The clauses having been severally considered and agreed to,

The Bill was reported without amendment.

The Bill was thereupon read a third time.

Now the accounts for that period, together with the report of the Controller and Auditor-General, were laid on the table of the House early in the session, and are now before the Public Accounts Committee. On which the figures which I gave last year as to the surplus it would be shown that for the first period of ten months it was £778,000, made up, as the House will remember, of £478,000, the surplus of revenue over expenditure for that period, together with the additional appropriation of £300,000, which my hon. friend the Minister of Railways and Harbours was good enough to give me. That made up my forecast for the ten months’ period. According to the audited figures, the revenue account for this period shows a credit balance of £856,000. That was the amount by which the revenue of the Union exceeded the ordinary current expenditure, so that hon. members will see that my forecast of £778,000 was a fairly approximate one. But that surplus of £855,000—as the audited figures now show it to be—shows that account has been taken of the total amount of contribution which I received from the Railways and Harbours, amounting to no less than £1,520,000. Now, sir, the Public Debt Commissioners Act, passed last year, makes provision and specially exempted any balance which might be found to exist in regard to the first ten months’ period, so that the sum of £855,000 will not automatically go to the Public Debt Commissioners, but remains at the present moment on the Consolidated Revenue Fund, and I shall later on make suggestions as to how this amount shall be dealt with. I think it is only right that I should make some reference to the balances with which we started Union. Hon. members may recollect that the matter of these balances gave rise to considerable discussion in the early part of last year’s session. They will recollect that ultimately, on the recommendation of the Public Accounts Committee, it was decided to accept as the opening balances with which Union started the figures which were given in the White Book that was prepared by the Treasury. These figures were, of course, subject to audit. During the recess these figures have been audited by the Controller and Auditor-General, and il appears from that officer’s report that I was fully justified in submitting the figures to the House, because I find that there are few discrepancies as the result of the closer examination of these figures by the Controller and Auditor-General, and I am bound to say that I view with no little satisfaction the observation of the Controller and Auditor-General with regard to the White Book balances. He says, in the course of his concluding observations, “Considering the difficulties and the pressure under which the White Book was prepared, the Treasury is certainly to be congratulated on the production. The closer examination of the figures has shown extraordinarily few inaccuracies, and it will be discovered that many of these have reference to estimated figures that could not be given exactly.” Well, sir, when I reflect upon the rather severe criticisms which were directed by hon. members on my left last year, criticisms on my delay in submitting an accurate statement showing what the balances were, I can’t help thinking that some of my friends might have been as ready as the Controller and, Auditor-General to acknowledge that the Treasury did work in the face of difficulties and under pressure, and that the criticisms which they made were hardly justified. Now, sir, with regard to the loan account for the period 1910-11. I will deal with this subject later on, because hon. members will remember that the appropriation sanctioned by Parliament last year did not cover the ten months’ period but the twenty-two months’ period, starting with Union and ending with March 31 of this year. But I deal with the matter of the loans later on. I will now go into the figures of the financial year ending March 31. My original estimate of revenue was, including the Railway and Harbour contribution, £16,052,000. That was my estimate of revenue, including the contribution from the Railways and Harbours. I am glad to be able to show that the revenue collections of the year will show a more handsome addition to this sum. According to the latest information which I have at hand the year’s revenue, including the contribution from the Railways and Harbours, will show no less a sum than £17,033,000, which shows an excess over my original estimate of £981,000. Hon. members will, perhaps, say that this is a remarkable difference compared with the original estimate, but it must be borne in mind that 50 per cent. of the increase is shown under the head of interest which exceeds the estimate by £459,000. I may say that this is largely represented by interest on capital of the Railways and Harbours. Hon. members will see from the report of the Railway and Harbour account that differences on this question exist between the Treasury and the Administration. I don’t intend to refer to this subject at this stage, because I intend to do so later. I only refer to it to show how my estimate of revenue is so largely exceeded. As regards other items of revenue, it is gratifying to note that apart from two heads the revenue shows a general increase over the estimates of the year. The two heads under which there are shortages are the Natal Poll Tax, a decrease of £43,000, and trading licences £12,000. As regards the poll tax the shortage is due to the suspension of the collection of that tax in consequence of an Act that was passed last session.

Apart from the increase on Interest Accounts, the most important increases of revenue are under the following heads: Customs, £198,000 ; Excise, including cigarette tax, £81,000; Posts, Telegraphs and Telephones, £79,000 ; Mining Revenue, £71,000; and Transfer Duty, £94,000. When I made last year’s Budget statement I admitted that my Budget estimates were framed on a conservative basis, and when I was confessing at the time that the figures were below rather than above the mark, I certainly did not anticipate, and few hon. members anticipated, that there would be such a remarkable and substantial increase in the revenue. I shall offer a few remarks on the causes which have contributed to the increases I have referred to. In the first place, take the Customs Revenue, which shows an increase of £198,000 on my original estimate of £4,302,000. The actual collection during 1911-12 should be in the neighbourhood of 4½ millions. Hon. members may recollect that in making my estimates last year I put the Customs Revenue at a sum of £200,000 less than the preceding period, and I stated that I did so because I had been impressed by the warnings which had fallen from hon. members in this House, and especially from gentlemen who are closely associated with the mining industry and representatives of the commercial interest, that they thought the time had come when there would be a reduction in the imports. Experience has proved that they, as well as I, were too cautious. Take the next head of increase —the Excise. Under Excise there is an increase of £81,000, which, is mainly due to the imposition of the cigarette duty. Doubtless the collections under this head of revenue are abnormal for the current year, because hon. members will recollect that large stocks of cigarettes were in hand at the time the law came into operation, and all these stocks had to be taxed in accordance with the law. I presume, therefore, that for the ensuing period the collections from the cigarette tax will not be so large as during the current period. The next substantial increase of revenue is in respect of the Posts, Telegraphs and Telephones collections. I think the increase of £79,000 under this head is one of the most gratifying features of the situation. (Hear, bear.) The Post Office is always regarded as one of the most satisfying indicators of revenue, because it always responds more readily to the ups and downs of business than any other department. In the present instance we have every reason to be satisfied with the upward tendency of this barometer. Each head of the Department s revenue shows a striking increase of revenue, and on the original estimate of £1,385,000, the receipts will probably amount to £1,464,000. Mining Revenue is the next item under consideration. My estimate of twelve months ago was £2,243,000; and the receipts promise to be £2,314,000, or an increase, as I have said, of £71,000. There is a shortfall of some £90,000 in the revenue derived from the gold mines, due to labour troubles and unforeseen difficulties which have arisen, but this deficit or shortage in the gold mines’ revenue has been counterbalanced in the yield from the diamond mines; and there has been a marked improvement, both in the demand for, and the market prices of, diamonds—(hear, hear)—and, of course, the Treasury has benefited from that. The next head of revenue which shows an increase is transfer duty. This head shows an increase of £94,000 over my estimate of last year, which was £366,000. It is almost an impossibility to make a close estimate of transfer duty; and the only safe course to take is to take the average for a period of years. I did that last year, and owing, no doubt, to the expansion generally of the country, the amount has been exceeded.

