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At present, in some cases, Volunteer officers are earning the Imperial Volunteer officers' decoration under entirely different conditions to those in force for Imperial Volunteer officers. In this colony we have an Officers' Unattached Active List, composed of officers who have served in the Volunteers, and who are supposed to be available for service as District Staff Officers. Many of these officers have not performed any military service for years ; but, provided they are certified as efficient and capable by their Commanding Officer, and have the requisite service of twenty years, passed partly in the Volunteer Force and partly on the Unattached Active List, they are eligible for the decoration. Some of the officers on the list take much interest in volunteering, and are, as they are intended to be, actually District Staff Officers, and give much assistance to the District Commanding Officers. Others never attend parade, and take no interest in volunteering ; and it is this class of officer who has a grievance, because when he applies for the decoration it is refused, on the grounds that his Commanding Officer is unable to recommend him as an efficient and capable officer. I consider that this decoration should only be issued in future to officers who have either completed their twenty years' service in a corps, or twenty years' combined service in a corps and actively employed as a District Staff Officer. The wearing when on parade or military duty of decorations granted by the Government for rifle-shooting should be stopped. It is contrary to all soldierly custom, and tends to lower the value of military medals and decorations and the Humane Society's life-saving medal. Now that the issue of the Imperial Volunteer Long-service Medal has been extended to the New Volunteer Force, the bestowal of the New Zealand Long-service Medal should be discontinued. The Nelson District. The Nelson District is now over its strength in infantry corps, and some of these corps are located in places where it is difficult to recruit and to keep up to proper strength. The district is so scattered that it is most difficult to supervise from Nelson, and neither the Commanding Officer nor the Adjutant, however willing they may be, can spare the time to visit the West Coast more than occasionally. There are now five corps on the West Coast, and these should be reduced at the end of the present financial year, by disbanding the corps at Hokitika, Boss, and Kumara, the Force at Westport to be increased, if possible, by the raising of another company at that port. This will bring the infantry strength of the district to eight companies; and this is quite the full strength the district should be maintained at. The field-battery at Nelson will be increased by two guns as soon as guns are available. Defence Depabtment. The organization of the Defence Department at head-quarters requires to be put on a different footing. The duties of the Commander of the Forces and the Under-Secretary of Defence require to be clearly defined and their individual responsibility fixed. All orders and instructions to the Forces should be issued by the Commander of the Forces, who is the responsible military adviser of the Minister for Defence. As at present constituted, there is no military organization in the head-quarters office. The clerks are mostly men from the Permanent Force, but are wholly under control of civilians, and no one, so far as lam aware, is told off to do purely military work. The office should be divided into military and civil branches, with a definite share of work and duty for each branch. The work should be organized into sections for discipline, military organization, training, &c, supply and finance; and regulations should be drawn up for each section. The Commander of the Forces should be consulted on all points connected with the administration, and no action should be taken with reference to any matters connected with the Forces without his being previously informed. Conclusion. In conclusion, I must point out that, though much remains to be done for the Forces, still undoubtedly this year has been one of progress. Orders have been given for a field - battery, four 12 pr. Q.F. guns, Martini-Bnfield rifles and carbines, spare parts, &c, to complete equipment of B.L. guns. The necessary plant to practically equip the searchlights, &c, has been received in the colony. Telephonic communication has been established in the forts at Auckland. An equipment of water-bottles and haversacks, medical appliances, &c, has been laid down, and is in course of supply. An allowance of 2s. 6d., as a personal payment, has been sanctioned for six daylight parades during the year. A Defence Committee has been set up, and the defence scheme for the colony is well in hand. Its functions are to frame a scheme under which the existing means of defence will be utilised, and not to advise as to future requirements. The scheme will be revised annually, and altered as existing conditions change. Its report will be a " secret " one. One Imperial officer from the Eoyal Artillery and an ex-Imperial officer from the Eoyal Engineers, also two extra Artillery Instructors, have been engaged, and money for the Adjutants and Infantry Instructors has been placed on the estimates. A definite organization for the Forces has been laid down, and I trust that all ranks will combine and do their best to make this organization a success, and encourage the authorities to further liberality in the future. A. P. Penton, Colonel, Commander, New Zealand Forces. Approximate Cost of Paper— Preparation, not given; printing (2,425 copies), £1015s.

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