LAND AND INCOME TAX.

Dominion, Volume 6, Issue 1822, 7 August 1913, Page 5

LAND AND INCOME TAX.

THE POSITION EXPLAINED. ' 'J 1 ) ; GRADULi'ED TAX PROPOSED. . The not reouipts for tho past year in this Department were— X i 6 Land-tax 728,636 Income-tax W2,901 Total 1,191,030 l'ho estimate was— Land-tax 650,000 ■Income-tax „„\ 450,000 1,100,000 The estimate was therefore exceeded by 91,630 Land Tax. The land tax receipts for tho financial Jear 11)12-13 as compared with the year 1911-12 are;— £ ■ Receipts, 1912-13 728,638 Receipts, 1911-12 617,016 An increase of 81,620 The following figures show tho increases in the net assessed taxable value of land and mortgages, the yield of land tax, and tho number ot taxpayers, in the last four years:—' Taxable ' No. Value. Tax. of TaxYear. £ payers. 1908-9 106,198,550 604,900 30,855 1912-13 '...... 130,675,919 728,636 33,232 Xnoreases 21,477,399 123,736 7,377 As it has been freely stated that the subdivision ol' the large' estates of the. Dominion is not being sufficiently accelerated, I may here refer .to tho alteration 1 which has taken place in recent years in the areas hold by certain landowners. A reference to Table No. 3, published under 8.—17 a, 1911, will show,that on March 31, 1910, there were 171 owners of freehold lands in the' Dominion whose individual holdings reached 10,000 acres or, more. The aggregate" area held by these 171 owners was at that dale 3,509,171 acres. An examination of' the assessments of these same owners on .Jlavch 31, 1912, or two years after the date of tho return, showed that no less an area than 811,202 acres had been disposed of during that period. For the'year ended March 31, 1913, details-of all subdivisions w'hich have taken place are not yet-to band, but from present indications I think I am warranted in saying that tho process of subdivision has of late been considerably accelerated.

Income Tax. The receipts for 1912-13 as compared .with 1911-12 were:— £ 1912-13 462,991 1911-12 ..; y 448,935 An increase of 14,039 No alteration was made in the rates of tax charged, so the above figures are an indication of the increased prosperity of the Dominion. The following figures give the increases In the net assessed income, the yield of income tax, and the number of taxpayers, in tho last four years:— Not Assessed No. Income- Tax. of TaxTear. £ £ payers. 1908-9 ~' 10,225,346 321,044 10,839 1912-13 12,939,338 462,994 1-3,167 Increases 2,713,992 141,950 2,328 The rates of income tax were increased in 1910-11. ■ . REMARKS AS TO CURRENT YEAR'S REVENUE. LAND AND INCOME TAX. I estimate the receipts for the currtnt year, as— £ land tax 750,000 Income tax 470,000 Total 1;220,000 It is intended during the present session to submit, to honourable members a proposal ..income. ,tux on a" moro .'equitable 1 :' basis' than the"j/resent system. The new scale will' be prepared on the same principle as the graduated'la'nd 'tax of .last session. Which provides that.',the increase!-in the" rate will. be uniform .with the increase,. ,in value, that for each, pound of increase in taxable income there shall be at corresponding increase in rate. The smaller incomes will pay slightly less, but this loss will be made rip by an increase in tho fax- charged on the larger incomes. Legislation has already been introduced with the' object of granting additional exemption from income tax to parents w'ho havo children under sixteen years of age dependent upoh them. Thislegis-' lation will, I hope, meet the objections so frequently made—viz., that tho present system of taxation presses more severely on taxpayers who are bringing up families than it does on those iritb. few or no children.

