of their produce. Reference has been made to the contracts which the
Government have entered into with the British India Company for the
carriage of farm and dairy produce. They are now considering the
advisability of assisting cattle-owners, whose resources are severely
strained by the low prices which they obtain in London for their frozen
meat. The principal cause of the low prices and the attitude of the
Premier can be gathered from the following extract from the financial
statement which he delivered in 1896:--
"Our meat I believe to be as good as any in the world, and the cost at
which it can be delivered at a profit at the ports of the Colony will
compare favourably with any other country that I am aware of; and yet
the prices lately obtainable in London are such as barely cover the
charges for freezing, freight, insurance, &c. Something will have to
be done if the industry is to be preserved. The only suggestion I have
received as yet is that the Colony, either individually or in
conjunction with the other Colonies, should take the business of
distribution into its own hands, as it is believed that, whilst the
consumers give good value for our meat, a great part of that value is
absorbed by various graduations of middlemen, leaving, as I have said,
a margin for the {80} producer altogether disproportionate to the real
value of the product. To effect this a large amount of capital will be
required, respecting which I have no proposal to submit, as the matter
is really one for private enterprise to undertake, but I mention the
matter as one requiring speedy and most serious attention, because, if
private enterprise should not be forthcoming to cope with the
difficulty, it may devolve upon Parliament to adopt such measures as
may appear practicable to conserve an important industry which we can
ill afford to lose."
Subsequently, I understand (I was not in Queensland at the time), a
Parliamentary Committee was instructed to consider the question, and
reported in favour of the establishment at London and in the provinces
of depots for the receipt and distribution of frozen meat.
On another occasion, referring to the injury done to the harbour of
Brisbane by excessive towage rates, the Premier said that if private
enterprise could not do it for a less sum, it would be a very simple
thing for the Government to take the matter in hand.
Thirdly, that the State may use its credit, after strict investigation
of the circumstances and upon conviction of the validity of the
security, to enable prospective producers to borrow money at a low rate
of interest. The Sugar Works Guarantee Act, of which I have quoted the
provisions, has led other producers to ask for similar concessions.
The {81} farmers want flour mills and cheap money; the pastoralists and
graziers complain of the tax levied upon them under the Meat and Dairy
Produce Encouragement Acts. Why, they ask, should the sugar industry
be exceptionally favoured? Again, if the Government are to establish
distributing agencies for frozen meat, why not also for other produce?
The Socialists describe these various measures as a spurious form of
socialism calculated to increase the profits of a single class of the
community; but the Government do not trouble themselves about abstract
terms. They have steadily pursued a settled policy, and have
successively assisted the sugar, pastoral, and agricultural interests;
they are prepared, if necessary, to give substantial help to
cattle-owners in the disposal of their produce, and they intend to
propose amendments of the mining laws which will promote the further
development of the industry. Nor have the producers alone been
benefited; the working classes, who are the first to suffer in times of
depression, are sharing in the renewed prosperity of the country, and
have been able to take advantage of the increased demand for their
services.
[1] Quoted, by permission of the author, from an article contributed to
the _Australasian Review of Reviews_ by Mr. J. V. Chataway, one of the
members for Mackay.
[2] See footnote p. 66.
[3] Financial statement 1896, p. 14.
{82}
IV
_THE LAND POLICY OF NEW ZEALAND_
Differences of conditions between Australia and New Zealand--The Public
Works policy--Taxation on land--The Land Act of 1892--The Land for
Settlements Acts--The Government Advances to Settlers Acts--The
encouragement of settlement--The co-operative construction of Public
Works--The unemployed--Continuity of policy.
