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knowledge of the fact that property-holders at the present moment are not realising more than 4 per cent, on investments, it could not inflict a further rate upon the citizens of Dunedin, as raising the rate from 6d. to 9d. in the pound would simply have a crushing effect; that would indeed be a disastrous policy. It therefore became their duty to cast about to see how to extricate themselves from the difficulty which they had to face, without increasing the burthen of rates on the ratepayer. The Corporation therefore caused inquiry to be made, and the result of their investigations was a report which 1 had the honour to lay before the City Council of Dunedin. From these circumstances proceeded this Bill for the conversion of Dunedin loans. The total debt of the City of Dunedin is £603,300, made up as follows : Municipal Loan, £300,000; Water, £203,300; Gas, £100,000. We propose to convert some of the debentures that are falling due within the next few years. I may in the first place be permitted to say that included in this indebtedness are £50,900 of bonds, upon which we are paying 7 per cent, interest and 1 per cent, sinking fund. This loan was raised in the early days when the City of Dunedin, in common with the other cities of the colony, had no very high financial status, and. all had to pay pretty dearly for any money they wanted. There are £131,100 bonds in addition, bearing interest at 6 per cent., and having also 1 per cent, sinking fund. The former, that is the 7-per-cent. bonds, mature in 1898,1900, and 1902. The latter, or 6-per-cent. bonds, mature in 1903, 1905, and 1906. The amount we propose to convert is £182,000. Seventeen years ago, the General Assembly passed an Act authorising the consolidation of the whole of the above loans, i.e., £603,300, but from various causes— principally, no doubt, owing to the number of years some of the debentures then had to run, and, possibly, in a lesser degree, through inability to discover the holders of some of the bonds—the Council only succeeded in consolidating £312,000. I do not propose to deal with these, as they carry only 5 per cent., nor do I propose to deal with another £109,100, although they carry 6 per cent., as they are not redeemable until 1925, and the cost of present conversion would be too great. Moreover, we do not require to do so for the purpose of putting our finances in order. We, therefore, allow consolidated stock amounting to £312,200 to expire by effluxion of time, and to be paid off with the proceeds of sinking fund. If this operation is carried out, it will save close on £5,000 a year.in payment of interest. What we propose is to issue new debentures to the same amount as those already converted—£lß2,ooo —having a currency of thirty years, and bearing 4J per cent. .■ .interest. By doing this we shall save a payment of interest amounting to close on £5,000 a year. We will obtain possession of £65,000 sinking fund, which we will devote to the following purposes : £43,000 we intend to apply to the paying-ofl of overdraft which we have at the bank, to that, or nearly that, amount. In that way we can save some £2,000 further a year. Our last year's payment for interest was £2,400 ; what remains we will pay into a trust fund, at interest, so as to provide interest as far as it will go for future loan for drainage purposes. The £43,000 which is to go to the liquidation of overdraft, and the balance, £22,000, which we propose to put into the interest fund in aid of the future loan for drainage. The necessity of a complete system of drainage for Dunedin is very urgent. We have deferred going into that question, because we have felt that the citizens were unable to bear the strain of an extra rate. We think if this scheme is carried out we will be justified in anticipating, by many years, the time when otherwise we would be able to complete our drainage system. The capital amount, which we are going to fund, with the accruing interest, will enable us to save paying interest for eight or ten years at least. This consideration, I think, justifies us in having a drainage system at once ; otherwise it would have to be postponed. And another result will be, that saving this interest will enable us to square other Corporation accounts. The payment of overdraft will enable us to have funds to the extent of £2,000 a year, or more, which w Till be spent in City works, and will enable us to spend in this direction about £2,500 more than now. The position, therefore, of the Council is this: that through decrease of revenue for the past ten years, through additional burthens being put upon them, such as that arising from charitable aid and otherwise, it has been obliged to contract this overdraft. I should state that £43,000 is the maximum amount of overdraft. It is nearly that now. It is somewhere about £42,000. This has been brought about through no fault of the Corporation, but because property has depreciated in value, and additional burthens being thrown upon us. We will also be able, if this scheme is carried out, to adjust our finance and put it upon a satisfactory basis. All that we do, as the result of this operation, is to convert what is now a terminable debt, payable by accretions of sinking fund in fourteen years, into a permanent debt on the City. The total indebtedness of the City, after the £312,000 consolidated stock is paid off, will amount to about £313,000. That will be a fixed debt; but, as against this, we leave to the citizens our water-works and our gas-works. The water-works cost us about £230,000 ; our gasworks, £130,000 ; and the permanent drainage which we have already effected and which cost us £45,000, making a total of £405,000. So that we shall leave to the citizens of Dunedin property costing a considerably larger sum than we shall have burthened them with in carrying out this scheme. The water- and gasworks since we purchased them have realised a profit of about £180,000. 2. In how many years?—An average of about fifteen years. The bulk of the money that has been expended has been spent in extending and improving works on capital account. We have used revenue on capital account, rather than borrow afresh for that purpose. The permanent debt will be £313,000. 3. Is it correct to say that, for an average of fifteen years, your gasworks have made a profit of £180,000 ?—Gas- and water-works. I think the average must be from fifteen to seventeen years. 4. How do you make the profit on the water? —That is one of the intricacies of our finance. We are charging a maximum rate; the difference which it costs between interest and maintenance is represented by the profit made. I have now traced the position and objects of this scheme. One of the great objects we have in view in getting this Bill through is, not only to adjust our municipal finance and put it on a proper footing, but I have a confident belief that, if we succeed in