Agriculture. a The Tural industries, and the preparation of their products for export, are among the most important factors in the material prosperity of New Zealand. It is consequently a matter of satisfaction that the past year has been one of prosperity for these industries. The wool clip has been good; dairying has continued to'expand, especially in the manufacture of cheese; commercial fruit-grow-ing-is mow-beginning to take its true place as a means of -utilising much land that is of comparatively small value for other purposes; the hemp industry has, owing largely to a period of high prices, shown a remarkable revival; and poul-try-raising and bee-keeping are exhibiting signs of a forward'movement. The Government has under consideration a proposal to introduce legislation this session which will enable financial assistance to be granted to associations of fruit-growers for .the purpose of .erecting canning factories and providing, cold storage. Agricultural Colleges and Experiment Farms, It hsis been decided that the question of jstablishing an agricultural college and txperiment farms shall be referred to the proposed Advisory Board of Agriculture is soon m the board is established, and It is hoped that its recommendations will be available in time to permit of provision being made in the Supplementary Estimates for giving effect to the proposals. Industrial Matters. It is pleasing to note that no industrial troubles of any magnitude have arisen since tho miners' strikes at Waihi and Eeefton took place.' It is bslieved that during the-past year there has bee® engendered a. more earnest desire amongst tho workers of New Zoaland, as well as amongst all other classes of the community, to find some method by which industrial dispute's may be settled in a manner equitable' to the parties concerned. With this object in view the Government has given careful consideration j to the Conciliation and Arbitration Act. | It is . proposed to effect . a number of amendments in the machinery provisions of'the Act, and to embody these amendments in a consolidating measure to be placed before honourable members for (heir approval. As the present Act cannot, however, bo regarded as complete, inasmuch as it applies to only those disputes' that affect registered -unions -of workers, it is proposed to include in the measure some provisions which it is hoped will enable the narties to all industrial disputes' to arrive at a peaceful settlement of their difficulties, and ■ in this ■way to, so far as possible, prevent strikes and lockouts from taking place A Bill to consolidate the Shops and Offices Acts has already been submitted for the consideration of honourable members. , „ •Workers' Dwellings. T'nfre has been considerable activity in tha purchase of suitable land for the erection of work?rs' dwellings; Land has b:«n purchased and set apart during the iiast vsar, and eighty-one nave ereeterl, while arrangements, are well ad-vanfr-for the erection of eighty-four auditing dwellings. A total of 235 acres i', now available for the purposes of this Act and applications for tho erection ot dwellings .thereon are being dealt with a« rapidly as possible. It is also hoped shortly to complete the necessary-negotia-tions on the lines indicated last year for the purchase of a nufnbcr of blocks ot suitable land in "tha country districts for agricultural labourers dwellings. Legislation will bo introduced this year extendinc the powers of local bodies in tho direction of enabling them to acquire land and exect homes for workers. National Provident Fund. The K<jtional Provident J'und during

