Local Self-Government will probably, at no distant time, form the chief dividing line between parties. It underlies all our political questions, and no Ministry has been able altogether to avoid it since the destruction of the old provincial institutions in which its principles were embodied. The loan policy has enabled Ministries to dally with Local Government in the past. But that resort must cease when people have discovered that an unsystematic and reckless borrowing policy means permanent burdens for all, while the permanent gain is for comparatively few. Last session the sum appropriated from the Consolidated Revenue was three million three hundred and twenty-eight thousand pounds. Of this vast sum, only forty-seven thousand pounds were available for even the pretence of public works. Additions and repairs to buildings, furniture, and similar items absorbed nearly all of this small provision excepting a poor £10.000 for tracks on goldfields, and £3,000 for prospecting. The whole of the great balance was needed to pay interest on loans, departments, the working of the railways, the cost of education (exclusive of school buildings), and the maintenance of hospitals and asylums.

There remain the land sales, a fluctuating and decreasing sum, but which were estimated to produce £330,000 for the current year. The Survey and Crown Lands Departments, extermination of rabbits and a few minor claims, absorb £154,000 of this amount. Two Reclamation Boards (New Plymouth and Lake Ellesmere) take £50,000, and certain local bodies get £35,000 for their share of the proceeds of deterred payment lands. The ordinary subsidies to local bodies will absorb probably £90,000 more. Here we have the only source, except loans, from which the smallest aid in opening up the country is to be expected.

Let us turn to the loans. From them we have now to look for roads and bridges, public buildings, water works, lighthouses and telegraphs, land purchase and immigration. These, with the departments connected with public works and railway construction, absorb nearly £700,000 during the year. The construction of railways takes nearly a million, and £184,000 was required for contingent defence. It will be seen from this brief sketch how unhealthily dependent we are becoming upon loans. If we do not take care, borrowing must become our normal state. The best and surest means of taking care is to bring down the enormous central expenditure, and to begin by reducing the number of members in our overgrown Legislature to at least one-half. This can only be accomplished by handing over local duties to well organised local bodies by whom they can be more efficiently and more economically performed.

In this light, local self-government is an important question of administration. Finance is dependent upon local government, and not local government upon finance. But I venture to say that it is of still graver moment if regarded from the ground of a higher policy; and that the fate of those who come after us must largely depend upon its satisfactory solution. Shall New Zealand continue its march as the well ordered and prosperous Democracy it has hitherto been? Or shall it, as wealth increases and society becomes more artificial, sink into an Oligarchy, with the social misery and political page 2 servitude from which an Oligarchy is always more or less inseparable? It is this consideration which gives dignity and weight to a question that might well be relegated to the background of politics if it concerned only the power of the people to control small local works, and to regulate small local affairs. Let us therefore first glance at

The Political Aspect.

The old New Zealand institutions were based upon the incontestible fact that its people were a Democracy. They had left behind them the well-established and varied political orders and social classes which time and circumstance have produced at home. The Provincial Governments were almost entirely democratic. There was a wide suffrage, with elected Legislatures and elected Executive Chiefs. The General Government was somewhat differently constituted. Prerogative was represented by a nominated Upper House and a nominated Executive Chief, The Governor of the Colony was supposed to exercise this prerogative as the representative of our gracious Queen. In reality it was exercised by the Colonial Ministry, uncontrolled by the constant regard for the good understanding between the Sovereign and the people, and by the ancient usages and traditions, which influence a Ministry at home. Nor did there rest upon our Upper House a shadow even of the personal and political responsibilities which press upon the House of Lords, whose place in our system it was designed to fill.

Unfortunately the Imperial Act which created our Government was passed at a time when democracy was regarded in England with a hatred and mistrust which have now happily passed away. That New Zealand was a Democracy, and that its physical formation precluded the country being governed from any one centre, could not be gainsaid. But it was resolved that democracy should be controlled. Hence the general Government, embodying the antagonistic element of nomineeism, was not only made supreme but was endowed with a concurrent jurisdiction against which Mr Gladstone and other eminent men in Parliament vainly protested at the time. They urged, in the strongest terms, that Democracy and hearty Loyalty had gone together in the best times in the old colonies of England's earlier days, and that they might well be trusted to go together in the new. But they urged in vain. A provision that the Upper House should be elected by the Provincial Councils was struck out and they were left defenceless in the hands of the General Legislature. Gradually the General Government developed the principle of antagonism on which it rested. In creasing wealth and population, and increasing diversity of interests and pursuits, gave to it ever increasing temptations and opportunities. In the conflict that ensued the Provincial Councils broke away from the control of the powerful party which aspired, in those days, "to curb democracy" by establishing the English system of a governing class in a country in which such a class had always been unknown, The General Government, on the contrary, unobserved and unregarded, fell into their hands. Skilfully taking advantage of their own power and of defects in the constitution of Provincial Governments, they reduced them, by constant aggression, to poverty, weakness and contempt. In 1876, the conflict culminated in the destruction of the provinces, and hundreds of trained men went forth from the provincial councils bent on making their principles prevail in the General Legislature which they had previously been too well occupied to regard. The House of Representatives was overwhelmed by what those of the old school called "a wave of democracy," and its halls were filled with men determined, above all things, to guard against the ascendancy of particular classes or particular sets of men which they clearly saw that Centralism was sure to produce.

Provincial Institutions.