Now, sir, as hon. members are aware, the Public Debt Commissioners’ Act, passed last year, provides that the ascertained surplus of each year shall be handed over to the Commissioners for the purpose of redeeming debt, so that there can be no question as to what shall become of this surplus of £446,000. In terms of the law, so soon as this surplus is ascertained, that sum will have to be handed over to the Commissioners, and applied for the purpose of relieving debt. (Hear, hear.) I am sure that that provision is a wise one. (Hear, hear.) So much for the revenue account for the current year. I now come to the position of the loan account. I said a few minutes ago I intended to deal with it as for one stage, for the whole period of twenty-two months. The Loan Appropriation Act, passed last year, provided for a total expenditure to the end of the current year (1910-12) of £5,365,000. According to the latest returns, the actual expenditure for that period will not be more than £4,944,000, showing a decrease as compared with my estimate of £419,000. The loan votes primarily responsible for this decrease are public works and buildings, £85,000 ; irrigation, £217,000 ; local works and school loans, £58,000; and land banks, £26,000. Well, having regard to the fact that this estimate covers a period of twenty-two months, I don’t think that the variation of less than 8 per cent., as compared with the first forecast, calls for any special comment, especially when it is borne in mind that the variation involves a decrease of expenditure. Before I proceed to make a forecast of revenue and expenditure for the coming period, I should like to refer to some matters that are of general interest. The House may remember that last year I called attention to many inequalities in taxation in the various Provinces, and I expressed the opinion that the only safe and practical course was to decrease these inequalities gradually, so as to prevent a financial upheaval. Well, last year, in pursuance of that plan of proceeding gradually, Parliament passed the Stamp Duties Act, to make the stamp duties leviable throughout the Union uniform. That policy established a uniform system of mining taxa tion, and we applied the principle of the Cape cigarette tax to other parts of the Union. In furtherance of the same object, we did not reimpose the Cape income tax, and we also repealed the Cape medicine tax and suspended the poll tax in Natal. During the present year I hope to bring about uniformity in two other important fiscal matters, namely, in the estate and succession duties law and the law relating to land banks. (Hear, hear.) The object of the estate duties law is not so much to get additional revenue, although I believe in time, under the scheme I am going to submit to the House, it will make a considerable addition to the revenue as to bring about uniformity

To-day the laws of the four Provinces vary very considerably. Three of the Provinces have a system of succession duties. The succession duty in the Cape ranges from 3 per cent. to 15 per cent., and in the Free State and Natal it ranges from 1 to 5 per cent. In the Transvaal there is no succession duty at all, but a much more scientific duty, calculated upon an entirely different basis. Well, sir, the Bill, which has already been published, should remove all these inequalities, and will introduce a uniform system of taxation under this head. Another matter to which I referred last year, in which striking anomalies in taxation exist, was the matter of native taxation. I should have liked to have seen this matter brought up and dealt with during the present session of Parliament, and to have seen some uniform and equitable system of native taxation imposed throughout the Union ; but I am afraid we have already too much hay upon our forks. I also called attention last year to the striking anomalies which exist in the Excise Law. These anomalies, of course, ought to be swept away, and we should have a uniform Excise Law introduced for the whole Union ; but I think hon. members will agree with me that the question of Excise is very closely bound up with the question of the Customs tariff. It is almost impossible to deal with the one without the other. Well, a few days ago, the Minister of Commerce and Industries made an announcement on behalf of the Government, from which the House was given to understand that it would not be possible to deal with this question this year, and it is proposed therefore that the question of Excise shall also stand over until the Customs is dealt with. Besides these inequalities in taxation, there are other matters which have invited the criticisms of the public during this year—the transfer duties and licences on trades and professions; but in view of the recommendations which have been made upon the subject of transfer duties of other licences by the Financial Relations Commission, it will not become necessary for this House to deal with these subjects, except in so far as it may become necessary to deal with them for the purpose of giving effect to those recommendations. I shall refer to this question of the Commission’s report later on, and announce to the House what the proposals of the Government are with regard to that. Well, sir, it has frequently been alleged against us that we are making too slow progress in the direction of co-ordinating our existing laws ; but I think, and anybody who goes through a list of the fiscal measures to which I have referred will admit, that the Government has moved a long way in bringing about uniformity in the matter of taxation. (Ministerial cheers.) Well, this brings me to a very interesting topic, namely, the financial effect upon the Treasury of the various fiscal changes to which I have referred. I have often beard the question asked “Where are the economies and where are the financial benefits which the people of South Africa were led to expect from Union?”

In the first place, it must be remembered that the economies which inevitably will result from the union of the staffs of the four Colonies can only be brought about gradually, and obviously it will be impossible to see any marked reflection in the early days of the Union on the Union Estimates so far as these economies are concerned. It must not be forgotten that since Union there has been a considerable expansion all round and that this necessitated very large and increased expenditure. But quite apart from these two factors, let me remind our critics of what financial results have been achieved since Union. First of all, the Income Tax in the Cape has been discontinued, with a consequent loss to the Treasury of £280,000 a year. The repeal of that small but irritating patent medicines tax involved the Treasury in a further loss of £10,000 or £12,000 a year. The Treasury resumed the burden of some £180,000 per annum in respect of the Sinking Fund of the Cape, which had been suspended. The suspension of the Natal poll tax involved the surrender of about £100,000 a year. Again, there is no doubt that very considerable relief was accorded to three out of the four Provinces, and especially to the Cape, by the passing of the Stamp Duties and Fees Act of last year. Furthermore, before the commencement of the present financial year a reduction in railway rates amounting to £465,000 a year was effected. This meant a relief of £570,000 to the Cape, £70,000 to Natal, and £25,000 to the Transvaal and Free State combined. Since that time further railway reductions amounting to £121,000 have been effected, making the total surrender £586,000. Hon. members can calculate for themselves to what extent each Province has benefited, but the point I wish to emphasise is that in consequence of these various surrenders of revenue and the assumption by the Treasury of liabilities means a difference to the Treasury and to the railways and harbours of £1,200,000 per annum. When it is borne in mind that the results to which I have referred have been achieved without the imposition of any new taxation, except in so far as the extension of the cigarette tax was concerned, I think that every fair-minded man will admit that this is no ordinary achievement—(hear, hear)—and that the critics are not justified in their criticisms.