tho year has made a distinct forward movement as a result of ail active lecturing campaign. At the present date tho membership numbers over 3800, whilst the fund funounts to approximately •C 15,000. A recent analysis of the occupations of contributors the following ■result:—Clerical, 19 per cent.; domestic, 5 per cent.; industrial, farming, labouring, and kindred occupations, 50 per cent.; shops (retail), 10 nor cent.; miscellaneous, 7 per cent.; total, 100 per cent. Experiojice shows that there exists a desire on tho part of employers that the functions of the fund should bo extended in the direction of enabling them to effectively co-oporato with the State. In England the co-operation of employer and Sfcato is an essential feature of tho national scheme. Pensions. • In accordance with the proposal foreshadowed in tho Financial Statement of last year, the Pensions Department has been recreated and placed under the control of a Commissioner, who administers old age, widows', and military pensions, "lie groas amount paid by way of pensions under these Acts throughout tho Dominion during the year ended March 31, 1913, was as follows":— t£ Old ago pensions 415,749. Widows' pensions 22,113 . Military pensions 3,673 ' Whereas the figures relating to. old age and widows', pensions represent a. full year's working, the amount paid by way of military pensions is tho payment for tho last quarter of the year only. The liability, however, in regard to military pensioners on tho roll at the present time exceeds ,£22,000, and it is anticipated that tho estimate of ,£25,000 per annum as tho probable cast of the Military Pensions Act will be realised before* the first twelve months have passed. , Applications for New Zealand war medals are still being received, and, in cases where satisfactory proof is shown, medals are. being' awarded. Amongst those to whom medals have been granted are a number of members of the Maori race. Tho number of pensions in force at the close of tho year under-each head was as follows:—01<1 age, 16,509, a decrease of 140 on the figures of' 1911-12; widows', 1313, an inorease since last year of 525; military, 568, or up to the present datp, G75. The decrease in ■ tho number, of old age pensions is duo to tho fact that some 380 have been converted into military pensions. Two Bills dealing with pensions have already been introduced—one to consolidate the wholo of the law relating to pensions of tho three classes enumerated above, and tho other inviting Parliament to ratify the ngreomc/it relaying' to reciprocity in tho matter of old ago pensions signed by the Prime Minister of the Commonwealth of Australia and the Minister for Pensions for New Zealand. In tho pension Consolidation Bill propcsals are contained which will grant an old age pension to women at the age of sixty. The estimated cost of this proposal is about .£70,000. Further proposals relating to tlve residential qualifications under thp Old Age Pensions Act will also be contained in /the consolidating measure. The Bill also extends the operations of the Military Pensions Act which was passod last year. CUSTOMS & SHIPPING. TARIFF LEGISLATION. CUSTOMS LAW BILL PROMISED. The Shipping and Seamen Amendment Act, 1912, having been assented to by his Majesty tho King, it was by proclamation • brought into force on May 1, 1913. live Act deals principally with matters relating to collisions and salvage, and brings the law into accord with the Imperial Maritime Conventions Act and the International Maritime Conventions. The Imperial Government 'has been requested to an'ango for the ndlierencc of New Zealand to those Conventions. Lighthouses. During tho past year, automatic acetylene ' lights were ord'erea, for erection, on. ono of the C£icton" on, 'Channel Island near Cape Colville, and on Karori liock in Cook Strait. The Accessary- tower for Chicken Island was pr.ooured, and it whs erected in April of this year, . the ; light being;exhibited on the 28th of that month. The tower for Channel Island 1 light, is ordered. , The public .will begrati- ' lied to know that , a final decision has ' been como to in reference to the matter of 'lighting Cook Strait in the vicinity of. 1 Cape .Teravhiti. , The site finally adopted has met with the general j;pprobation of * all concerned, and the work of erection is being proofied'cd with. Reciprocal Trade. With a view to stimulating trade between Australia and New Zealand, Hie Minister for. Customs recently visited Australia and successfully negotiated a reciprocal trado treaty with the' Govow ment of tho Commonwealth of Australia. Since this treaty was concluded tho position of political parties in the Commonwealth has materially c'hanged, and it is not possible for the New Zealand Government to take any farther action in the matter until the policy of the new Commonwealth Administration in reference thereto is disclosed. Customs Tariff. , For the reason, iust given the usual practice of bringing' down the proposed rew Customs tariff with the Financial Statement will not te followed upon this occasion, Tho piecemeal introduction of measures affecting tho tariff would have a most disturbing and unsettling effect ■ upon trad© g-emrally; and, as the general tariff proposals and tho reciprocal trade treaty are complementary to one another, the Government deems it advisable to hold over the proposed legislation dealing with this subject until later in the session. ■ Customs Law. There has been comparatively little or no alteration in the principles of the Customs Law Act since tho year 1882. This most important Act has become lo a great extent out of date. The anomalies whicli aro inseparable from such a meaBWB have created a freat deal of hardship, and the difficulties of administering the Act have been largely due to the hard-and-fast conditions imposed ' upon the administrative officers of tho Department by the inelasticity of the existing law. With a. view to effecting a remedy for this condition cf affairs, a consolidating Customs law Bill will be introduced this session. This measure will contain many new m-oocsals which it is hoped wiil'rrlake our Customs low more modern, more eouitable, and in its administration mc<re elastic. The proposed measure should en a bio our commercial community to bA freed from many of the harassing restrictions raidar which they liave been labouring for so long. Mining. Owing to labour troubles which existed for many months at Waihi.and Reefton, and which stopped the mines, the output of gold for the past year does not compare favourably with that of the previous year; but. despite these difficulties, it is encouraging to note that the output amounted to .53.035,5t0. as against JSH,132.362 foT 1911-12. and there seems to be little "doubt that the output'for the current year will be quite up to the average. The coal "'ining industry continues to pro=p cr - The output of coal for i 1912-13 amounted to 2.177.61"> tons, as against 2,000.073 lons in 1911-12, being an. increase of 111,512 tons. State Coal Mines. ! Mention was mad" in last year's Finnn- ' c ; al Statement of the revaluation of the ! assets of the State coal mines account, I which was then in progress. The revalua- : lion showed, as was expected, that the as- : were net in all ca«es worth their ; 'rook value, and the Under-Secretary of flic Mine? TJenartment in his report on the matter—Parliamentary Paper C-3a. - recommended additional writings-oft <i'i "under:—Point fllizabetli No. 1 <•■->!- litry, i! 25,000: Setldonville, .£10.000; Ivrioi'iette works, ,£600fl; Wellington depot, JIGftO: Dumedin depot,. .£400: Charming O r Tk nTOsnectinr. -KMC: total, J344.9G6. ■ He also advised that 10 per cent., instead of 5 per cent., should be annually written off for depreciation in future in respect of both the old collieries and the briquette-works, and that such amounts should bo computed on the gross total capital expenditure in each c.a=e, and not merely on tho balance not written off as hitherto. ' The'lron and Steel Industry, Hon.. members will recollect that during last session certain proposals.relative to establishing the iron and steel industry

