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Beyond the point to which this railway is now proposed to be carried, namely, to Burns's farm, no further extension would appear to be justifiable until the colony is in a position to continue it to Wellsford or Maungatoroto, that is to say, to a distance beyond Burns's of about 15 or 32 miles respectively; and, in order to provide for this, and for the further extension of this very important railway in the future, the Government propose to introduce a Bill this session setting apart the proceeds of certain kauri forests, the property of the Crown, to the North of Auckland, as an endowment for that purpose. Gbahamstown-Te Aeoha. On the Grahamstown-Te Aroha Eailway the rails are laid from Grahamstown to Kauaeranga, about 5 miles, and the formation, without bridges, is completed from thence to about the 19th mile, near Ohinemuri. From that point to Te Aroha, a distance of 13 miles, no work has as yet been done. The loan allocation is short by some £65,000 of the amount required to complete the work, and as there are no funds out of which this amount can be supplemented, and, furthermore, as any farther expenditure on the railway would be wasted until it can be completed throughout, it has been decided by the Government that nothing more should be done at present, beyond the completion of some necessary drainage works, including the culverts required at the Thames. The line passes through some very good land, suitable for settlement; but a large portion of this land is still in the hands of the Natives, and it is intended that steps should be taken to acquire for the Crown as much of it as is possible. The authority now proposed to be asked for to cover the drainage works which I have referred to is £4,500, and of this amount £3,500 will require to be voted for actual expenditure this year. PUTAEUEU-BOTOEUA. No work has been done on this railway since the date of my last Statement, and it therefore remains in the same position as there described, that is to say, it is completed with permanent-way for 8 miles (to Ngatira), at the Putaruru end, and the formation without bridges for about 6 miles at the Eotorua end is also done, the intervening gap of 18 miles being at present untouched. As the line at present stands, therefore, the work done upon it, which has cost about £70,000, cannot be utilised, as there is no road, and no justification for making one, from Ngatira to Ohinemutu. It is therefore proposed that it should be carried on for a further distance of 10 miles, to the Okohiriki Saddle, from which point to the present road from Oxford to Kotorua a road 6 miles in length can easily be made. This would reduce the coach journey to 12 miles, and it would thus be possible to get from Auckland to Ohinemutu, or vice versa, in one day, whereas it now takes two days. It is manifest that this would make an immense difference in the tourist and other traffic, and thus attain a better return for the expenditure already made, not alone on the Putaruru-Eotorua Eailway, but also on the railway from Auckland to Putaruru. The extension to the Okohiriki Saddle will also open up one of the best blocks of agricultural land in the district, the property of the Crown, containing about 43,000 acres, on which there is a large quantity of valuable timber. If this land is opened up by a railway to Auckland, and by a road to Eotorua, as I have suggested, it would, without doubt, carry a large and thriving population, whose first efforts in settlement might also be very considerably assisted by the employment which could be afforded to them during the construction of the road and railway. It is, in fact, the only block of good agricultural land in the immediate vicinity of Eotorua, and, until it is opened up in the manner suggested, there is very little chance of its being settled upon. The opening-up of this land would also conduce very largely to the development of the Eotorua Sanatorium. In order that the railway-works which I have above indicated may be undertaken, it is proposed to ask for authority this year for the balance of the