THE FINANCIAL STATEMENT

Otago Daily Times, Issue 15244, 9 September 1911, Page 4

THE FINANCIAL STATEMENT

A RECORD REVENUE

SURPLUS- OF £583.483

PUBLIC DEBT ANALYSED

UKEJIPLOTMENT INSDBAJfCE

THE COST OF LIVING

COMMISSION OF INQUIRY TO BE SET UP

EXTENDED OLD-AGE PENSIONS

HELP FOR POOR WIDOWS

PROPOSED STATE NOTE ISSUE

; [Br TKrEGium] ; WELLINGTON. September 8. In Committee of Supply this evening • itho Prime Minister (Sir J. G. Ward) de•livcrcd t.lio Financial Statement. In t.lic conrjo of his remarks lie snid:— I have the pleasure to submit, to the comi mittco tho Hudget of the year's finances ias 011 March 31 last. I shall also deal ivitli matters affecting the current year's , operations, and as on former occasions it - will .bo my duty to submit subjects for consideration ofFocting- the future that I jfeel suro will bo recognised as of consider.able importance to the Dominion. 'Die 7abstract of the accounts showing tho re- , ceipts and expenditure of the financial year ...will l>o found in the tables attached to 7.|lie Statement. .y. Ijast year I had the pleasure of onnounc- ~ ing that a substantial kilance of £432,316 was available at the end of tlx? year. It is with much satisfaction that I state that tho present year's results have exceeded those of any previous yoar in the 'history of tho Dominion. REVENUE. I prof cod to give details of the year's revenue, which, I am pleased to say. was a record one, amounting to £10.297,021. The increase from railways amounted to V £225,492, from Cutsoms £356,708, and stamps .-.v£209,328. The total increase of revenue from railways and Customs amounted to £552,200, and was due to the activity of f trade in all il> brandies. The large increase in stamp revenue, both of the : Stamp Department and tho Postal DepartAnient, is due partly to tho prosperous condition of the country and to the alteration in stamp duties affecting deceased estates, ef which a larger mimlier than usual Jiovo Icon dealt with. Tho increase from stamp duties under all head"ing's amounted to £289,328, m that tiio ; incrcafp from tho three departments—Rail'■ways. Customs, and Stamps—was £871,523. ,An there lias on former occasions been a .. desire expressed that more details should ".be liven retarding our revenue and exI propose to set tlicm out more fully than heretofore. The details are shown in the tablo below:— Consolidated Fund. Ordinary Revenue. 1910-11. ISO 9-10. Customs £3,027,829 £2,671,121 Stamps (Stamp , Department ; £819,839, and ■ Postal Depart- : me-nt £316,306) 1,626,145 1,346,817 , Post and To'.o- , graph (cash receipts) 211,261 190,535 Land tax ... ... 628,723 6'2.270 . Income tax ... 407,235 316,835 .Boer duty 118.100 115,363 Railways 3,483,755 3,258,263 Registration and '• other fees ... 100,026 88,305 ! Marine 45,933 42,918 Miscellaneous ... 327,123 296,099 Territorial re- ..' venue 255,032 202,587 National endowments 55,851 ■ 67,142 : TotaJs ...£10,297,023 £9,238,261 The revenue fl>r 1903-9 was £9.001,185, and the reveniio for 1910-11 was £10,297,023 — increase £1,295,838. EXPENDITURE. • • The estimated expenditure for the year was rot doivn ss £9,472,278, to which has to 1)C added an additional appropriation fcr railways of £233,755, making a total of ■ £9,7C6,033. Of this amount £9.342,106 was spoilt, a saving of £362,927 being effected. Pormanont appropriations show a saving of £29.660, and the departmental expenditure is £333.667 less than the amount authorised. Cf this amount the railways arc credited with £192.496, lx?ir.y the balance niisnent after tho exoeas of revenue as allowed l>y law was added to appropriation, so that if we eliminate railways we have a direct saving for the year of £141,171' on our departmental votes. With the exception of tho legislative class it will be seen by reference to the totals thy t. every other class has been kept within tho amounts voted by Parliament. Tlie amount estimated was: Permanent charges, £3,672.110; annual appropriations, £5,800,168: additional appropriations for railways, £233,755;—t0ta1, £9,7C6,0i53. Tho amount expended was: Permanent cJlarge?, >'3.642.850; annual appropriation*, £5,700.256 — total, £9,343,106 — ■ saving on appropriations, £262,927. Tho is a comparison of the expenditure for 1909-10 and 1910-11; — Permanent Appropriations. 1910-11. 1909-10. .'Civil lift £34,373 £33,730 Interest and sinking fund 2,458,452 2,397,461 Under special acts ... 482,119 452,491 Subsidies paid to local authorities 103.017 94,203 Territorial revenue ... 40,397 36,300 Endowments 153,459 158,066 Old-age pensions ... 366,033 342,053 Total, £3,642,850 £3,514,409 Annual Appropriations. i Legislative depart- | . inents £37,611 £23,6341 Department of Finance 48,023 36,773 Post and telegraph ... 911,819 855,862 Working railways ... 2,270,814 2,168,1891 Public buildings, domain?, and mainten- j ancc of roads 31,103 86,729 j Native Department ... 21.661 18.874 '■ Justice Department ... 370,182 365,920 , Mines Department ... 22,457 24,704! Department' of Internal I Affairs 262,140 256,466 Defence Department ... 212,939 194,050 i Customs, marine, and inspection of machinery 114,737 122,782 Labour 22.725 24,212 Lands and survey ... 206,660 233,753 Agriculture, commerce, and tourists 184,579 189,914 Education Department 024,777 859,243 Services not provided for 8,027 10,418 Total £5,700,256 £5,476,513 Grand total ... £9,343,106 £ 8,990,922 The increased expenditure of £352,184 is made.up of the following increases: — Permanent, charges £123,441 Annual appropriations 223,743 An analysis of the increase in expenditure gives the following results: — Interest and sinking fund ... £61,000 Under special acts 2,000 Payments to local bodies 14,000 Old-ago pensions 24,000 Public service superannuation 28,000 Legislative Department 9,000 Department of finance 11,000 Postal Department 561000 Working railways 102,000 Nntivo Department 3,000 Justice WOO Internal affairs 6.000 Defence 19,000 Education .. 65,000 Total £404,000 SAVINGS. Department of Lands and Survey ... - £27,000 Customs, marine, and inspection of machinery 1 8,000 Public Works 6.000 Agriculture 5,000 Miscellaneous 6,000 Total ... £352,000

Tho results of the year's operations aro as follow:— are as follow:— ; Revenue. ' Halanco April 1, 1910 £432,316' ; Receipts during yearRevonuo 10,297,023 Other receipts ... 250 | Total £10,297,273 . . Exi'ENDITUUK. t Appropriations £9,343,106 r Excess of receipts ... .:. ... 954,167 j Amount carried forward 1,386,483 Trar-icrrod to Public Works , luind ... : 800.000 | lialance March 31, ISII 5E6.483 111 the Budget last year I estimated the > surplus at £727,421. lew tlio amount required for tho Supplementary Estimates. ■ It is pleasant to announce that tho estimate i has been exceeded by to much. The excess • is, as I have already said, largely due to tho ' widespread revival of trade both in and I out of the Dominion. TREASURY BILI/S. As will Ik> seen, there were none outstanding on March 31. These from time to ■ timo will have to bo am in rewtcd to in 1 anticipation of revenue for which the law rurhtly provides, but it must ho satisfaci lory for lion, members to note that, as 1 promised by me, the largo amount for 1 several years npi:earing under this head, 1 which had practically bccotne ]>art of our permanent debt, has disappeared. The position for 18 years is sliowh by this table :— 1803-4 £811,000 1894-5 ' 810,000. 1895-6 735,000 1896-7 730,000 1597-8 730,000 1898-9 710.000 1899-1900 700,000 1900-1 . ... 700.000 1901-2 700,000 1902 3 700,000 1903-4 . . ... 700,000 1904-5 700.000 1905-6 700,000 1906-7 ... 550,000 1907-8 400,000 1908-9 250.000 1909-10 100,000 1910-n ... Nil. As the wholo of tho £700.000 has been paid off out of ordinary revenue since my Government took office in 1896 1 think I may reasonably take credit for a satisfactory clearance of what, had come to bo regarded as part of our pormanent debt. PUBLIC WORKS FUND. A community liko ours, which is develop- ' ing its heritage by tho expenditure of public moneys, must look with interest on tlio ('audition of the fund available for the construction of public works. Tho talanco from last war was £312,366. During 1910-11 it revived as loan moneys £1,984,742, transfer from revenue £800,000, other receipts £6506; total, £3,103,614. The expenditure was:—Under appropriations, £1,692,851; other charges, £70,718; balance at March 31, 1911, £1.140.045; hi la nee of loan money to lx> received £181,650; available public works moneys to start tiie current year, £1,321,695. Tito balance on .March 31 is mado up as follows:— Cash in public account £381,259 Advances in hands of ollicors of the Government 8,780 Invested at fixed deposit. Dank of New Zealand, London 750,000 Total £1,140,045 The total amount transferred from revenue to the Public Works fund sjnoo 1891 amounts to tho large sum of £3,030,000. I give tho actual amount for each year during that period:— 1691-2 £39,000 1892-3 200.000 1893-4 250.000 1894-5 250,000 1895-6 150.000 ie 96-7 150, OCO 1897-8 300,000 1898-S 425,000 1899-1900 ' 450,000 1900-1 500.009 1901-2 500,000 1902-3 300.000 1903-4 350.000 IGO4-5 600.000 1905-6 ■ 500,000 19C6-7 775,01 X) 1907-8 800,000 1908-9 800,003 1909 10 Nil. 191011 800,000 ][ ilio amounts transferred from revenue had been lxirrowed instead of ljeing provided in this way, tho interest laid thereon, reckoning it at 3j per tent., would have totalled £2,001,400 to date.. Our public debt, as in the case of taxation, in comparison with other countries, is very light indeed, so there is another [wpular delusion which, in my opinion, requires to bo dealt with. That is, that our debt is a | grievous burden— alirost t<i> great to be borne. It is nothing of the sort, and tlio true position must be stated again and again I at tiw risk of qipoarini; wearisome in iteration. Our gross debt is large, but 6o I are our ascots, and in considering the |»si- ' tion of any individual lomiiany or nation the debts mast not bo referred to alone. . What has been done with tlio money borrowed? Are there assets to represent it.' | Winn percentage <.f it has lx<'ii applied io I increaso the earnius iKnver of Pusmc*,? i These are sonio ot the questions which : must, be answered bofore an opinion can be I formed as to the heaviness or lightness of tiie ilo'it under consideration. Our debt I inay bo examined in detail thus:— i Total gross publio debt £61,078,122 accumutatcd sinking funds 1,2)0,754 Net debt £79,837,288 The gross debt is shown in detail thus:— IVirrowwl for Maori war, £2,357,000; defence, £2,783,727; railways, £25,60^,948; loads and bridges construction, £6,871,251; public building.', £5,240,251 j telegraph and telephone lines, £1,431.647 ; harbours anil li glit! i twos, £573.68-). immigration, £2,463.002; lands settlemont, £6,303,485; Government advances to settlers, £6,974.935; Government advances to workers, £964.765; Hank of New Zealand shares. £500,(XX); Now Zealand wtttol.-, £462,166, purohaso of Nativu Ijnds, £2,461.167; tourist ami health retorts, £131,507; developinont of goldtields and coal mineft, £937,598; loons, to locsil b<xli(v, £4,882.000; Stato fire insurance, £2000; rewrvo fund securities, £800,000, scenery preservation, £40,000; detieiencies of revenue, charges and expeiises in raising loans, increase by conversion, etc., provincial liabilities. and miscellaneous, £9,244,990;— total, £81,078,122. ANALYSIS OK THE DEIIT. Railways (£25,602,948).—Tiie nulways more than tho interest on tlio moneys lx>rrowed for ccnfitruction, and tho general taxpayer contribute nothing to their upkeep, but. indirectly Iwnofits by their existence. Advances to Settlers and Work-srs (£7,939,700). —This money is lent- out at. higher rata; than theso at which it was i borrowed. The dilforonco moro than piys ! t:'r.o cost of working tho dopart.n-.ent, and \ makes [irovisioii for a fipecial sinking fund j to |uy oil' tho lcane, toßothor with a reporve fund for all possible losses. A considerablo profit will nltimatoly go to the Slate. I.iko tho construction of railways, (1)0 londiriK ot this money indirectly help.; tho tnxpayor by inorwusini; (ottleinent, oontributui;' to tlio Dominion's prosperity, and Has conferred widespread Ixmelit on the Kottlcrs and indiroctly ution tho i-raders of tho Dominion. Luids for Settlement (£6,303.435). -Larfre estates liavo boen purchased witb this

The public deiit may be summarised thus:—(l) Paying interest and making a. profit, £47,923,946. i»orcontage of whole 58 |>er cent.; (2) indirectly interest-l>earing, £7,701,418, 11 per cent.: (3) non-interest-k-aring, £25.452,757, 31 i*>r cent. If t.h<. per;o<l of tho Dominion's knowing is divided into two-that before 1891 an the first, and after that, date the second, -if will be iwen that the burden of our debt is ivally decrearing, although tho tolal has larg.'ly incroasMl during the second term. The interest-lk'ariiig and non-interest-be-aring i»rtious of our <lebt up to 1891 and from 1891 In tho present dale are: — Before 1891; lnt :'-n.-.st.-lx*ariii^ —1 tor rowed for railways, £14,580,000; public' buihhng\s £1,800,000; telegraph alnd teleiiliono liiu-s, £769.000; pnrcha=,T b." Native lands, £1,546,000; loans to Iwal lindio-, £325.000; —-total, £19.020, OCU. Noa-interett-beariiii;

--lsorrowe<l tor Maori wais, £2,557.i' (L'feiw, £1,638,000; loads and bridges, £5,106,000; Irarljour and lightli juses, £484.000; immigration, £2.459.1>J0; goldtields and coalfields development, £571,IKWcosts of raising loans. dto.Munts, and conversion into stock, etc., piovincial liabilities taken over, £7,195,350;—t0ta1, £19,810,350.

