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upon to meet in the ordinary course of events. Where expenditure is most required is in perfecting the armament and equipment of our existing defences and Forces, and this should be thoroughly taken in hand at the earliest opportunity, and our men should be so equipped as to enable them to take the field at the shortest notice. At the present time the manufacturers of warlike material and equipment are so busy with orders for the Imperial service that it is a matter of some difficulty to obtain any supplies from England, and I think it may be taken as a certainty that if the Empire was engaged in war with any European Powers, it would be impossible to obtain for the colony any large supply of arms, ammunition, or equipment during the time the war was in progress. The colonies having joined so heartily in Imperial defence, it seems probable that in future Imperial struggles of any magnitude this colony will again wish to come forward and assist, and I think it would be a wise measure to keep a spare store of saddlery, arms, and equipment always ready to furnish a force of mounted men for service either within or without the colony. Peemanent Force. During the present year two young officers have completed a course of artillery training in England, and should have returned to the colony by now, but on my recommendation they were allowed to proceed on active service in South Africa. Lieutenant Hume has also gone to South Africa, and is now attached to an Imperial battery of 4 - 7 in. guns. At the termination of the war he should be sent to England for a course of gunnery training. Two young officers who have been trained in the colony are now on their way to England for instruction, one in artillery and one in engineer duties. One cadet has lately joined the Force, and another should be appointed as soon as possible. I must again point out that, owing to the increase of armament and electric-light installations, the strength of the Permanent Force is inadequate, and we should have an increase of fifteen men in No. 1 Company and ten men in No. 2 Company to efficiently provide for care of stores, &c. Should the New South Wales Government again invite us to send any officers or men in No. 1 Company to undergo a course of gunnery in Sydney, I most strongly urge that the offer be accepted. There is a thoroughly equipped school of artillery instruction in Sydney, and it would be greatly to the benefit of the Force if some of the non-commissioned officers could be put through a more extended course of instruction than we are able to give them in the colony. I much regret having to report that a most serious accident occurred to a party of men of No. 2 Company when preparing to carry out a demolition with guncotton, by which three men lost their lives, and a fourth was seriously injured. A Coroner's inquest was held on the victims, which absolved the officer in charge from blame, and a full report was sent to the Imperial authorities, with a request for the highest scientific opinion on the accident. The opinion of the Home Office authorities bore out the finding of the jury. I have issued strict orders that for the future demolitions are only to be carried out under "service" conditions, and with "service" stores. Last year I drew up regulations providing for a fixed time of enlistment for men in the Permanent Force, and for the formation of a reserve. The Defence Act in its present form does not permit of such regulations being given force to, but this is provided for in the amendments to the Act which I have submitted. We annually lose a number of trained men who leave the Force to better themselves in private life, and the colony gets no benefit from the time and expense spent on their training. It is impossible under present circumstances to keep the requisite number of specialists required in No. 2 Company. Skilled watchmakers, electricians, engineers, carpenters, and blacksmiths will not join the Force at the present rate of pay. We have to train the men as they come to us, with a prospect of losing their services when they are fully trained. During the past year twenty-four men have left the Permanent Force for various reasons. I must draw attention to the state of the Mount Cook barracks at Wellington. Some of the buildings are forty years old, worm-eaten, and not worth repair, and it is essential that they should be renewed at an early date. No recreation-rooms or gymnasiums have yet been provided, and this is a matter that I hope will receive early attention. Volunteers. The establishment of Volunteers as sanctioned last year for each district was:—Sufficient naval artillery corps and submarine miners to man the forts and mine-fields, one battalion mounted rifles (four companies), one battery field artillery, one company engineers, two battalions infantry, one cycle corps, one bearer corps. Offers of the services of Volunteer corps of all arms have been sent in from every part of the colony, and the strength of the-Force as now sanctioned is as follows :— Auckland. 8 companies mounted rifles. 1 submarine-mining corps. 1 field battery. 1 engineer corps 2 naval artillery corps. 16 infantry corps. 1 garrison artillery corps. 1 bearer corps. Wellington. 16 companies mounted rifles. 1 engineer corps. 1 field battery. • 22 infantry. 3 naval artillery corps. 1 cycle corps. 1 submarine-mining corps. 1 bearer corps.