Excellent as were these institutions in principle, and admirably as they managed affairs in the early days when the Assembly was yet too weak to molest them, they had inherent defects. Their sphere of action was neither defined nor independent. Their finance was dependent on that of the General Government, and they suffered by its wasteful extravagance and needless wars. They were prohibited from passing laws that created a criminal offence and, being thus deprived of the power of compelling statutory declarations, they could only raise a revenue by the rudest and most inefficient means. Their laws had to receive the sanction of the General Government and their elected chief was made responsible to it and not to the people who elected him. The latter was a fatal defect. It forced the Councils to resort to a system of "responsible ministries" unsuited to Legislatures of their character. With an elected chief, the Executive and Legislature might easily have been kept distinct. A con- page 3 tinuous and steady control over the finances and over the administration, might have been found in the well-proved expedient of giving to the Councils power to override the veto of the Superintendent by a fixed majority of their members. Had they possessed this power, common in similarly constituted Legislatures, the work of the largest province could have been done by the Superintendent with a couple of secretaries (of his own selection and approved by the Council) instead of with the responsible advisers," by whom the Council was obliged to surround him. Had this been done we should have been saved the party intrigues and the mimic political struggles which so ably aided the General Government in combating institutions that it was bent upon destroying, but which a truer wisdom would have induced it to reform.

Finance.

The abolition of the old Local Governments brought no diminution in public expenditure and no aid to the Treasury. On the contrary, the expenditure has increased, and in such a form as to be much less under control. One hundred and forty legislators now do, at enormous cost, that which Provincial Councils did far more economically. A host of ministers, under-secretaries, private secretaries, royal commissions, nominee boards, chairmen of counties, county officers, and civil servants of all kinds, are now needed to do work which the Provincial Governments did more simply and cheaply. Local Self-Government cannot, therefore, be regarded as injuriously affecting colonial finance It would only be necessary to decide what sources of revenue should be retained by the General Government and what sources be handed over to such Local Governments as might be created. This would depend upon the work and responsibilities assigned to each, and must be considered by those who may have to undertake the re-establishment of Local Government. It would be their further duty to propose some equitable arrangement, in order that available funds may be so distributed as to balance the great disproportion in the assets that would be handed over to different portions of the colony. For example, the railway expenditure in the Middle Island has so much exceeded that in the North that, on the 31st March 1881, there were 845 miles open in the former and only 432 miles in the latter. The surplus of railway receipts over expenditure in the Midele Island for the year was consequently £265,000. In the North Island it was only £50,000. If the railways were handed over to one or more Local Governments in each Island, this great disparity, as well as the value of the Crown Lands and of other assets that might be divided among them, must be taken into account. A ready way of equalising these differences would be to issue General Government debentures to each Local Government, in such proportions as a careful investigation might prove to be just. The interest on these debentures would add to the local revenues until works—such as those of the Auckland-Taranaki Railway—could be advantageously begun. It would be a useful safeguard to require that no Appropriations or Loan Acts of Local Legislatures should be legal unless passed by an absolute majority of two-thirds of the members. This provision has been found an admirable check on hasty extravagance wherever it has been tried, and would have been of great use in the old Provincial Governments.

In the meantime it may be useful to see how the present expenditure can be roughly divided by analysis of the Appropriation Act of last session into General and Local charges respectively,

General Charges.

Here we see how large is the proportion of the General Government Expenditure which has to be met without annual appropriation, and is practically above control.

Local Charges.

If we suppose that the remaining services of the country would be performed under Local Legislatures, we should have them dealing with an expenditure of £1,188,649 To analyse this expenditure accurately, it would be necessary to have page 6 House in the General Assembly of the Colony. They must be started fairly on their new career by such an equitable provision as will atone for inequalities produced by the past expenditure of loans and land fund in particular localities. Beyond this provision, they must raise their own revenue and ought assuredly to do it better than the General Assembly can do it for them. The Railway Revenue, the Property Tax and other direct taxes might be handed over to them. To the General Government would remain the Customs and other indirect taxes and the fees earned in the administration of the Departments left to it. The public debt, the Natives, the Supreme Court, and all work affecting the colony as a whole, would remain with the Assembly. The Crown .Lands could be better dealt with provincially in a country in which uniformity of price and of administration has already been found impracticable. Whether there should be two provinces or four, or what other number, ought to depend on the area that can be conveniently administered from a common centre, and yet be sufficiently large to enable its Government to raise an adequate revenue. Administration in the provinces, as well as in the General Government, should be decentralised so as to secure the distribution of power and patronage. As many local bodies as possible should be elected at one and the same time, so as to impose the least burden on the electors in accordance with the custom in all democratic countries. Still further following that custom, it might be well in cases like Road Boards, for example, to vest the administration in a lesser number of members. It is a question whether we should not have a keener sense of responsibility and a more faithful performance of duty if the work were left, in many cases, to a single, annually elected overseer, than when left to a Board which too often serves to shield from responsibility the one or two active members under whose control it may fall, These are important points in order that Local Self-Government may be conducted with the least possible burden to the people, but they are details which it is unnecessary now to consider. I have endeavoured rather to show in broad outline the grounds on which Local Self-Government is to be regarded as a paramount question, and the means by which, in my humble opinion, it can be best secured. Attempts were made by the late Ministry to replace by nominated "Roads Construction Boards" and other composite and fancifully constructed bodies, the provincial institutions which some of their number took the most active part in destroying. It is useless now to discuss proposals that were condemned as soon as heard. Ministries, by plunging the country into deeper debt, may avoid a settlement of the troublesome subject a little longer. The field is still a blank, but they cannot leave it a blank without imperilling the highest interests of our descendants even more than those which immediately concern ourselves. We leave to those descendants a great public debt. Let us also leave to them the priceless blessing of full and perfect self-government, without which we may build up a rich and powerful country, but assuredly neither a prosperous nor a contented people.