in this Dominion were made by the Ethelburga Syndicate. On the motion of the Prime Minister a spceial Select C'onmiiltea was appointed to go into the matter, and, after an 'exhaustive inquiry, tho Committee reported tiiat it could not recommend the acceptance of the proposals in their then form. The proposals of the Kthelburga Syndicate involved an expenditure by. them of about .['GSO,OOO,- spread over five year.-, in buying out the rights of tho present lessees of iron-mining property near I'arapaia, .Collingwcod, and in putting down a.modern plant for the production of iron and steel, on a. fairly large, scale. They also involved the payment of. a Government subsidy at the rate of 5 pel' cent, annually. This subsidy would have amounted to .£32,500 per annum, and was to continue for n ■ period of forty years, al. til? end of which term the syndicate was to hand over tha whole enterprise to the Go\)?rnment without further payment. During my recent visit to England the matter was brought before me again, but on ail entirely new basis. The Government has decided to submit tho various proposals to a Committee of experts for examination and report. State Fire Insurance Office. The year ended December 31, 1912, lias proved tho most profitable in tho existence of the State Fire Office. Tho profits amounted to .£14,024, as against ,£5391 lor the previous year. The total profits at the close of tho year amounted to ,£2G,4GI. The net- ineome'of the office for the year advanced from .£48,931 to <£56,315, showing an -increase of X 7361. The reserved funds increased from ' £31,535 in 1911 to .€48,213 for 1912. The percentages of working expenses were 2G.7 for 1912, and 27.5 .for 1911. Mental Hospitals. , The expenditure on mental hospitals for the year was .£145,979, and the net expenditure .£100,151. Owing to the lar,?e increase in• the number of patients, to the high price of provisions, and to the carrying out of extensive works in developing the estate in connection with the new Mental Hospital at Tokanui, near To. Awamutn, there was a considerable increase in expenditure last year, but tho receipts from maintenance and from sales of produce were very satisfactory. ■, Public Health. , The Native medical service i 3 being reorganised with a view to obtain tho co-operation of Hospital Boards in this most important branch of the Public Health service. Tho anointment of nurses for special work among the Natives has been fruitful of such good results that further appointments are contemplated. ' It is evident tint it is necessary to increasy tne accommodation at lour St. Helen's hospitals, and to make arrangements to provide our chief centres with modern and well-equipped buildings. It will also be advisable for Hospital Boards to erect maternity wards in connection 1 with onr country hospitals, and thus provide for tho requirements of country maternity patients. It is proposed to continue the practice of subsidising country medical and nursing associations. A great deal has been done in that direction during the past year, and also in the direction of cooperation between public and private charitable organisations. The ever-increasing demands for accommodation in our public hospitals is a matter fcr serious consideration; and makes it clear that considerable expenditure will be necessary during the next and succeeding years on hospital buildings. At no distant date many of the hospitals will liavo to be replaced by modern structures of a more lasting nature. LAND MATTERS. SETTLEMENT OF CROWN LANDS. LAND BILL TO COME, As indicated in my Statement last session, instructions were given to expedito the survey and subdivision of our Crown lands, and this work is being accelerated, 'lie officers of tho Lands and Survey Department are'endoavouring to give cffect to bur desire that'all available lands be placed on the market at as early a date as possible. During tho past year the area of Crown land mado available for Settlement totalled 337,505 acres, in 2230 subdivisions or allotmonts. Since tho close of the year there has been advertised for selection a further area of 141,500 acres, in 540 allotments. It was considered advisable that the leases of pastoral runs expiring next February should be extended for a period of uvelvO months, in order that the dealing with these areas might bo postponed until after the passing of further land legislation during the present session. The'area involved amounted to 217,713 acrcs, comprising thirty runs. The. Freehold.