In 11)91, 49 per cont. of the was directly or indirectly interest-bearing, and 51 |wr ctrnt. non-inU'i«.-t-l>eari»tr. Since 1891 cur debt lias I von iiierivu-cd from £38,830,i50 to £81.078.122, hut it will Ik. rccn thai mora than 86 per ci-nt. of the incroaso is M>lf-Mi|i|)orti!iL'. Intonut-lh'ar-Ifcinowed fw litihvnys. £11,022.9^1!; public buildings, £3.HP,251; telegraph unil telephone lines, £662,b47: lawk for moid, £6,303,435; advancis to >oitioi\i, £6,974,935; advance.; to workeis. £964.705; lianl; of Now Zcala-nd sha.-es, £500, COO; Now Zealand comols, £462,165; purchas:; of Nativo lands, £915.1b7; loans to local hcliiv, £4.557.030; Sui (.:> fire insurance, £2030; reserve fuml iL-curitirs £8Cfl.OOO;- ■ total, £36,605,364; of increase - that, is, intcioM-hiarint! 86.7. N'oti-iiiUwt-ln-ariiijj: Uonxnved for doff nee, £1.145,727; roads and bridges, £1,765,251 ; liarUiuri mid lif,'htliou!-vs, £89.683; immigration, £4002; Umrbt and health rcforls, £131,507; goldlields and coalfields development, £-116,598; syanorv pne.servalion; £40,000; wis of raising loans. ilkount*, and conversion into stock, etc., £2,049,640: -total, £56.424.408; perccnta-iii; of inonroso llial is hoi inlf»n*s(-ln>n riiifj. 13.3. It will bo «mmi thai, prior to 189 1 49 )-?r conl. of our debt. was directly or indirectly intcrcst-lx'iirinjr. and from 1391 to 1910 the jweniaiw of increase of loans that were intoicst-boarin;,' was 36 por conl., while pftor to 1891 loans that wero non-intore.-t----baarini; was 51 ]K?r cent., and fuim IS9I to I'Jll the perwiil'a;no of tins inereaw of our loans liiat were not l«uiu-_' inleuwl. was only 10.3. Tim-o facts spoak for themselves, and should lie ruinomiiorod by I Wewho arc so ready to cry out, against our financial )w>iii<m. The average ralo of interest paid on our loans was considerable moro in 1891 than it is now. On tho 31rt March, 1691, it w.ik £4 10s 3d par £100, niul now il is (ilx)iit. £3 14s 6d. Tji-kintr the difference in population, tho rato of interest per head on t.ho non-intercKl-boariii'.; j.-ortion of our dol.-t is much loss now than it was 20 years aj;o. Tliat which is c.nrnint; interest, it cannot lie too often ieixvitcd, does not oppnvK tho taxpayer at, all. In 1391 th« population of the Dominion wa-s. exclusive of Maoris, 634,058, and il i--, now 1.058.407-an increase of 59 pr-r conl. Tlio imri-iiilorest-lMviriiif,' debt iia-. now increased by only 12.8 por cent. In 1891 it v.'::s £19,510,;50, nr.d it is now only ££5,452.758. At the ralo of interest paid on our loans in 1891 th« annual sum lo Ikpaid on Hie £19,810.350 of non-impost, lie.arinj; debt would N> £503.'14(>; thai is £1 fs por head of population. At Ilia! f-ui:o ralo of int-ero-st tho amount, por head on tho £20, '52.755 of deadweight debt, now oivitiu would 1» £1 2s; but, we, aro pavim: less inl'.-rost now. and for I.lm £'2M5?.,75!i debt, now owini; liio prevent .in'.ount of inlerrr-t would I o £916,812. or 18s Tjd por head only. If wo th-> wlwln amount of our dolrt .in a deadweight one -t.lial. is. iiuitiier profitable iior self-supporting, us tho grcutcr |>ortioii:>

money, and closer ■ettlenicnt brought about. Tho lent and ollkt inivmo from tho land* purchased moro than pay tho interest oil Ihv money borrowed for this pur|>osc. 'Hie cxjTt'iiiiiiuro indirectly helps Iho tux payor, ami without tho system being in operation a largo number of |xxiple in tho Dominion now ii: good |iositions could not have enjoyed tho happmit>s they experience. Telegraph and Telephone Lines (£1,431,647) —This sum, too, finds iU own efficient public convenience.-, and we liavo tiiulcniiilily the most efficient telegraph and telephone system in the world, and which I liopo to sec .'till picatly improved. ll.ink of New Zealand Shares (£500,050).— The money for the purchase of those shares was borrowed at 3j per cent. The Stato has to |w.v £18,133 per annum interest on thi-j n.nd on the expense of eonvertit;'.,' it into stock; hut it receives dividends much more than £18,133 per annum. Siiu:e 1904 tho Stato lias pi id iir interest. £125.900, and has received in dividend.* £262,500, giving

a net. profit of £126,600 in seven years. If shares ware now .sold thev would bring much mom in tho open market tljan the half million paid for them. 1 think you will agree With iiic in saying <hat. apart from being a profitable investment, the attachment (f tlx.- bank to the Uominiou is, as

a malter of public policy, a wise one. Leans to Local Hodiis (£4.882.000). —This money was liorrowed to. help tlm local authorities. The interest is paid by tho l>orro>v<ing authority for 26, 32, or 41 years, according to tho rato of interest paid—4J, 4, or oj per cent. per aiHimn. The loans liavo been no burden to tho taxpayer, although the principal will have to be repaid by the State, and not- l>v tlio Jcca.l l>::iiies. Tho indirect benefit. t<) Iho State his, however, bwn substantial The local authorities can obtain sufficient funds to enable them to carry on with reasonable activity local works of great value and convenience to t how whom they kti'c. Under tho old system the work of tho local Ixxlies was cramped and restricted. Reserve Fund Securities (£800,000!.—1 his ajiionnt was borrowed, and as soon as possible invested in Lngland in undoubted securities, wliidi at any time ran lx) easily realised. The intercut received almost equals that paid. The investment was created to form a reserve which can bo drawn upon in case of some great emergency, peril, or national disaster. Tho creation of this reserve ha* the approval of the [irc-atest experts in finance. 1 hope that in years to come an additional £200,000 may lx* added to the present sum, £1,000,000 in all. Tho advantage to this country liy ro (loin? would bo very Croat-. I new show Uio division of our dent which is self-suppcrting and earning interest. Amount expoiuled on railways, £25,602,543; loans to local bodies, £4.882.000: to!og;raph and tolephono lines, £1,431.647; leseive fund securities, £800,000: New Zealand consols, £462,166t0ta1, £33,178,761. Prolil earning: Advances to srttlcis and workers, £7,939,700; lands for settlement, J'6,303,485; Dank of New Zealan<l shares, £500,000; State Fire Insurance, £2000:—total, £14,745.185. It will (bus he seen thai £'7,923,946 cf our debt pays interest, and some of this (fives more than the interest paid for its use, being actually piolit-pi'o-ducintr. If from this is deducted the sum lxirrowed to help looal Ixidies, which, when due. wi I be ]Kii<l by the Doininii.n, there remains a* sum c,f £43,041,946, which i> no burden from the p;>int of view of taxation, .Till never will bo to the taxpayer, tlf tho lomainir.ig isortioti of our public debt some is indircetly intercst-lieariinr. such as the purchase of Native binds (£2,461,161). has been well spent. Somo of the lands purchased have l>'.c :i sold, some leased, and some are still owned by the Lrvvu. liie returns to the State in way of rtiit moneys received fcr tl'.e .*> 1! 1 1 s and tl:o still remaining would be more than suflicienv to set oir against the liability. Roads" and Rridg<* . Construction (£6.871,251). -This may bo considered indirectly interest-tioariug. Though it is well known that a very large portion ot it ha* been loaded on the land ami is direct iiitorcst-boaring, for, p<r< sent purposes 1 call it indirect int- ret-t-bearing. lie physical configuration of our country, its deep gorges, high liill;> and numerous iargo rivcivi mudo it imperative that a lieavy expenditure should l« incurred for intercommunication amongst its scattered settlements; otherwiso soltlcmont in many partu of tlin country would have ken next to jm|Mssil)le, tus witJiout. facilitivs for transport. ihotLsands of pcor people would have been in a iorry state were money not. freely spent on such works, and the development of the Dominion would have liC'.'ii seriously retarded. I shall, however, in tlio ultimate analysis consider it as noninteivst paying. Expended on Public Huildinirn (£5,240,251).--This amount may l« re(jardetl as indirectly Kent, would have to ba paid if the State did not erect odices. To tbe foregoing might he adde<l the loans raised for •immigration ami tourist resorts, but if is safer to regard them as non-interest liearing. 1 will now state the loans that a.iv non-interest liearing;— Ixans fur roads and bridges, £6,871,251; immigration, £2.463,002; Maori war. £2,357,000; defence, £2,783,727; harbours and lightiuniiets, £573,683; development of goldtields and coal mines, £987.593; touript, and health resorts, £131.507; ecenery |ii\.'servation, £40,0 ft); charges and oxpenrew of raising loans, increase by conversions, etc., together with provincial liabilities taken over oil tho abolition of tbe provinces, £9,244,990; -total, £25,452,758.

3 per 3jper 4 per cents. cents. cents. New Zealand £S5 10 0 £97 0 0 £104 0 0 N.S. Wales... 87 10 0 98 10 0 104 10 0 Viutori.i .. 84 10 0 93 0 0 102 0 0 S. Australia 32 0 0 93 10 0 Nil. Queensland.... EG 10 0 93 0 0 102 0 0 W. Australia fD 11 0 97 0 0 Nil. Tasma.nia ... 84 10 0 97 0 0 Nil.

There are bound to be fluctuations from tin.o tr> lime. The law of supply and demand alfccts the price of money, as of ar.v other commodity, mid I take Ihe latest tmntatkxns as a reasonable guide to our position. We sometimes lind our slocks Riling higher thrill those of our neighbours, and sometimes lower, hut il cannot be snegrsled that by giving the latest (pioUitions I have attempted to i-electa favourable period. Yet they comp.ire well, and our posit ion is a strong answer to those who express doubts as lo our standing nt th:; world's lin;vK.'ii!l centre. PrilLIC DF.I'T EXTINCTION ATT. The amount that will be required to he paid out o' the Consolidated Fund for the litpiidation of public debt will during this year lie £1-14.885. This is a large sum and a gmil liegiimiiig bill, us fully explained in last vein's Huduet, it will involve but little extra trouble) lo the taxpayers, and will be mflicir.'it to pay off our prosent National Debt in 75 years. The amount will lie made up as follows Saved lo the Consolidated Fund by the discontinuance of contributions to provide a sinking fund for exlimtuishing old war and defence loans nnd for the lepiiymenl of inonevs nnWd for lending to local bodies. £92,208; interest to be received from the Public 'I'ritslee on Ihe sum of £992,592 held by him and set aside uiielor the net as a permanent endowment to a:=ist in the repayme.'it of the whole of our public debt, £3!).fifll: amount lo be paid in addition out of Ihe Consolidated Fund, £12. W. Thus for an additional payment of £12.835 out- of the Consolidatisl Fund more than wis paid last veir the whole of our present debt not provided with an interna! reserve or sviking fund for il« reir.yment, will be cnli'elv i":tiiign : »he:l in 75 years. The ;cl.eni.> has cnuie well out of the criticisms, friendly and otberwi«.\ lo which it has been subjected, anil tlio more caro'illlv i| is examined the more sntisfacto**v il will appear. I had the pleasure of fullv explaining, the to financial ex-i-erls in London, i.'.'id 1 am glad to say Ihnt if met with general .•inp'oval. Inquirie. have lieen made aUiiit the s\>teui from ('-oinmoiiweall.il Slates nnd other countries. I .ike miinv of the irord tilings fnvl jnlrodreed bv Ihe New Ze-ilnud l/cish'ture. it i< eerU-iin to lie nilopl.-d elsewhere. I note wit!) ■■egret that Ihe o'd bul most eoniiiion objection to it i* still feel.lv voiceil <.<v.vi.inall.-. Tlii'l is Ilinl sou.e future Piirli.-inieiil '"ill repeal lh" net and undo what lim been done under it. Il'is a'gmeent wou'd lie in-t nn ..nsv.ud if nrt'ed aL'aie-i any li'si-da-lion. Ine aboliti in of c'lilal i.iii'ishmenl for mvi'ir offences, th" freeing cf Slav-*, <.r ;..iv ellier eeli'.-lileue,-! "leasure could li.'.ve been otipc-vd with n like eon-I'-.1-'on. We eaiinol. of eoume. bind fuluro l':rliani"!ils in inall"rs of this kind, but wliv should we as<nme Hi,-it our 'iimcssors will K' less honest than wc are'' The world is getting te'ljer. fortunately, and repudiation of Ihoir financial obligations by modern Plates is lieeoming r.nvr than formerly, and no Kiicli idea has or ever will lie entertained by this Dominion. The mischievous statements recently made with such persistenev ill this country aliotil ]>r<and past Governments sei/ing- or, as j| jms U I'll inelegantly lenn>(j. collaring ing funds thf strongest fx'iisure. I assert will) emphasis (hat at no time in tho history of New Zealand has any Coverniniproporlv used nn.' sinjl |>ennv of a fund .*(1 a.sido for the leeayiitetit of a loan. Where Ihe at cumulated .. inking funds inv been liberated and used for public purpc.!J.ji this W.:s done in every i;..-" .villi Ihe full consent of Ihe lender. When this fund has I von in existence for some jc.irs it will have a lymeliei.-i| rlfeel on our limincr.-. ,;nd ennl'!.' renewal transactions to he effected with advaniagc lo lie. tloininion. Ti:.' liiiioun! c a.-sl in inierrct will go a long way lo providing th" annual instabcont.'i reipiiiwl lo be piid um'..r it. nmotintiir: lo only •'« 5-d ikt £10T of our ilel.l. in suel. n.ntlers .is llii- we innsl lo'il; beyond the |.r.-=erit. I'or V'.irs I have antieipatrsl the <..stablishni' , nl of a we||tho'.igtit. out ,-ysleni le' which the repayment, of tho whole of our debts would l)c a^urcd