The Constitution of 1852, under which New Zealand obtained responsible
government, differed from those granted to the Australian Provinces in
the creation of Provincial as well as Central Authorities. Owing to
the mountainous character of many parts of both islands, and in the
absence of railways and other facilities for internal transit,
communication had been carried on principally by sea, and settlement,
instead of radiating from one point, as in New South Wales, Victoria,
and South Australia, had been diffused at Auckland, Wellington,
Christchurch, Dunedin, and other places of secondary importance. Under
these circumstances, while it was deemed advisable to create a Central
Government at Auckland, which was transferred to Wellington in 1865,
six elective {83} Provincial Councils were established, which, though
their legislative and executive powers were confined within specified
limits, promoted the continuance of the separate development of the
several portions of the Colony. In 1876 the Provincial Legislatures,
which had in the meanwhile been increased by a division of territories
to ten, were abolished by the Central Government, principally because
they impeded the execution of the national policy of the construction
of public works. The effects of the system, however, are still seen,
especially in the demands made in the House of Representatives that the
different districts shall share in the benefits of any proposed
expenditure of public funds.
Another feature which served to differentiate New Zealand from
Australia was the existence of a warlike native race in the North
Island, which opposed the colonisation of the early settlers. From the
outset, ignorance of each other's language and habits of thought led to
misunderstandings in regard to the disposal of land, which was
complicated by the communal tenure of the Maoris. The appreciation of
this difficulty led to the insertion in the Treaty of 1840, in which
the chiefs purported to cede the sovereignty of New Zealand, of a
provision which reserved to the Crown the right of pre-emption over all
native lands. But the dissatisfaction was not allayed; the natives,
conscious of the steady advances of the {84} settlers and urged to sell
by agents of the Crown, feared that they would gradually be
dispossessed of their territory. A conflict which arose in regard to
some land, and led to fatal results, increased the state of tension,
which culminated, after a struggle in the extreme north, in the
prolonged conflicts of 1860 to 1870. After the pacification the
reciprocal relations began to improve, and are now excellent. The
Maoris are universally respected, have four members in the House of
Representatives, and two in the Legislative Council, and are
represented in the Executive Council by a Minister, who is himself a
half-caste. Numerous attempts have also been made to settle the land
question, notably by the resumption of the right of pre-emption, which
had been waived for a time, and by the constitution, by an Act of 1893,
of a Validation Court for the purpose of considering and finally
settling the titles to lands obtained by Europeans from the natives.
In view of their pre-emptive right, the Government have been bound, in
justice to the Maoris, to make provision for the purchase of such lands
as may be offered to them, though they have not herein initiated a new
policy. From the establishment of Imperial sovereignty to 1870,
successive Governments acquired six million acres in the North Island,
the whole of the Middle Island, with the exception of reserves for the
original owners who were few in number, and Stewart Island. From that
date until 1895, another six {85} million acres had been acquired at an
outlay of a million and a half pounds, and subsequent purchases, from a
large area still under negotiation, amount to about 550,000 acres. New
Zealand has thus disbursed, and is still disbursing, large sums of
money in the purchase of native lands, while Australia and Tasmania
recognised no right of possession on the part of the few degraded
aboriginals; and New Zealand alone is burdened with the payment of
interest upon loans raised to cover the charges of prolonged military
campaigns.