The provisions in the Act of last session airing Crown tenants"holding ordinary Crown lands under lease-in-perpetu-ity and settlement lands under renewable lease the option of purchase • either for cash or deferred payment were heartily ivcloomed by settlers' generally, and since the issue of regulations under the Act somo hundreds of applications have been received from settlers desirous of making their tenure as secure as a freehold title can niafeo it. A Land "Bill will be introduced during the present session, and Parliament will be asked to' agree to further extensions of the freehold policy which was approved by the country at the lasfc general election, and which' undoubtedly makes for the confidence of the settlers and the pros-; perity of the Dominion. National Endowment, The area of national endowment land occupied under lease or license at the end of the year was 6,324,008 acres, at an ; annual rental of .£89,559. The gross reveuue received from this source for tho past year amounted to i£97,081. This sum has been dealt with in accordance with the statutory provisions. The total area at present within the endowment is 8,551,250 acres. The unlet area will be prepared for settlement n9 early as possible, and the same vigorous measures are being adopted in regard to the endowment as in the case of ordinary Crown land. Tlio total area of Crown lands of nil classes held under lease or license at the close of tho past financial year was 19,514,394 acres,' held by 29,532 selectors, and paying an annual rental of .£698,831. In addition to this, educational and other endowment lands administered by the Lands and Survey Department represent a further area of 1,175,664 acres, divided into 4280 holdings, paying an annual rental of .£87,460. The gross land revenue received during the past financial..year was .£912,029. The following are the various heads from. which, the amounts word derived:— £ Cash sales and purchase of free- ' holds 87,235 Deferred payment instalments ... 609 Perpetual lease rents 2.34S Occupation-with-right-of-purchase rents 84,497 Lease-in-perpetuity ronts 241,090 Renewable-lease rents 108,069 Small prazing-rnn rents 80,655 Pastoral-run rents 79,223 Educational and other endowments 102,597 Other leases and licenses and miscellaneous receipts 125,712 Total 012,029 Settlement of Kauri-Gum Lands. • Regulations to give full effect to the ' settknuent of Crown lands within gum ' districts, as provided for in the Land ! Laws Amendment Act passed last session, : have been prepared and gazetted, and sur- ; veyors aro now busily engaged in subdi- : viiling suitable blocks for settlement under these, provisions. This "system of i land disposition should- prove a great ' boon to the gum-digger, who will be able : to acquire r fair holding to settle on i : with his family, and thus to become a 1 ! permanent settler, i Land for Settlement. . I The operations under the Land for Set- ■! Moments Act have been larger than in i the previous'year, an area of 50,819 acres >! having been purchased at a value of ; i ,£428.045. Thero is a good demand for I grazing land;, but for lands for mixed : farming it is not so keen. Land Settlement Finance Act. Ten associations have been completed . during the year with a membership, of j' eighty-seven, and an area of 11,354 acres, • valued at .£165,599. Several others a';

in course of formation. It is proposed to amend the Act materially this session in order to facilitate settlement anil to make batter provision for finance. Native Land Settlement. The settlement of Native land during llio past year has been up to the average. Sinco the coming into operation of the Act. of 1909 the average of Xative land alienated either by purchnse or lease has been about jOO.OOO acres a year. A Hill extensively amending the IHO9 Act in the direction of'giving increased facilities for settlejneut of the remaining surplus. Native lands, while duly conserving the interests of the Natives, will be introduced shortly. The important question of rating Native lands is under consideration, ancl a Bill is in preparation which' will make the collection of rates by the J local Louies easier. Cook and Other Isfands. Th? appointment, of a new Resident Commissioner for the Cook Islands was necessary owing to the services of the late Resident Commissioner being retained in New Zealand. Mr. 11. W. Northcroft, late Stipendiary Magistrate, was offered and accepted tho position. The care of the health of both natives and Europeans is one of the chief considerations of the Administration, and when opportunity occurs one of the two medical officers stationed at Rarotonga visits the outlying islands to attend to the health of the people. The liospital at Rarotonga is under the special cavo of the Chief Medical Officer, and is one of the best-equipped in a.ny of the Pacific island?. Its value is recognised by the inhabitants, and everything is being done to encourage.the natives to continue to avail themselves of the benefits of tho institution. A duly qualified nurse has been appointed, and her services, are greatly appreciated by both natives' and European?. As an indication of the manner in ■which the hospital has benefited the community of the Cook Islands, the following figures for the past twelve months are quoted:—Visits of out-patients to hospital, 378; in-patients admitted, 75. Strict measures are being taken by the newlyjappointed Resident Commissioner for the suppression of bush-brer drinking. A Bill validating the constitution of the Federal Council of the Cook Islands and 'containing other provisions for the'improvement of general conditions in the islands will be submitted this session for the consideration of honourable members.

