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U70. r if . . . ,^..„ , - r >Ml li I l l , , „ „„ ,.,^^^^ p I ll 'iWillf>a'alr-r« MfeMiliiik III III I'lTi— irr ■ V Wi^Jli SPEECH ON THE BUDGET BY THE HON. SIR FRANCIS HINCKS, MINISTER OF FINANCE, CANADA, DELIVERED IN THE HOUSE OF COMMONS, OTTAWA, 7th April, 1870. OTTAWA : PRINTED BY HUNTER, ROSE & COMPANY. 1870. SPEECH ON THE BUDGET. HOUSE OF COMMONS, OTTAWA, Thursday, 1th May, 1870. The House having resolved itself into Committee of Ways and Means, Col. Gray in the chair, Sm FRANCIS HINCKS, Minister of Finance, addressed the Committee as follows : — Col. Gray, — Before proceeding to discharge the duty which devolves upon me of submitting to this Committee an exposition of the financial state of the Dominion, I think it necessary to advert very briefly to what I may almost call an irregularity, at all events a peculiarity, of the position in which I am placed in having to go into Committee of Ways and Means and making my financial statement in this particular way. I believe it is in accox'dance with strictly constitutional usage in England for the Chan- cellor of the Exchequer to make his financial statement after the House has been for some time in Committee of Supply, and after the supplies have been in great part voted. I have no doubt the hon, member for Chateauguay (Hon. Mr. Holton) knows that to be the pnictice. Well, Sir, unfortunately, considerable delay took place this year, as hon. members are perfectly aware and as I was frequently reminded, in bringing down the public accounts. I have no cause of complaint against hon. gentlemen opposite who expressed great anxiety about the public accounts for the year and found fault because they were not ready. I readily admit that they ought to have been ready earlier— that they should have been in the hands of hon. members on the opening of the session. I regret that they were not ready. I cannot charge myself, however, with any laxity in endeavoring to have them ready, nor can I charge it as a fault to the officers of the Department over which I preside, for considerable delay took place in the outside departments and the accounts were not ready as they ought to have been. That involved delay in the preparation of the esti- mates, and it was not thought desirable to bring them down until they were complete. Now, a practice has prevailed here which is contrary to the English practice, and which I think it expedient should be altered, namely, to delay bringing down the estimates until all of them, coverin<'- every branch of the public service, are ready, though it has hocn usual— nnd I dare say the usage will not be departed from — to bring down a supplemen- tary estimate. (Hear, hear). There are many reasons which render it impofisiblc to brin;:; down the entire estimates early in the session. I think it would be Ibund nioro convenient, more conducive to the speedy despatch of the business of the House, to adopt the English practice not to wait till all of them are completed, but to brinj^ them down as they may be ready, so as to j^o into Committee of Supply at the earliest possible period in the session. I have thought it necessary, 8ir, to make this explanation. lion, gentlemen oi)posito for some time past have been en- (juiring when the financial statement would be made, and I am considerably indebted to them for allowing'me to take several motions pro furma, thus enabling me to explain sooner than I otherwise would have been able to do the financial position of the country . I have thought it advisable to make these fe^v observations in explanation of the cause of the delay that has occurred in making this statement, and of the cause also why I now proceed to make it in Connnittee of Ways and Means without having taken any votes in Committee of Supply — tliat is, any votes of importance. It hjui been usual, Sir, on occasions of this kind, I find on looking back, for the Finance . Minister, in the course of his explanations, to review the general condition of the country. 1 do not propose to occupy the time of the Committee with any lengthy remarks upon that subject. I believe there is no reason to doubt that the country is in a state of prosperity and that it is amply able to meet ail its obligations ; and I would hardly have adverted to the sub- ject at all were it not that on many occasions during the present session hon. reicmbers have made remarks which 1 very much regretted and which Bcemecl to indicate a doubt as to the ability of the Dominion to meet its engagements, and have spoken as if there were a constant deficit of revenue as compared with the expenditure, and as if the country was in a very bad financial position. I believe, Sir, nothing of the kind. I believe the country is in a state of prosperity, perfectly able to meet all its obliga- tions, and that there is no cause of complaint of excessive taxation. With reference to this question of deficits T would like to call attention to some observations made in his speech last sesstion by the hon. gentleman who preceded me in my present office. He said : " We all know how serious, in the past, was the eflFect of the deficits " which arose in the old Province of Canada for some years previous to the " Union : and, in adverting to them, I am far from seeking to throw any " reflection or blame on those who occupied in those years the position I " now do, or to seek, by contrast, to laud the present Government at tb*) " expense of their predecessors. I know the peculiar difficulties in which ♦< former Finance Ministers found themselves. Neither my honorable friend "opposite (Hon. Mr. Holton), nor my honorable friend, the member for "Sherbrooke (Hon. Mr. Gait) had that amount of support in the House " or the country which would have enabled them to bring down thoee " measures of taxation wliich would have been necessary under such cir- " cumstances. Parties were so equally balanced, that to have carried the " measures necessary to equalise the revenue and expenditure would have <' been found a peculiarly difficult task." Now, I do not pretend to way — it would not be proper for mo to eay, not having been in the country at the time — whether that iaa correct statement of the cane, or whether the true cause for those deficits has been assigned; but that is the statement with reference to the past made by my predecessor in office. I do not intend to trouble myself or the Committee by adverting to anything that took place prior to the union of the Provinces ; but I apprehend that it was then chiefly that those deficits occurred to which reference has been made on more than one occasion during the present session. But with regard to the means of the country,— with regard to its ability to discharge all its liabilities — and with regard to its taxation, I would desire to say a few words, and to institute a compari.son between its condition and the con- dition ot other countries with which we are acquainted. I find, Sir, if we take Great Britain, that the debt of that country is about $135 per head of the population. The debt of the United States is about $60 per head. 1 may here observe that although the ratio of debt is lower in the case of the (Jnited States than in that of Great Britain, it would be unfair to estimate the burdens of the people according to the same ratio, for it is pertectly well known that the debt of England carries a very small rate of interest, while the debt of the United States carries a large rate. Now, Sir, wliile the debt of those countries is what I have stated, the debt of Canada is about $22.50 per head of the population. (Hear, hear.) Then, again, taxation in Great Britain is at the rate of about $10 per head, and in the United States about $9.25, while in Canada it is only about $3.50. I do not think, bearing these figures in mind, that we need be afraid of any sliglit increase of taxation which it may be necessary to impose upon the pcoj)lc in order that there shall not be the least cause to apprehend deficits in the future. (Hear, hear.) I find, too, that if we take the Customs Revenue of the United States, it is about $4.50 per head of the population, while the Customs Kevcnue of Canada is about $2t I may be permitted to draw attention to the reuiarkable point, that although our customs contributions appear to be large in proportion to those of the United States, hon. gentlemen will see just now, when I draw a comparison between the internal revenue of the two countries, that the revenue from customs approaches more nearly, although still very far below that of the United States, than the internal revenue does. And the reason of that is obvious. The United States have such high protective duties upon everything imported, that importations are much reduced, and the customs revenue per head does not come up as in Canada, where on leading articles the duties are much lower. The internal revenue of the United States is about $4 per head of the population, whereas in Canada the excise revenue is only about 67 cents per head. I have thought it advisable. Sir, to preface the statement I am about to make in reference to the opeiations of the year now some months ter- minated, with tliesc general remarks with regard to the position of the country and its financial condition, its ability to meet all its obligations, ■iHplM*^^^^^ and with regard to the burdens imposed upon the people as compared with the burdens borne by tlio public in the countries to which I have referred. I mij:;ht add while ppeakin^ of other countries, that I have lately resided in a colony where certainly the people, taking them alto- gether, do not in any way compare in wealth, intelligence or skilled industry, with the people of this country ; and yet the people of that colony — the colony of British Guiana — which enjoys a great degree of prosperity, pay taxes at considerably more than double the rate per head paid in Canada, and they pay it cheerfully and without the slightest diffi- culty. (Hear, hear.) I will now proceed to stuto the result of the operations of the last financial year — I refer, of course, to the year 1868-G9. But first I will draw the attention of the committee to the previous year, ending on the 30th of June, 1808. which was referred to in his speech last session by Sir John Rose ; and I do so merely to make a comparison between the results of that and of the subsequent year. The revenue of 1808 was $i;},83r),400, but in estimating the revenue of the following year, Sir John Kose put it at 815.114,000, of which he calculated the customs would contribute $1), 100,000, and the excise 85,114,000. Last session, aiter several months of the year had elapsed, when he came to make his estimates, he found the estimate of revenue had been excessive, and that there was likely to be a very considerable deficiency ; but he stated to the House that when he became aware of the fact that there was likely to be a very great deficiency every effort had been made by the Government to reduce expenditure in all the departments, fo as to provide that the expenditure should not be in excess of the revenue. When he made the revised estimate of revenue for 1809, instead of taking the old estimate which was ?1 5, 114,000, he estimated it at 81o,744,0fj6. In this esti- mate, it may be observed, he included items which I shall probably, in my subsequent remarks have occasion to allude to — items which 1 have no doubt were not calculated at the time of the original estimate. If, how- ever, the $500,000 received from the Great Western Railway were not to be treated as revenue- there would be a very considerable difference in the result. Hon. Mr. HOLTON.