I will now refer to the financial adjustments which the Government intend to place before the House as the result of the proposals of the Financial Relations Commission, Since Union lump sum grants have been made by the central Treasury to the four Provinces in order to enable them to perform the services committed to them. These grants were made under the South Africa Act and pending the completion of the report of the Financial Relations Commission. But there was no fixed principle upon which the size of these grants was determined. The grants for the ensuing financial year are also based on no fixed principle, and I hope that this will be the last occasion that this Parliament will be asked to vote money to any Province unless on some sound and fixed principle. (Hear, hear.) The report of the Commission has now been made, and I regard it as one of the most important documents that this House will be called upon to consider. Although all the recommendations of the Commission may not find acceptance in all quarters, I ventue to think that on the whole the scheme submitted by the majority of the Commissioners is the one that will find most general acceptance. At all events, that is the scheme which the Government has taken as the basis of the proposals they intend to lay before the House. At the same time it is impossible to disregard the care and attention which the Minority Commissioners have bestowed on their reports, and I am sure the House will agree with me in expressing its approval of the very valuable contribution which the two gentlemen who signed the Minority Report have made. I want to take advantage of this opportunity of acquainting the House with the action which the Government has taken, and which the Government proposes to take, on the Financial Relations Report. I shall also refer to the legislation which the Government intend to introduce in order to give effect to that report. I am glad to be able to say that as a consequence of a conference which the Government has had with the Provincial Administrators and their officers recently, a tentative understanding has been arrived at, and I hope that that tentative understanding will form the basis of an agreement to regulate the financial relations between the Union and the Provinces. This understanding, which is subject to the consent of Parliament, is based mainly on the recommendations of the Majority Report, but there are some modifications—some of an important character—which the Government have deemed It necessary to make, in order to meet the exigencies of the present case. I shall now tell the House what the tentative basis of the agreement is between the Government and the Provincial Administrations. As a preliminary it has been accepted by all parties that each Provincial Administration should be wholly and solely responsible for all expenditure on the services which may be administered by it. (Hear, hear.) That is the first principle.

In the second place it is proposed to apply the wholesome £ for £ principle in assessing the subsidies which the Union Treasury shall grant to these Provinces. This is really the vital and essential feature of the whole arrangement—the £ for £ principle—and it is based upon the conclusion of the Majority Report, a conclusion which, I think, cannot be challenged. The Majority Commissioners say: “One of the most salutary principles of a sound system of public finance is that any authority which is entrusted with the expenditure of public money should also be charged with the direct liability for raising either the whole or a substantial portion of the revenue required to meet such expenditure.” Those are the words of the majority of the Commission, and they go on to say: “When funds are raised by one authority and disposed of by another, the sense of responsibility, by which the latter should be guided and which constitutes a most valuable protection for the taxpayer, is almost inevitably weakened. It is only when the power to spend is controlled by the liability to provide the necessary funds that efficient and economical administration can be secured. The reciprocal action of these two influences tends to discourage extravagance and to ensure that good value is obtained for all the expenditure incurred.” Well, sir, this brings me to the question of the resources of the Provinces which will be made available to them for meeting their 50 per cent of the liabilities. The Government propose, following the recommendations of the Majority Report, that the following sources of revenue should be transferred to the Provinces: firstly, licences in general, saving those mentioned in paragraph 42 of the Majority Report, which should be retained by the Central Government. It is not proposed, sir, to include liquor licences in the category of transferred functions, as advocated by the Commissioners, but rather to preserve to the Union the full legislative responsibility for liquor licences —(hear, hear)—and merely to assign to the Provinces the revenues derived from liquor, licences. The intention is that the Union Parliament should continue to legislate in this important subject of liquor licences, but the proceeds of liquor licences would be assigned to the Provinces. (Hear, hear.) It is also proposed to transfer auction dues. Transfer duties will also be transferred, education fees, except in the case of the Cape Province, where these fees are really paid to the School Boards, and hospital fees, and to assign to the respective Provinces the proceeds of the following revenues: Pass fees payable by employers of natives, which are not recoverable from the natives themselves, liquor licences, and Indian pass fees in Natal. These three last-mentioned licences are to be assigned. If the Provincial authorities desire to supplement their sources of income by means of direct local taxation, as contemplated by the Act of Union, they will, of course, be allowed to do so, and for every pound so raised to meet Provincial expenditure the Treasury will be liable to subsidise them by an equivalent amount. So far I have only discussed the proposals for regulating the current or normal expenditure of the Provinces. The capital or nonrecurrent expenditure will be dealt with on similar lines to those recommended by the Majority Commissioners.

Then, sir, I come to another very important subject, and that is the question of the transfer to the Provinces of additional-functions. It is proposed to take powers in legislation which the Government intends to introduce in certain circumstances to transfer to the Provinces certain services for the administration for which the Central Government is at present responsible. I allude to such matters as legislation dealing with shop hours, half-holidays, general dealers’ licences, and similar licences, also the control of industrial institutions, libraries, museums, agricultural shows, etc. But, of course, hon. members will understand that the £ for £ principle will also be applied to each of these further functions which may be assigned to the Provinces. That, sir, is briefly the scheme which the Government intends to ask Parliament to sanction, but I should like to quote some figures to show how the Treasury will emerge from this financial transaction, if effect is given to it, and I also want to explain in what respect the Government has departed from the recommendations of the Majority Report. Hon. members who have read the report of the Financial Relations Commission will remember that, in the absence of more up-to-date figures, they state what would be the effect of the Commissioners’ proposals on the basis of the 1910-11 Estimates. Since that report was issued, it has been possible to make a similar calculation on the basis of the estimated figures of revenue and expenditure for the coming year. I will give a summary of the results obtained upon the basis of these later figures. Dealing first with the Cape Province, and taking account of the amounts annually raised by local authorities in the Cape, which the Commissioners put at the sum of £500,000 a year, we obtain the following result: These figures are upon the basis of the 1912-13 Estimates, the normal or current expenditure of the Cape will be £1,400,000. To meet that expenditure, there will be the £ for £ grant by the Treasury, a sum of £700,000. The revenues transferred and assigned to the Cape will yield to the Cape Province a sum of £388,000, leaving a net deficiency to be met in the Cape of £312,000 These figures, of course, are per fiscal year The corresponding figure of deficiency in the financial relations estimate was £296,000. So hon. members will see that the later figures bring out the Cape at approximately the same amount of deficiency.

