B.—No. 2.

£ s. a. £ s. a. Third Wire from Dunedin to Christchurch —250 miles 4,000 o o ■ 4,000 o o Purchase Money of Otago Provincial Line ... ... 2,385 o o Purchase of New Materiel from Otago Provincial Government, including 1,120 Iron Poles* ... 2,04 So o , . 'i'j'aL'OO O O Second Wire from Christcliurch to Hokitika—lBo miles 3,700 o o 3,700 o o Lyttelton to G-odley Head —6 miles ... ... 360 o o 1 Station ... ... ... ... 250 o o f\l r\ r\ /-i Akaroa Line —40 miles ... ... ... 2,000 o o 1 Station ... ... ... ... 250 o o ■ 2,250 o o Branch Line to Waiau (including Ilurunui) —40 miles 2,650 o o 2 Stations ... ... ... ... 500 o o ■ 3,150 o o Town of Nelson to Port —1^ miles ... ... 100 o o 1 Station ... ... ... ... 150 o o ■ 250 o o Wellington to Pencarrow, via Hutt —20 miles ... 635 o o 1 Station ... ... ... ... 100 o o — ■ 735 o o Patea to Taranaki—loo miles ... ... ... 6,000 o o 2 Stations ... ... ... ... 500 o o 6,500 o o Tauranga to Thames, 1 wire—loo miles ... ... 7,000 o o 2 Stations ... ... ... ... 500 o o ■ 7,500 o o Second wire to Thames, via Tauranga—3oo miles ... 5,400 o o 5,400 o o Onehunga to Manukau —20 miles ... ... 1,500 o o 1 Station ... ... ... ... 250 o o 1,750 o o Auckland to Kaipara, Wangarei, and Bay of Islands 200 miles ... ... ... ... 12,000 o o 3 Stations ... ... ... ... 750 o o ■ ■ 12,750 o o Instruments, &c. ... ... ... ... 2,000 o o ■ ■ 2,000 o o Total ... ... ... ... £60,178 o o FINANCIAL RELATIONS WITH THE PROVINCES. In the course of the remarks I have made on these various proposals, I have abundantly evidenced the desire of the Government to respect the integrity of Provincial institutions, and to put them to their highest and most valuable uses; but I have not hesitated to declare that, inasmuch as the objects of Government are superior to a blind subserviency to particular forms, we must not shrink from making such alterations in the Provincial system as the requirements of the country, and of a colonizing policy, demand. There are features in connection with the Provincial system which require to be considered, with a view to removing the objections to which they are amenable. The financial relations between the Colony and the Provinces require to be re-shaped. They are wanting in simplicity, and they work unequally; they are of a nature which tends to embarrass the consideration separately of the respective finances of the Colony and of the Provinces. The present system has, however, the advantage of making each Province responsible for its own liabilities, and of making it also the interest of the Provinces to aid the General Government in keeping down departmental expenditure. It is, on the other hand, open to the objections I have already referred to in general terms, and which may be thus described :—Firstly, Some Provinces receive less, and some more, than they are equitably entitled to. Secondly, The present arrangement impedes the consideration generally of questions relating to taxation. Thirdly, It is productive of difficulties of an almost insuperable nature in the way of maturing, with other Colonies, reciprocal arrangements for the exchange, duty free, of Colonial produce and manufactures. Fourthly, It somewhat hampers the freedom of Interprovincial trade. 6

Financial Relations with Provinces must be modified.

21

EINANCIAL STATEMENT.