of tho national elebls of many countries unfortunately are,—it will be soon that ,t is not so onerous now as il was 20 ve'aiti ago. Tho interest piiil |ier head on the wiiole debt was in 1891 £?. 15s 3jd, and it is now JJ2 10s si<l—a. decroaw of 8 per cviil. Hut in 1911 only 31 per cent, of our debt can bo said to b:> deadweight, whilo in 1891 51 per cent, of it was of llim nature, and III? amount |r.iyabh; on il has fallen from £l 8s lo 18-s 7Jd per liead of population- a decrease of 19.4 per cent, llow ('.in anyone, iu view of lliese striking fuels, say that our debt is increasing and our taxation is being piled up to such an exlent ,k lob imlK-aralilo:' It is to b iniicli r.-gretted thai a statement of this kind should 1m so persistently spoken and written by tlio.-e who should know belter. Ignorance in connection with this subject, is to be expected in all uninfornu'd [>crfoi;.;, but for public men and i:ew|v,iprr writers who have acccss to the record-, of the) Dominion lo make such misstatement.; is inexcus.ible. They have done serious injury to our country, whether they meant lo do fo or not. 11. is the duly uf every person who s|rcaks as one having authority in public mutton lo make hiinsolf acquainted with the I mill respecting our debt--. The more inimilely they aro examined the l>etler. it will Ih> found thai they are a dimiulsiiiiig lo:«l for Ihe taxpayer to boar, tJiat they hr.ve licen, on the whole, well expended. and that the inhabitants of the Dominion have lienelited cnormouslv by thcni. The provision now established by which they will be wholly extinguished in seventy-live years fr.'iin the present time shouiti further relievo well-wishers of tile country from any anxiety in respect of them. I have considered it desirable lo go somcwlnit at length into the position of our ii.dehlcdne.vs owing to the persistent misrepresentations made about the linniicinl position the last few months. There apiiears lo nave heon almost, a widespreaei conspiracy of defamation of our country's linai.cia! condition, which has made the foregoing full analysis necessary. As in ineclianical laws, so in politics, action and read ion are cipial and opposite, nnd whei: erroneous slatementji are made often a rocoil is to be expected. 1 shall return to this f|iic.=tion again and so often as annears lo lie necessary WKAI/ril AND ASrfWS OF THK DO.MINION AND ITS PEOPLE. There are so many wrong impressions conveyed t regarding the general position of Xoii /cjJ.uk! tJmt 1 ih.'/.'lc it v.'ilj he recojfnised as of use to our if I sot < m i i air estimate of ihe private weribh iu 1911. Our iHvsition may lie si-i-n at a ulanco by civmpariiiß our liabilities with «>iin; of our nasots:—].ii:bi!iti(- i , £79.837,333 (cf which only £25.452,753 is disid weight dclit); lisfts—fxuvn lauds, £22,000,000; cducatieinal lands, £5,033,615; Government milways open and under construction on 31st. March. 1911, £31,509,960; other public wcrks (telegraphs, lighthouses, harlxmrs, water supply on goldlield-), £6,COfI,CC(): valuo of lands hold as seonrity for amounts her-, roiml feir aelvaitce's te> settlers and workers,' £20,000,000; wine of lands held under Ixmd for Settlements Act, £5.000,000; Bank of New Zealtind shares, m.iv, £2,000,000: re-sen-o funds seewities," £ECO.OCO,lotul, Tii:s does not, of cotirfo, cover all nnr private kind ami inort^agc.i Iwing laxubli! us against ptiblie debk If we include all c.ur wcxltJi, such as land, live stock, bank deiiesits, timber, etc., the tol«l exceeds £650,000,030. Tlio sales <;f laiiel lnve shown that the valuation; tire very much lx>!«w Ihnt of actual sa'es so lhat no exception tun Ih> taken to valuations under this head, as they are on the low side. lam not taking into account incomes derived from salaries and profession!;, which now approach about £4,000,000 sterling per annum, nor elo I lake into account Ihe earnings of wageearners, the estimated total income of whioli is £.16,030.0c0 |ier annum. The public and private wealth in the Dominion is over £&50,CCO,OCQ sterling, and I would again call the attention of hon. members to tlio fact that for every million inereuso in tho public elebt the as ; ets havo increased rather moro than 10 miiti.-.ns, so that when th,- |x>sitie>n of the country is being criticised bv those who recognise that the future construction of railways and proper provision for the public service of the people require iKirrowcd money to do a iKvriion of it they should not shut their eyes to the other side of the ledger, a flame at which proves conclusively that though our debt- is increasing, due to ihe expenditure of money on well-ivuisiderce! proposals for the general bonelit of the people, the financial stability lxitli of the country and its people is lieyond all question, ami per capita of popnluticji our a.<>ets nnd w.-alth to day are the highe. t ill the world. The large lVjrease iu private wealth of the jirt.p'.e of the Dominion from year la year shows that cur per capita wealth is increasing much faster than our indebtednc.-s. I'tUC'K OK NEW /.DAI,.AND STOCKS. A great deal has lieon said from time In time "«s to our indebtedness affecting adversely the credit of tho Dominion. The best answer fo this will be found in examining the price of our slock compared with that of other Dominions at latent quotations. which I now do.

within .1 rnr.wnntilo time. In my Financial Statement of 1695 I raid: ''Tho ipicstion or I lip extinction of our leans has given mo much concern 'flu time is tipiironchiug when, isi my opinio-), it would tuld to tho stability of Ihc Dominion and place it in the forefront of any cnuntry in the world if we would rescilvo to make u moderato

.n.eriiiee in providing with our annua) interest a small payment to enable the loan to tsu extinguished within a reasonable p.jriod. 1 fully recognise t.lio fuel that ii:rjii( ill authorities iirjjo (hut a borrowing country should not provide a sinking fund until it has censed to borrow. Circutnt'.'iiifo; tiller taw, tintl 1 siiy liiat, uilli tin novoi pr<ifjx.v.H of obtaining money at. such a low rrde us would enable us lo provide for the gradual reduction anil extinction of our d'ht- without adding to our actual Illusions, flip provision of a Milking fund is a course that Ins much lo commend it. Wliil" posterity Inn doubtless to reap the reward of the (Hurl.'; of onrs-jlves atuf those who have preceded lis, a.nd should l>ear a full share of the burdens croatml to make the connIry, still, us prwfcnt men. we should, while recognising the necessities of the tinw in which we livo, endeavour to make our legacy as light as jxissiblo for those who will follow u?. I think there is much l<i Ixi said for this ni\)|x>sul, ami I am seriously of opinion liiat it would give greater stability lo thin country wero we, when tlio right lime arrive. l , to adopt, an effective system for the extinction of our inelobtedness. This will prove lo lion. niembsrs that I liavo long considered such a plan, ivnd that it is not, as some critics have unkindly mggested, a suddcJi inspiration, duo to a deHire lo make the way easier for further borrowing. I feel great plea-sure, fhorofore. in realism'.; that this long-cherished object is now in actual operation. THK FIVE MILLION LOAN. I learned ii|x>u my return to the Do minion that, there hud been much criticism by thos© opposed to the Government^ concerning the flotation of the five million loan. When in {inland I ascertained from various financial authorities that '.ho ojxuutkm was reg-ardod as a mat suewsf il one, nor did the fact that the underwriters of tho loan retain a large portion of it iu any way weaken .4he credit of. or do any injury to, the Dominion. The abnormal wiuie:; that led lo the underwriters taking up so largo a ]nrtiuu of the_ loan woro well known to financial houses ill _ ICncliiiKl, and tlu> fact that they were, within a comparatively short time, able to dispose of as much nf their holdings as thev desired to ■the inverting public at a. profit showed conclusively flint the disparaging slalotnctlhl as to the success of the loan made lit this end wero without foundation. In fact, moreover, we obtained a higher price for our loan tlia.ii any other countries that wero borrowing for some months before or since that period. In conseitlcncc of statement* that I learned had been circulated during my absence regarding the loan, I felt it neccfsury lo cable lo the High Coinmiwioner, and I will put on record lih leply to each of the <|Ucstions 1 |>nt to him! 1 will five tlio t|i'icslions ami their rcplict iu their sequence so that they may bo more evuiily understood.

Copy of oablogiviiii sent to llich Comfor New Zealand elated 26th August, 1911, iinel reply to cticli iiucnt.ie.il from Ihe High Commissioner dated London tit.' ?/jlh August, 1911: — Firstly: It is stated hero that, the flotation of the fivo million loan was a failure because of tho faei that a largo portion was not taken lip by the public, but was rctaimd by the underwriters, l'lease state the fact > iu connection with this aspect of the matter. Iteply: The statements elid not. justify describing the loan a.s a. failure. Aftor full experience of other lHiises and of the general conditions, Ihe' underwriters won. not aware that little public response was urobable. Nearly every important lin.nieial institution had an opportunity to underivrit'?, and mit one has Ix'Oli dissatisfied with his bargain of lieing unablo t.i unload his slock, if ro.iuired. This is the true test and'that tho loan was underwritten on the iiKiri favourable terms.

Scondiv: It is further stated that tho credit of Ihe Dominion was such as lo account for the underwriters having to no,tain sa large a proportion of the loan, ltopiy: This is quite untrue, as is proved by the fact that, despite a serious <l«prcintion of gilt, edged investments, collsequent in part on huge capital creations ever all the world, the Government <if New Zealand was üblo to place here sonw £5,000,000 during 1908-09 anil a further £1,R50.000 in April, 1910. nearlv all converted lo stock by investors bv litl November. Without the highest credit such operations v.vro im|K>ssiblc. Thirdly: Ilatl the amount of tlio loan anything |.-> do with tho underwriters retaining the amount thev did?—Ueply: With reward to the public rospon-w. no. The size of Ihe lean nceendtated a like distribution of the underwriting anil enabled all Ihe important city interests lo participate, many do ng so for investment. The transaction of eccurities was regarded rather in the nature of n sale to investors.

Fourthly: l'lease stale any facts in connection with the flotation of tho loan that you consider neexssiry.—Reply; Hut (or the serious political crisis owing to tlio breaking clown of the conference between bolli House-; of Parliament then sitting it is probable that there would have »ccn a small premium whilo the. list remained open and as a conscepicr.cc eome applications would have lxeen attracted from s|iecailators. who would havo immediately sold the loan at a premium. Had Ihe confer ence icsulte.d in an agreement, and the same' been known before the list closed, a considerably d IFcrcnt result might havo been obtained.

Fifthly: Should be glad if you would stati' ti.lt-;> how loans raised by other countries immediately pr.or to and since the llekition. of live New Zealand loan havo fared, giving the dales of flotation and tho name of country.—Heply: I'articiilars of loans issued and percentages of underwriters are as follows:—April, 1910—.South Australian 3J per cent., underwriters 07 per wnt.; province of Manitoba, 4 |>er cent., underwriters 87J p<er cent, .Mav. 1911— Canada 3J per cent. £5,C0D,C00, underwriters 73 |ser cant.; over £2,C00,C00 was conversion; West Australian 3J per cent, underwriters 88J per cent. Juno—Port Bumbay 4 per cent., underwrit-eix 78 per cent..; (Ji(y of YaJieo.ivi'r 4 por cent., underwriter iO per cent. July—Oraud Trunk Piieilie S por oeiit.. iindonvrlois IS per cent.; Newfoundland 3} per cent., underwriters practically all. October— Ktruits Hettloments 3J per cent., underwriters 93} per cent. December—Province of Saskatchewan 4 p.'r cent., undenvriters 88 per cent. February, 191 l West Australian 3i p.'i- eojit., underwriters conversion loan. .MaiT.li—lndia 3J por cant., un(lerwr.ters conversion lean. .March—lndia 3} i>cr colli., underwritoi-B 38 ])cr cent.; I'ort of I/indon 3i j>er cent.. tiDderwril<>rs 50 |»?r cent. April—Vancouver 4 per cent., umlcnvriiei's 77 per cetil.; Queensland 3J cent., tinderwrilcrs 91 |icr ccnt. June —Province cf Ontario 4 per cent., tinderwriters 73 por cent.

Sixthly: Have New Zealand stocks upon the I/undon monov market bc<ni in anv way depreciated as the olltromo of the tlotahoii of Ihe live million loan?---Iteply: As tho of the issue there ha.s Ictii litlJe or no depreciation. The form of issue wheivbv .-,tocl; need not Iv- creatol in oxeess of the demand prolecteel us iu that ivspecl. .libl previous lo the ifsuo tho price iuled about 9:J and tlio price today is about 97. but it would lw well lo remember that during this p:\rieil there had been adverse Unci nations in llrilish (loveiiiruent jtt-uri-lie.s ranging from 2 per cent, to 3 per cent. Hritis.li consols, New &mllt Wales, Queensland, and Tasmania 3i |ier cents, have dropped one lo two point,-; since NovcmIx'.r.

Jv.'vi-nihly: Is it. or is il not, a fact that a lar.'e portion of Ihe lean mils lake.-i by inviMiors to hold as investors' stock?--Iteply: It is a fncl tlint a very largo amount of underwriting is arranged by Imih!.' as invc. tninil, mid aro doing' so. lii recent ytars the jxilicy of Ivinkers and ollnrs lias lyji'ii lo lake this class of j-nurily in prcferonoo to stocks with a long ci rrency.

Kightlil> : Prior lo lho flotation of lixms, woulei publicity of the intention to do so be injurious or otherwise lo the Dominion? — Itepl.v: In large financial arrangements iu Ihe city any public discus-don in advance would he detrimental iu its effect, on (lie negotiations. Among other reasons is tho following:—ln accepting a new liability tlio oily houses often lind il will be nrnwary and profitable lo ioduc.3 in anotiher direction. Wit lie,ut xcrecv this would be often im|K]Ssible. It will thcrj'r.re be s.y.n that underwriters held lirgo iiortions of all llievo loan-, an<| New Zealand -ceuml a higher price than any of them, even the.-.' t.ayiug a lii'jlt:'!' rato of interest than we diil. KAiI.WAY CONSTKCfTION. 'flic during tho year on railway const rtu'l ion and impiovejiionf anioiinled to over .CI.CO'J.OOX The \ear Iris uitiH.-vd tho steady pros"eution of new rail.vay lonslruclion in various Igealilii's. Tiie is.nipletion of the main aru-nal Hues is a principal obj.vtive, and the chief effort. 1 iu ihe way of mu.-lruction have i.'. Miii 'veil din-fted to t.liis end. Tlio com-mi.-sio!i -ct up during the rccits lo consider ihr 11 iiipaialive merits of rival sti?,-ge.-t-'d roule.s for tlie 0: :in line north el" Auekl .n.l lias ioti.pl-lul its investigaliou nn.l submitted a unatiimotw iv[Kirt, nn-oni-nieudinu llio adoption of what, is known 11s the western route !<i Mimgnkahia, and thence to a [loint neur Ktiikohc. Const no