The Natal figures, also based on the Estimates of the coming year, work out as follows: For normal or recurring expenditure, £418,000 ; £ for £ contribution made by the Treasury, £209,000; revenue transferred and assigned to Natal, £122,000; net deficiency in the case of Natal, £87,000. The Transvaal figures are as follows: Normal or recurring expenditure for 1912-1913, £1,178,000; £ for £ contribution made by the Treasury, £589,000; revenue transferred and assigned to the Transvaal, £447,000; net deficiency in the Transvaal, £142,000. For the Free State, the figures are as follows: Normal and recurring expenditure, £390,000; £ for £ contribution made by the Treasury, £195,000; revenue transferred and assigned to the Free State, £147,000; net deficiency for the Free State, £48,000. It will be seen from the figures which I have given that the position of the Cape and the Transvaal, on the basis of 1912-13, will be very much as brought out by the Commissioners, while the Free State and Natal are considerably worse off. Well, these figures which I have quoted were submitted to the heads of the Provincial Administrations when they were in Cape Town recently, and, by common consent, it was agreed to take the figures of 1912-13 as the basis of any agreement that may be arrived at in the future. Well, sir, I may say that from the outset the Government recognised chat it would be hopeless to ask any of the Administrators to go back to their Provinces and to tell their Provincial Councillors that, as one of the first acts of the Union, they would have to tax themselves. That the Government felt to be a perfectly impossible proposal to impose upon them. Well, sir, hon. members may perhaps think that it was unwise not to insist upon the Provinces taxing themselves, but I feel sure that, upon further reflection, hon. members will agree that the action of the Government was wise. Well, sir, that being so a way had to be found out of the difficulty, without, of course, impairing the right of the proposal of the £ for £ contribution. The situation was further complicated by the fact that the Free State Administrator and his Executive strongly insisted as a condition that the Free State should be placed in such a position as to be able to reduce her transfer duty—which is 4 per cent.—to a lower figure. Well, sir, after much discussion, it was provisionally agreed eventually to depart from the recommendations of the Majority Report to the following extent. In the case of the Cape, it is proposed to transfer certain native fees, £4,000, to the Province of the Cape. The net effect of this arrangement, if it is approved of, will be that the Cape Province will come out of this deal with a surplus of nearly £200,000. It will be seen, therefore, that the Cape Province reaps an enormous advantage from these proposals if they are passed. (Cries of “No, no.”) Well, sir, as regards Natal, it is proposed to assign to the Provincial Administration the revenue derived from the Indian tax, which is estimated to yield £10,000. On the basis of the 1912-13 Estimates, this will reduce the Natal deficiency to £77,000. To meet this, the Government recommends that for a period of ten years the Treasury should make a special grant of £80,000 per annum to the Natal Province, that is, in addition to the £ for £ contribution. Parliament will decide if this subsidy is to be continued after the expiration of the ten years. As regards the Transvaal, it was agreed to assign to the Province the whole of the pass fee collections in respect to natives in labour areas. The Commissioners, it will be remembered, recommended that only half this sum should be granted. On the other hand, it was agreed that the Government should abstain from transferring the totalisator fees of the Transvaal Province, as it was safer that the responsibility for this matter should remain in the hands of the Union Government. The net result of the adjustment on the basis of the 1912-13 Estimate will be to give the Transvaal a small surplus of £5,000, in the place of a deficiency of £142,000. As regards the Free State, which, according to the figures of the 1912-1913 Estimate, is faced with a deficiency of £48,000, which from various causes will be increased to £67,000, the Government recommends that a special grant of £67,000 should be made to the Free State. That, sir, is the result of the Conference with the heads of the Provincial Administrations, and the Government intends to introduce legislation during the present session, so that hon. members will have ample opportunity of discussing and criticising the proposals of the Government for the settlement of this thorny subject. I may say that it is the intention of the Government, if these proposals are adopted, that they should date from April 1. 1913. I will now deal with the Estimates of Revenue and Expenditure for the coming year. Since our financial dispositions are necessarily dependent on the allocations that have to be made, I propose first of all to discuss the expenditure estimates of the year. Hon. members have had plenty of opportunities of studying the Estimates, which have been on the table of the House since the first day of the session, and they are aware from these Estimates as to what are the intentions of the Government. In pursuance of the policy which was laid down by the House last year a section of these estimates has been referred to the Public Accounts Committee. I am bound to confess that last year when this practice was introduced of interposing the Public Accounts Committee between this House and the Government, I was very much concerned as to the wisdom of setting up such a practice.

But I want to say now, sir, that I am strongly inclined to alter the views that I then had—(hear, hear)—because the experience that I gained during the last twelve months—experience gained largely upon what took place in the committee upstairs—satisfied me that the committee is a source of great strength to the Treasury, and prevents and checks extravagance. (Hear, ear.) Well, sir, the ordinary expenditure for the approaching year is placed at £16,782,000, a decrease of £108,000 on my Estimates for the current twelve months, which aggregated £16,890,000. Now, sir, I see it contended that this is not a very great reduction on the Estimates for 1911-12, but what I would like to impress upon the House is that it is absolutely incorrect and misleading to describe the difference of £108,000 as the measure of the economy which has actually been effected by the Government. In fairness to the Government, there must be added to this sum of £108,000 a considerable amount of projected expenditure, which is either entirely new or due to expansion. Of such description are the following items: £45,000, increase in the Printing Vote, due to the South Africa Act; £100,000 on the Defence Bill, which is new expenditure; £95,000 on the Police Vote, due to an increase in the establishment and the cost of providing a more satisfactory system of providing horses for the mounted men; £42,000 on the Pensions Vote, owing largely to the unfortunate and unavoidable necessity for reducing salaries ; £51,000 on the vote for Posts and Telegraphs, due entirely to the expansion of the Department—these figures making a total of £333,000 ; so that, as I have said, in order to make a true comparison of that expenditure you must add that sum to the difference of £108,000 ; or a total decrease of over £400,000 as com pared with the Estimates of Expenditure for the previous year. It is true, sir that the Government will have to present Supplementary Estimates before the session closes, but these will be relatively small, and will still leave a very handsome balance in favour of the new year. Perhaps the most striking satisfaction that one derives from a scrutiny of the Estimates is the wholesale reductions in the establishment that have been effected. With the exception of such Departments as the Police, the Posts and Telegraphs, and Irrigation, which must expand to meet the imperative need for development, the great majority of votes for the new year show a considerable decrease in salary charges, and the aggregate is a considerable saving, but it is considerably discounted by the increased charge on the Pensions Vote. I think, sir, that the acknowledgments of the country and of this House are due to the heads of Departments and the others who are largely responsible for these economies. Nearly half of the gross saving is contributed by the Agricultural Vote, for which my right hon. friend the Prime Minister: is responsible—(hear, hear)—and to him and those associated with him in effecting these reductions I wish to tender my especial thanks. The task of cutting down expenditure has not been a pleasant one ; on the contrary, it is difficult to imagine a more distasteful or a more painful one, but it had to be done. Parliament and the country insisted upon it. But I am bound to say that it is not very encouraging that the only response to the savings effected in many departments has been unrelenting opposition and criticism where we might easily have got sympathy. Well, sir, I hope that the time is not far distant when the Government will be in a position to announce definitely that the era of retrenchment is over and done with.

