar value, might to some extent disturb the estimates of receipts by the Imperial Exchequer, but this disturbance would be infinitesimal in comparison to the hopeless confusion into which the calculation of the coutribution on a gold basis reduces the Budget of a Colony, of which that contribution, with other military charges on the 1895 Estimates, exceeds one-fourth of the estimated revenue."
42. In a memorandum, dated 24th February last, addressed to the Secretary of State for the Colonies, the Straits Settlements Association say-
"It is maintained that it is absolutely necessary for its welfare that the contribution to be paid for military service shall be moderate and reasonable; that it shall be a fixed charge, and not as in the present case, & charge settled for a quinquennial period when one year has expired and a second year has been entered upon, it being impossible to secure any stability in the public finances, or to project and carry forward any important works under such a dilatory and hand-to- mouth system of finance.
"It is contended, on behalf of the Colony, that the most satisfactory arrangement would be the payment of a fixed percentage of the revenue in full for all military charges, land, barracks, &c., but in no case to exceed their total cost. And it is believed that the Colony would be willing to pay the percentage which Lord Knutsford, in his despatch to the Governor of 18th December, 1889, put forward as not being 'excessive,' viz., 17 per cent."
43. The Committee consider that these suggestions may be accepted as furnishing a basis for a permanent and satisfactory settlement. If accepted, the only subsequent rectification that would have to be made would be a periodical checking of the cost of the garrison, to ensure that the Colony did not pay more than its full cost.
44. The arrangement of 1889 was undoubtedly at that time "moderate and reasonable. The contribution represented a charge of 16:55 per cent. of the Colonial revenue of 1888, exclusive of certain small local expenditure which brought the estimated charge up to 17:10 per cent., and exclusive of capital expenditure on lands and buildings, an estimate of which was not framed at that time.
45. It is stated that the Colony would be willing to agree to a contribution of from 17 to 20 per cent. of its revenues in full for all military charges, lands and barracks, but in no case to exceed their total cost."
46. The Committee, while accepting a proviso that in no case should the contribution exceed the estimated cost of the garrison supplied by this country, cannot recommend that the capital expenditure on lands and buildings, or the local charges for providing lodgings in lieu of barracks at Singapore, should be included in and covered by a fixed annual contribution. It would be difficult to provide in a fixed annual charge for a purely local expenditure of uncertain amount, and extending over an uncertain number of years. The Colony has always, and without objection, provided sites for barracks and constructed the barracks required for its garrison, and that arrangement should not be dis- turbed. With that exception the above proposals may be accepted with advantage to the Imperial and Colonial Governments.
47. In calculating the amounts which fixed percentages would yield in the future, the Committee have excluded revenue derived from the sale of Colonial Crown lands. It was represented to the Committee that the Colonies had been directed not to deal with sums derived from land sales as ordinary revenue. The Committee feel that under these circumstances the Government could not treat the proceeds derived from land sales as part of the ordinary revenue, which would be subject to the percentage charges for defence services.
48. The contribution settled in 1889 represented a charge of 638,649 dollars,
9
exclusive of local services, which brought the total estimated ordinary military expenditure of the Colony, exclusive of capital expenditure ou barracks, up to 660,000 dollars, or 17.10 per cent, on the gross revenue of 1888, viz., 3,858,909 dollars.
49. A contribution of 173 per cent. on the estimated net revenues of 1895, 3,934,521 dollars, amounts to 688,541 dollars. The total capital expenditure on barracks is estimated to cost the Colony about 524,730 dollars, but there will be a set-off to this in the value of barracks at Penang, no longer required.* Assuming, however, that 524,730 dollars net be expended, and that it is raised by loan at about 4 per cent., including sinking fund, an annual payment of 20,989 dollars would provide for it. If to this he added the estimated annual local expenditure on lodgings in lieu of barracks, and on Volunteers, about 15,052 dollars, a charge of 36,041 dollars is reached, or less than 1 per cent. of the net estimated revenue of 1895, making a total estimated military expenditure of 18-41 per cent. of the estimated net revenues of 1895, or well within the percentage proposed by the Governor in his despatch of 29th Para, 41 December last, already quoted. The loss to the Imperial Exchequer under this percentage would be considerable, viz., 11,1467., compared with the contribution See paras. received in 1894.
50. The chances of future gain or loss on the part of the Exchequer depend upon the following conditions. Should the Colonial revenue decrease, or should its currency still further depreciate, there would be a loss in the sterling value received. But even if the contribution were fixed in sterling, the same loss would have to be faced, for it seems certain that the Government would again be obliged to reduce its demand, as it did in 1804, and as it will now have to do for 1895. These are the conditions which would diminish the receipts into the Treasury.
51. On the other hand, when the Colonial revenues increase, the Colonial contribution would grow in proportion, and the objection of a Colony to anı augmented contribution is always at a minimum when its revenues are rising.
52. Should the Colonial currency appreciate in value, the sterling yield of the contribution would augment without any addition to the currency payment, without any action on the part of the Government, and, it is to be hoped, without opposition from the Colony.
No. 4.
60, 61.
Extension of the percentage system to other eastern Colonies. 53. Should this arrangement be agreed to for Singapore it would be necessary to extend it to Hong Kong, Ceylon, and Mauritius, and, if adopted for all these Colonies, the loss incurred on the Straits Settlements would be materially reduced, while, in a very few years, the actual sterling receipts would, in the absence of any unforeseen conditions, probably be increased above those at present received.
When the Govern- Printed
54. Hong Kong has, for some years, paid 40,000l. a-year, ment imposed that contribution in 1890, it was estimated that it would absorb corres- 17.12 per cent. of the Colonial revenue. At that time 40,0007, with the dollar pondence,
Hong Kong, worth 3s., represented 266,666 dollars. Now, with the dollar worth only 2s., Enclosure 400,000 dollars are required to pay the contribution, and this amounts to 1981 in No. 18,
A para. 18. per cent, on the net estimated revenues of 1895, viz., 2,018,520 dollars. contribution of 174 per cent., which nearly approximates the percentages fixed 1894 in 1865 and 1890 (16 and 17.12 per cent. respectively), and which is the Report of Committee same as that now suggested for Singapore, will, with the dollar worth 2s., yield
on Hong Kong, 35,3241., a loss of 4,6761. to the Exchequer.
paras. 2 and
55. Ceylon, during the past four years, has paid a contribution of 81,7501. 9. This absorbed, in 1891, 1,074,244 rupees out of the net revenue of 17,703,924 rupees, or 6.06 per cent.
56. The same sterling payment for 1894, out of an estimated net revenue of At the 18,637,644 rupees, absorbed 1,394,558 rupees, or, 7-48 of the revenue.
There will probably also be a charge for sites for barracks, &c., provided by the Colony, The Committee has no estimate of their cost, but it seems probable that it would not bring up the charge to 20 per cent. of revenue.
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