During the wars, settlement was necessarily checked in the North
Island, but proceeded in the Middle Island without intermission. At
their conclusion, in 1870, Mr. (now Sir Julius) Vogel, the Colonial
Treasurer, placed before Parliament a comprehensive scheme of public
works, which aimed at the general improvement of means of
communication, a matter of particular importance in the North Island as
being likely to hasten its final pacification. "The leading features
of the policy were: to raise a loan of ten millions, and to spend it
over a course of years in systematic immigration, in the construction
of a main trunk railway throughout the length of each island, in the
employment of immigrants on the railway work, and in their ultimate
settlement within large blocks of land reserved near the lines of
railway, in the construction of main roads, in the purchase of {86}
native lands in the North Island, in the supply of water-power on the
goldfields, and in the extension of the telegraph. The plan, with some
modifications, was authorised by the Legislature. These modifications
mostly related to the amount to be borrowed and to its expenditure; but
there was one alteration which crippled the whole policy. The
reservation of large tracts of Crown land through which the railways
were intended to be made, with a view to the use of that land for
settlement thereon, and as the means of recouping to the Colony a great
part of the railway expenditure, was withdrawn by the Government from
fear of losing the whole scheme. That fear was not unfounded, inasmuch
as provincial opposition to the reservation in question, combined with
the opposition of those who disliked the whole scheme, would have
seriously endangered its existence."[1] The provincial opposition was
due to the fact that, though the disposal of the Crown lands and the
appropriation of the Land Fund were vested by the Constitution Act in
the Central Legislature, each province had in practice been allowed to
frame the regulations for the alienation of land within its district,
and had received the proceeds of sale for its own use. But the
omission of the proposed reservation "has necessitated the frequent
recurrence of borrowing large sums in order to continue work which had
been begun and was useless while {87} it was unfinished, instead of
making, as would have been the case under a proper system of land
reservation, the work itself to a great extent, if not altogether,
self-supporting and self-extending; and that deplorable omission has
also frustrated the anticipated conduct of progressive colonisation
concurrently with the progress of the railways. The result of not
insisting on this fundamental condition has been what should have been
foreseen and obviated. The Provincial Governments sold land in the
vicinity of the intended railways, and expended the proceeds for
provincial purposes; and, as a rule, speculative capitalists absorbed
the land and the profits which should have been devoted to colonisation
and to the railway fund."[2] As the proposed railways would pass
through private as well as Crown lands, Sir Julius Vogel also sought
the power to levy a special rate, in certain circumstances, upon the
persons in the vicinity of the railways who would be benefited by their
construction. He believed that he would thereby prevent
"indiscriminate scrambling for railways," but was equally unable to
induce Parliament to accept his views. The aggregation of large
estates was promoted by the low price, 10s. or even 5s. an acre, at
which the land was for many years sold. 262 freeholders, including
companies, owned in 1891, 7,840,000 acres of land in estates of 10,000
acres and upwards. The Province has, since its {88} foundation, sold
or finally disposed of more than 21 million acres, and has at present
nearly three million acres open for selection. The remaining lands,
exclusive of those in the hands of the Maoris, amount to 16-1/2 million
acres, but comprise large tracts of barren mountainous country in the
Middle Island, and of valueless pumice sand in the North Island. In
most directions, according to the Premier, settlement is already in
advance of the roading operations.
The policy initiated by Sir Julius Vogel in 1870 was carried on by
successive Ministers until 1888, during which time more than 27
millions were borrowed and devoted, for the most part, to the
construction of railways and other public undertakings. Subsequently,
Sir Harry Atkinson and his successor, Mr. John Ballance, realised the
danger of constant reliance upon loans, and greatly reduced the
expenditure, which had become extravagant in the abundance of borrowed
money. Mr. Ballance also reformed the system of direct taxation and
gave an impetus to legislation dealing with the settlement of the land
and the protection of workmen in industrial pursuits.
The existing property tax, at the rate of one penny in the L on all
property, subject to an exemption of L500, was replaced by a graduated
tax on incomes and land values, the principle of graduation having
already been recognised in the case of succession duty. The former
impost was naturally upheld by {89} large owners of property and by all
classes of professional men who had escaped taxation upon their
incomes; while it was distasteful to shopkeepers, who might be taxed on
unsaleable merchandise, and to cultivators of the soil, who found that
their taxes rose in proportion to the improvements which they effected
upon their estates. The Government had little difficulty in passing
their measure, which, subject to slight modifications, is in force at
the present time. Incomes below L300 are not taxed; between L300 and
L1,300 they pay 6d. in the L, above L1,300 a shilling; but the sum of
L300 is deducted from the total income in the assessment of the tax.