| lion work on this and other main lines has j been vigorously pushed 0:1 during tho yesir. I .Much remains to Ivj accomplished beforo the system of arterial railways necessary I to provide adc|Uatu trani-i;x)rt facilities for the prodtieors new* on tlw land, and to niei'i, I ho needs of our cwr-extcnding scillenicnt can bo paid to be complete; In:!, l!:i' (iowrmmMit is endeavouring, by the prudent expendituro of tho funds at it.s commami, to gradually extend tlio system m> as lo provide the ncoesAirv conyenieiice lo the scttJr-rs without sacriliejng it<s valiio ;.rs a revenue-producing enterprise. .Siime further iino; of branch railways a.r» wwstirv, ami fresh millitiriiations will l;o asked for this session. ROADS. The expenditure during the year on tlio formation of rtuds and tracks and Iho erect ioi of bridges to provide means of .icce.-'i lo coni|ia.ralivcly new settlements was hardly so heavy i..s was anticipated, principally owing to a <learrii of labour during tlio summer months, when njatl construction in the more remote districts can best lx> jvushed on. The rervicei of the (■cunty councils and raid Ixwds tliroughoiil the' Doniiniou have again bcvii utihV-d to carry out. the larger putt of the expenditure under sulyulv or grant, awl in oaves wkuro t.he local bodies were unable or unwilling lo undertake or supervise the works the Government's own stalf was entrusted with I ha expenditure. Some .minor dillior.lt its wero encountered when the system was initiated, but these are giarfuitlly boing ovofcoine. ajid it is probable that the local lwlies will during the current year be entrusted with the expenditure of an increased proiKirtion of tlw \otes aviilable for road iVorli.s. In many cases the settlers concerned have displayed a willingness to Kite their lands for loans to k* expended on road improvement, aiul in < most, instances of this kind the Government | lias assisted tiiose who endoavcuml to help ; t.henift'lves by graniing subsidies on the I aiuoiinl.s provided by means of loans. Much of the road construction work now in progrew is in localities remote from the larger .settlomnnU, and in many places the climatic I conditions and uncertainty of obtaining | regular food supplies iniike it difficult lo keep the works manned during the winter months. IRRIGATION. Satisfactory progrcs; has lieen made with tho development of the scheme for irriipt.ii!;, r the kinds in Ci v nt .rnl Ota go, the prcductive jxiwer of which has deteriorated during a succorsion cf years of inouilleeint'rainfall. Surven rccoiillv enniilck'tl show Hint, u Inige area of fertile land in Ida Valley can be irrigated by gravitation at a;i annual cost, to the landholder? which would !>:• rehimed many times over by the increase in tlu' nieduotive power resulting from bringing ill an abundant water supply. The scheme is a very promising one, but the co o;>erntioiv of the settlers :s reipiirnl, and the Guvernment is n;>w placing definite pro- | pmls liefoie them thot should enlist their interest and permit of the enterprise being brought into snrcci-vful eperahen. The irrigation of other areas in (.Vnvral (lU(;o is also propped, and luiuch nccossury Btirvey work in conneetioir therewith has been undertaken. There is good reason to believe that in many places whons tha natural conditions arc favourable irrigation would bo practicable and successful from an economic point of view, and would be tho menus <■{ re;t'jring prosperity to this old settled district. MINING. Tho output, of minerals for the year shows a slight decrease oir llrat of the prc-vious vcar. This <le??re'jse in other iuinera.ls is liaiaiicod by a hr','e inercdse in the production of coal. x> that tho lota! value of tho output of the underground wealth of tho Dominion shows an increase for the year. The dccre;isc in the production cf gold and silver is largely iitlrilmtablo to the restricted ojv?rutio:is of the WnLlii Gold Mining Coiunany, but it is hoped that tip cheek is only temporary, and that when the olieap nower freun the Horahora Falls is availubfe tho ccmpiMiv will to in a position to prolita.b!y treat low gnule ores, wlueli at present are of no value. New is not solitary in showing a dccreascd yield in gold, as most of the Australian States also sliow decreases. Notwithstanding the decrease the mines are showing well, and the year under review witi!es'"d considerable improvements iu some iir.d a brightoiriuiJT in the prospects cf othors. There is every justification for regarding: the future with ceinfidenett and for l-eccrelhig the conviction that, with fair encouragement in I Ifc work of development, an even more prosperous era thinr the inelestry has vet experieuciil is One mineral liiat shows n large increase in production is fheelite, which is boiiig actively mined in Central Olago. alw at Wairaii Valley, in the Marlbarcuili district. The driving of the deep level crosscut at tlio Thames is heiiß actively carried on, iukl the striking of go;id prcspi'i-ts in the course of the work cnciiurnges the. hr.pe that favourable anticipatient .will le realisod. Tho production of coal continues to increase, and for Ikfirst tuns in the history of the Dominion the two million tons marl; lias been passed, 2,197,362 tons hiving been | reduci d, as against 1,912,247 tors for tho previous year. AGRICULTURE. Tho year has shown very gratifying progrew in tho work of the Department of Agriculture. This progreci is very imirkcd, both in tlio activities of the <ltpiiiiment ami iu the greater interest displayed in itrt undertakings by the agricultural oamiiiunity. Tim all-impnrlant, dairying industrv luis reocivcil |iarticular attention, with tiie objeet of increasing the profit to tin; f:ini::r and lo msuro a Mill higher quality **. the proelucto of that industry—butter and cheese. Tlio herd-test-ing associations are being highly appreciated by the farmer and have U't'ome more than |x)pul;ir. The demand far the establishment of these assveiations is in cxcesa of tho capacity of the stall of the division available for that purpose. These testing .■msociutious have eleinoustrutcd incst remarkably the dill'erenco between tho pi-otitable and the unprofitable cow. Th<se have boon re vela lions to oven the most skilful of tho funners who nro occupiial in that industry. The pasteurisation of milk will have a most important bearing on the future oi this industry. It will assure tho provision of n better quality of our dairy exerts, and, furthor, in viow of Ili'o hlost scientific tJiis pnstouri«ition neurit? tl*<» maintouancxj of t!i? health cf the farm animal ami very iiml-ori-ally al.'O the health of tlio human consumer of meat and milk. In this there id ono of tlio principal means that will ultimately provide control of the white plague tubiTch'. The (fcverninent is taking into consideration the question of turning into profitable account tho products from our butter and ch'.sxio faetoriet). The result of this will bo an iiicreascti ivveuuo to,' tlu dairy farmers of tlx! Doniiniun. The dairy industry occupies a large share of tho work on the experimental farms; in fact, there was at one of these farms the initiation of milk-rccording and lierel tesling, and fiom I lies'., there have developed the associations already referred to. The.se farms make s|Kcial r\pernneiit6 in forage crt<|)s especially for milking rattle, n.n<l every eflort is lieiug made to encourage tin; cultivation _ of tint plant- for tho dairj-- fanner - lutvrno. Agricultural education is one of the tmwt. importiuit subjects all'ccting tlin country, and at one of tlio farms (in tho Waikato' a nuiiilier of youths and young men aro assembled for training in agricultural practice. At. Waeronga., in the Au(J;l:uid district, on land that w;us at ono tiino eonsidered useless, but which by ex|«rinient was found suitable for fruitgrowing. a series of small farms, each of about 'ii acres iu extent, have been prepared, cullivaled, and plnnt.vl iu fruit trees. The*) farms were lately olFercd for election, miel they are nil t.iken up, Th.' aggregate value of tlu so farms is estimated at about i601>3. and they have Lieni provided for fiom ordiiuiry revenue. A comniutiily such as will ultimately lie (stabat Witerciiga would 'assist very materially in I,'ringing about, an organised exiwrt of fruit, nt:-tl it is to this export that, the fruit . industry must seek its success. This dopaitmeiit. has aim undertaken very extensive work in the testing of certain lands in different parts of tlx; Dominion—for instance, the pumia' lands of I ho extensive Taii|xj plateau, I lie gum hind* of the Northern l'cnii'.Mihi, and the intract'ibl': lam's on tlio West Crast of the Poutli ldand, and it is niaki-ng a rfries of experiment* with tho object of regraxsing <'e|ileled |Vk~toral lauds of the central regions in I lie South Is'aiwl. .Associated with tliL'i work is the .ill-important soil survev of the Dominion. Tho chief agricultural chemist and a surveyor are unelertaking a soil survey of the fenv-t land; of Ola'M and Soiiinlnml with n view of enabling the farmer to trrat and cultivate lltoso lands on scientific are ill progross applying lo a million acres in tho North 1.-'.a'id where nil atfeclion of stock militate? against occupation of Hi" land. The oxi>orimo.iilal farm is in di niand tliroiiL'hout. New and it will lv •jnitifvii.g le inform von that such nil iii-:itiiti;.n will, be t'te.iblislied in th" K:<nth Island. This farm will be parlie.iiarly useful as apnlyim: In conditions of olimiiie ajul nf Miil tint have so fur rendered the work of |||.<0 in 11... \oiih Istnnd hardly appliiable iu th" f-'oulli. With thin will lie .msiKiinh'tl plant bawling at three diderenl sl.itions, and nl.L'il. brce.l ing is prolmbly one of tho most useful of

| tlio undertakings on tho modern cxpori- | inentol farm. In Sweden with cereals, : and in LYi-many and in America witli l>oot i for sugar-making, the increase in the val-.io i of tlm crop by selection in breeding has j bi'ou phenomenal. Tlio dcparlnmnt in many | cf its undertaking ar.d on the experimental I farms liih but experienced what lias been so universally felt in other part.; of lh-l world whore s'niilar undertakinirs exist. Tilers is first the period of criticism, licxi, of somo .''.ppnt'iation, and finnllv that of Iwtli appreciation and confidonco. These farms, in addition to their great valuo lo the agricultural community. have, I am glad to say, shown ;i profit on tho operations for the year. \V ATI-ill I ;( OAVKK. liniwtnnt progre.-s lias Iteen mado it) tho direct ion of giving effect to the decision of parliament to brinir into profitable litre the latent jk>wcr in our rivers and streams by the development of electrical energy on a largo scale. The Government has liccurcd tho services of Mr Kvau Parry, a professional gentlonuin of - high standing with considerable experience of iiydro-eiecti'io ppwer schemcs, to act ns chief electrical engineer, and litis iplKiinted Mr Lawrence Hirks. ajicthcr enNiiicei' with Itiqh profcw'onal credentials, us chief assistant to .Mr l'arrv in this work. It. is ivitisfactory to nolo that the preliminary investigations ami survey work eani(d out. principally under the drection of the late cnginecr-in chief were in the right direction, and that, tho fir.it schemes to lie undertaken by the new engineers will be tho:c evolved and advocated by *.iO late Mr I'. S. Hay. Tho ixiliey of tho Government is to develop one large propo^al first and study results before oinbarking mi a more extended programme. Witlt tli::i end in view prctta rations an: being made for developing a large 32110111 C at Lake Coleridge. uiul conveying the power to ChristchurchJ Lyttelton, iind tlio surrounding districts, where there is likely to be a market for it. from the outpet. It is also hoped to demonstrate the advantages of electricity for haulago purposes 011 railways generally, apart from its value in special eases where tiie conditions aro unusually favourable. Inquiries arc being made with a view to ostablishing within tho Dominion new electro chemical industries wliicli would obtain their i»wcr supply from the Government mains. One of the most promising is the manufacture of chemical fertilisers, for which there Li likely to be a. large and increasing demand throughout tho world. With the natural conditions obtaining in New Zealand it is lirobiiblti that iirodtitilß of this nuturo could be manufactured (vi a largo Male at a prioo which would make the industry profitable in itself, and of lienefit to the whole community. Another feature of tlio development of our water power on a largo scale which would have an important bearing on the social lif ? of the people is its possible influence in the home. Tho problem of assistance in carrying on domestic work under existing conditions is one which is steadily becoming more acuto in most civilised countries. A practical solution seems difficult of 'attainment, but will doubtless ultimately bo reached by reducing tho amount of personal effort required to attain a Riven degree of domestic comfort. I.n my opinion, the day is not far off in Now Zealand when, with an abundant supply of elcctrical energy available at a cheap rat-.\ it will Iks within the power of most people, to utilise the new [Kiwer for all tlio lighting, heating, and cooking required, withi-.it any tract) of dust, dirt, or excess of {tout. Under these conditions the kitchen would become as clean and as comfortable as the drawing room, and domestic duties would no longer bear the stigma under which they labour while existing conditions prevail. Tho estimates of expenditure and revenue iu connection with the Lake Coleridge project indicate possible prices for tho supply of current which warrant tho hopo that fiicli a consummation is within the range of practical achievement in New Xealand. The imixirtoqt question of electrifying the Lyttclton tunnel, through which a hiTgo number of passtmgers travcjl annually, has rccciv.;d careful consideration, and tho electrical engineer, Mr Parry, has been instructed to report upon this matter without delay, and to prepare the necessary plans, with a view to the work being put in liand at an early date. He hns also been iiu-lmettvl to furJiish a report upon the utilisation of Lake Waikare-Moana for the supply of electrical nower 'or lighting and industrial purposes in the North Islo.'id. This is cspected to be avaihdile at an early date, and I am hopeful that (ho waste power latent there will before lone- be made availablo for tlio uses of the people. NATIONAL PROVIDENT FUND. This fund, which was established by tho act of last session, commenced operations in March last, and tlio department is now actively engaged in distributing information relating to flic benefits and in corresponding with employers, local bodies, and industrial organisations throughout tho Dominion. The applications so far received, show that all classes are iksirous of enrolling—farmers, artisans, labourers, domestic, and clerical workers of all gradesindicating, 1 think, that tlio echeme is bn.fctl on riffhl lines, ami that by tlio tiino it. is in full operation a considerable number of our workers not othorwiso provided for will bo enjoying tho_ security of the fund. Interest in tho working of our act of last year lias boon much stimulated by • tho comprehensive fchemo now boforo the Old (.'omitrv and ba.=cd on compulsion, wherein j it dilfets fuiuhmentally from our voluntary system. One of tho most striking features cf tho British proposals is tho thorough manner in which tho machinery of tho friendly eocicties is to to utilised, and it is clear that any schomo purporting to deal with this problem must tako into account tho work of thes? well organised and deserving todies. In considering any extension of our mstem, therefore, llw interest of tho friendly societies can lie relied upon to -be carefully i>rotecte<l. There is 110 nlotibl that' t.hu compulsory policy in rcspcet to this importa.'it social reform Jias in recpnt years mado considjrable headway in public opinion, and fow students of tho problem doubt its etncaoy in t.lio older countries, whero highly organised industrialism anil extensive distress exist side byside. Tho extremes of |xjverty and wealth exwfitt',; in Kuropean .State, however, find jio parallel, ovon coinpaiatively, in our : land," whoro w« arc still" fortuiiatolv in the position of tieing able, to forestall many of Ilw ovils io liiliorcnt in iJte older social systeint. Tltcro is, I think, tho opportunity in this oonntry to attain universality of eiokneAS and health insurance by tlio ma«t economic mctlioiLs and at the samo time 011 sound actuarial lines—that is, by enlisting | the young into insurnnoo and preventing I them from lapsing from it throughout life. | It should atso bo cur aim to sccure tlio ■ gradual cooperation of tlio various organised bodies having kindred objects. Tho 1 lines upon which tho fund might enlarge | ils scope would Iw to provide for imnroI diatc Mikncss and enter into tho question I of assisting local bodies to overcome their j superannuation difficulties. By following I the policy I linvo outlined it should bo |wsI s.blc-, without entailing' heavy financial | obligations on the Stato or tlio' individual, j eventually to arrive at as good results as would ho attained by the adoption of an I Immediate compukory system. Tho irsurai»3 against unemployment proposed in 1 tho Britisli schcmo is udinittixllv expor--1 menial and restricted. It is the first I national schcmo of ils kind, and the developments will lie watched with absorb- | ing interest in those countries whero the I problem is under consideration, j PUBLIC SIiKYK.'E CLASSIFICATION. I As was stat.-d in the Financial StateI meiit of last i-vtsion, the atinilgajnation of j departnicnks and extensive rclrcnchinonts | upset in a gi«it hica-suro the classification ! which hail been almost liiiish«l by tJio j Ixiard appointed under tho act of 1933. During the rccctv, the classification | Hoard appointed a commitltv (o draw up a j H-homo for the ch'fsilicatiou of the' wliolo j of the public sorvkv, excluding the railways and the Past ami Telegraph IX'part- | ments, whittli are already ela.syilicd, mid ! the report of the lx>anl will ibe pioscnted ! 10 Parliament shortly. It. will not bo • brought into foa-o this year, ami ample ! time will bo givon to all conoo.rncd to ; n|i|>eal if desired. Inereasiv: of salary ■ will Ix- provided 011 tho Supplementary ! Kstimates j PUBLIC TRUST OFFICE AUDIT. At the request of the Public Trustee arI rangonionts have licon made with tho Auditor-general for Uiking ovor the in--1 J|tection of the Public Trust ollito branches ! and agencies, wiiioh for some years has j l>eun c,irri«l out by the oflice itself. The | servitw of tntvelling inspectors of tiie I Audit De|artmeut will be available for this I purpof-e, and will insure on indepcmlent i iiudil Ikmiiu' made, which is much more desirable than a departmcnlal 0110 I Pl'lililf SKKVH'K SUPKRANNUATION i FUND. I The income during the year ended eeniK'r 31. 1910. amounted to £156,008 Rs i 7d, inclii<line £32,785 15» 4<l lieing tho value | of the Police Proudenl Fund trans- ; fi-rrcd on April 1, 1910, and £22,500, the annual subsidy by the (I'overnment. The amount contributed iby memlicrs of the fluid ihirin-j tiie yrar was £30.214 13s 6<l. 1 r.nt inc!mlin< ? r £I£o-1 lis Gd which olfc-rs ■ of t!:e polic feny' contributed to liioir . I'lMvideiil fund Jiiring the three inonttu i iminoili.-itcly prior to l-hc ilate of meri;ii!i;. j (he bnlance of the inoomo Ix-ing mad" up : of interest (£10.211 lU< 4dj. and'lines (£296 I ft. ;,1). The lotnl outgo for Uu> .v«ir of £40,C0S lfw .vl LruJuiLsi allownai<;e.s to mem-

hers, and lo Tfidnws and children of doc<\uod memlwrs. £36.009 17s 3d, ns against £17,862 5s Oil for tho previous year; contributions refunded £574'! 13s sd; compensation £319? 0s 7d; and excuses £1657 ss. Tlio lolal value of tlio fund at tho end of l!i--> yew was £263.943, tho greater part of which was invested by the Pnhlia Trustee at rates ranging from 4} j*r rent. I" 5 per osiit. TJie number nf contributors at tiie beginning of the year was (323, and 1520 new contributors have sinco joined, including'tho 773 jmunbors of tlio Police Provident Fund. Hie number of officers who ceased .to contributo during Mm y*tir by reason nf having loft tho sorvien. retired on pension, or died was 472, le-i vin); :i total of 8371 clFcclivo members nf the fund at. tlio end of tho year. Tho statutory triennial examination of tho fundi is being made.