Insurance of Public Buildings. In my last year's Statement mention was made of the fact that it had been tha custom to rebuild out of loan money buildings destroyed by fire, and that tlia Government had dccided to discontinue this unsatisfactory procedure. A. scheme ■was outlined for the establishment of a special sinking fund to meet five insur : ance losses, and ho?ourablo members approved the scheme by passine a vote of J?10,000 from the Consolidated Fund as tho first yearly contribution to the fund. This amount, together with <a. subsequent contribution of ..610,000, has been invested with the Public Trustee. railway construction. LIGHT LINES. ENCOURAGING PRIVATE ENTERPRISE. When the Government took . office in July, 1912, now construction work on main and branch railways was in progress at twenty-ono different points, and provision was made on Inst ■_ year s Public Works Estimates for continuing work on practically all these lines. The total expenditure on new construction, apart from additions to open lines, amounted during the year to ,£G84,19(i. In August last Messrs. M Lean and sons, contractors for the Arthur .s Pass tunnel, between Bealey and Otira, on tho Midland railway, approached Parliament bv petition praying to bs relieved their contract, on the ground that they had exhausted'their resources and were unaj.vj to carry the work to completion. The jxtitioiuwas considered by a Special Committee,which recommended that the contractors' shojild' bo relieved of the contract, and that Hie tumieV should be carried to completion, under a fresh contract or by labour employed directly under the Government's own engineers. In pursuance of this'recommendation the contract was formally determined on December 2.1, 1012, snd the work has since then been oontimied by the Public Works Department. It is propo-rcd, however, to invite tenders at an early date for tho completion of tho tunnel. In the Publio Works Statement of last year it was suggested that wherever branch lines of railway were deemed to be necessary a lighter and cheaper form of construction should be adopted. In pursuance of this view several r.ew branch lines were authorised during Inst session. As it is impossible for the Dominion to borrow in anv one year a sum sufficient to provide for all these, branch liner, as well as for the construction of the mam lines, it is the intention of tlio Government to permit private enterprise to undertake such work, subject to conditions which will carefully safeguard tho public interest. Legislation riving effect to this proposal will be introduced this session. Roads and Bridges. The total expenditure under this heading'for tho last financial year, including the national endowment and land for settlements roads, amounted to £429,253. Development of Water Power. Satisfactory progress is being made with tho tunnel (which is now being carried out directly by the Public Works Department) and with the other works connected with the Lake Coleridge hydroelectric power scheme. Large consignments of plant and material for the generating station, transmission _ line, etc., are also coming to hand, and it is still anticipated that tlie Government will ba in.

a position to - supply electric current to the city of Christohurch by May 1, 1914. \n agreement has been entered into with the Christchurch City Council for the tale of current to that body for distribution to consumers within the municipality, and negotiations are now proceeding for tho supply of electricity to other towns in Canterbury., Irrigation in Central Otago. In pursuance of tho programmo outlined in last year's Budget, it was decided to proceed with the irrigation of a part of Ida Valley. The construction of the i necessary works has been put in hand, I but progress has been very much h<tm- ! pored through delays in receiving articles of plant and fittings required, owing to strikes in England and difficulty in obtaining shipping accommodation. In view of this delay it is unlikely that the works will bo completed in time for the current year's irrigation season, but they should certainly be available for the season of 1011. Full information has been obtained by survey and investigation with regard to the works required for irrigating land in the Manuheria Valley, and , between Clyde and' Alexandra South. DEFENCE. OUR NAVAL 1 POLICY. PROPOSALS TO BE SUBMITTED. Owing to the amendment mado last year in tho defence legislation, detention in military custody has been substituted, for imprisonment. The Act of last year needs further amendment, and the Government has submitted this question with others affocting the national defence scheme to a joint-Committee i.f both Houses of the Legislature for consideration and report. A full statement of the position of tho military forces of this Dominion will be found in tho Defence Deport. The officers, non-commissioned officers, and men comprising our citizen army have, with few exceptions, proved anienablo to discipline, and tho spirit in which they have entered into their respective duties is a matter for. congratulation. Naval Policy. The second meeting of the Committee of Imperial Defence, which I had the privilege to attend, was held seven days before my leaving London. Prior to this, several conferences had taken place with the Admiralty, tho results of which were considered at the above-mentioned meeting of the Committee of Imperial Defence. Some important detail's remained to bo considered, and these, owing to my departure. for Kew Zealand, became matters of correspondence. So soon as these details are settled, the Government will submit to Parliauunt a policy which will tccognl/fr. to the full the necessity for cue con.

