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ANNUAL REPORT. The Secretary to the Hon. the Commissioner of State Forests. Sir,— Wellington, 10th September, 1920. I have the honour to submit herewith the annual report of the Forestry Department. I have, &c, E. Phillips Turner, Secretary. The Hon. Sir F. H. D. Bell, K.C.M.G., K.C.

REPORT. PART I.—INDIGENOUS FORESTS. Legislation. During last session the State Forests Act, 1908, was amended so as to enable the Proclamation as provisional State forests of national-endowment lands. The amendment also provides for the net revenue which may be derived from any national-endowment land proclaimed provisional State forest being equally apportioned between the National Endowment and State Forests Accounts. Provisional State Forests. During the year, under the powers conferred by the State Forests Amendment Act, 1919, and section 34 of the War Legislation and Statute Law Amendment Act, 1918, 3,.'111,000 acres of Crown lands and 56,066 acres of national-endowment lands were proclaimed provisional State forests. These lands (particularly those in the South Island) contain a large area of barren mountain-top, a large area of mountain-slopes carrying only a subalpine scrubby vegetation, and a large area of forest at present of little value except for protection purposes; there is also a large area carrying forest now of value for milling. The reserved areas will be thoroughly examined by forest officers, and those found more suitable for farming than for forestry will, after the timber has been properly utilized, be made available for settlement. So far no proposals for the creation of provisional State forests have been received from the North Auckland, Wellington, and Canterbury Land Districts. New Areas proclaimed State Forests under the State, Forests Act, 1908, and Areas withdrawn from Reservation. During the year a total area of 4,624 acres of broken forest country were proclaimed State forests under the State Forests Act, 1908, whilst four areas totalling 2,558 acres were withdrawn from reservation for the purposes of settlement. An area of 2,229 acres was also acquired under the provisions of the Public Works Act, 1908, and section 34 of the War Legislation and Statute Law Amendment Act, 1918. This land is situated at the source of the Akatarawa Stream; and as a State forest it will ensure the preservation of the scenery on the Hutt to Waikauae Road, it will regulate stream-flow, and will also help to provide timber for Wellington. Control of the Sale or the Gutting of Standing Timber on Private or Public Lands. Under the provisions of subsection (6) of section 34 of the War Legislation and Statute Law Amendment Act, 1918, 103 licenses were issued authorizing the sale or the cutting of timber on private lands. In most cases these licenses contained a condition prohibiting the export of the timber; in some cases where licenses were granted without this condition it was considered that export was sufficiently controlled by the Board of Trade Regulations, and in the others export was permitted, as it was satisfactorily shown that the timber produced could not be used in the locality, and that there were no coastwise vessels available to convey it to the large centres of population in the Dominion. Financial. Receipts and Expenditure. The amount appropriated last year for expenditure upon State forestry was £136,998, and expenditure amounted to £66,819 2s. 6d., which is an increase on previous years, and is due mainly to increased wages, additions to buildings, the building of hutments, and the purchase of forest lands. That the expenditure was so much short of the estimate was due to certain proposed purchases of forests and sawmills not eventuating. The building (deferred owing to the war) of cottages for employees has to be undertaken, and as large areas of indigenous forest have to be brought under systematic management an increased expenditure must be provided for; but, on the other hand, it is confidently expected that by this systematic management revenue will be very much augmented. Up till now the expenditure has been practically all on the plantations.