VOST J!! E !.'!-sn-M!H..depart-

M KXT'.S ()'PEUATIONft

The returns of t:':c Post and Telegraph Department indicate a \ory successful year. For tho first tiino in the history of that department the revenue lias exceeded £1 WO, 00. As will b? soon liy tho table of revenue, tho balance of rovenuo over expenditure (or tJio year amounts to £123,195 9s sd. Tho savings bank deposits reached tho large sum of £10,708,938 163 10d. bringing tlio balance to tho credit of deno=ito'rs up to £14,104.089 lfe 2d. Tlio turnover of tho money order and postal note business for tJio year exceeded £5,500.000. Those figures show a very healthy state of business in tJic Dominion. .Steady progress lia.s been made in connection with tho extension of tho telephono system to remote districts. Tho recent decision under which tho department takes half the risk of tlio estimated deficiency cn telephone lines applied for has lieen tho means of providing communication to many places where the business would not have warranted such facilities unless on the payment of a comparatively heavy subsidy by the rattlers. At tlio same timo the rate of interest hitherto charged on the capital wist, of construction on wliieh tho subsidy is based has been considerably reduced and minor charge.-; havo been abolished. . Tho demand for tnmlc telophono lines between tho larger towns continues. This class of service involves a heavy capital investment, Ibufc as theso facilities invariably result in a profitable business, the Department, is endeavouring to cops with tho demand as fast as its moans will allow, Tho corcrtruction workj carricd out during tho year amounted t<l 426 miles of poles and 2-156 miles oi wire. There wwo 103 new telegraph off!ccs opened during the year. _ The experimental wireless station at Wellington has been of piuetical valuo in notifying tho near approach of vessels installed with like apparatus It is proposal to hav« the permanent station on, a site on tlx -South Tinakori Hills, near Wellington, thus enabling communication to bo held with vessels within a 300-milo radius. Sitej have l>cen selected at Awanui (North ol Auckland) and at Awarua Plains (between Invercarpill and P-lutT) for the establishment of high-power stations having a radius of 1250 miles. Contracts for tho two latter works have lieen let, owl it is anticipated that, tho Awanui station will bo in working order early liovt year, and tho Awarua Plains station a few months later. Low|x>wer stations at. Gisborne and in tho neighbourhood of Christchurch are expected to be in operation in the near future. LAND AND INCOME TAX. / Both taxes were paid ud very well, tho percentage outstanding at March 31 being small. This branch of tlio rovenuo continues to be collected at a very low oost. The percentages of cost to rovenuo arc as follow:..lncome tax, 1.75 per cent.-, land tax, 2.71 per cent.; both taxes, 2.23 per cent. Income Tax.—Tho amount collected for tho year was £407,325, as compared with £316,83!) for 1309-10—an increase of £!W,400. Tho increaso is duo ip tho new graduated rates of taxation which were in lcrco during the period undar review. The: cstimat-xl result of £80,000 additional ro-' venue <luo to the new scale was moro than realised.

Fjiintl Tax.—Tiro amount collocted was £623,723, _ as compared with £642,270 for tlie previous year—a dccreaso o[ £13,457. Hon. members will rccollect that this was anticipated in last year's Budget, as I estimated the probable rovenuo at £625,000. I estimate tho reoeipts for 1911-12 a« follows: —lncome tax, £410,003; land tas, £635,0 CC. figures aro very little in excess of the collection last year. I have before pointed out to lion, members tlmb wo cannot oxpeet a recurring inercaso of the land tax, as it is found tlw-t tho increase resulting from tho enhanced valuations iiiado from tinio to liuio by tho Valuntiou ) Department is equalled by tho diminution in tlie graduated land tax causcd by the subdivision of estates which ncoeaarily followed this jnrtieular form of taxation. LAND SETTLEMENT FINANCE ACT.

Very satisfactory progress lu-is been made under this act. Tho amendments introduced hist session somewhat simplified tho pro-jedure,. but further amendments are required to complete tlio measure. Tho total number of associations incorporated or approved under the act is 18, with a membership of 107. All area of 14,965 acres, valued at £209,577, has been dealt with by them. In addition there aro iivo other associations under consideration, and 11 proixMals to form associations to purchase lands havo been declined for various reasons. Tho board luut to excrciso vory considerablo care in dealing with tho formation of associations, as it is found that members are apt to entor into agreements without due consideration. Tho responsibilities v.-hich eaeli member is supposed to undertake are not well understood, neither aro tlo conditions of purchase, in some instances, being complied with. Further safeguards aro still very ncoAKiry. Tho system (if land purchase and cloter settlement provided for by tlie act will have a great development when it m better understood. LAND FOR SETTLEMENTS ACT. There' havo been a considerable number of estates purchased during tho year of a total area of 14,399 acres, valued nt £153,796. Tho bulk of theso havo been taken delivery of and satisfactorily settled. Thero is an increasing demand for land, both pastoral and agricultural, and every effort is being mado to secure suitablo arena at anything lib a price that will lcavo a living" margin to tho settler. NATIVE LAND SETTLEMENT. . Tho activity of tho Native Land Cteurfc and its oft'ects upon the progress toward tlio settlement of Native lands during tho past year havo boon most marked. During die vear ended Mattel 31 the Native Land Court imestynted tho ownership of total arras of 186,679 a acres hitherte unclothed with title, and dealt with 833 lartitioris sited ill? an aggregate area of 503,829 acres. In addition to tlio foregoing, tho court confirmed 49 transfors, comprising 11,628 acres, and approved 24 lenses of a total area of 5056 acres. Tlioo transfers and leases wero in respcct of laiuts not situate within tlio Maori Land Board district.

MAORI I/AND BOARDS.

As to tlie general statement of the Nativo lands dealt wiUi by tho Maori Land Boards, the position, during tlio year is thai some 435 alienations by way of loose wore approved, covering a total area of 116,498 aares; b&O .transfers uvro comwikxl to, Whilo under part 18-of "The Nativo Laud Act, 1909," some 37 transactions by. way of sale and lcyiso covering 98.922 acres wore completed, making a total of 295,766 acres dcall with by way of approval of arrangements made letweiin Native owners and aliens. Tho various boards administer, as Tested lands, 975,010 acres, over which area they havo issued 422 leases for a total area, of 282,402 acres, and 24 transfers, comprising 6003 acres. Tho remaining areas are being surveyed into sulxlivisions, and also roaded, etc., preparatory to lieing placed cn tho market. The advantages of the assembled owners' provision (part 18) have not vet received tlie full attention of the public, but evcrv indication paints to tliis, important feature of " Tlie Native Land Aot, 1909, brin? Ix-'ttcr availed of iu tho future. Although during tho first six months practically 110 application under part 18 nart been roccivoci, a considerable area dealt with in the last half, and tho settlement of 115,143 acres was thereby determined. The boards during tho year issued remusitions for swvoys o( 112,685 Rcmj, which it is anticipate*! will be completed and tho lands offered during the current year.

native land purchase board. The IxxmUs constituted bv stction 361 of Uw Native Land Act, hold 12 uml considered oilers assrepUmg 902,07+ acres. Tlio purchase of 75,437 ncrw luisbccn (•ollipletoil, wlli'o 90lli<! 430,560 acres aro under negotiation. I'nvat-o altcnabois haß been prohibited in rcspeot of 271,058 acres, wliilu olfors of 83,933 acuvs .ro hoK ov-or jx'.ulinv; appwls, etc. Only .two °» lilalliiiU' 162 acres, wore dcolmcd by tho loud. Tile fees during the year paid to the nu'nlic amuml By ho >|vhvo I.und Court. £5945: by the Maori Land Hoards. £3469 l>y other sources, &9Z-m an auurojjatiiig £9507. defence. The new Dofonco Art, which is now in operation provides for tho t, r r.uluru militnrr trainnv; of everv iirtlc above the ago of 1} in Now Zealand. Tie enormous amount iif work involved in coti:i<ct:on with the putI ir/- into operation of this iu"t IS, I thins, tmito apparent to hon. motnlions. It is liujicd tot wo shall eventually build up »

citizen army, wfc'eh in its organisation, training, n-rxl efficiency will enable us to preserve our shores inviolaWo fivtn iirv.ision bv (oivini fcfxi. I woald men-lion that a staff of tajccaiiy selected officers lias boon from i!:o Jiiipcrial army in order to assist in carryiw; out tho organisation a::.i training of the new force on tho most, modern turtj lit:«. It is very gratifying tJrat- sue!: excellent hcidway lias clrcjviy been undo towards placing our defm.ea; on a moro secure fooling. The authorisations asked for arc wit.hin the amount placed before 'Jio Ilouss when submitting tho ncrw doforio* schcme. To enable t};- nceesary equipment to k- provided I propose t;> pay out of oidinary Kveiiuo tho full amount required, which" is estimated B' £150,003. It is not desirable (Jut the. equipment should be provided cut of loan r -- ; '-p. vs , and, hohlirg this opinion, I am limiting tho nccessary provision to er.ublo tlio course I .1111 now indicating to he fob lowed. The extremely practical outcome of tho new act, wheieby all youths, who are physically fit and luvo attained tlio ago of 14 years, undergo n course of military training will, I am confident, bo of undoubted benefit to UlO individual in after life. During his period of training lw will be taught discipline and thoso habits of alertness of nuiicL and body, said also of patriotism, which should be qualities that ivill further enlarge tile good results that will nccnio by tlio adoption of univeml iiiiJitnrv tiaiiiiii?. Spcoial effort* art; lieiny made to ensuro tliat the building upof tliis forco will bo carried out with a mininiucu of inoonvenicnco to employers and employees, and without in any way interrupting tho ordinary routine of t.rnde ojkl commoreo. The necessity of always being prepared to defend our shores is of paramoiwt importance, nnd it bthoves us all to do everything in our power to assist the Bc-hcmo and endeavour to bring home to the pcoplo of (ho Doinotiion tJio groat Ksponsihihty which rests with themselves, as the building up of a citizen anny on the most 000110. niieal lines possible "will depend in gr«vt measure upon the support hik! sympathy of tho peo|Je, who must provide, in addition to tho noctssary funds, the rpirit which will give it life. THE NEW ZEALAND DREADNOUGHT. In conncction with tho Dreadnought battleship, I have the pleasure to inform members that it has been clulv launched, and it i 3 anticipated that it will be commissioned and ready for the Pacific by 1912. THE VOLUNTEERS. Last year you will no doubt remember my mentioning tho excellent work tlio Volunteers have done in conncction with tho defences of thu Dominion, and I would like to take the opportunity of reiterating how thankful I am to all—officers, notl'commissioncd officers, and men—for their valuable services in the past, I am very glad some of thein will be able to continue in the good work until that day comes when the nations wili bc persuaded to abandon their own destinies at tho expenso of others. We must be prepared to mako sacrifices in order to do our sliaro towards helping to keep intact our great Empire, and it would bo well always to remember the motto: "United wc stand, divided wo fall." I intend to ask Parliament to pass a resolution expressive of tho appreciation to those who have served in the past. ADVANCES TO SETTLERS. The amount granted to settlers during tho year was £1,204,510, an increase over the previous year of £109,190. The number of applications received proves that a large demand is still existing for cheap money. ADVANCES TO WORKERS. This branch shows a record business in tho amount granted to workers for building and aoquiring homes during the year. 40/,760 complcto plans and specifications have now been printed. They aro for inspection at the valuation offices in Auckland, L'hristchurch, and Dunedin, and at the principal offices. Copies arc supplied to borrowers free. They comprise 18 different types of building, of froth two to seven rooms, costing £120 to £750. The"' have been planned with the view to tlio maximum of convenience at reasonable cost, and when availed of will do much to increase tho comfort of workers and their families. -

ADVANCES TO LOCAL AUTHORITIES.

