8.—6.

XXIV

and the Queen Mary Neurological Hospital at Hanmer. The cost of administering these hospitals has been reduced : a saving of £9,000 was made last year, and a further reduction of approximately £20,000 is estimated this year. The orthopaedic work performed at Trentham and Rotorua can be undertaken by the general base hospitals, and it is proposed to close Trentham Hospital as soon as possible, and later King George V Hospital, except as regards provision for local needs. Hospitals, General. The annual subsidies to Hospital Boards amounted to £471,711 in 1921-22 as against an estimate of £425,000. Action has been taken in the direction of raising the fees for treatment in State institutions to a figure more nearly approximating the cost of treatment than heretofore, and also to induce Hospital Boards to do the same. The estimate for the current year is £425,000. MENTAL HOSPITALS. The total expenditure for the year under this heading was £384,615, but the credits, mainly receipts for maintenance and sales of produce and stock, amounted to £115,416, leaving a net expenditure of £269,199, an increase of £7,460 over the previous year. In a Department where the maintenance of a number of people is being continued on established lines, and when that number is always being augmented (the increase last year was 100), an increase of only £7,460 is not excessive, especially as the item for salaries was £15,070 above the previous year, due to the increased nursing staff necessitated by the reduction of working-hours. DEFENCE. Owing to the geographical position of New Zealand the people of this Dominion are vitally interested in the maintenance of peace in the Pacific. The proceedings of the Washington Conference were therefore followed very closely by all sections of the community. Although the Conference did not provide for disarmament to the extent desired by the British-speaking peoples of the world, it has resulted in the creation of a better understanding among those nations bordering on, or who have interests in, the Pacific. The causes of war have, however, not been removed, and, while it is imperative that our Defence expenditure should be kept as low as possible, there is a limit beyond which reduction cannot be made with safety. This limit is governed by the ability to rapidly expand our naval and military organization to its full effective strength in time of need, and requires the retention of the necessary machinery to enable this to be achieved. Overlapping and duplication have been eliminated, and the administration of the Department has been, reorganized in such a way as to enable the fullest advantage to be taken of the existing machinery of State. The expenditure out of the Consolidated Fund for defence, including Ordnance services and the maintenance and training of the Territorial Force, during the financial year ended' 31st March, 1922, amounted to £415,451, or £3,333 less than the amount appropriated. The estimated expenditure for the current year is £317,616, showing a saving of £97,835. including an economy of £50,000 per annum effected by the execution of a new contract for the supply of small-arms ammunition. The discontinuance of the issue of a maintenance grant to units of the Territorial and Cadet Forces, and the substitution of a Regimental Funds grant, has been the means of effecting a saving over a period of twelve months of £11,983, of which £10,794 has been recovered and paid to the credit of Public Account. The centralizing of mechanical transport into one Government garage has been found more economical than the previous system, the saving, to the Defence Department in this connection amounting to £8,000 per annum.