| trol for Imperial -purposes, will throw upon tile New Zealand Parliament a more direct responsibility for naval defence, and will givo the people of this Dominion a more definite interest in defence matters and afford them a better opportunity for service. Expeditionary Force. In organising the defence of the Empire tlio AVar Office found it necessary to ascertain the probable number ami nature of tho forces which the oversea Dominions might be able to supply, 'l'o enable tins question to be answered by New Zealand, it is proposed to provide the machinery for an expeditionary force. It is not intended to bring in In existence a force for service outside New Zealand; this can only he done by tho men volunteering to servo when the time conies._ It is necessary, however, in order to Rive an answer to "the AYar'Office, to decide upon tho number of men ami tho nature of tho force; also to provide the arms and equipment', and to have everything ready for theso in the Territorial Force who may offer their services. From past experience there can be no doubt that if the necessity arises there will be no lack of volunteers to respond to the call. Aviation. . It is with pleasure I have to announce that the Imperial Air Fleet Committee has, presented the New Zealand Government with a Bbriot" monoplane. Mr. Gustav Hamel made a successful flight from London to Cologne in the machine. An officer of tho New Zealand Staff Corps is in England undergoing, a course of aviation, while in the Dominion there aro several officers, non-commissioned officers, and men of the Defence Department with a knowledge of mechanics who are qualifying to undergo a course of training under proper supervision with' a view to becoming proficient in tho same art. Battleship New Zealand. I am now in a. position to announce thai; the actual cost of the battleship presented to the Imperial Navy amounted to i 1,701,000, and that the final payment has been made in London. In accordance with the provisions of the Naval Defence Act, 1II0!', the sum of .£50,000, being sinking fund at tho rate of 4 per cent., was paid over during the year, making a total of '.£102,028 now in the hands of the Public Trustee toward? the repayment of the loan. The sinking fund will be sufficient to repay the loan in about seventeen years. EDUCATION, v STAFFS AND THEIR SALARIES. WHAT IS PROPOSED. The increase in the amount to be provided for this year, as compared with last year's expenditure, is due almost entirely to the increased attendance at tho ordinary public elementary schools, at tho manual and technical schools and classes, and at secondary schools, and also to the additional number of new school buildings which have to be provided for and maintained. It is tho intention during this session to go carefully into the report of the Education Commission of last year. Although it will not be possible to give full consideration to University education, tho most urgent needs of the University colleges will bo provided l'or. I do not think it will be possible to bring down this session a scheme for tho improvement of the staffs and of tho salaries of teachers in public schools, but proposals dealing witli these two questions will be submitted to Parliament next y«ar. Meanwhile, to give some increase of salary where it was most needed, tho Government intends, as from January 1 next, to raise the amount of the yearly increments of salary in the several grades from .£5 to J3lO, so that, for instance, a teacher of Grade >1 whoso salary under tlie present law begins at .£IBO and rises in six years by XA increments to ,£2lO, will receive £190 after one year, .£2CO after two years, and .£2lO alter three years; and similarly for all other grades. Tho cost of this for the first year will probably be about .£12,000. In addition, it is proposed to make better provision for tho pay of somo of tho staff of tho training colleges, and to increase the salaries of the secondary assistants in district high schools. , Free University Education, ' Tho opportunities for free University education have been further extended during tli'3 year l.y a modification of the conditions tor obtaining University bnrsar'iss, so that it may be said that the University is now open free to any person who has shown himself qualified to take a University course. Special bursariea have also been established to enable teachers to become well trained in homo science. Tho number now receiving l'ree Univwaity education in New Zealand is about 750. # . /

Special Schools, The system outlined in the last Financial Statement of placing young offenders with their relatives on probation instead of sending them to industrial schools has been successfully inaugurated. There is abundant evidence that tho training given in our industrial schools is praiseworthy, and that the results fully justify the public expenditure necessary in the upbringing of the children; yet the offioers engaged in this work are unanimously of. opinion that as far as possible aggregation should bo avoided, and that for a child of normal tendencies who cannot be provided for with his relatives, the -system of boarding out with foster-parents, which has been in operation for thirty years past, is the nearest approach tx> the ideal of family life. 'Tho extension of facilities for tho caro of ifcelle-minded and epiloptic children is a matter of most urgent importance. It is necessary to mako provision for girls as well as to increase the present limited accommodation for boys. Works aro to be set in hand at Otekaike immediately to enable girls to be received there for tho present, and the buildings will be erected in such a manner as to lie equally available for boys Should it bo necessary in the near future.to mako a separate establishment for girls of this class. School Buildings, Tho demands on tho vote for school buildings are very great, and with all tho care for economy that can be exercised in the Department tho need for new schools as settlement proceeds, and tho extension of schools in tho settled districts to provide for increasing school attendance, together with ths increasing demand for facilities for secondary, technical, higher, and special education, mako it useless to expect any diminution in the amount <f this vote. At the present time the commitments on this account (including, of course, the expenditure sinco March 31) amount to very little short of J5150.000. The Magistrates, '& Bill has been introduced this session fixing the salaries -to be paid to magistrates. Under this measure the three jurisdictions at present existing under the Magistrates' Courts Act will be abolished, and only ono jurisdiction will be provided for, which will be exercised by all magistrates, except in the case of the Chatham Islands, -which is specially provided for. Magistrates arc thus put on an equality as regards jurisdiction and status, but- as it is recognised that the magisterial work in the four chief cities is heavier than in the other_ districts, a slightly larger salary is provided for the principal magistrates in these centres. Town-Planning. The contrast lietween • cities laid out with soino regard to tho future and those built up without forethought and intelligent design impressed itself-upon me even more forcibly than on previous visits to Britain and Canada. Some time spent in the East End of London, and East Ham, with their narrow streets and,very few air-spaces and reserves, made apparent tho urgent necessity for legislation ideal with the proper planning and laying-out of areas which may become in th'" l future towns and cities. Ample provision for school-grounds and other necessary reserves, in the interests of public health and the development of the best type of citizen, is of great importance. The Government will, either this session or in the ensuing one, introduce a Bill to deal with tho question. IMMIGRATION. REVIEW-OP THE POSITION. Before the present.Government assumed office it had become obvious that the methods adopted to procure immigrants to supply the demand for domestic servants in both town and country, and for farm labourers in tho country districts,