As'anticipated, a large amount of business has been done in this branch. The total applied for during tlio .year was £3,701,312. Of this £1,857,39-1 was provisionally approved—that is, granted subject to sufficiency of the security and t Invalidity of the procedure. Applications for £1,813,913 were declined. Those for loans for recreation ground?, installations of clectric light, etc., were refused, us "it was thought desirable to favour loans for roads, bridges, water supply, etc. Loans for the repayment of moneys already owing liy local bodies were also refused. Apart from what is owing to thu Government under tho Local Bodies' Loans Act thero is a sum of £13,000,000 owing by local authorities. It is obvious that if the Advances Department were being advancing its fund at per cent, to repay such debts, the average rale of interest on which is about £4| 12s per ccnt, there would be little left for carrying out urgently-needed works. At present none can be spared for tli'o repayment of old loans, but it is hoped that the existence of the department wili have a tendency to lower tho average rate of interest paid on such loans on first-class security, such ns is given by our local bodies. The average rate of interest paid for loans outside of tho Government should be less than it is. The procedure for obtaining loan 3 has been greatly simplified, as was promised in the last 13udgct. After the ratepayers have approved a loan the department does practically everything. A pamphlet has been issued giving full instructions to applicants bow to obtain advances. Interest is charged only on moneys obtained from the office during the progress of the work, so there is great saving in interest and costs and an avoidance of worry. Full details of the average amounts of the loans to settlers and workers on freehold and leasehold, and the provincial districts receiving them are given in the annual report, which has already been laid on the table of the House. ' The total amounts advanced, including repayments lent again since the department, commenced business, is: Advances to settL rs, £10,547,970; advances to workers', £1,2(1,755; advances to local authorities £405,195t0ta1, £12,230,930. There can lie no doubt that these largo sums spread amongst so many borrowers at low rates of interest anil on easy terms have contributed largely to the prosperity of the Dominion. .Much of this money has been expended fn assisting numerous settlers, who would have been unable but for the department, to obtain homes for themselves. TAXATION. Our taxation is not heavy. I am of opinion that, in tho best interests of the country, it is desirable to deal with widelymado and persistent statements that have been circulated in reference to the taxation' of this count!T-«tateme.ntH which have Ix-en tlio infills <j( creating an erroneous belief as to the amount of taxation barno by our community. It is sometimes lionestlv but mistakenly slated that. Mow Zealand is tho most heavily-taxed coimmi-iitv in ||,o British Kmpire, if not in tho "civilised world. This is far fmm being true. In comparing tho taxation paid by individuals in different countries wo am met with serious dilliculfies in getting tho exact position. Some countries levy nioro fivm direct taxation than others, Tlio revenu:: derived from property tax, lard tax, citat, ; duties, or income lax is collected in different ways liy different Governments. In | some countries Micro is no income tax; in I others, no land tax. In some inheritance ! taxes aro oonsidcrablo, in others they are wholly absent. Tho incidence of taxation, direct and indirect. diTers greatly in mast j systems. In some tho poore.it memtars of tiiecommunity are paying an unreafonablo pro|)ortio!i of thu whole. It is necessary to distinguish b-'tweeji taxation and cliargco for services rendered by tin, j •Stat.,'. In a country lileo Mew Zealand, which owns ils railways, the income of service is regarded as rovenue, and it is an error to s|x.:il; of this us taxation. If the total earnings of tho nilwayn of the United Stafcs of America (£580.630.445) or of thu United Kingdom (£120.174.052) were added to the revenues of those countries. as is in New Zealand, the taxation would apprur tolx* enormous; and k> on with the other .Slate activities. Only by carcful analysis cuji t.lio real amount of taxation bo ascertained. A country wilJi a email revenue per tioa<l may havo a morn oppressive system of taxation than 0114 witn a much larger ( .ipj revenue. I ho status in civilisation of a <tiuiit rv may bo gauged roughly by tho proportion of revenue applied to useful public purpuses and an e<|iiitablo incidcncu of taxation— that, is, the proportion ot revenno collected from these best ablo to (war it. Judged by 111 is standard. Mew Zealand holds a high position, indeed. Tako a small business man, a farmer, an artisan, or labourer with four children in Mew Zealand owning land valued at not more than £500, on which homo and busines; premi.-cs are eroctcd at a valuo of £1000, or oven more, , and in rcccipt of an incomo under £3Q() . per annum: ho pays no direot taxation whatever to the General Government, ajid

n, may contribute vory littlo through Ctisto loins if ho is a. teetotaller ami noil smoker, in Even if ha and his wifo and children uro .1 the average cjfiuntity of dutiable good.', Ml including silks, jewellery, ,-uid utile." or .articles dwined luxuries, lis wil pay only >n al.-.nit £6 EU 2d i>er annum. If ho cc<:i■st. : ; u-i'fj tlio avorago armiuat of tobacco and rv 1 1' id in addition, ho wiil pay in all ;is I i. s 9d in indirect taxation. If they nr j el, to go without what, aro considered 10 luxuries ho and his family pay hardly 10 anything at all in the way of taxation. For b- thu amount paid, tmppesing it is £10 5s ie 9d per 1 annum, he gets much in return. I His children receive free education.. At no £5 8s per milium, tho col of education of each child, fnun tlio ago of live to 14 le- hi! receives from tho State £21 12s yearly, in If hi*'children aro talented tliev can win m their way to any ;>ositioii that is dependent Jo upon su|ieriar ediionti-'ui. WHi tho chil- >!• dren begin work they are Iccfcod after by of Government officials, v.ho wo that they r ''_ have .sanitary surroundingf, get a miniof intim wage, sulliciont air :;pace, and aro n " not workixl 100 long cacli <lay. lie is ? d also safeguarded in manv ways during mo: kiny horn's, and if he )un> lieen unfoitunate ho will, at 65, receive a ]>ciisioii from tho Stato for tlio rest of his life. °J llis lot in respect of taxatiwi and a J' benefits obtained therefrom will com111' pare favourably with that of any lvorkcr anywhero in tho world. In W New Zealand no inootne tai is paid " Oil an ineonio le-is than £300. This is a ■J very high exemption. Jn Britain tho ' exemption oominences at £160; in Japan ' ' at £60, and it rapidly progresses tJioro until at £10,000 per annum as much as 43 in tJio ]>oin;-;l is taken by the Stale. . In Germany, taxation 011 IJIO [xxirer 1110111hers of tho community is much higher • than in the Dominion. In addition to tho heavy Customs dutks on meat and tJio ; 5 r nceessarica of life, ilia tax wliitJi they pay, oomparctl with ours, is w.ry seven 1 . Hero 3 " are ssmo exainplcj wJiich should be Khidie<l . in order that we may realise how fortunate wo arc .in comparison. Hie amount of 'JJ tho exemption varies in tho StJtA> of the " Gorman Empire. 111 Prussia all incomes of £45 or over, oarncd or unearned, must ]iay inoaroo tax. In somo States tho exemption is only £20 and. ns tho tax is assosscd on the toKiJ earnings of tho n family, and not thoso of tiio father only, I few escape. It is gradal from j to ' per cent, on an incoino of £45; and 111croasns jis tJio incomo groirt. Take tJio • case of (i servant girl in Saxony with a salary of £15 per year. The taxation of incomes begins in Saxony at £20. hut in'r como includes food, lodgings, Christmas 0 presents, and other gratuities. The emh ployer_ is compelled by law lo give tlio d authorities a list of tiicfo items. Food, t- lodgings, n«d other things will lx>, at tJio 1- lowest, computation, £23, making an inr como of £38 per annum and bringing the y girl under class 3, in which tho direct 1- tax is 4s per year. But in Germany it y it is a local tax. In some towns it is tho d same, in others more. Thus, in Frank- :• fort-on-thc-Main tho local tax is 125 per 0 cent, of tlio Impt>rinJ tax; in Dtiisbtirg, 0 300 per cent.; at hlhenrcld. 230 per cent.; it at Berlin, 100 pL'r cent. In some places o it reaches 250 per cent. At Dresden a |, servant girl, in eddition to 4s dircet taxal- tion, must pay for general purpesss 3s, for 0 church and school i-ax about 3a 6d. or a n total of 10s 6d. If tho total ineonio is £40, instead of £38, she is placod in class 4, which applies to incomcs of from £40 to £47 10». Slio will then pay 18s g in direct taxes. Consider tho position of r a married couplo in Dresden, cacli work- -- ing and together earning £100. Tlicy mo 11 taxed togetlier, and will pay £4 10s out [i of £100. If in difforent occuiwtions and separately earning only £50, each would havo to pay a tax amounting to £1 lfc. But in New Zealand it is not only the ]>ooror porsons who are lightly taxed; thaso who aro members of what in other ' countries axo called tlio' middle classes are s lioUer off hero Uian elsewhere. W'o will tako tho ffiso of a man rcreivin? £1000 per | year in Now Zcabrcd, England, and Germany. In New Zealand he will pay £2 Us fi)—tli.it is, lOd in tli? pound on £700,— - all in exccsi of flic exemption of £3CO. ' A Londoner receiving £1000. half of which ■ is earned njhl half unearned, will pay on ' tho £500 earned, at 9d in tho jiound, £18 3 ss, and on the £500 unearned, at ls 2d in ' tho i»tind, £29 3s 4d, —<1 total of £47 18s r 4d. At Frankfort-on-tho-Main a person ill receipt of a similar income will pay . £96. The Gorman Empire is purposely taken for comparison. Jt Ls ono of tho , great world Powers, in the front rank 1 of civilisation and prosperity. Wero a jioor ' or lackwanl ,Stato referred to, it might le said tll.'it the eomti:irL-:on was unfair. , It is not necessary, however, to go as far ! as Kuropo to find a country where the , small man i.s more liravilv taxe<l than in New Zealand. In incomo tax is nnynblo 1 11s soan as the incomo reaches £80. Tho exeinpt.ion Itegir.s to diminish at £110 and (lis.ippc.irs at £400, so that an ineonio of £300, 011 which 11 Now Ze:ilander pays nothing, a Tasmanian jiays on £270 at 5Jd in the iiound-t.hnt is, £6 ?s ' 9d. There is 110 exemption for land tax, 1 1 which is payable on every pound luiim-' proved value, mid if a man owns unimproved land worth £500 lie will pay £2' ls 8d land tax. In addition a glanco may hi; taken at the direct taxation systems of the other Australian States. In South Australia a man owning l:ind of tlio value of £500, exempt from taxation in New Zealand, would nay id in tho pound, or £1; alscntees l>eyond tho Commonwealth 20 per cent. more. , If his income is £300 «.nd derived from personal exertion (exempt in New Zealand) lo will n;iv 4id in tho |>ound on the inconic over the exemption of £200. or £1 17s 6d. If his income is from pro|K>rty the r.ito will ho 9d in tho pound,—thai is £3 15s. 111 Victoria tlio [ uninijiroved value tax on land is id per ' pound. Tho owner of £500 will pay £1 1 0s lOd, aa in .South Australia. Tho incomo ' tax is at tlm rate of 3d in the pound on ! 1111 incomo of £3CO jxt yror if such income ! is derived from personnl exertion (other than ine-xiie arising from live stock, wool, meat, milk, dairy produce, fruit, fodder ' and other crops arising from land under unimproved values of £5000) after allowing an exemption of £150, and 6d in tlio ( pound if arising from any other koiiico j except inooine from interest on Govern- t ineiit debentures, dividends from com- t panics, etc. A person in receipt of an j, income of £300, at which a New Zealander ; is exempt, will pay from £1 17s 6d to £3 t 15s. In there is 'iio laJid 1 tax except thai, of the Commonwealth and - tlio local authorities' rating, but tlio in- j como from hind, that is exempt in New v Zealand, is taxulile with an exemption of t £200. Above £200 it i.s 9d in the [kiuikl, J so that an income of £300 derived from { land would pay £3 -15s in taia- c tion. On income dr-i-ivcd from ], persona! exertion the lii-sl. £20 is f exempt, and 6d is royab'e r.n every )>ound 0 over £200. It is interesting to coini)xre tlio ~ taxation oil divid:»n<|s of coinfianies in Gerinun.v willi tliat of Now Zealand. us c ii,ppo?e that in tli:.s country a. companv jWilli a oipital of £100XC0 inakes £10,OM 0 profit and distributes £8010 in dividends. ( | 'Hie taxation iwynblo will l«: Income tax, s £8000 at ls 2d in tho pound, £460 13s 4d; c annual lie wife fee at ls |>er cent,, £50;- u total. £516 13s 4d. A similar company in t, one of tlio German Statu-:—say, DuisbiirV,— f! wiiera tli? local taxation is twice that 0 levied by tlio Jinpsrial liovermnent, will 0 ]vay tax amounting to £260. to tho ci(v on u a £10,000 trade licen.-x> at 2 per ccnt. £209, u and incomo tax (local), 8 per ccnt., £8C0;— |] fatal. £1260. But on £OCOO jxaid in divi- |< (lends it.'coine tax has to lv paid by ilio || The .unount, will <t?pe.nd U|xin n the totil income ot each shareholder as the ii incomo tax is graduated. If they are persons in re.-x>ipt of £500 tley |«a'v the n •State 0 I»r cent. (£?d0) to ' tho " local a authority b per eet-t. (£4£C), nnd to the cliurck 0.45 per cc-nt. •£36) total. £756. u j le'iiiirmg the total laxiv 011 £10.000 to 0 I £20.'0. In New /,;m!.h:<| ;i (ax is noj; levied I 'l , v-i"inV r'vci-«<l from compnnie.';, one o tax at tiro sourco only being colli'tl/nl. W'e 1( :....r a ml "I tompl,-lints aU,ut our land o I tax. '11ns is not l.ijfh until »•,. ted p I land tav b.-yximr s ] ayalilo, but it must b:> 1, I ren:oinneri\l thai our graduated land tax is n not, imposed for revenue iiurpoFcs, but with ii tJio intention of causing closer i-ettlemejil. " by tho Mil:divi.sio:i of large cj-talw, which o| will, of eo'.irr;\ reduce the revenue di'riveti oi from the graduate;! tax. In New Zealand n, mi owner of land of 11 value of £500 or in under is, i:s slued, exemiit. from land lax tc no matter what, tho value of his house or otl/.'r iinproveini'ii's thereon may he. In j r , many other countries rot only is there a si tax on land of .small values and nil i m . pi'ovements thoiw:i, but a portion of the ir nn.-i-i.iifc in vainer is also ;1.-iini<-«J |, v fii<> 0I State. Tints in England the duly (in in-ci-e.i.- 'd value is iv tax of 20 ]>er cent, levied on any increase in silo value. It is to l:e jwid whonevor land is sold or let 011 lease for more than 14 year' and whenever i|, v ' cti-inges h.'iiid< by dentil. Again, tliere Ls ' II duly (.11 ii!;:levelo|)"(l liiml at tlm ralo of )' jd for even - £1 i>: vabi'.>. There are cer- ' K tain s|ie;'ia! exemiitions, of cj«n>.e, to all " s those taxes, but tlicir evi-stence shows how much ly-'lter oil' landowners are in New ' a [ Z<-aknd. In on all inhabited "J lioiifcs and lauded pioiifrtie.s that change oniieivhip within a peric<l of from 20 "to 111 60 years a Sink* tax of 1 |>er cont. and a I local tax of 2 per emit, uv.lst. lxi paid on tho sale pri:v>—that is, 3 per rout.,—no kii matter whethei i|. is sold at a Iks or gain ia <om|.nred with the pnuious sale price. If on there is prolit—thill in, an increaso over the fo previous sale price—there is a, graduated Tl scale of taxa: amounting to 5 per ccnt, fa