— Hear, hear. • Sir FUANCIS HINrKS.-Wy hon. friend calls 'hear, hear," and no doubt he will be prepared to shew at the proper time that this item ought not to be considered in the revenue of the year. But I don't know if I can take a better opportunity than the present for disposing of the qustion I took the trouble to lock up a precedent, and I hold in my hand an authority — for the transaction to which I am about to refer was of a very similar kind. The authority, I am sure must, be satisfactory to all gentlemen on the other side of the House, as it be to those on this — it is no less an authority than the present Prime Minister of England. There was an occasion in 1860. when he was in trouble with regard to the Budget, and found himself likely to be short, and he announced to the House that .« 1 doliveranoo had como from a quarter not expected, for the Spaniards had remitted a debt of £500,000. I think that the doliveranoo which Mr. Glad- stone was so happy to rcooivo in the payment of this debt, is very analo- gous to the deliverance of my predecessor by the Groat Western Hallway when the revenue had fallen very short indeed, and he found he was likely to receive this amount. Many other precedents might be ad- duced of moneys which cannot bo calculated as part of ordinary re venue of the year, being paid in and nevertheless treated as available ways and means. Hon. Mb. HOLTON.— Oh yes, but still it is not revenue. Sir F. HINCKS. — In the revenue which appears in Sir John Rose's revised estimates is included, of course, the Great Western Railway's mo- ney, the sum was $13,744,650, the actual receipts ^14J485,139, from which I deduct an amount arising from the transactions in the Interco- lonial Railway Loan, 8551,082, leaving a surplus of 8189,401.57 Mr. MACKENZIE.— This is taking credit also for the Great Western amount ? Hon. Mr. HOLTON. — The hon. gentleman does not mean the actual surplus, but the surplus upon Sir John Rose's revised estimates. Sir FRANCIS HINCKS.— I have no desire to keep anything back, but perhaps it would be better if the hon. gentlemen opposite would let me finish the whole statement, taking of course the amount of the Great Wes- tern money, for Sir John Rose calculated on this as part of his ways and means— we find a gross surplus of $390,333, viz. : on Customs, 8208,517, and miscellaneous, $128,416, while the loss on Excise must bo deducted, 80 that the net surplus on Mr. Rose's calculations was $210,258. There appears to have been some omission of figures in his reported speech, for the exact surplus was 8189,401. Wo have now to consider the expendi- ture of the same year. I have shewn that the revenue of my predecessor was in excess of his calculations, but I am sorry I cannot say that his expenditure was as low as he calculated upon. But it must be borne in mind, and it is only fair to put this strongly before the Committee — that we are dealing now with what we may call his revised esti- mated expenditure, and not with the estimates that were voted by Parliament the previous session — and in the revised estimates he had gone over all the departments and done his utmost to bring down the expenditure to the lowest possible point. I am afraid it is a very difficult thing indeed for a Finance Minister to accomplish so large a saving in expenditure as my predecessor thought he was able to do. The expenditure, according to the original estimates, was $14,032,756 ; while the revised estimates stated it at $13,470,624; making an estimated saving of $562,131. The actual expenditure was $14,144,029 ; but from that, however, I have to deduct what honorable gentlemen will say I am justified in doing — namely, the specific charge on the Intercolonial Railway Loan, $170,641, and that being deducted, we have an actual expenditure of $13,973,408, shewing an excess of $502,783 on the revised estimate. 8 The final result is :— Actual revenue $13,934,057 57 Expenditure 13,973,408 00 Shewing a deficiency of. 39,350 43 But wo have a gain on the Intercolonial transaction of... 551,082 00 Less management 170,641 00 Surplus 8 380,441 00 From which deduct the deficiency, and the final result is a surplus of. 341,090 57 There is another fact which I want to point out, namely, that in the returns of the transactions of that year, to which I have no doubt from what I heard in another place, exception will be taken, it seems we have items which are included in the Public Works account, but which have not been charged to the ordinary expenditure of the year. Hon. Mr. HOLTON anJl Mr. M ACKENZIE— (Hear, hear.) The question of classifying Public Works into those chargeable to ordinary revenue and those to capital account has always been one of very considerable difficulty. There are a great many services which really are of a debateable character, but for my own part I think it exceedingly desirable that it should always be clearly understood when the estimates are being voted what services are to be charged to the ordinary revenue of the year, and what to construction account, and which may be provided for from other sources. There are certain services about which there can be no diffierence of opinion. For instance, no one would for a moment imagine that this country would undertake to construct such works as the Intercolonial Railway, the Welland Canal, and many other works of that kind, out of the ordinary revenue of the country. On the other hand no one would pretend to charge to construction account, or to any other than the ordinary revenue, a great variety of services that come under the head of Public Works. But there are a number of services of a doubtful character. Hon. Mb. HOLTON. — Salaries, for instance. Sir FRANCIS HINCKS.