The only other point of a general character in expenditure for the new year upon which I want to touch is the grading of the public service upon uniform lines. The scales of salaries published in the Estimates are those which the Government have made up their minds are the most appropriate for the unified public service. In coming to this decision, the Government were fortified in their decision by the recommendations of the Public Service Commission, whose remaining reports should be available before the House has made much progress with the Estimates. But at the same time I should make it clear that the Government has not always seen eye to eye with the Commission regarding either scales of pay or strength and classification of establishments. A good deal has been made, sir, of an alleged injustice to public servants through the fixing of their posts or emoluments lower than the scale of emoluments at the date of Union ; and it has even been urged that the Government has committed a breach of section 144 of the South Africa Act, which preserves the existing and accruing rights of these officers. Let me say at once, sir, that there, is not an atom of foundation for these allegations. (Hear, hear.) It has already been stated by Ministers, both inside and outside of this House, that the rights of these officials have been invariably respected ; that no officials taken over from the various Colonial services are being obliged: to accept a lower rate of remuneration than, before Union; that the incremental privileges that they enjoyed at the date of Union are being preserved to them, and that where the new salary scale attached to any post is lower than the existing salary of the present incumbent, such scale does not apply to the present holder of the post. I hope, sir, that this explanation will effectively dispel any doubts or misapprehensions that may still exist on the subject. But I suppose that what the House really desires to know is what I estimate the revenue of the coming year to be, since it is upon the revenue forecast that our financial policy for the new year must he framed. The ordinary expenditure, as the draft Estimates show, amounts to £16,782,000. The revenue for the same period, including the Railway Fund contribution, I estimate at £16,112,000, giving an estimated deficit for the new year of £670,000; That is the position in a nutshell. How, sir, let us see how this revenue estimate compares with the actual collection for the current year. The current year’s collecting, as I intimated earlier this afternoon, should not be less than £17,033,000, so that I am really budgeting for a revenue during 1912-13 which is less than the receipts for 1911-12 by £921,000.

Now, it will be asked at once: “What the reason for this shrinkage of £951,000?” Well, I may say at once that this shrinkage is mainly due to a reduction of the contribution to be received from the Railways and Harbours Fund for the year ending March 31 of this year. The Treasury draws from that source this year the sum of £1,169,000, hut next year I am only asking for £500,000, so that on this head alone the Treasury Joses £659,000. I should like to remark that by accepting a reduced contribution from the railways next year I am giving up £293,000 more than I am actually obliged to surrender under the automatic arrangement the House approved of last year. Under that scale I was entitled to £793,000 during 1912-13, but I thought it would be in the best interests of the country, and afford a substantial proof of our desire to give effect to the provisions of the South Africa Act if I w.as to hand back to my hon. friend (the Minister of Railways and Harbours) the sum of £293,000, so as to enable him to make further reductions m the railway rates. (Cheers and laughter.) Customs, sir, is another head of revenue which shows a decrease for the coming year as compared with 1911-12. I am estimating upon a yield of £4,405,000 during the new year, as against a probable recovery of 4½ millions for the year 1911-12: a decrease of £95,000. I consider it best to be cautious in forecasting the revenue from this source. I reminded the House, earlier this afternoon of the warning uttered last year by leading members of the industrial and commercial community respecting the check that seemed to be impending in the volume of the country’s importations. No doubt the same warning holds good to-day also. Therefore, I think I am justified in being cautious in regard to the Customs revenue. Perhaps a few statistics of last year would not come amiss at this stage. These statistics are, however, frightfully dry ; but I see that all my predecessors made a great feature of them. The imports for 1911 total £38,035,000, as against £39,940,000 for the preceding year; a decrease of £905,000. But this decrease is more apparent than real, and does not actually betoken any contraction in our purchasing power. As a matter of fact, it is due entirely to a decrease of Government importations and specie. The business communities actually increased their importations by £945,000 during last year. The increases in commercial importations are most noticeable under the following heads: Apparel and slops, £2,722,000, an increase of £317,000 ; cotton manufactures, £2,993,000, an increase of £225,000; butter, £250,000. an increase of £23,000 ; furniture, £695,000, an increase of £123,000; cheese, £144,000, an increase of £10,000 ; confectionery, £290,000, an increase of £53,000; preserved fish, £241,000, an increase of £33,000; preserved meats, £486,000, an increase of £95,000 ; condensed milk, £405,000, an increase of £54,000; sugar, £465,000, an increase of £74,000 ; glycerine for manufacturers, £531,000, an increase of £127,000; tobacco, cigars, and cigarettes, £189,000, an increase of £25,000 ; vehicles, £788,000, an increase of £176,000; woollen manufactures, £892,000, art increase of £53,000. These are only a few of the articles which show an increase upon the previous year’s importations ; but I think that the satisfaction which we feel at this unmistakable evidence of increased prosperity of the country is tempered by the knowledge that many of these commodities should not only be produced in this country in sufficient quantities to supply the whole Union, but should figure largely in the figures of the exportations.