wero inadequate, auil that efforts must be made to direct-the stream of those classes of immigrants to „\W Zealand 111 greater numbers;' 'i'jie control of immigration had for years past been with tlie Lauds and Survey Depurtmonl, most uf tho officers ol' wliicli were occupied v.ith other and more urgent work, 'liic Government determined to establish, a distinct Department ol immigration, whoso officers snould be employeu <>nly upon tho spccinl duties of that Department, and the change has resulted in a mciu systematic ami regular administration. Lut the work of finding emigrants, and testing their capacity, health, and character, 1111131 necessarily be enrried out by ollicers 111 England, and during' tlie past year correspondence oil tho subject ixlwwu the Government and the High Commissioner has resulted in modifications of the conditions which formerly obtained, the result of-which, it is hoped, will be to provide a satisfactory increase in the How of suitable immigrants. li. is not possible within the compass of this Statement to explain fully the changes which have been made, or to do nioro than briefly refer to one or two of the mora important modifications. The requirement for payment by each immigrant in cash of a certain jyoportion cf his or her passage-money lias been cancelled in the rase of persons who aro without tho means necessary to provide the required sum. In siich ' eases tho Government advances the whole of the passage-money, but requires a contract from the immigrant; to make the necessary refund, within a limited time alter arrival in New Zealand, so as to place him on an equality witli tho immigrant who is able to provide the required cash. The requirement of one year's actual servico as a domestic servant has been altered so that women who have had practical domestic experience in their own homes may lie accepted, though their services have not been for wage. Efforts hftva been made to arrango for a supply of boys from country districts in England, to be employed'!)}' farmers in NewZealand, upon term 3 to .be approved by the Government on somewhat similar lines to those previously arranged with Mr. Sedgwick. 'X'lie Government has considered various proposals for altering tlie present cystem adopted in our English office, which relies 011 advertisements in newspapers to induce applications from eniigivuiis, and it is suggested that a process of seeking emigrants in tlie country districts of Great Britain and Ireland, as our competitors do, would ba beneficial. The difference between a method of inviting applications by advertisement and a method of bringing -before .the people in their own counties the advantages offoicd by Now Zealand is manifest; but under tho form.sr nlan the expenditure can be accurately estimated, whereas under the latter the procedure mr.st bo limited by tlw cost of working. The Government has reason to bnlicve tbnt it will be able, without an excessive increase of wt, to employ both methods in the futune. Tho establishment of a new system to be controlled by the Hißli Commissioner is, however, a matter which: can bs fiiMlly determined only after full conf»deration of every suggestion made by him. A comparison between the number of assisted immigrants arriving in the year ended March 31, 1913, and the number of the previous year jrroves that an ine.reasD lias already been effocted. The. number fc,r 1911-12 was 3300, and for the year 1913-13 3923.

High Commissioner's Offices, Shortly after his arrival in London last 3T«!ir tHo High Commissioner reported to flio Government, in confirmation of similar rE-present-anons oy his prodcee.vscrs, that tno present offices in Victoria Street, Wfcitnunsrer, I'v&io insuMciont .lor the accommodation of the staff, and that the locution oi the offices was unsuitable for rarious reasons. Several alternative sites wore submitted and considored, and finally a site in the Strand, next to the Adelphi Theatre, was selected, and lias been reported upon by competent land surveyors nominated by tho l-iovemmtnt. It is believed that negotiations for a lease will s'hortly ljj completed. Tho site has a frontage to this Strand of about 501t., tho ground area being 45G7 superficial l'cet. Tho owners of tho land will erect a.-building cf- six sfcoripj in height, upon pCans to hs approved by tho Government, at a east estimated at between - and 1 j£2O,COO. The term of the leass will ba eighty years. Bank of New Zealand, The ojio mil lien loan guaranteed by the Government cf New Zealand on account of the Bank of New Zealand becomes due in ISM. Tha directors of the bank have advis-sd the Government that, it would be in tho interest of tho bank .to renew this loan, and that legislation should 1» parsed this session to permit of an in-or.-ijs; in tho capital cf tho tank. Some difference of opinion exists between the directors and sonic cf the _ shareholders. The lattsr haw made their representation' to the Government.. These, with the beard's recommendations, havo'been carefully considered, and tha Government has decided that legislation shall be introduced this session-which it is believed will h? frtfefnetory to Parliament, to the directors and shareholders, and in the interests of the people of the Dominion.