INHERITANCE TAX. There havo been complaints witliout real justification as to tha amount, that is obtained in this country from inherited estates, but I propose to show that it is not. exc-otsive in New Zo.iltmd. Jt is increasing in all countries. Estates of £500 or under aro exempt in New Zealand from cslalcs' duty. Tlmso hiking |Jn> inlieritaixj i<ay according to tho relationship of the successor to the deceased, strangers paying 10 per cent. Gient caro has boon taken iu our legislation to protect tlio family. In wine other countries not only is tho succession duty as high as ours, but tho interests of the wife and children of the deceased are not nearly so well guarded. In tho United Kingdom estates of ovar £100 and under £500 pay 1 per cent., so that, £4 would bo payable. 111 this country there would hj no tax. Tlio siitmsion duty is higher 011 collateral heirs in tho United Kiuadorn than in New Zealand, and tlio maximum is the same —1 per cent. In Western Australia- the inheritance tax would lie 011 an estate of £500. if tho wife and children \v«ro at tho date cf the defense liona fide residents in Western Australia, £210s, if not £5. In Queensland tho duty on ail aitato cf £500 left to a wifo and children would be 1 per cent. (£5). In South Austral La thero is an exemption of £503 if atl estate goes to tho wifo ami children, but strangers havo to pay, as with us, 1 per cent. It. is the sa.me in 'IVsmania. Of llic United States all but_ 10 levy inhoritanco taxc.s. TJio tax varies greatly, and iu some of them the amount. reaoh<3_ 12 ]Kir cent., 15 per cent., rnd in ono (NewYork), in the ease of a largo (state and unrelated or distant ;>ersoiis inheriting its 25 |>er ocn(. is taken—tho maximum estates' duly (15 par eont.) and tJio succession duty (10 por cent.). It is tho s;uue in tlio United Kingdom as in Now Zealand, but tho higher duties aro reached much sooner in Now Zoilnnd, while smaller estates up to £3000 aro moro lightly t;ixcd here. If wo look round the world and compare tho taxation systems of this country with thoso of otliens, wo must bo impressed with tho advantages which our peoplo enjoy in tins respect. A man may own a home worth £500 and rccoive an incomo up to £300 ]>or annum, and ho will not pay ono penny of direct taxation during his life, nor will his cstato on his death if it pa£63s to liis /amilv. Ilow many countries aro there 111 tho clviliad world in such a fortunato i»stlion-/ COST OF LIVING. This has increased within tlio Inst few years in all countries in tlio world to an alarming extent. It has been tho cause of much suffering and sorious disturbances in many placcs. The cajiso is explained in different ways. It is attributed to yariius causes, but- authoritiw who have investigated it. stato that the principalcaiise is il'o ireleased production of gold, and In conseqtioneo a oorrcsixindiiig incrcaso in thu cxclmngo valtio of goods purcliasiblo by gold— that is, moro gold is required for purchases now than wlven gold was scarce. Whatever the causo may bo. the effect is very serious, especially to the poorer members of the community. All right-thinking people nro anxious to find a remedy if possible, nnd with this object in view tlio Royal Commission which will inquire into the unemployment- insuranco scfiemo t\i!l alfo fully investigate tlio matter as far as New Zealand conditions tiro nfFoctod, <wl f hope that valuablo suggestions will result therefrom. REMISSIONS. Tho condition of tho rovenuo warrants concessions in our gift duty, nnjl also in those connected with the estate duties when tlio disposition of tlio latter is to a stranger in blood, and 1 will ask the House to remove the dufv 011 gifts up to £1000. 011 gifta from husband to wife and wife to husband, also from parent to child, and n;i to £200 011 proporty loft to a slra.ngor in blood. INSURANCE AGATNST EMPLOYMENT. I am of opinion that the time has arrived when a practical sehemo of insurance against, unemployment nnd sickness should 110 established in this country, nnd to enable it. to be curried out on effective lines I propose to set up a commission of representative of the employers and employee.", of the Dominion to examine into tho scheme rubmitt-od to the British Parliament by the Hiirht Hon. Mr Lloyd George in order fo wlapt it to our circumstances nnd to make provision for relief on a rcale that will meet I he circuiratancrs of those who, either from sieknes.'. incapacity, or other caitsea find themselves unable 'to obtain r.r avail themselves of work. The matter requires to be npiironchi'd from 11 broad-minded standpoint, but at the same time with rare and 7,Hition. My idea is that- it should be nssn;iated with tho friendly societies throu-rli-ittl the Dominion, and that, with the aid if the Government associated with tho^e xxlies, n linmano and practicable fdienio mil be adopted. ENLARGEMENT OF SCOPE OF OLDAG H PENSIONS. The burden of life in old-age falls most loavily on men nnd women who have to ;upport in indigent circumstanic.s a fniiiilv >f voting children, and where a woman over >5 "years of age, or a man over 61), luus two ir more children below the age of 16, I iroiKise to ask the House to authorise a tension to lie paid to her or him at tho nte if 50 por cent, higher than is now ixiid nxlor the Old-ago Pensions Act. I nstini:ito his will cost about £10,003 per annum. ASSISTANCE TO WIDOWS. I propose to submit a system for the parial relief of willows with children left in wor circumstanocs. Tho umoiuit to bo paid rill range from 7s 6d to 10-s for the widow vrnkly. It- will bo worked in conjiinciion ritli tlie old-nge pension eretein. At-present hero are about 7603 widows between ihe , ges of 25 and 55 in the Dominion. I eslinato that over one-third of this number ,-ould be siillicienlly provided for. aad would tot- retpiire assistance, and ns 0110 marriage . II live is infertile, the number coming uiuier Im sclicino would l:e al>oiit 3000. ] estimate ho umount reiiuircd for this laudable purioso will be about £55.000. . OIL AND IRON WORKS. It. is rccognifcd that New Zealand must o its best lo promote the development of j s oil fields nnd its minerals. The »n'-tit.u-ion of l-heso great industries is by any dillicultics. Among thc.oe is tho largo itiriuiit of c-apital required, and 1 feol that II rcai'Xinable i»liof should bo given to 1 iiofo trying to establish those important 1 With this in view, I nropo«) t -111 connection with oil plant—cither to < diuit. it with tlie machinery for the do- 1 olopinent of our oil fields froo of duty, t r to remit this by a provision, on tlio ( idiinnta or, wlicro such niaohinory can 1 0 locally made, to meet the mpiircnientfi 1 f these industries to givo a bonus lo our t >o:d manufacturers equal to tlio amount of 1 vight. Assistanco must- also bo given to i iitorprisc recking to make our iron oro I nd Kinds available for profitable use, aitd 1 t-ato assistance will l>e given in these 1 LSfK 011 condition that the Stato haft the 3 ght of acquiring the iron works and fields t 1 proper conditions if Parliament should t -'0111 such puroluito desirable. At the pre- 1 ml time the Government linn an offer to I ;tnblis.h Ihe iron industry in New- Zealand t 1011 giving an annual contribution for a t *riwl of 40 years. The condition asking 1, r the contribution to be for a long period I ' years is ono that the Government is of I union should b> rcduced, and provision | ade giving tho right to acquire such | nrks by tho Government on terms fair to t le owners at any time on reasonable c ngtli of notice being given. Tho altenia- a ve is to euiltintla the suhnidy for a lunger | iiriod. I am of opinion that- it is of great a i|iortanco to tlio country , that we should e icotirugo the' production of iron from our £ rs and ironsand and have it supplied at | rate to our manufacturers that would u lablo them to cwnjielo Eiic-OKisfnlly in tho (, jrl; of manufacturing- articles against n mipet ifcion from beyond New Zealand. ). suc-li a work is put iu hand 1 shou!<l :pect in a few years lo find at least j, ,009 men employed iu a great, iiidiLsti-.v a tli.? kind, and v. - o need for our public p ir|>oses, ILS well as for private ne<[uire- w ente, to lyive iron and steel available nt tv itch lower than they can now i>o qxirtcd. This would l» <M:courn,gi:ig a eat looal industry with the .•idvanlji:v> kcoping the money within the country, ving e.ntploymenl to :i large number of ], im, and giving an impetus to our iron ijiu-try which at. the present, is rewgnised (| be most nocessary. Should, however, t| ivate enterprise not, Ih> altrju'ted to tlie 111 industry 011 tho inducements I havo v , ited tho Goveniment will consider im-:-diately f.K> exnedioncj- of developing tho 0 m resources of tlio Dominion as a Stato tl terpriso. ;i] FINANCE FOR WORKERS. I' Some amendments to the Advanos to orkc.rs Act will be submitted, The pro-. ll; >ion limiting nil advance to a worker to ''' • value of his building will be .ibolfshod. '' irMitir, t-o assist the workers to provide men for tlioiu.'olvrs authority will bo 'i ked to increase the prrsent. amount, • t.horifcd to l» Ixirrowcd by £250,C00 |ier !' mini, making £750,000 per year, instead , £500,000 as nt present. These altera- 1 jjs will further inc-icitio tho usefulness of '' 3 meiisuro. ARMERH 1 CO-OPERATIVE RANKS, h: It. is desirable to enable .small men or uf mil nssre ntioiis of tnen to whom credit tc not _ readily, if at all, accessible under 111 r existing bunking system to obtain it di ■ productive |iuqx>s?K insuring (wnpiny, la lis. iu my opinion, can la* dono by tho re motion of farmora' aaiociationa of cvon in

comparatively small numbore. I propose a ] to submit a scheme to cualilo this to Iv dono. Tiir.su will lx< incorporatod and em.,l powered to barrow money for purposes ; s of loa.ti to their members on such securitj ii. us tlwy think fit for productive pur|x>sse 30 lmt the repayment of the money so Uir i„ rowed will bo guii.''ar.t3o:l under proper ton •j. (lit ions by the* State. This will enable J 1 „[ to lx> obtained at reasonable rates of in v- toro.st from the ordinary banks, and, if no; in so available, then from other sources. Eacl [„ member of the association will bo suhjee s . to propor safeguards and conditions, ajid 1h t s liaWe for the* default of any one of thcii ■<| number. This Ja.fi provision, it is oouccived u, will pivvent waste or abuse of t.lio system H ] The security for a loan to email farmer J4 under such a scheme is not r.w&uri'y, ■» re is under t.he present bank! it;' methods, tin is vnitio of properly the small farmer cat ,) olfer, but nitlut tlio iixlustty, character io and skill of the farmer himself. Such I s- se.hemo provides for on oxjKTt test, of tl.< )e moral risk involved in tho lHj v .\:rial know il- lodge the londir.tf associations will have o i;i tho borrower, and for a watchfulness scouree if by n. keen sense of oollcetive responsibilit; in of tlie oapuoitv of tJio lwnmrar It) turn tin in loan tjo profitable acoount. Thus, the s- mtalilicalions of the small farmer for lit: m business becomes in 1.-.rgo measure the sccurit; it on which ho can borrow,' and, men witl ?r stiKi.ll or even no material security call ob )f tain capital. Similar schcjues liavo bfci i- found enormously lxvielicial by tho final id farmers in several European countries. Tho; 12 have not only wade capital available t< w st-rug-R-Jing- men, lmt have greatly cheapen** id the rates at whicli it oould bo obtained t s This, too, will tend to rcduoe any nltomp s' at monopoly wliieh lnijht arise under ou y pri'sent tanking systom. lit Germany 951 io co-operative banks of cue t.M)O akmo ke.i| it alxiut A"100,000,000 steadily in circulation it t credits ill tJio country. Germany has, in ip deed, about 12,000 of such Wurks in all If nnil by far tho greatest iminlwir nro em io ployed in financial agriculture. I havi 50 every confidwico in stating that, ns tho re 10 sub of cJoso examination into tho matter is litis can be dor.o without risk to tin •li Dominion or injury to our liiiaiioial institu >r tion. if FINANCIAL ASSISTANCE TO is FARMERS. ' s Tho 6ystom of fanners' cn-operativo banki J 1 for certain specified purposes can bo use •' fully envploycd by the fxnillv land sett'o incnts which 1 also propose to provide for These sott.lomo.nis will lx> promoted oil th< w following liiK-a: —I.sltklk now inacccsable n but will suited for settlement, will Ik if aa|uired by tho Grown. Of theso there an 11 considerable areas, both with Nativo am n European owners, as well ns areas Uta is are still Crown land. A wliome of puhlii i- works will Lo submitted to provide will l! mmricntion to those ureas by road or rail i" Application for three lands will l>e calle* e for, and the applicants may bo of twi J" kinds—ll) Individual applicants; (2) appli ,r cants as associated settlors. Tho latter wil '• consist, of not less tlian lfl or more than 21 3 men, preferably married men or womci '* with families. In neither cf theso cases wil there bo allotment- by ballot. A carcfu >' examination of tJio fitjres> o{ applicants wil c be made, and suitable* areas allotted t< " either. Public works, consisting of road: '' or railways, will be promoted (xuitem j porancously with ti;oso sottJements, and [ wliero applicaii'ts nro withcut tJte mean: necessary to (liable tJicm to on th< work of tl:eir farms into ctl'.tiva tion up to the reproductive point, fHtlert s w ill be olfered irorlc oil tho roads ami rail ri ways for eLt'Jidr a cortain luunlier of day; i d week or a certain. 2Jtl>■'r cf weeks t r month. By this iikxuis I anticipate thai - theye settlors will be errab!e<l to carry or until their farms nro safficisnlly ■ protluc • tive to maintain their owners. Amp.e facilitj will 1.-o given, moreover, to these f-'ttlors to form farmers' coopcrativt tanks ami so obtain canitnl to help the memixjrs of , the associations. Tlus pro- | by eliminating tlio ballot sysk'in, j will remove much of tho present (lis ] couragemelit in failure to draw an allot- . niejit, and will also check to somo extent s tJio trafiio which has hero anil there arisen • in selections under our Act. I ex--5 pect that this system will l>o applied If ■> private lands to 1» voluntarily or com- } })u!«>rily acqninxl from pretenh owners, i lioth Nativo ami European, and also tc ; largo areas of (-V.nvn lands. It aims at i, promoting Iho dual purpose of public i works development a[i<l closer settlement. I In order that these associated settlements ■ inav lx> made more altrtict-ive to scttleiv > -with young childtv-n, a relief telephone • system' connecting the settlors with a centre I from which mcdiral aid and other urgent n-.xxls may !>o will bo supplied • by tJio Government. ! STATE NOTE ISSUE. i 1 prtrjwsa lo nsk tho Ibuse to change t he system of issuing If.nk notc.s. Tin to will i:i future, after I'i-a.sonablo notico is given, 1)3 issmd by l-ho tiovenuncjit, as is done in Canada and other places. It must b? undeibtood that thi.< is not in any way a recognition of money in lieu of tlie present methods of exchange. The proposal is to make a Skito moiioiwlv of an operation hitherto carried cut by private institutions, and will I>J L.ued u|kih the principles of the Canadian system, which Have worked most stitisfactorily for many years past. The value of the notes in circulation in Now Zealand is about £1,600,033. The tax on this is 3 per cent,. This will, of course, ba lest, by tho Dominion, but. the Stato will gain in other ways. Tlia banks will pay gold to tJio Treasury for tho notes, ami tho Stato will not havo to pay interest on moneys so received. The Treasury must hvp a full reserve in gold win lo ensure the stability cf the notes issued. 1 will submit fuller details when submitting the legislation. In ca-v of tho los« or destruction of the notes tlie Dominion will, of courso, lxuielit. There aro sound rcusais for and again.-t tlie change, but on tho whole 1 am convinced that it is in tho interests of the country tltai. the issuo of notes sliotild Iw a function of i-lie State. This c.au be <lone with much advantage to the people and without injury or dislocation to the busilies;; of the banking institutions of the Dominion. REDUCTIONS AND INCREASES. Owing to a heavy shrinkage of revenue in 1903 I askod t.lio House to adjust the railway rates for long distances, and 1 think, in view of the satisfactory position of our revenue, those may now bo readjusted, and 1 ptopefio to do' so partly tu the public and partly to tho railway employees. With u view to facilitating and enyounu.'iiiK long-diilaneo trarel I pro|>ose to ivducv the fares for all distances over 200 miles. The pre.-e.nt rates are ljd per milo for lirst clat-s and Id per mile for n'coikl class, irrespective of distance. Undo.- the prw|>osal 1 nni submitting the lut'j per mile for all di/stiince,s over 200 miles will be U<l per mile liist. clats anil Jd mile wx-ond class. The value of thii eoneesiion on the basin of tile exisling tr.illic will bo £50;000. Tho whole of tlv> rcccnd-chm-i carriage,s are being tonvcrl.:'d from tlie present longitudinal scats to reversible chair N'ats, and this will greatly add to the comfort of the larger >ccti;;n of the travelling public. I'rop-.fcata will nl-o be submittal to tho House for aiue.ndin.Mits lo the t-cltedule to tlie Ciovenunent, Railways Act. 'l'hit> will provide for increases of |>ay to certain sections of railway workers (permanent mid casual) and involve an e.\pen<iiluiv> of, alxiut £60.000. over and nlwve the amount I riKpiired to provide for the suile ineie.ises twiuiug under the act in the <dinnr)' course. Thcwj scale iucieasis approxinuito £35,000, and, taken in conjunction with Iho amount stated above, the gro>,s increase will ba £95,000. The alteration in respect, to cusuaLs will he in the din-el inn of a minimum payment at the rate of la lid p«r lKmr—cejuivalont lo 9s per day of eight hours. In keeping within the mvnt (jenenH improvement of pay in the l'wt and Telegraph l)e|xirlmeiit, it is proposed to ineieaso the niiuiniuni wage of daywage, men from 1.-, t<i Is lid per hour, cipial to Hs per day for eight houis. 11K.M1SS10NS 01' TAXATION AND CONCESSIONS IN CHARGES. It will lx> interesting lo note what hits been given by way of reduction in taxation and of oonccstioihi in «he public service bv the Uovoriimwit sinoa IE'JI. In Customs the savings Ui tho people during that, l>?.ri«l and the of revenue to the i!o----veniment amount to the sum of £5.322,018. During tho time I have had the huiioor of lioiiur hctul of tho present, (lovernment tlio rodjjetion ill taxation uiion the Customs amounted to the sum of £1.764.070, and tbc ir.cre.ities to £'60,523. DNluct.ing this latter from tho amount of tho reductions, it will be s'een that tho not, savini: to t.iio ])-:ople bv rixluctiiu-.s of Customs amounts lo (hv largo sain of £1.403.5!7. wldeti amount litis been saved to the ooopl-e during my lorui of oll'uyi as Minisbv. Articlts retpiired for the breakfast, table, including coH<v. orram of tartar, dried fruits, mustard, rii-e, salt, sniees. and nil of which wore dutiable, have llee,! p!ac.\l witin-ly on the five list. (Viucesikuw in fares ami freights of tho Railway I )e|M-'t,inej»t, to Iho ntnount of £1.150,000 have been granted, and out. of this sum I lie agriculturists ajid iwstoralists Ihlvo benefited to Iho extent of £&50,000. There has been no increa.se of rates excepting for long distance travel, and this I am doalim: with later on. In addition to the reductions referred to in those two important departments thoro havo boon concessions ma/do