I must confess that it comes as a surprise to me to find that, as compared with the already large figures of 1910, we are increasing our importations of such articles as cheese, preserved fish, preserved meat, condensed milk, sugar, and tobacco, cigars, and cigarettes. The farmers in this country should derive encouragement from these figures, since they show what a valuable market there is at their very doors for the fruits of their labour. (Cheers.) I am not making out a case for increased protection. Far from it, for there is unmistakable evidence that our local products are expanding in volume, side by side with a larger importation, and are finding an increased and a profitable market within the Union. It is simply a case of the demand outstripping the supply. (Ministerial cheers.) There are, however, on all sides, indications that the near future will show a marked improvement in the local production of many of the commodities which I have mentioned. Rapid progress is being made in butter and cheese making—(cheers)—and the sugar industry in Natal was never so vigorous as to-day. Among the decreases in importations are: Corn, grain, and meal, £1,285,000, a decrease of £309,000; candles, £32,000, a decrease of £33,000 ; and soap, £187,000, a decrease of £30,000. There can be no doubt that the importation of candles is decreasing very rapidly, and that soap, exclusive of the higher qualifies, is also rapidly being manufactured locally in sufficient quantities to satisfy the Union consumption. The large decrease of £309,000 in the importation of corn, grain, and meal is also, of course, due to largely increased local production—(cheers)—a very satisfactory sign. Turning now to exports, the total value of our exports for the year 1911, including diamonds, raw gold, and specie, was £57,308,000 as compared with £54,000,000 for the preceding year—an increase of £3,308,000. (Cheers.) The great bulk of this increase is due to the increased production and export of raw gold. To obtain a comparison of how our industries, other than gold and diamond mining, are progressing, we must deduct the values of gold, diamonds and specie. This leaves the following comparison of the exports: 1910, £13,339,000; 1911, £13,678,000, an increase of £339,000. Considering our resources this is not as satisfactory as one would wish. Among the export items showing notable increases are bark, £290,000, an increase of £71,000; coal, £1,079,000, an increase of £93,000; copper, £574,000, an increase of £95,000; fruit, £46,000, an increase of £11,000; whale oil, £96,000, an increase of £35,000; tin, £245,000, an increase of £69,000 ; tobacconists’ wares, chiefly calabashes, £27,000, an increase of £16,000; wool, £3,900,000, an increase of £69,000. Among our articles of production which show a marked decrease in exportation are, blasting compounds, £14,000, a decrease of £11,000 ; the maize exports for 1911 were, £403,000, a decrease of £290,000—(An HON. MEMBER: “Oh!”)—hides and skins, £1,212,000, a decrease of £74,000; sugar, £3,000, a decrease of £30,000.

With regard to the decrease in the export of blasting compounds I am informed that it is more apparent than real—that it is due to a shipment for the 1911 account having been despatched just before the close of the previous year. When I first saw the figures I was afraid that the decrease might be due to the Customs duty levied on our explosives by the Commonwealth of Australia wherein our goods have found a modest market, and I was therefore re-assured to find that the trade with Australia during 1911 was about the same as for 1910. (Hear, hear.) Incidentally, I may remark that negotiations are still proceeding with the Commonwealth authorities regarding the extension of the reciprocal trade relations between the two Domiions so as to include South African dynamite. (Hear, hear.) Under present arrangements our dynamite does not receive any preference. Earlier in the year, the Commonwealth Government, in a telegram to the Prime Minister, announced that they proposed to consider this question at an early date. We have not yet received an intimation of the decision arrived at by the Commonwealth authorities, but the matter is being kept in view. If we succeed in our efforts the explosives industry should derive a very considerable advantage. Posts, telegraphs and telephones is another head of revenue upon which I wish to offer a few remarks. The expansion in this branch of our activities continues unabated, and I estimate the total collections for 1912-13 at £1,498,000, as compared with a probable yield for 1911-12 of £1,464,000; an increase of £34,000. It has been customary in the Budget statement to quote statistics of the work of the Postal. Department, but although I have a quantity of most interesting information, illustrating the astonishing growth of the administration, I am afraid that I must omit them on this occasion. I should only be occupying the time of the House too long. Any hon. member who desires to acquaint himself with them in detail can do so by a reference to the annual report of the Postmaster-General. But I should like to call attention to the fact that, on a purely cash basis, the Department very nearly pays its way. The estimated figures for the year 1912-1913 are, revenue £1,498,000, and expenditure £1,536,000, a shortage of £38,000 for the year. On the other hand, taking account of the services rendered to and by the Department without payment being required, and of interest on capital, the shortage is increased to £124,000.

The next head of revenue which I wish to mention is mining. The yield for 1911-1912 will be in the neighbourhood of £2,314,000, and my estimate for the coming twelve months is £2,261,000, a decrease of £53,000. Perhaps a few figures respecting the progress of the gold mining industry during the year 1911 will not be out of place. The ore crushed amounted in round figures to 25 million tons, which yielded 8¼ million ounces of gold—equivalent in value to £35,000,000. The profits amounted to £11,800,000, and the sum distributed in dividends to £8,023,000. Comparing the yield of the tax on gold mining profits for the year 1911—£1,015,000 —with the figures just mentioned, the burden represented by the tax works out as follows: Per ton of ore, 9¾d. ; percentage of profits, 8.6; percentage of value of output, 2.9. If this tax, instead of being secured by the Treasury, had been paid away to shareholders, they would have received £9,038,000, as against £8,023,000. The tax, therefore, represents a stoppage of 9.1 per cent. on dividends. The gold production during the past calendar year shows an increase of roughly £3,066,000 over the previous year. The figures are: 1911, £35,147,000 ; and 1910, £32,082,000. The increase is principally due to new producers.

Apart from gold, the mineral production of the Union repays a careful study. The figures are: 1911, £11,940,000; 1910, £11,010,000, an increase of £930,000. The details are as follows: Diamonds, 1911, £8,747,000; 1910, £8,101,000; coal, 1911, £1,942,000; 1910, £1,867,000; copper, 1911, £556,000; 1910, £447,000; tin, 1911, £415,000; 1910, £326,000 ; other base metals (including salt), £280,000 in 1911, and £239,000 in 1910. The increased value of the output of diamonds during 1911 was due to the rise in the price of stones, for the number of carats fell from 5,457,000 to 4,892,000, while the average price rose from 29s. 8d. to 35s. 9d. per carat. The Cape production of diamonds accounted for 63 per cent, of the total value, while the Transvaal and Free State each contributed half of the remaining 37 per cent. The outlook of the diamond trade, at the present moment, is encouraging, prices being good and disturbing elements absent.

The coal production showed a steady if not remarkable increase during the year. While the value of the coal produced in the Union may seem small compared to the total value of minerals, it need hardly he pointed out that its importance cannot be measured by its money value, since, without coal, probably the major portion of our mineral production would cease to exist. (Hear, hear.) The shipments of copper during the year showed an increase, which is due entirely to an advance in production from the Cape mines. In the Transvaal, the shipments have receded, but this probably only temporarily, as the output from the Messina mine, the only producer, may be expected to improve considerably when the railway to the mine is complete. The shipments of tin have risen by nearly £100,000 in value during the year. Here are some more interesting figures. The total value to December 31, 1911, of the principal minerals produced in South Africa is approximately: Gold, 325½ millions ; diamonds, 160 millions ; coal, 23½ millions ; copper, 9 millions; and tin, 1¼ millions. With these figures before one it is unnecessary to emphasise the extent to which the Union has been and is indebted to minerals for its progress and prosperity. During December, 1911, our minerals were giving direct employment to 31,700 whites and 259,600 coloured persons.

