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1913. NE W ZEALAND.

COOK ISLANDS: REPORT OF ACTING RESIDENT COMMISSIONER.

Laid on the Table by Leave of the House.

Sir, — Cook Islands Administration, Karotonga, 7th November, 1912. In accordance with your instructions I have the honour to submit the following report :— Before discussing the various questions referred to in your letter of instructions I think it well to remind you of the financial position. The revenue of the Islands is already strained to breaking-point. Expenditure has exceeded revenue for several years past, and will certainly do so this year, while many public works of the highest importance yet remain to be undertaken, and unless by an increase of direct taxation I see little prospect of a materially larger revenue. Without such taxation I am of opinion that the revenue has reached nearly, if not quite to, high-water mark for a good many years to come. The Native population, if not dwindling in numbers, is at least stationary, and there is little room for any large influx of whites. The market for fruit is confined to New Zealand, and apparently as much fruit is now produced as can be profitably disposed of there. Hence there will be no great expansion of trade in that direction. The destruction of bananas caused by the hurricanes of recent years in other Pacific Islands, from which disasters the Cook Islands have fortunately been comparatively free, very greatly assisted the banana trade in this Group, but that factor in its prosperity will not endure. Moreover, the area suitable for banana-cultivation is limited, and much of it is becoming exhausted by constant use, the bunches being much smaller than formerly. A large proportion of the orange-trees are old, and renewals are needed to fill the places of those past bearing. But the question of market is the all-important one, and it is on that account that I consider that the export of fruit will not materially increase in value, even if it does in quantity. In my view the great future asset of the Group will be copra, for which there is an unlimited market, and of which much more could be produced. But it takes about ten years to bring a coconut-tree to the copra-producing stage; therefore, although a good deal of coconutplanting is being done, and much more might be done, it will be some years before the effect of it is apparent in increased value of exports, and, incidentally, of increased revenue. The Natives are being urged in all the islands to plant their lands with coconuts, but it is very difficult to make them appreciate the reward of industry when that reward is so far off. Much more coffee might be grown, but there are no immediate signs of its being done. Though no one would be better pleased than I would were I shown to be wrong, I believe myself to be on solid ground in expressing these views, which I do in no pessimistic spirit, as to the future of the Islands, but to justify me in saying that the cost of systematic and organized attention to the health, morals, and education of the people of these Islands will have to be mainly borne by New Zealand, it being obvious that such cost will be no light matter. You will observe that I use the words " direct taxation " as the only means of increase of revenue. I do so because I feel assured that Parliament will not consent to any special Customs tariff for the Islands. Purely from the Islands standpoint such a method would be the fairest and by far the most economical. A special surcharge or primage duty on certain articles, in addition to the existing tariff, would be paid by everybody, 'and would cost little or nothing to collect, whereas to get in direct taxation from Natives scattered over so many islands will be an expensive and difficult process. There is no doubt that the Natives can well afford some extra taxation. But, of course, the Island standpoint is not the only one : the producer in New Zealand proper has to be considered, but he would still have the protection of the New Zealand Customs tariff as against foreign competition here.

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