DISALLOWANCE OE PROVINCIAL BILLS.

3

a.—No. a

Otago for the reasons stated. Ist, —" Dunedin Eeserves Management Ordinance, 1866:" Steps will be taken to remedy the objections to which you refer with a view to the subject being dealt with by the Provincial Council at its next session. With respect to the intention of the Government to test the validity of the Crown Grant conveying the Provincial Government Eeserves to the Superintendent in trust for the municipality, I must respectfully demur to such a step as being in direct contravention of a Eesolution of the House of Eepresentatives as founded upon the report of a Select Committee. As to the equity of the title upon which the Crown Grant has been issued, it appears to me that there can be no manner of doubt, and I venture to protest against any attempt to disturb the same Grant —in which light alone a reference to the Supreme Court must be regarded. lam the more surprised at this, seeing that not only has the ownership of the Provincial Government Eeserves been declared by a special Eesolution of the Lower House, in the session of 1865, but it has subsequently been confirmed by an Act which passed the Lower House in the session of 1866, which Act was prepared and supported by the present Attorney-General, and by him all but carried in the Legislative Council. 2nd. —" Southern Trunk Eailway Guarantee Interest Ordinance 1865 Extension and Amendment Ordinance, 1866." The Provincial Treasurer has requested me to transmit a Memorandum respecting the disallowance of this Bill, which is enclosed herewith, and to which I beg to refer. As this Memorandum enters fully into the merits of the case, and, in my opinion, successfully combats the grounds upon which the Ordinance has been disallowed, it is unnecessary for me to say much ; I would only remark that the disallowance, reaching me as it did immediately after arrangements had been, completed to despatch a special agent to England for the purpose of negotiating for the construction of the railway, has thrown a considerable damper upon the hopes —the well founded hopes which were entertained of his success. I feel that lam justified in stating that if there is any one thing moro than another upon which the people of this Province had set their minds it was the construction of this railway —as the precursor of the railway system throughout the Province, and the disallowance in question is justly regarded as a heavy blow and great discouragement. I trust the Government will reconsider its decision upon the question, with a view to the Ordinance being re-enacted by the Provincial Council about to be convened, and so as to reach England as early as possible after the arrival there of Mr. "William Carr Young, the gentleman who has been appointed special agent of the Province in this matter. Mr. Young leaves to-morrow, and proceeds to England via Panama. I have requested him to call upon you in order that he may personally represent the serious injury which will be inflicted upon the Province should the success of nis mission be retarded or imperilled by the withholding of those inducements to undertake the construction of the railway which the disallowed Ordinance provided. I have, &c, James Macandrew, The Hon. the Colonial Secretary, "Wellington. ' Superintendent. P.S. —I will do myself the honor to address you separately respecting the other Ordinances disallowed.

Enclosure to No. 4. The Provincial Treasurer to the Superintendent of Otago. Tiie Provincial Treasurer desires to make the following observations upon that portion of the letter of the Colonial Secretary, dated 23rd March, 1867, in which he signifies that His Excellency has beeu advised to disallow '' The Southern Trunk Bailway Guaranteed Interest Ordinance 1805 Extension and Amendment Ordinance 1806," and gives the reasons for the same. These reasons appear to be— Ist. That the amendment by which a guarantee of interest is to be extended to the whole of the paid-up capital not exceeding £400,000 pounds, and by which it is made to date from the commencement of the works, is in " direct opposition to the object of the nineteenth section, of ' The Southland Debt Act, 1865,' prohibiting further Provincial Loans without the previous sanction of the General Assembly, and would enable the pecuniary obligations of the Province to be definitely increased." 2nd. That the Ordinance authorizes the Superintendent "to make an agreement to pay public money to a purely private purpose, and that it cannot be held that moneys appropriated to the payment of those dividends are appropriated to the public service." "With respect to the first objection, the Provincial Treasurer has to remark that the nineteenth clause of the Southland Debt Act simply prohibits the authorization of Provincial Loans without the sanction of the Assembly. A guarantee is not the same as a loan, since it involves no repayment of the principal either expended or borrowed. At most, a guarantee may be considered to amount to an appropriation extending over a series of years, and the Treasurer submits that the General Government are not required by law to apply to it more than the ordinary consideration which guides them in leaving ordinary Appropriation Acts to their operation. In this case, that consideration would amount to whether the Province of Otago had a sufficient command of money to warrant it in appropriating a sum of thirty-two thousand pounds annually for fifteen years. There is no question that the resources of the Province are sufficient to make such an appropriation a safe one. There should be no objection to the nature of the expenditure, since the Act of the Assembly authorizing the railway, although it did not authorize a loan, authorized the Superintendent to construct the line. By the interpretation clause, the words " Promoters of the Line " were made to mean the Superintendent, and the seventh clause also shows that it was not only contemplated that the Superintendent might construct the line, but that the Provincial Eevenue might be saddled with a permanent charge for it. A permanent charge for guarantee cannot therefore be regarded as beyond the intention of the Legislature. But supposing that the nineteenth clause were capable of being so strained, and, it may be added, so impossible au interpretation, as that any increase of the liabilities of a Province is tantamount to contracting a loan,