The only remaining head of revenue I wish to discuss is the question of Interest. Under this head is included interest paid to the Treasury by the railways and harbours. The interest receipts for 1911-12 are £3,265,000, and the estimate for next year is £3,294,000—an increase of £29,000. At the present moment the Administration is paying the Treasury interest at 3½ per cent, on an assumed capital of £81,225,000. This is, however, only a provisional agreement come to between my hon. friend, the Minister of Railways and Harbours, and myself, pending & decision on the question of the capital at the date of Union upon which the Administration is liable for interest. The Treasury’s claim is for interest on a capital amount as at May 31, 1910, of £88,596,000. If, therefore, the Treasury’s claim be upheld, the Railway and Harbour Fund will have to make good to the Treasury an amount reckoned at £258,000 per annum from May 31, 1910. There the matter remains, but I hope that it will be finally settled during the present session. The Select Committee on Public Accounts will doubtless take evidence upon the subject and bring up a report. In the meantime, I do not think matters can be carried any further. I should like to say, however, that apart from the particular merits of the Treasury’s claim there is a feature of the case which cannot be entirely overlooked. I refer to the fact that, under section 127 of the South Africa Act, the Railway and Harbour Administration is entirely relieved from making any contributions to sinking funds in respect of that portion of the public debt which is applicable to railways and harbours. (Hear, hear.) The entire liability for finding the contributions falls upon the Treasury, and at the present time involves an annual payment of, roughly, £37-0,000. That concludes my remarks concerning the revenue of the new year.

To recapitulate the forecast of 1912-13, revenue and expenditure: We have seen, that the revenue is placed at £16,112,000, and the expenditure at £16,782,000, leaving a deficit of £670,000. Now we have to consider how this deficit is to he met. Well, sir, I stated earlier in my speech that there was a balance of £855,000 in the Consolidated Revenue Fund, brought forward from the financial period 1910-11—a balance that was not payable to the Public Debt Commissioners—but was still available for appropriation by Parliament. I propose that this balance should be drawn upon to supply the deficiency. This would still leave available for appropriation a balance of £185,000, against which there will be the liability for the Supplementary Estimates that the Government will have to present in respect of the year 1912-13. While it is no doubt gratifying to find that we shall probably be able to square accounts during the coming year, the House should carefully remember how this result has been achieved. If we look the facts squarely in the face, what do we find? We find that by utilising a credit balance of £855,000 brought forward from 1910-11, and taking credit for a contribution of £500,000 from Railway revenue, we can square the account of the approaching year. In other words, if we had not this nest-egg of £855,000 to fall back upon, and if we were unable to draw upon the Railways, we should be faced with a deficit of £1,170,000, which could only be provided by new taxation.

The fact is, Mr. Speaker, that we cannot continue to give up revenue with both hands and still manage to square our accounts. As I have shown earlier in the day, the Treasury and the Railways have both given up large sums; the Railways must give up further amounts of considerable magnitude if the provisions of section 127 of the Act of Union are to be complied with. Furthermore, there is every probability of a diminution of provincial taxation as a, consequence of the projected settlement with the Provincial Administrations—for which, of course, the Union Treasury will have to pay.

Now, Mr. Speaker, this generosity has its limits ; we cannot go on indefinitely giving up revenue and increasing expenditure without finding some fresh means of supplying the country’s requirements. And I am very much afraid that, what with increased loan charges and the growing cost of such services as the defence scheme, the end of the next financial year will find us in the unpleasant position of having to cast about for a means of supplementing our revenue.

To be more precise, I fear that my next Budget statement will foreshadow fresh taxation of some description. It would be wholly indefensible, of course, to impose any fresh burdens upon the country so long as there was a possibility of effecting further economies of administration, but I confess that I am unable to perceive how we can do very much more in the way of reducing public expenditure. The country is undoubtedly expanding, and the problem will be to check the growth of expenditure rather than to diminish the present rate of our outgoings.

There are still one or two matters I want to touch upon. The first of these matters is the loan expenditure during 1912-13. From the Loan Estimates laid upon the table this afternoon it will be seen that, in round figures, the loan expenditure for the new year is placed at £7,339,000, as compared with a probable loan expenditure, during the current year, of £3,600,000, an increase of £3,759,000. This increase arises principally on the following votes:—

As these are all reproductive services, I do not think the House will take exception to the increases. As regards the last three votes—i.e., lands, irrigation, and land banks—the provision made now represents the funds that will be required for the year, in pursuance of the legislation now, or shortly, to be placed before Parliament. With regard to finding the money towards meeting this somewhat substantial programme, I should point out that, according to the audited figures, the amount of loan moneys held by the Treasury at the commencement of the current fiscal year was £1,195,000. The moneys borrowed during the past year amounted to £3,143,000. The recoveries on loan account during the same period should yield £205,000—so that the total loan moneys made available to the Treasury for loan expenditure during the year 1911-12 amount to £4,543,000. The expenditure during the year will be approximately £3,600,000, so that we should start the year 1912-15 with a cash balance on loan account of some £943,000. Coming now to the receipts and issues on the new year’s loan account, I estimate the loan recoveries during 1912-13 at £370,000, which, with the cash balance of £943,000 carried forward from 1912, gives a sum of £1,313,000. Our expenditure during 1912-13 is estimated at £7,339,000; so that we shall have to raise a further sum of £6,026,000 to meet our projected loan commitments for the ensuing financial year. We will commence the new year with unexhausted borrowing powers under the Public Works Loan and Floating Debt Consolidation Act, amounting to £6,640,000, and, therefore, it will not be necessary to ask Parliament to grant further borrowing powers during the present session. My statement would not be complete without a reference to the Public Debt of the Union. Our debt at the time of Union was £116,037,000. During the ten-month period ending March 31, 1911, no additional loans were raised, but, on the other hand, the Debt was reduced by £1,800,000, including the surplus revenue at the date of Union, £1,477,000. At the commencement of the present year, therefore, the Union Public Debt stood at £114,237,000. The year’s liability stood for interest on this capital sum at £3,877,000. Thus our annual interest has an average rate of 3.393 per cent. The sinking fund accumulations on the same date were £5,055,000. During the present year the only loan raised which the Government raised in the open market was one of £2,000,000, required for certain Cape of Good Hope 4½ per cent. debentures, secured on July 1 last. The loan was obtained in London, on Treasury bills, discounted at the rate of 3¼ per cent., an extremely favourable rate. The bills mature on the 31st March, when they will be renewed for a further period of twelve months. Owing, however, to the stringency on the money market, caused by labour troubles, the rate of discount has advanced by ½ per cent. This still leaves an amount of ¼ per cent, as compared with the interest payable on Cape debentures. The public debt vote in the new year’s Estimate shows the various descriptions of loan liabilities at date. I may say, however, that the vote does not include provision for the renewal of the Treasury bills, amounting to £2,000,000. Provision will have to be made in the Supplementary Estimates for this service.

