B.—l.

ment for the New Zealand Eailways. The Government believe they are fully justified in anticipating from this change a large increase in the net profits from the railways. In the meantime we have to deal with the serious present deficiency in our revenue which I have stated. Now it is obvious that without an increase in the number of taxpayers there are only three ways in which a deficiency of revenue can be met, or rather its continuance and recurrence avoided. —First: Taxation may be imposed for the whole amount required. Second : Expenditure may be reduced to the whole extent necessary if that be possible. Third : Eeduction of expenditure may be made, and additional taxatidn may be imposed, which together shall make up the required sum. Proposed Ebductioxs in Sbbvices. It is hardly necessary for me to say that it will be impracticable to cover the deficiency of the current year by reduction of expenditure. Seven months of the financial year have already passed, and it is impossible for two or three months to come to obtain much, if any, effect from reductions. The proposals, however, which I shall submit will, I hope, prove to be of a sufficiently comprehensive character to satisfy the most thorough reformer. There is an impression in the public mind that sufficient reductions can be made in the public expenditure by reductions in the numbers and salaries of the civil servants ; but I need hardly point out to honourable members that it will be altogether impossible to effect the whole of the necessary saving in that direction alone. It will be necessary also to curtail the conveniences and aids which are now being enjoyed by the public and the local bodies. I will now state to the Committee what our proposed reductions in the Services are. In the first place we propose to begin with the highest office in the colony— that of His Excellency the Governor. I need hardly remind the Committee that this reduction cannot take effect until the appointment of a new Governor. It has been said that the colony is likely to lose standing and credit in England by reducing the salary of the Governor; but we have no fear, after careful consideration of the subject, that ill effects will' follow this reduction. We have no fear but that we shall still obtain the services of officers of the same high standing as heretofore, and as to our credit, we have the fullest confidence that the reductions and other economies we are proposing will prove the existence of that first condition of commercial confidence, a determination to pay our way. We propose, then, that the Governor's salary shall remain at £5,000, but that this shall include the cost of his staff and all allowances. This will be a total reduction of .£2,500 from the amount at present paid. We think that the sum I have named above should cover the total cost of the Governor to the colony. In the next place I will deal with the legislative and executive brandies of the Government, and the Committee will, I trust, excuse me if I take the latter first. We propose then with regard to the salaries of Ministers, that the Premier shall receive £1,000 instead, of £1,750 now paid, and that the other Ministers shall receive £800 instead of £1,250 at present paid, and we propose to reduce the number of paid Ministers from seven to six simultaneously with the reduction in the number of Members of the House of Eepresentatives, which I shall shortly mention. As to travelling allowances, it is obviously important that Ministers should travel, so as to make themselves personally acquainted with the wants and circumstances of the several districts; but the allowance should be arranged so as merely to recoup necessary outlay; and we propose to allow £1 10s. a day while actually travelling on the public service, and limit the total to be paid to the whole Ministry to £1,000 in any one financial year. The average amount paid to each Minister for the last three years has been £190. With regard to the expenses of the official residences of Ministers, we think that large reductions can be made. We think the one known as " Tinakori Eoad North " should be sold, as being too large and expensive. Of the others, we propose one should be retained as a residence for the Premier, the cost of maintenance of ii—B. 1.

Governor's salary and allowances.

Salaries of Ministers.

Travelling allowances of Ministers,

Residences of Ministers.

IX