D.—l

6

The condition of the line at present is, that at the Hokitika end, the railway is completed, with permanent-way from the Hokitika Wharf to about the 4th mile, near the Arahura Eiver; and between that point and the Kapitea Creek, near the 10th mile, the formation is nearly all done, and the Arahura Eiver is bridged. At the Greymouth end the rails are laid for l£ miles, and the formation, without bridges, is partly done to the Teremakau Eiver, 7J miles farther, and the bridge over the Teremakau is, as before stated, nearly completed. The Government regrets that, as so large a sum of money (close upon £100,000) has already been expended on this line, it cannot be at once completed ; but, in view of the fact that it would cost quite £80,000 more to complete and equip it, whereas there is only £26,178 available under loan allocation, it is evidently impossible for the Government to complete the work. This being so, the question arose as to what could best be done, and, after giving the matter full consideration, the Government decided to ask the Midland Eailway Company if they would be willing to take over this railway, and complete and equip and work it as a part of their undertakings in the colony. It is not probable, however, that the company would enter into this undertaking without a subsidy of some kind, and the Government have determined upon not granting any further endowments of land to railway companies. If a subsidy is given, therefore, it would have to be in the shape of the works already done, or some of them, and it is understood that the company is willing to entertain the project on these terms. No final arrangement can, however, be come to until the arrival in the colony of the company's engineer-in-chief, who is shortly expected from London. The House will be asked to authorise the balance of loan-allocation, viz., the £26,178 already alluded to, to be utilised (in the event of the negotiations with the Midland Eailway Company falling through), firstly, for completing and equipping the railway from Greymouth to the Teremakau (or to the Eumara Eoad); secondly, for adapting the Arahura Bridge for combined road and railway traffic; and, thirdly, for such other works as may be found, after full inquiry, to be the most advisable to construct. By this means it is hoped that some return may be obtained for the expenditure already incurred. The Greymouth end of the line, at any rate, can be worked very economically in conjunction with the Greymouth to Brunner Eailway. On the basis of these proposals the amount required for expenditure during the current year will be £15,000. Mount Somebs. On the Mount Somers Branch Eailway, the extension to Springburn, 4 miles, which has been for some time in hand by the "unemployed," and otherwise, is now approaching completion, and, as the balance of existing allocation in Part 111. of Loan Fund is insufficient to finish it, a further amount in aid to the extent of £1,971 has been provided from Part I. The total amount now required to be authorised is therefore the balance of allocation in Part 111., £4,415, and £1,971 from Part I.: total, £6,386; practically the whole of which will be required for expenditure within the current year. Livingstone Beanch. On the Livingstone Branch Eailway there is a balance unexpended of loan allocation amounting to £1,063 ; but, as no further extension of the line is contemplated, it is not proposed to ask for any vote on account of this work during the current year. Otago Centeal. On the Otago Central Eailway the rails are laid from Chain Hills Junction to Barewood Creek, 21J miles. The formation, tunnels, and masonry of bridges are completed to a point 3 miles beyond the Sutton, or 36 from the Chain Hills. The bridge-superstructures are finished as far as the rails are laid, and under contract to. the Sutton at 33 miles, It has not been considered necessary to