D.—l.

Christmas. From Hunterville, for about 25 miles, to a point about 5 miles up the Hautapu Valley, the contract survey is completed, and a contract for about 8 miles of it is prepared, but the works have not yet been put in hand. The contract survey is also in progress for a further distance of about 19 miles, to the end of the rough country at Turangarere, near the head of the Hautapu Gorge, 63 miles from Marton. As in the case of the works at the north end of the line, the proposal indicated on Table C is to carry on steadily from Marton for the four years ending 31st March, 1891, by which time it is anticipated that the railway will have reached to Powhakaroa, near the mouth of the Hautapu Valley, a distance of about 32 miles from Marton, and the rate of expenditure suggested is £26,000 for this year, and £35,000, £40,000, and £42,000 for the three following years : total to end of March, 1891, £143,000. After carrying out these proposals at both north and south ends of the line, it is estimated that there will be a balance on loan still available for further works to the extent of about £54,000. Further Works and Surveys. —Further preliminary surveys have been made for the railway to extent of about 12 miles, at various places between the Murimotu and Waimarino Plains, and to extent of about 20 miles between the Waimarino Plain and the Upper Wanganui Valley; and service roads and tracks in connection with the railway have been made, in whole or in part, from Hunterville to Turangarere, 24 miles; Upper Eangitikei to Turangarere, 4 miles; Pipiriki to Ohakune, 25 miles; Murimotu to Upper Wanganui Valley, 50 miles; and Te Koura to Waimiha, 14 miles. The Wanganui Eiver has also been cleared of snags, and otherwise improved from Wanganui to near Pipiriki, about 56 miles. The expenditure and liabilities on these roads and river works, up to 30th September last, was £39,239. Purchase of Native Lands. —Of the £100,000 allocated for purchase of Native lands under the loan for the North Island Trunk Eailway, about £70,300 was expended last year, leaving about £29,700 for expenditure during the present year. The work done up to 30th November ultimo consisted of the purchase of 490,000 acres, at a cost of £54,100, and there is now under negotiation the purchase of blocks aggregating about 750,000 acres, on which £33,000 has already been paid. The lands purchased and under negotiation are situated mainly around Euapehu and Tongariro, with the Wanganui Eiver as their boundary on the west. The surveyed line of railway intersects the purchased land for 45 miles, and that under negotiation for about 15 miles, or 60 miles in all, out of the total 216 miles between Marton and Te Awamutu. Napiee-Palmebston. The Napier to Palmerston Eailway was completed and opened for traffic to Woodville (97 miles from Napier Spit) in March last, and now only remains to be completed from Woodville to Palmerston, a distance of about 15 miles. Of this distance, 4 miles in the Manawatu Gorge is under contract for formation and bridges, exclusive of tunnels, and is expected to be finished in October, 1888. From Woodville to the upper end of the Gorge, 3 miles, and from the lower end of the Gorge to Palmerston, 8 miles, the contract survey is completed, but works have not yet been put in hand. To complete this very important link in the railway system of the colony an addition to existing funds is required to the extent of £120,000 (which includes £22,000 for rails), and this sum is proposed to be allocated to it accordingly, and it is hoped that the work will be completed by March, 1890. In order to get it done by that time it will be necessary to proceed at once with the tunnels in the Manawatu Gorge, and to let a contract for the Pohangina Bridge as soon as practicable. The rate of expenditure proposed, exclusive of amount required for rails, is £40,000 for this year, and £50,000 and £70,813 respectively for the two following years ; total to the end of March, 1890, £160,813,

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