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Your Committee is of opinion that this is sufficient, if any! proof were wanting, of the advantage of the steamer "Nelson" going to the different Provinces, carrying to and fro, a mass of correspondence and intelligence undoubtedly of great public utility, and winch, ■without such aid, could not be accomplished, but with great irregularity and loss ottime. Your Committee regret having been unable to obtain any reliable return of the number of passengers who have already availed themselves of the steamer's now running between the Pro. vinces • but they have reason to believe that the number far exceeds the first calculations made oa the subject, and this has no reference to the members of this house who, with expedition and comfort, have attended the first meeting of the New Zealand Parliament. The desirability of having frequent steam communication efficiently established between the Provinces, has been universally acknowledged by every class of settlers;—the practicability has also been satisfactorily tested by the performance of the steamer Is elson. Your Committee, therefore, have no hesitation in recommending that the arrangements now existing and at the time, so judiciously entered into, between the agents of the steamer "Nelson" and His Honor the Superintendent of Nelson, should be adopted by the General Government. Should the Government take upon itself the payment of the bonus of six thousand pounds •agreed to be paid by His Honor the Superintendent of Nelson to the agents of the steamer, and thereby have the same control over the steamer as such Superintendent has had, it will, no doubt, alter the present arrangements thus far that both extremities of the Colony will be equally visited, which lias not been the case heretofore. Your Committee have not been able to obtain any information as to the working expenses of the steamer " Nelson," the agent having left all the accounts relating thereto in Nelson. They would however, here point out°the difference between steamers able to carry on the ordinary communications of the Colony, with a daily regularity, and one that would ensure the maximum of punctuality—the former could be done by such a vessel as the " Nelson," having the ordinary power of vessels similarlv employed on the i'-nglisli coasts, and at a small consumption ot fuel, which is the most expensive item in the vessel's expenditure in this Colony. The latter would require a vessel of greater power, such as those employed in the postal service in Europe, and to meet the enormous cost of such a vessel, a large and constant passenger traffic is necessary, which does not at present exist here. Your Committee is therefore of opinion, that it would be better, in the first instance, until such traffic is created by the present facilities of steam, that a vessel of the former class would meet the wants of New Zealand,—and that the most practical method of giving effect to this object would he by the General Government advertising in the newspapers of New Zealand and Australia for contracts for specific services to be performed on the coasts. Should the contract be taken by parties in Australia, it might tend towards accelerating the establishment of Steam Communication between these colonies. To this latter subject, in compliance with a special direction from the house, your committee desire to state that they are unanimously of opinion that the growing importance of this colony demands direct and frequent communication by means of steam vessels with Australia, and they cannot but hail with great satisfaction, the contemplated establishment by parties in Sydney of a regular communication between that City and Auckland— and also to Cook's Straits, which arrangement cannot fail to be highly advantageous to both colonies. If this line should be established, the time occupied in reaching either shore, by powerful vessels, will not exceed five days—and for all purposes of postal calculation, the ports of Manukau and Nelson may be considered equi-distant. The rapid, easy, and safe conveyance of horses, cattle, and sheep from Australia, would be most advantageous, and would, at the same time, facilitate the occupation and cultivation of the great •wastes scarcely yet explored in these islands. It is impossible for your committee to overrate the advantages to be derived from the establishment of such an intercourse between the colonies. The greater facilities afforded for postal and passenger communication with India and Europe will, of itself, be a recommendation without looking at the subject in apolitical point of view, which question is not referred to your committee. Your Committee can scarcely offer an opinion on the prospect of a profitable return upon the vessels running on this line—but, from the evidence taken, it is the general opinion that the Australian and New Zealand line of steamers would sooner become a profitable investment to the owners than the steamers plying 011 our coasts. A loss, however, is sure to occur on the first starting of such undertakings, the preliminary expenses of which are very great. Your Committee therefore, are strongly induced to recommend to the house, that provision should be made by way of a bonus, to a moderate extent, out of the general revenue, for the purpose of obtaining, as early as possible, this important benefit to the colony, and therefore trust that His Excellency the Officer Administering the Government may see fit to recommend that the necessary amount may he placed in the estimates for that purpose. In whatever way, your committee views the question of introducing Steam Communication as a coasting or more general system, it cannot but strongly express its opinion that it is a subject of the greatest importance, and one which so affects the rise and progress of this Colony, that it stands second only to that of getting Representative and Responsible Government for its inhabitants. Approaching the question in any way, it must be admitted that, great and grand results depend upon the introduction of a general system of steam navigation—which, if encouraged and fostered, may make this colony the Britain of the South, and which, if now neglected, will, whilst other countries are taking every advantage in steam to annihilate distance, keep this colony in a position foreign to its best interests. . James Mackay, Chairman. House ot Representatives, Auckland, July 20, 1854.