The Progress of our Debt.

[From the S.A. Advertiser of May 13, 1884.]

We recently published a table which placed before our readers a statement of the growth and pressure of the unjust system of taxation which has been in force in South Australia for the last thirty-two years. We now direct attention to another tabular statement printed else where, which will give some insight into the growth of our national debt. The period with the table embraces is from 1854 to the end of last year. Our debt like our taxation has been always growing larger, although the figures show that there have been a few instances in which the amount of our liabilities has actually deceased. We commenced borrowing in 1854—at least that is the first year in which a debt figures in the annual returns. It was then only £135,000, which was equal to a personal burthen of £1 9s. 8d. per head of a population of 92,545. In the following year the capitation rate fell to £1 7s. 11d., because the population had increased to 96,892, whilst no addition had been made to the loan account. In 1856 the debt was no more than doubled, and notwithstanding a considerable increase in population, the rate per head advanced from £1 7s. 11d. to £2 16s 4d. Next year (1857) the debt in round numbers was again doubled, and the rate per head stood at £5 8s. 9d. For the ensuing three years a few comparatively small loans were contracted, which brought the total up to £870,100, and the rate per head to £6 16s. 8d For the next six years with one exception (1863) the debt was being continually reduced, and the amount had fallen from £870,100 in 1860, to £775,600 in 1866, and the rate per head from £6 16s. 8d. to £4 14s. 5d. At this point reduction in principal as well as in the capitation rate substantially came to an end. In the earlier stages of the borrowing, the bonds issued were terminable at irregular periods, and were retired at maturity. The practice now is to give all the bonds a uniform currency of thirty years. From time to time some of the earlier securities drop in and are paid off, but our borrowing for some years past has been conducted on so large a scale that the repayments which are made have no other effect than gradually to bring down the rate of interest to one standard of 4 par cent.

At the end of the five years which came after 1866, the rate per head had grown from £4 15s. 5d. to £11 13s. In 1872 the debt was again slightly reduced, and the rate per head fell to £10 17s. 11d. This is the last decrease that has taken place. Ever since then not a year has passed without some augmentation of the permanent burdens of the colony. The borrowing pace has been rapid. Between 1872 and 1877 the debt itself had been increased from £2,094,000 to £4,737,200 and the capitation rate from £10 17s. 11d. to £19 19s. 7d. Our progress from the end of the last-named year may be conveniently shown by quoting the head rate from that time down to the end of the year 1883. Thus in 1878 it was £21 8s. 5d.; in '79, £29 8s. 5d,; in '80, £36 17s. 4d.; in '81, £39 2s. 1d.; in '82, £42 9s. 10d., and in '83, £44 18s, 2d. The late treasurer, we believe, stated that the debt could be increased until it amounted to £50 per head of the population. However this may be, it is as well to point out that we have already reached that amount, or at least we have approached it so closely as to render it at least prudent to scrutinise our position with some care. The present Treasurer has just sent home bonds to the amount of some £1,600,000, to be converted into cash as soon as the state of the money market is such as to promise the most favorable results. By the end of this year there is no doubt that that sum will have been added to the total of our present indebtedness. For 1883 the population is set down as 304,812, the colonial debt less repayments at £13,908,700, and the head rate at £44 18s. 2d. At the close of the current year, allowing only per cent. for the increase of population by immigration and from natural causes, the colony will contain 315,480 souls, the debt will amount to £15,508,700, and the indebtedness to £49 3s. 2d. per head.

In setting out the facts which the table discloses we have offered no opinions on the policy which has been pursued in creating the heavy liability that rests page 6 upon the colony. The remarkable circumstances connected with it is that no provision has been made for meeting the annual charge in the shape of interest. The short-dated bonds were duly retired when they had run out, but whilst we were paying the public creditor with one hand we were increasing our liabilities with the other. The matter of the interest was left to the determination of circumstances, under the general idea that we should always be able to pay the yearly charge. So far this has been done, and hitherto without sacrifice. The prospect that the time would come when the revenue would require aid from additional taxation has been distinctly recognised by every Ministry since Mr. Boucaut was in office, and attempts more or less earnest have been made to obtain an increased revenue by this means. The landed interest, however, has succeeded in defeating every proposition which could reach either them or their absentee clients. The evil day has now come upon us, and our actual cash deficiency is at the present moment more than a quarter of a million sterling on the year's transactions. We shall not now consider how this particular difficulty in the history of our debt is to be encountered. It will be sufficient here to show how our debt has been spent. When that is thoroughly understood the source from which new revenue should be derived will easily be discerned.

The theory upon which our borrowing was founded was that all moneys so raised should be applied to the construction of reproductive works. This principle has been widely and seriously departed from; for at the close of the year 1883, of the debt amounting at that date to £13,908,700, no less than £3,055,642 had been applied to undertakings that were not reproductive, and out of that £3,204,642 was sunk in works which never can be reproductive as investments The remaining £10,256,058 is represented by works reproductive in their nature; but some of them are so in a small degree only, and others not at all, as far as regards the country which borrowed the money and laid it out. The railways, which represent an expenditure of £5,923,150, returned last year only 2½ per cent. on the outlay; and the waterworks, representing £1,053,160, less certain losses, yielded only 3¾ per cent. These returns are reckoned only on the actual outlay. Taking the gross amounts borrowed for these undertakings, which total £9,022,178, the revenue from this sum last year was only £191,567, or rather less than £2 2s. 6d. per cent. From this it seems that of the money raised for reproductive works £1,230,880 returns nothing at all—making £4,886,522 of borrowed money absolutely unproductive, and so a dead weight on the community

With the exception of £100,000, which figures in the loan accounts as "aid to revenue," and some money borrowed on exchequer bills—since repaid—the whole has been expended in such a way as to effect a large increase in the permanent as well as in the annual value of all the land which has been alienated from the Crown. How the propertied classes, who pretend that they pay their fair share towards the public burdens, recognise the value of State expenditure on public works may be seen from the avidity with which they ask for railways, roads, waterworks, police-stations, courthouses, harbor works, hospitals, bridges, jetties, &c. Their high appreciation of the benefits they enjoy in the shape of increased value may be seen in the sums they demand for land whenever it is necesary to repurchase it for public purposes, If all the money spent had been devoted to works exclusively reproductive, possibly the loans might be regarded as less formidable than they now appear; still, that would afford no reason why propertyholders should not contribute substantially to the revenue, and so acknowledge in some degree the source from which they have derived so large a proportion of their landed riches. But the £1,066,500 sunk in main roads costs the country nearly £43,000 a year for interest alone, besides the cost of maintenance, which last year amounted to £113,722. Thus it is with harbor improvements and the other works above enumerated. They have been made with borrowed money, they are maintained by the Government, and the public through the Government actually pay interest on the endowments they have conferred upon the lands. In what sense do the masses who now pay £2 3s. 3d per head through the Customs towards the revenue participate in the wealth the State has created? In what sense do the landed proprietors stand between the working classes and the dead weight of £50 a head—man, woman and child—in the shape of the permanent debt that weighs upon them? As yet they have given nothing; hitherto they have refused everything. How long is this state of things to continue? The solution, it is certain, cannot be far off when it is known as a fact that the whole of the Customs revenue for the year is at this moment very little more than the interest on the colonial debt for the same period; the figures being £618,871 for Customs receipts, and interest on bonded debt £617,008. This subject will be referred to again in a future article.

The figures relating to the population and public debt are taken from the annual returns, which do not notice the changes which have been made from time to time in the time for beginning and ending the financial year. That, however, does not affect the result. It is almost needless to remark that fractional parts of the penny have been omitted.