For instance, an income of L2,000 pays L60, at the rate of L25 upon
L1,000, and L35 upon L700. The ordinary land-tax is a penny in the L
on all freehold properties of which the unimproved value exceeds L500;
between L500 and L1,500 exemption is allowed on L500; between L1,500
and L2,500 the exemption decreases by L1 for every L2 of increased
value, being extinguished at the latter amount. Should the value
exceed L5,000, a graduated land-tax is also levied, which rises
progressively from half a farthing, until it reaches twopence upon
estates of the unimproved value of L210,000 and upwards. All
improvements are excluded from the assessment of the taxable amount:
they are defined to include "houses and buildings, fencing, planting,
draining of land, clearing from timber, scrub or fern, laying down in
grass or {90} pasture, and any other improvement whatsoever, the
benefit of which is unexhausted at the time of valuation." Under this
provision rural owners have every encouragement to improve their
properties, as the more they do so, the smaller becomes the proportion
of the total value of their estates on which they are liable for
taxation. Owners are allowed, for the purposes of the ordinary, but
not of the graduated land-tax, to deduct from the unimproved value of
their land the amount of registered mortgages secured upon it; and
mortgagees pay one penny in the L upon the sum total of their
mortgages, but are not subject to the graduated tax. A return,
published under the assessment of 1891, shows, however, that rural
owners are obtaining less benefit from the exemption of improvements
than the owners of urban lands. The figures are as follows:--
Actual Value, Value
including of Unimproved
improvements. improvements. value.
Counties ... 85,818,167 27,922,735 57,880,233
Boroughs ... 36,406,862 18,442,562 17,907,662
Total ... L122,225,029 L46,365,297 L75,787,895
It thus appears that land is taxed, on an average, at 49 per cent. of
its actual value inclusive of improvements in boroughs, and at 67-1/2 per
cent. in counties; {91} but it must be remembered that, as the urban
population is not concentrated in one centre, land values have not been
inflated to any great extent, and that much of the rural land has
either recently been settled or is held in large blocks in a
comparatively unimproved condition. The improvement or sale of such
properties would, the Government believed, be promoted by the
imposition of the tax. The Minister of Labour (the Hon. W. P. Reeves)
expressed this view in the clearest terms: "The graduated tax is a
finger of warning held up to remind them that the Colony does not want
these large estates. I think that, whether partly or almost entirely
unimproved, they are a social pest, an industrial obstacle, and a bar
to progress." Similar feelings are, apparently, entertained towards
the absentee owner, who, if he has been absent from or resident out of
the Province for at least three years prior to the passing of the
annual Act imposing the tax, is required to pay an additional 20 per
cent. upon the amount of graduated land-tax to which he would otherwise
be liable. The income and land taxes produce a revenue about equal to
that formerly derived from the property tax, and are collected from far
fewer taxpayers, the respective numbers being 15,808 and 26,327 in a
population of some 700,000 persons. The benefits have been felt
principally by tradesmen, miners, mechanics, labourers, and small
farmers. Of 91,500 owners of land, 76,400 escape payment of the
land-tax. It {92} may be noted, incidentally, that a permissive Act of
1896 authorises such local bodies as adopt it to levy rates on the
basis of the unimproved value of land. Much anxiety has been felt by
large landowners and owners of urban property throughout Australasia at
the successive adoption of a tax on unimproved values by South
Australia, New Zealand, and New South Wales. They fear that it is the
first step towards the national absorption of land values advocated by
Henry George, but forget that the Governments of New South Wales and
New Zealand, in respect of exemptions, and of New Zealand and South
Australia, in respect of graduation, have introduced features in their
systems of taxation which cause them to be fundamentally distinct from
his proposals. The Bill passed through the Victorian Assembly in 1894,
but rejected by the Council, also provided for exemptions.