There is an important question arising out of our public debt liability which I feel I must touch upon. I refer to the doubts which have arisen in relation to the currency of what are known as Cape of Good Hope stock or perpetual annuities. These securities were issued under various statutes of the Cape of Good Hope Parliament passed, between 1869 and 1886. The total issues were of 4½ per cent, stock £492,000, and 5 per cent, stock £749,000, making a total of £1,241,000. This amount, however, falls to be reduced by £178,000, being the amount of stock purchased by the Cape Sinking Fund Commissioners for the purposes of cancellation. At the date of Union, there was outstanding of the 4½ per cent, stock £482,000, and 5 per cent, stock £581,000, a total of £1,063,000. One-half of the outstanding stock may be said to be held by the public and the other half by the Government. Some months ago the Public Debt Commissioners refused to purchase a portion of these issues, which was offered to them at a high premium, and it was argued in certain quarters that this refusal was tantamount to a repudiation of liability on the part of the Government. There is, of course, no justification for such an assumption. (Hear, hear.) Neither in the Acts of Parliament authorising the creation of these perpetual annuities nor the conditions of issue nor in the certificates themselves is any date fixed for their repayment or redemption. I understand that the private holders of the stock contend, in the first place, that, inasmuch as no date was originally fixed for repayment of the capital, the stock must be regarded as irredeemable, and that the Government cannot pay off the capital unless the holders agree. In the second place, it is contended that the Cape Government always regarded the stock as irredeemable, and, therefore, that the Union Government is also bound to regard it on the same footing. It is also argued that, inasmuch as the Sinking Fund Commissioners of the Cape bought considerable quantities of the stock in the open market at considerable premiums, the Union Government cannot claim that the stock 3till outstanding should be surrendered at par. It appears to me that the first point to be determined is, what is the legal position of the stock? Is it, (because no date was originally fixed for redemption, irredeemable ; or must it be regarded and treated as irredeemable because of the action of past Governments? In order to ascertain what the legal position was, the Union Government obtained the opinions of counsel in Cape Town and Pretoria, and also from the official law advisers. The advice received by the Government is conflicting. One learned counsel advised that the stock is irredeemable and that stock-holders cannot be compelled to surrender their securities, while others give it as their opinion that the stock is redeemable at the pleasure of the Government, and could be redeemed by the Government at any time at face value on giving reasonable notice to the stockholders. I feel bound to say that although I have not been able to find any specific record to show that past Governments have represented the stock to be irredeemable, I think the action of the Sinking Fund Commissioners of the Cape in purchasing this stock in the open market at high rates of premium was calculated to create a belief that it could not be redeemed except at a premium. There is no doubt that many persons who hold the stock to-day were induced to buy at considerably above par value in the belief that it was irredeemable, and, of course, the Cape Parliament might be said to have shared this responsibility, since it provided the funds wherewith these purchases were made. In view of the circumstances, therefore, the Government consider that the matter is one that should be brought to the notice of the House. If it be definitely decided that the stock is redeemable, I think we should even then not insist upon our strict legal rights, but should treat the stockholders with consideration, and give them a fairly long period of notice before requiring them to surrender their stock. I think, also, that in such a case the question of allowing the holders some premium above the par value might be favourably considered.

With regard to the Government’s policy in relation to future borrowings, I might say that there is no immediate necessity for our going into the English money market. At the same time there is a matter to which the Government will soon have to give consideration. Two questions are involved—the funding of our floating debt and the provision of additional funds to meet our programme of capital expenditure. As regards our floating debt, the bulk of this is held by the Public Debt Commissioners. I am glad to be able to say that there is every reason to believe that arrangements can be made with the Commissioners for converting their holding in terms that will be satisfactory to both parties. The legislation passed last session gave the necessary authority to the Government for effecting such a conversion. With regard to the provision of additional loan moneys to meet current requirements, the Government have received assurances which point to the possibility of raising substantial portions of our requirements within the Union. (Hear, hear.) And as soon as I have an opportunity of going into the matter more fully, the experiment will be tried. (Cheers.) I am not in a position as yet to say what sum may be expected from this source. It is unnecessary to point to the advantages that accrue to the State from having a local issue. Moreover, the Treasury has under consideration at the present time a scheme whereby, with the co-operation of the Public Debt Commissioners, small denominations of our local stock may be made available to Savings Bank depositors and other small investors. (Hear, hear.) If this scheme proves a success, it will be a big source of strength to the country. (Cheers.) Before resuming my seat, I would like to say that the Government have every reason to believe that the policy for which it has been responsible since Union has been of the greatest benefit to all sections of the community. (Ministerial cheers.) The carrying out of their policy of land settlement on prudent and well-conceived lines will tend to the solution of many problems. The provision of a properly-organised land bank was another step in the same direction. Reductions on railway rates have already been effected, and additional reductions are in contemplation, which will afford much relief, and this, coupled with a substantial programme of railway construction, undertaken since Union, must hasten the development of our national resources. (Hear, hear.) I need not reiterate the extensive reductions in general taxation that have been effected by the Government, nor need I allude again to the consolidation of legislation that has taken place. I have said enough, I think, to show that since we came into office the Government have not been idle, but they have been responsible for a large number of measures that cannot fail to be for the permanent good of this country. As regards the future, the Government intend to go ahead surely, but without undue haste, with a policy which has for its objects the development on sound and permanent lines of the national resources of the Union, the stimulation of industries, and, in particular, of agriculture, which is destined to be the greatest asset we possess, and the administration of the country’s affairs on a sound, efficient, and economical basis. I beg to lay on the table the Estimates of Revenue and Expenditure for the year ending March 31, 1913. (Loud cheers.)

The Minister of Finance resumed his seat at 4.12.

On clause 116,

Mr. Meyler’s amendments, previously moved, were negatived.

On clause 117, security in case of loan, etc.,