8.—6

XVI

The increases have been made with the object of assisting local industries and improving trade within the British Empire. In this connection I may say that the duty on agricultural machines and implements, upon which the products of the soil are so largely dependent, is not increased. I propose, how : ever, to renew the provisions of " The Agricultural Implement Manufacture, Importation, and Sale Act, 1906," for three years, in order to prevent unfair exploitation of New Zealand markets. Boots. An alteration has been made with the object of keeping out the cheap inferior qualities of boots that have been imported, and with this object a specific duty per pair, in addition to an ad valorem rate, is proposed, but the cost of those boots chiefly used by the majority of people will not be greater than at present, as this has been met in the tariff. Children's boots and shoes remain on the free list. Flour. I am keenly alive as. to the desirability of enabling our people to get the necessaries of life (and first among these, bread) at the lowest possible price. The question of removing the flour duty has been given most anxious and lengthy consideration. The removal of the duty would practically stop wheatgrowing in New Zealand, and leave us entirely dependent upon South Australian or other supplies. We now consume in New Zealand not less than 5,580,000 bushels of wheat per annum ; and last year it is estimated 222,183 acres of wheat were threshed. Our wheat-farmers' interests therefore demand the strongest justification before we prevent their growing this cereal. The removal or substantial reduction of the flour duty would, it is believed, cripple every flour-mill in New Zealand. We would then be exposed to flour-importers, who could without difficulty effect corners, as has frequently been done in America. The flourmilling industry employs some hundreds of hands. Under the existing tariff,° which has been continually in force for twenty-eight years, vast sums' have been expended in establishing and equipping flour-mills in different parts of the country. We cannot lightly make a change which will crush an important local industry like this without direct injury to many individuals. The duty on flour is one shilling per hundred pounds, and its removal would, if the whole benefit of the remission were given to the consumer, enable him to buy the four-pound loaf one halfpenny cheaper than at present. If this could be secured it would be a great achievement, but experience too often proves that the full benefits of such remissions are not transferred to the customers, and as the bakers do not deal in farthings no reduction in the price of bread would result unless the bakers gave up the halfpenny per loaf, which is the whole benefit of the remission. That they would do so is at least very doubtful, and for this uncertain gain to the community some propose that we should make a change which would virtually extinguish our wheat-growing industry, throw out of employment large numbers of men, and ruin our flour-millers. There are some indications that the reason of the present price lies in an entirely different direction. If upon the very close and thorough inquiry I am now making I am satisfied that the present price of bread is due to any monopolistic ring or combination, the Government will not hesitate to introduce legislation this year to defeat such a combination, and secure to our consumers this necessary article of diet at a fair competitive price. And, with the responsibility that my position entails, I would impress upon the flour-millers of the country that in their best interests they should remove any cause that exists for the present position continuing. Further details will be found in copy of resolution attached hereto. RECIPROCITY. When in London recently, the Prime Minister of Canada expressed himself favourable to the establishment of reciprocal trade between Canada and New Zealand, and negotiations with this object in view are proceeding. Anything that