8.—6.

of a National Savings Scheme operated in conjunction with the Post Office Savings-bank. Each individual's contribution will be accumulated in a separate National Investment Account in his or her name and, if desired, will be convertible into National Savings Bonds. Provision for loan contribution by large investors will be made by the issue of loans with a currency of ten years or more in respect of which Government stock will be issued in the usual manner. In the circumstances the Government consider that these loans should be regarded as contributions to the war effort from the material assets of those with property and should accordingly be free of interest for a period of three years or until twelve months after the conclusion of the war, and thereafter for ten years at a rate of interest not exceeding 2i per cent. In this way the Government proposes to raise within New Zealand not only the money required to be expended in this country, but also some portion of the amount necessary to meet expenditure abroad, thus relieving, so far as is possible, the drain upon the resources of the British Government. .. f ... A start towards the provision of interest-free loans has already been made by generous voluntary effort on the part of many citizens, and to date nearly sufficient has been subscribed to balance the War Expenses Account to the end of last financial year. But that is not sufficient. It is not right that others equally capable of affording assistance should not make their due contribution. In this connection it is the intention of the Government to formulate for the consideration of the House a procedure under which all who have means will be required to assist by subscribing to loans for these purposes. Those who already have or who may in the future voluntarily lend money free of interest, may have the amount already subscribed taken into account in determining their total liability under this heading. In addition to meeting all war requirements, some provision has to be made for carrying on national works such as development of more hydro-electric power required for our industries, both primary and secondary, and landdevelopment and irrigation-works which have a direct bearing on increasing production; while the curtailment of road transport to conserve petrol makes it all the more important that sufficient rolling-stock is provided for the railways to handle the traffic. In fact useful development work is a necessary preparation for rehabilitation which must start before hostilities cease. Even so, it is fully recognized by the Government that with so much required for war purposes, borrowing for public works must be reduced to the minimum required for essential works. Honourable members will appreciate that it takes time under the proposals for marshalling the man-power of the Dominion to get large numbers of men transferred from public works to other works of greater national importance. Furthermore, the large volume of works in hand has either to be completed or rounded off at a point where it can stand over without losing the money already invested. A substantial beginning has been made in reducing the expenditure on the whole works programme, and the amount of borrowed capital required this year is approximately £15,000,000 compared with £19,000,000 lor last financial year. As men are required for more urgent purposes associated with the war the volume of national works will be progressively reduced. Concerning the actual works which it is proposed to carry out during the year, an allocation of £3,450,000 has been made to railways construction and improvement. Of this total, £700,000 will be devoted to the completion of construction works already in hand, including the Napier to Gisborne and the South Island Main Trunk lines. The new line from Paeroa to Pokeno, which had just been commenced at the outbreak of war, has been discontinued for the time being. The balance of £2,750,000 under this class is for additions and improvements necessary for meeting existing commitments and for building essential locomotives, cars and wagons, new goods-sheds, &c. From a military point of view alone, an efficient and complete railway organization is most important in the national interests.

Loan contributions.

Public works.

Railway construction and improvement.

8