But how, it may be asked, has an equitable assessment of the land been
secured for the purposes of the tax? Any owner who is not satisfied
with the value placed upon his land on the assessment roll, may require
the Commissioner to reduce the assessment to the amount specified on
the owner's return, or to purchase the land at the sum mentioned on the
owner's return of its actual value inclusive of improvements. The
Commissioner is bound to make the reduction unless the Government
approve of the acquisition of the land. A reasonable balance is thus
struck: the Government are unwilling to {93} have a large amount of
land thrown on their hands, while the owner does not take the risk of
the resumption of the land at an inadequate valuation. Disputes
between the Commissioner and owners have, in most cases, been adjusted
satisfactorily; but the Government decided to buy the Cheviot Estate of
85,000 acres, which lies close to the sea in the Middle Island. Upon
its purchase they at first let the pastoral lands temporarily at the
rate of L8,862 a year, while their surveyors laid out the country and
supervised the construction of roads. The results of the transaction
were, in 1896, eminently satisfactory; the capital value of the estate
then stood at L271,700, and the annual rental at L14,300; and the few
inhabitants engaged in pastoral pursuits had been replaced by 216
settlers and their families, who were reported to be of a good class
and to have done a large amount of work in the improvement of their
lands.
The principal Act dealing with the alienation of Crown Lands is that of
1892, which consolidates and amends former legislation. Crown Lands
are divided into urban, suburban, and village lands, which are sold by
auction at an upset price, and rural lands, which are again subdivided
according to their adaptability for cultivation or pasturage. When
townships are being laid out on Crown Lands, one-tenth of the
superficial area is to be reserved for purposes of recreation, and a
similar extent as a nucleus of municipal property, to be {94} vested
subsequently as an endowment in the local authority in addition to the
reserves necessary for all public purposes. At the option of the
applicant, lands may be purchased for cash, or be selected for
occupation with the right of purchase, or on lease in perpetuity.
Selectors are limited to 640 acres of first-class land, or 2,000 acres
of second-class land, the maximum being inclusive of any lands which
they may already hold. The object of this provision is to prevent
existing landowners from aggregating large estates by the purchase of
Crown Lands. Cash sales are effected at a price of not less than 20s.
and 5s. per acre, respectively, for first-class and second-class land,
and entitle the selector to a free-hold title upon the expenditure of a
prescribed amount on improvements. Land selected under occupation with
the right of purchase is subject to a rental of 5 per cent. upon the
cash price, under lease in perpetuity, which is for 999 years, to a
rental of 4 per cent.; and strict conditions of residence and
improvement are, in both cases, attached and rigidly enforced. At the
expiration of ten years, a licensee under the former tenure may, upon
payment of the upset price, acquire the freehold or may change the
license for a lease in perpetuity. The latter is the perpetual lease
of the previous Acts, denuded of the option of purchase and of the
periodical revaluation of the rent, and is, in the latter respect,
reactionary, as the State gives up its right to take advantage of any
unearned increment. {95} Subsidies amounting to one-third of the rent
of land taken up under any of the above tenures and one-fourth of the
rent of small grazing-runs are paid to local authorities for the
construction of roads, but must be expended for the benefit of the
selectors from whose lands such moneys are derived. The Act of 1892
also authorises the Governor to reserve blocks of country, as special
settlements or village settlements, for persons who may desire to take
up adjacent lands. The Village Settlements have been successful when
they have been formed in localities in which there was a demand for
labour; the Special Settlements comparative failures, because many of
the members of the associations had neither the requisite means nor
knowledge of rural pursuits. Pastoral land is let by auction in areas
capable of carrying not more than 20,000 sheep or 4,000 head of cattle;
or in small grazing-runs not exceeding, according to the quality of the
soil, 5,000 or 20,000 acres in area. The dominant feature in the Act,
in its application to pastoral as well as agricultural land, is the
strict limitation of the area which may be held by any one person;
rightly or wrongly, the Government are determined that the Crown Lands
shall not pass into the hands of large holders. The principal
transactions of the last three years are thus summarised, the figures
for 1894 covering the period from April, 1893, to March, 1894, and so
for the other years:
{96}
1894. 1895. 1896.
No. AREA. No. AREA. No. AREA.
Acres. Acres. Acres.