8.—6.

The Government have very carefully considered whether it was desirable that a rateable reduction .should be made in the salaries of the Civil servants. They felt reluctant to adopt this course, because of its wearing the appearance of specializing one class of the community for subjection to an income-tax. But the House has indicated its resolve that the cost of the service should be reduced. One of two courses only was open: either to arbitrarily lessen the salaries of some officers, trusting to their not being in a position to refuse to accept the lower salary offered, or to make a fairly-graduated reduction all round. The latter seemed the more considerate course, because of its probably proving of a temporary character. This year there will be large retiring allowances to pay; besides that, the effects of the new conditions which I have explained will only be partly felt. A reasonable rateable deduction need not be permanent. Moreover, the Civil servants must be aware that there has of late been a general fall in the rate of salaries outside the Government service, and they must also know that the cost of living and commodities has become so much less during the last few years that any amount they receive now represents as compared with the same salary a few years back a larger purchasing power. The reduction contemplated is not of an extent to fall heavily on the officers, especially those receiving low rates of remuneration. Salaries up to £150 will not be affected. On over £150 and not exceeding £200, a reduction of 3 per cent, is proposed. £200 „ £300, „ 4 £300 „ £400, „ 5 £400 „ £500, „ 6 £500 „ 7^ The deductions in any one class are not to make the salaries smaller than the last salary in the class preceding. The plan will not apply to the officers in the Agent-General's Department, as they are subject to the English income tax, neither will it include policemen or men in the Permanent Militia, nor men on wages, whether weekly or monthly, in any department, nor gaol or lunatic warders. It will not apply to persons whose salaries are permanently fixed by Acts. Ministers, however, accept it as regards their own salaries. It will rest with members to apply it to their honorarium if they see fit. They may desire that a percentage shall be deducted corresponding with that levied on similar amounts. The total amount the deductions are expected to yield is about £20,000.

PROPOSED EXPENDITURE THIS YEAR. The estimates of proposed expenditure this year are as follows:—

VIII

Estimatd , 1887-88. Voted, 1880-87. Expended. ORDINARY REVENUE ACCOUNT. Civil List ... Interest and Sinking Fund Under Special Acts ... £ 29,750 1,764,793 232,867 £ £ 29,750 1,654,500 231,054 £ 31,015 1,642,876 232,189 2,027,410 Legislative Departments Colonial Secretary's Department Treasury and Eevenue Departments ... Justice Department... Education Department Native Affairs Department Mines Department ... Working Railways Department Public Buildings and Domains Depart1,915,304 1,906,080 17,000 130,515 407,838 110,170 381,509 17,828 28,983 748,000 17,810 163,236 457,323 118,084 383,489 22,830 40,104 761,282 17,626 162,940 455,609 118,571 371,603 26,836 32,693 695,772 ments Defence Department ■"... 35,850 186,201 40,210 191,551 27,961 182,569 2,063,894 2,195,919 2,092,180 Services not provided for Deduct from Salaries 4,091,304 4,111,223 3,998,260 14,338 20,000 4,071,304 4,012,598