to tho public hi the Post and Telenra-pli Dnpail.ineiit to tho amount of £37f1.74f> per annum, The*. total 'reductions to the puhlki in tlio three directions named dmii:u r ti 1-3 period to which I have just referred amount to i,'[j,fSo,733, u) that thcuo who are c.riii-»"i-sinu llie Uovernmciit ill eoniKetion with it* taxation .should, in order to lie fair, i'»l overlook Ihe piwrniou;; rudurtic.M that have Ikph made. The amounts Elated alxtvo have lieen carefully compiled by each of th-> <?i>p-_irtnipiit.s concerned. and can !o relied ,ii|)ou as correct.. I attach detailed returns of samo to tho statement. which will well repay perusal of all who 1-ako an interest in the v.ell-beiner of their followmen. 1 desiro to further point out Uci'b during tho same period the increase-.! of pay and coiKxtuione in hours of the Railway Department amounted to £870,000, v.hilo in ilm other brandies of tho publio service tlio annual increment of salaries during the period I have been head of the Government amount to £348,530, so that I am fairly entitle*! to fay that the public service hits not been overlooked. LAND SUBDIVISION AND TAXATION OF LAUGH ESTATES. During tlie [tfii-t five years sinco I havo beon head of tho Government the number of perrons who selectevl Crown lands amounted to 8300, and the area taken up by thei-o settlor* aggregates 2.692,200 acres. 1 am excluding from t-hefo figures all thoso who soleclotl liuxb and leases for f-hoii or temporary periods. Tliey, however, inctiiclo the selections of areas in estates purchased under tho land for settlement acts. Under tlieso latter acta tho figures are: 1500 selectors plaecd upon 442,200 ,'tcro-.:. Tho amount expended <lnrintc tho sumo period in purchasing and sulxlividing 50 estates for closer settlement was £1.6-16.000, mid the area aceiuired was 265,872 acres. Notwitltst-anding the subplantkil progress which has l>con made in the sulxlivision ami closo .seitloment -if Ihn largest, estates in tlio Dominion the (vice demands aeocleratiion, and I think this can !>c\;t lx» effected by ,-ui increase of tlio uradualed land tax on all estates where the unimproved value exceeds £103.000. I propose, <lK>refore, to ir.creasc rales found in -the present graduated sealo on estates by 25 per coat., and, to allow owners a reasonable limo to cut. up their estates themselves, to privo thran three years before putting tlie increase into operation.

TRADE OF THE DOMINION. Dfppito tlio fact that last year was a record one in the export trado of tlio

. 1 Dominion, tho year ended 31st March >! showed ail increase of £52.091 in value I! ove-r tho previous one, the actual figures t j being-1911, £21,5-13.900; 1910, £21,491,£09. j The imports for tho year wore valued at . £17,713,183—an inert rise of £2,359,604. I'm- . :ent prospects give 1110 every reason to be- | lievo that, general improvejiient will 00111 tinuo and that the producers of the country . and our traders may look fonvand with | confidemco to steadily growing progress in i tlio trade of the Dominion. | FUTURE BORROWING. I ' As t pointed out during last session, tho . onel of our publio worla scheme is now in sight. Tho jirain arterial systems of railways -will not tako many years to complete, j The cost of this and tho future main roads I of the Dominion can now bo approximately j ascertained. The whole should l>o eomI ploloel in a pnriexl of 15 or 20 years. There | will he no important dejurturo from the plan as mw laid down. 'llio only question la bo considered is, Aro tho works to be completoel out of revenue or loans, or partly one and partly tJio other method? Finished theso necessary works must be. To diseontinuo would 1» inconceivable folly. They tro necessary ferr development, and will go on. It would, in my opinion, bo wron<r to Uirow tho whole burden of constructing them on tho prosent generation; it will hand them on to our descomlafifs, and sonic cost, should |>orno by them. Tho most buiiincfisliko method is to spread tlio cast over two or threv? generations, the monovs required to be borrowed for finishing them teiiK; topaid by the sinking fund now established. 1 ins is fair to jih thoso avlio will ; succool ns. W'c must lornomlwr iltat our ' Atistralia.. is abcut to ' enter ii]»on a vigeirous ]x>licv of railway construction, rarrj-ing out .other great pub--110 works, involving the spending by its j fhlForont StotM nnd by tho CoininonwcaJlh (jovemmenf. of £50,003,0c0 witli.'n the next 10 years. If our policy were slackened it would mean tho less of many' Ihoiisaueh of our best workers. To allow this whdo our own publio works em so neevjssarj- in ondor to round olf our s\slem of intercommunication amongst our "scatjewxl communities wonld l« national imliecility. llie policy of the (!e>vernmont in tins will Ik* to borrow sufneient to push on .'ls /imckly ns will ponn.'t t in railways, I'ojkls, .mtl othor lntblio. works t lml. are mesi urge.nlly required, menling the lean moneys each r-.-ir bv ta much as cin 1» transferred from the ooneoluhitcd fund. A full sUitcnuwit will In» ln j ' a^. r fo p.'ir(icu!,Tr railways,, nad.s, and other works now roinainintr to ho constructed and tho estimated cost and tho tlino ramirw! for l.h« completion of ', would, in my opinion, be a goexl plan to ha.ve tho question of what aro ncocKSjiry railways in e.wli island once and tor all determined by a exjnsnissioii of memlxTs and ex|H<rls, and that, only such works should bo completed with Iwrowed moneys. Any further sums i«iuii-c<l in p*. cess of a certain amount por nnmim should bo found out of rovo!n.e. 'Hus method ?! d givo a linalil.y |„ our sehenie of railway const ruction, and it is desirable from many pomU of view. ]!v Mich a coiiife t.lie country would know \vluit was necessary over a perir<| of ye , lt( | iln amount annually cmild then 1* devoted II fi l !"f! ):)S V. 1 wisl ' ,0 5,!1, 0 emnhatieallj that, the Government will carry on a Vigorous IH3l,cy of ra ;lwav construe ion. Recognising.. n.s I' do. 1.1,-t liiey are reproductive. nll d Hint if. is of .«<» most vif.'fl iniporfanco to our FotUors ami our bustnt-ss tbit \h« fnUf.-f liossible facilities should 1. F i'U inr on the work of those fo! t!„| on mlr laml and those intending to settle that aro to their sturessful existence, ami hat not lung helps to develop Irmin.-ss more than transit facilities, railways will, con-sisk-nt with the aiii'ouiit. of money that eatr be .devoted lo them yearly, be pushed on its rapidly as possible. F.IXANCK FOR. 1911-12, There, is every reason to hojie that the year we aro now in will l>o a good one. 1 I'lees for cur skiplo product are on a satisfactory ns;i.lo, tiled trade thronjliout tlio lJoininion is aotive. Tlie.ie are coinpariitlVCiy few,- out oi olii])!ojnuetit. FhietuatioiLS 111 the labrwr .luarieet will otwir in nil coil'itries, and we _eniigniti:lnlo ourfehes on < beiirg comparatively fiee here. 1 Icoi; for- : ward to a ye.'ir, ami am justified 111 anticipating tliat there should be a suj>- ■ staiitial siindus at tho end of March. Expenditure.—Tlio progress and prosperity 1 of the eounuy have made such strides that ■ It is wily iiai.ui','!,! that with the increasing : demand for facilities in railway and j>ostal ( services, education, and estahlislimcnt. of iiiiivers-.il tniiitin;,' an inoreasod o,\peiidituro ( of public, monej-s will be re(|i!iied. This 1 is estimated at £10,130,566, an ir.cr.-as3 of i £793,161 over In-1 year. The increases aio < as follows:—lVnnanent charges, £227,741; 1 dejKirlme.utol. £565.720. The permanent 1 charges must increase l . The interest on e each sum Isortowoel is of courso a per- t inaiicnt increase. Tho principal increase is i for interest, £?.05,!Q-1. Tlio dqi:iitiiionta.l i ex|(i;rditiire will reach £6,265,575, L'"ing £065,720 in oxcors of that for 1910-11. The r prinoipal increases n.ro: Kiilwnys, £105,187; ( education, £93,150; defence. £171,635. ]

Uevonue. —I estimate ihe revenue for 1911-12 to lx. £10,429,010, being £131.937 more than last year. I estimate the railway revo-nuo at £3.525.000. at £3,000.000, stamps at £660,C00, post and telegraph revenue at £1,095.C00, land lax at £655.000, income lax at £110, MO. l>cor duly ill £115,000, regis: nil ion mid c.tlicr fees nt £101,315, .marine at >'45,000, inisce.l.'ancotis at £333.150, territorial revenue al £233.550, and endowment revenue at £62.555.

LOAN'S FOR I'UlifdC WORKS l't'RPllSl^.

The worla: which should lx> fronr or. with | dtiriiiL' IJio next 12 months will require so niiifil inouov that, an additiona.l loan will be necessary. Tile Ixi in I lie Public Works Fiiikl en iho olst March was H1,H1),015. This will lx; strojiffilieml l>y tninsforriiij; £500.000 k> it from tln> ('<:ikolid:ile<l Fund. As ftaled, however, till:; will not. snfiitfor (ho prosvout-ion of I ho unicntlv mpiired works, whicli must, lie vigorously ptishoil on, ami I llioreforo pivi|x>:e to a.-l; I'arlianic::t to «a loan of £1,500.000 for tlio I'onrf.nK'tion of railuuvs, ro:wk liridp's, and additions lo open lines and other public works. SUMMARY. I fo:'ir .vliat is now proposedKemlssitin." of. railway faro-;; 11.s5ifl.1ncc lo widows, ami railway employees: additional funds for workers' houses; rcmi-wm in sift anil estate duties; Slate a.'.Mst.'i nee to iron and oil industry: advantages lo uld-ago pensioners; Government aid lo fanners cooperative hanks; State note L'siio; el<*lrilical.ion of |Ik> Lyltclton tunnel; lianipssitijr and ulilifatinn <if I/ike .Vaikare-Moatm; purchnfe and settlement of Native lands; irrigation; prosecution of ron<!s: development. of ininiiif,'; national provident, fund: public service cla-isiliea-tion: defence* on n practical basis; land for M>tie.incnl undor Iho Lund Scltlfinmnt. Financc Act; insurance nuninsl unemployment; cheaooninc UlO cost of living;

financial aFsistanoo to associations of farmers; improvement to the pulilic service (other Ihnii railways mid jxist.il service) on tin; Supplementary l'-stiniutCo; increase of the friailiial-ecl land lax 011 largo- cslalcs; lam! Ml Moment; proirresrivo raihvay roads and public works policy: advances to selHers, workers, and local ]inl)lic lax lies ; promotion of Kijrioiillnre throiipliout tin; Dominion; establishment of a State farm in llio South Island: maintaining the stability of the Dominion's fitinr.ee. 1 have now aliout finished my task. A strong financial rv.Mlxin exista in tlio country. Tliero is nil abtir.diiiil supply of money. Tlio Dominion generally is very prosperous. 'i'Jto development of the country requires ca much attention now as it lias dono for voara past. Ways and means to onablo ttfo prosecation of our public works to bo carrieel on vigorously hut prudently ns suggested will bo sliown in detail by mv colloairtio nt an early date in the Public Works Statement. As railways, roads, bridge?, telephones aro required in various Parts of tho coitntrv. it is obvious that until thoso aro reasonably provided for our people further loan money is necessary. So lone w it Li s(>cnt in reproductive works, 11s tlio great bulk of it is, there is no valid ground for fear. No ono can deny that money advanced to our settlers, workers, local public bodies, and for the purchase of laml"for settlement is of great value to t.hono for whom it is obtained, If the country is satisfied—and I ■fee! sure it is—that this policy is a trood one to prosecute, tlton I ask witli confident that tho proposals I have now tho honour to submit may be agreed to. In that, case I am confident that by carrying tiiem out with couracts and determination tho prosperity of the Domuiion will eontinuo to increase on broiid nnd solid linos. Such a pxilicy. aided by tho individual efforts of (lio i>coplo, will command success and demonstrate to our descendants the wise and slront: faith wo have in the future of Now Zealand—a country that lias already accomplished much and is destined by Providence to bccomo a conspicuous star in the constellation of States that form the British Empire,