B.—No. 8.

This result, showing the considerable amount of £318,750 available for Provincial appropriation, lias been attained— Ist. By the reduction of the Defence Estimates to the extent of £39,000, referred to above. 2nd. By eliminating from the current Estimates for the year certain charges of a permanent character. I now proceed to state the ordinary Eevenuc estimated as available to meet this current expenditure, viz. : — , £ Customs ... ... ... ... 850,000 Ordinary Miscellaneous ... ... ... 146,000 Stamp Duties ... ... ... ... 50,000 Bonded Warehouse Duties ... ... ... 4,500 Licensed Distillation ... ... ... 1,000 Additional Postal Revenue ... ... ... 7,000 . £1,058,500 That is to say, the estimated ordinary Revenue of New Zealand for the present financial year, as proposed to be supplemented by the new taxation, will be sufficient after defraying the first charge for interest on loans, to provide for all the ordinary Colonial and Provincial Services, and also to make further provision to the extent of £318,000 for the use of Provincial Governments. It must bo admitted that it is very satisfactory to be enabled to make such a statement. And it is satisfactory also to find, on turning back a little upon the past, that the Colony has for some time been working up to this desirable adjustment between revenue and expenditure (my remarks are simply confined to ordinary revenue and expenditure). This favourable tendency and result I attribute to a combination of causes, viz., partly to the stimulus of the gold fields, partly to the increase of taxation effected in 1801, and partly to a prudent restriction of Departmental expenditure, and may be traced in exact terms in the valuable Returns which I have now before me. Return No. 1 shows that upon a comparison of a period of three years, viz., from 18G3-4 to 1805-6, the growth of Revenue was 27"15 per cent., and of Expenditure 261 per cent. Return No. 2 exhibits comparatively the Departmental Revenue and Expenditure, and affords some instructive lessons; the following inter alia, viz. i — Customs. —That whilst the Revenue has largely increased, there has only been a slight increase of expenditure. That the surprising increase in the Customs Revenue of Canterbury and its steady increase at Wellington and Nelson have more than outweighed the decrease at some other ports. Postal. —That the great disproportion between Revenue and Expenditure is gradually diminishing. Judicial. —That there is an alarming and increasing disproportion between Revenue and Expenditure, particularly in Otago, owing possibly (I throw it out as a suggestion, which I have not yet had time to verify) to the costly attendance of witnesses at trials, and to the diversion of fees to the Mayor's Court. Registration. —That there is a very gratifying increase of Revenue. I would merely take occasion to observe, Sir, that it is by the study of Returns such as these that we can alone ascertain the direction in which retrenchment of expenditure or increase of revenue (as the case may be) may be effected from time to time with safety. I observed just now that certain charges of a permanent character are proposed to be eliminated from the current estimates of the year; and I should also state that it is proposed to remove the unexpended balance of the Loan from the revenue side of the accounts. The advantages of this process of separation are sufficiently obvious, and I need not therefore occupy the time of the Committee by dwelling on them, but will at once submit for consideration what I may stvle — A proposal for appropriations in liquidation of charges under the Three Million Loan :— £ Military Settlers ... ... ... ... ... 207,000 Cook Strait Cable and Telegraph Extension to Auckland ... ... 38,000 Treasury Bills (removal of Seat of Government) ... ... 11,500 Liabilities on account of final settlement of Mib'tary Settlers ... 50,000 £300,500 Unexpended balance of Loan ... ... ... ... 170,000 Balance to be jirovided for ... ... ... ... 130,500 £306,500 I take this opportunity of mentioning for the information of the Committee that the £100,000 in debentures advanced to Auckland forms part of the sum of £170.000 just referred to as the unexpended balance of the Loan. Before however proceeding farther, I must notice what might at first sight appear to have been an omission in any proposal purporting to have for its object the winding up of the colonizing scheme of 1863. I refer to the sums of £38,750 (Taranaki Loan Ordinance), and £32,000 (Taranaki Land Purchase Fund.) It is sufficiently well known that these two amounts have been diverted from their original destination and expended by the General Government on other objects. It will be understood that lam not now canvassing the propriety of those transactions ;I am simply stating the case; and no one will dispute that the good faith of the Colony requires that these funds should be reinstated. With regard to the first item; inasmuch as the interest is provided for on the Estimates, and the debentures do not fall due till the year 1873, there is no immediate pressure; and against this I bring to account an asset of .£43,007 i)s. 9d., being the amount of debt due by the Province of Southland, which I have every expectation will be repaid before the period of maturity of the Taranaki debentures. It is in my opinion a perfectly good asset. With reference to the second item; it is proposed to

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FINANCIAL STATEMENT.