— The salaries to which my hon. friend adverts are, I think, salaries in connection with the construction of works properly chargeable to capital account. Mr. MACKENZIE.-No. Hon. Mr. HOLTON.— The Welland Canal ? Sir FRANCIS HINCKS.— Yes, the Welland Canal. I speak under correction from the Minister of Public Works,|but I think that the works connected with lowering the Welland Canal to the level of Lake Erie are properly chargeable to capital. I hold in my hand the Estimates for the present year. I shall not do more than just glance at them. In making them up there has been an 9 endeavor to separate the two classes of works to which I have alluded — works which in the opinion of the Government ought to be chargeable to construction, and works the expenditure on which ought to be defrayed out of ordinary revenue. The Government believe it desirable to limit as much as possible expenditure on public works not chargeable to the ordinary revenue, and are prepared to co-operate with the House in providing for the construction, out of ordinary revenue, of all the public works that could rerjonably be so charged. On the other hand, however, I am scarcely prepared to go the length in this direction of my honorable friend who preceded me. He went into the subject very carefully and treated it on the whole very fairly. He says : " We have endeavored to scrutinise every item of expenditure " which could possibly be subject to reduction ; and to-night I would " appeal to the magnanimity, forbearance and patriotism of my friends " around me not to ask for any expenditure on any particular works and " services which, however advantageous or useful in themselves, can possi- ** bly be postponed. These works cannot be gone on with this year, unless " we resort to increased taxation, or borrow money for the purpose. In " regard to such works as the renewal or extension of wharves, harbors, " piers, light-houses, &c., I think we ought not to borrow money for that; " as for the opening up of the North- West, that is not in the same cate- " gory ; the cost of that territory may be fairly charged on posterity, the " money necessary to pay for it ought to be borrowed, as also a furtiier " sum towards opening up a communication with it, for once we h^ilver leaf, emery paper and emery cloth, sand pa|)er and sand cloth, and platers' leaf. Then there are a few articles which it is proposed to insert in the free list, that have hitherto been subject to a duty, and one or two articles upon which it is proposed to allow a draw- buck. We propose to allow a drawback upon iron used in the construc- tion of composite ships. — (Hear, hear.) We also propo.se to allow a drawback of duty on tin used in packaj^es for exportation. Tin is u.scd pretty extensively in the several ex{X)rtiu«; trades, just an in point of fact iron is used in the composite ships built here and sent ai)road. It is used largely in packages in which petroleum and preserved fish are exported, and it is scarcely fair that it should be subject to a duty, and when exported afterwards that there should not be a drawback upon it. Of course no duty would be collected if it were imported in bond for re-ex- portation, and it is only fair to allow a drawback when it is exported in the way I have mentioned. Mr. workman. — The hou. ji;eutlcmau does not, of course, include block tin ? Sir FRANCIS HINCKS.— No, it is only tin in sheets. Mr. workman.— That is tin plate, as it is called. Sir FRANCIS HINCKS. — Yes, the tin imported in sheets, and used in packin. l''rom till other nrti- doH wliicli liiivo hwu in tlic l'w.v list. I dnn't voiiturii to aiiticiptitn ii liir^or aiiiount ot'diitj tliiiii $2(10, 0(10. Tlwri! uni muH'. artictUis on which thorn iH no vciry xpos. (Hoar, hear.) I have now only to thiuik the OommitttM^ for the attention with which tluty have listened to me, and to apologise for havin;; taken up so much of their time, ((/'hecrs. ) in reply to I Ton. Sir Alkx. (J.M/r, Sim KUAN(MS 111 N('KS.— My hon friend has pointed out several short oomin;;s on my part in his spe(u-h which ho has just mad*>. I stated at the outset that 1 W(udd not follow tlur usual plan of j^oiiijj; into a lon^ »rucnswon in r(!ference to tln^ state of the allnirs of llio (utuntry, hut that I would eon- line myself to tlio suhjecjt more immediately hcfori! tho House. I really do not fettl myself spet^ially (;all(>d upon to take up srn'n/im the ohjoetions raistnl hy the lion. •.^cMithtman. I think that some of my colleagues are hot- ter ahle at tho pro|HU' time to reply to the remarks which tlu; hon. i;(!ntl(>- man states that he will hriiii; up at a futurt< sta^^c. He says I have p^iven no ini'ormation on the suhjeot of Dcnninion Notes. I did not think it necessary to fj;o fully into that suhject, IxM-ause I thou<:;ht it had hedi suili- oiently explained when tho matter was unditr discussion that Ithero is no prospect of our dc^rivin^ any nwenue from those notes this year. The charter of tho Itank of Montreal (toes not expire till after the next session of Parliament, and until the expiration of that (charter we have to Ipay tho Hank of Montreal five perxists duriii;^ the existence of the charter. Sill A. 'r. (JAI/r. — The law provi Uank ol' iMoiitrcal to receive live jier cent upon e amcmnt of their circulation. Tho notices which have heen given are mply those : ■ ' r 24 To terminate the arran