B.—No. 2.

Oedinasy Expendituke. £ s. d. £ s. d. Civil List ... ... ... ... ... 27,500 0 0 Interest on Public Debt ... ... ... ... 217,83110 3 Under Acts of General Assembly ... ... ... 34,977 18 0 Departmental Expenses — Class 1. Public Domains and Buildings ... ... 3,080 0 0 „ 2. Public Departments ... ... ... 31,768 0 0 „ 3. Law and Justice ... ... ... 6,835 10 0 „ 4. Postal, including Telegraph and Marine ... 44,435 11 6 „ 5. Customs ... ... ... ... 1,910 0 0 „ 6. Native ... ... ... ... 17,011 4 0 „ 7. Miscellaneous ... ... ... 35,219 12 10 „ 8. Defence ... ... ... ... 12,499 9 3 [Refunds of Revenue ... ... ... ... 453 1 9 Supplementary ... ... ... ... 9,217 17 0 442,739 14 7 Expenditure in Reduction" or Liabilities and Repeoductite and Exceptional Expenditure. Sinking Fund — Amount employed in Repayment of Public Debt ... £46,598 0 0 Class 4. Telegraph Extension ' ... ... ... 17,166 13 0 „ 4. Marine Survey ... ... ... ... 4,500 0 0 „ 7. In Aid of Provinces ... ... ... 5, 000 0 0 „ 7. Advance to Province of Wellington ... ... 15, 000 0 0 „ 7. Unapportioned — New Gold Fields ... ... ... 500 0 0 Roads, North Island ... ... ... 25, 000 0 0 Patea Settlers ... ... ... 10, 000 0 0 ~ 8. Confiscated Lands ... ... ... 5, 000 0 0 „ 8. Defence ... ... ... ... 240, 000 0 0 Supplementary ... ... ... ... 11,732 3 0 380,496 16 6 £823,236 11 1 ■ As the payment of Sinking Fund is so much expenditure in aid of the reduction of debt, it is fair to look upon it as an item on the opposite side, to rebut the charge of our having to borrow money to pay the interest on our debt. Telegraph Extension and Marine Survey are items not ordinarily charged to revenue. The item Aid to Provinces, is an exceptional one, rendered necessary by our having to meet the inequality of revenues arising from the present mode of distributing the Provincial moiety. Advance to the Province of Wellington, is really a loan to that Province. Expenditure on New Goldfields, is an amount to be recovered. Expenditure on Roads in the North Island is, I need scarcely say to you, an extraordinary expenditure—one which may properly be considered as not chargeable to ordinary revenue. The same may be said as to Expenditure on Confiscated Lands. The item Patea Settlers, is also a loan. Under the head Supplementary, are included four items, which I need not particularize, but which come properly within the description of expenditure to which I am now referring. It remains only for me to invite your attention to Defence Expenditure.' You may, perhaps, ask me on what grounds I urge that this is an extraordinary ■ expenditure. I have no difficulty in stating those grounds. It is useless for us to < attempt to disguise from ourselves that when, in 1863, we incurred an enormous loan for war purposes — which, loan has been from time to time increased by other expenditure of the same nature —we did that which put it utterly beyond the power of the Colony, in the present generation, to continue to pay interest upon those loans, and yet to defray ©ut of. its revenue large war expenditure. In 1863, we decided —I do not say improperly —that war expenditure should be provided for out of borrowed money, —that the burden of such expenditure should be shared by ourselves and those who came after us; and now, when we have created these immense liabilities, it is out of the question to suppose that the mere handful of people inhabiting New Zealand can pay interest on them, and at the same time be able to find the means for the extraordinary Defence expenditure which has been unexpectedly forced upon them during the last two years. You have, therefore, in the statement, as I have prepared it, on the one side £442,739 14s. 7d., and on the other £380,496 16s. 6d., making together the total expenditure. Taking the Colonial moiety of the revenue at

Why Defence Exrerarderash°"Extra ordinary." •

11

FINANCIAL STATEMENT.