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A slight increase is shown in certain Departments, particularly the State Fire, Inland Revenue, Pensions, Public Trust, Public Works, State Advances, State Forest, and Valuation. These increases have been due to the increase in the amount of business transacted. In other Departments the number of temporary employees is being steadily reduced as opportunity offers. Efficiency of the Service. The Public Service Act has now been in operation for ten years, and there is no doubt that during this period the efficiency of the Service has considerably increased, due principally to the method of recruitment and to the recognition of merit. In considering the claims of an officer for promotion, not only is the manner in which he performs his duties taken into consideration, but also his educational attainments. No officer is appointed to the Clerical Division unless he has passed the Public Service Entrance or a higher examination. Every encouragement has been afforded officers to continue their studies, and it is pleasing to note that while in 1913, when the Public Service Act came into operation, there were only 537 officers who had passed the Public Service Senior or Matriculation Examination, now there are 1,231 such officers. Similarly, the number of officers who have passed the Solicitors' Examination has increased in that period from 43 to 121 ; the number who have passed the Accountants' Professional Examination has increased from 18 to 151 ; and the number who possess University degrees has increased from 21 to 92. Officers of the Service generally, and the younger members in particular, are all keen to improve their positions, and quite a considerable number are at present studying for one or other of the examinations previously referred to. Increments to Salary. In a previous report attention was drawn to the provisions of section 25 of the Public Service Act, 1912, which provides that the annua] increment of an officer who is not satisfactorily reported upon may be withheld by the Permanent Head of the Department. It is satisfactory to note that controlling officers are real: zing to a full sense their responsibility in this connection, the number of cases where an order depriving an officer of his increment has been issued showing a considerable increase over previous years. Promotion of Officers. The following extract from the report of the Royal Commission on Public Service Administration of the Commonwealth of Australia is of interest, as the provisions of the Commonwealth Public Service Act and the New Zealand. Public Service Act are in many respects similar : — . . . It is necessary to consider a further important phase of Public Service administration in relation to promotion and transfer of officers to fill vacancies occurring in the Departments. The efficiency of the Service depends very largely upon the methods adopted in effecting promotions from class to class, and any defects in the system of carrying out staff changes in this direction would react with telling force against the proper and economical management of public business. Fortunately for all concerned, the old evils of political, official, or social influence in the advancement of officers of a Public Service have given place to recognition of fitness for the discharge of the duties to be performed, the Parliament in the Act of 1902 having clearly defined the methods to be adopted in the Commonwealth Public Service to insure a fair field and no favour. It is hardly necessary to dwell upon the defects of any system of promotion wherein seniority is regarded as the determining factor, as in all modern legislation dealing with Public Service administration provision is made for the subordination of seniority to other more important considerations. As far back as 1888 a British Royal Commission, reporting on Civil establishments, remarked : " We think that promotion by seniority is the great evil of the Service, and that it is indispensable to proceed throughout every branch of it strictly on the principle of promotion by merit —that is to say, by selecting always the fittest man, instead of considering claims in the order of seniority and rejecting only the unfit." Similar views have been expressed by Royal Commissions dealing with Public Service matters in various parts of the British dominions. As has been pointed out by the Commissioner in previous reports, the provisions of the New Zealand Public Service Act require that both fitness and seniority shall be taken into account in considering the promotion of an officer. The matter is such an important one that I feel constrained to repeat what was previously said : " Promotion by merit, however, and by merit alone, is regarded by the Commissioners as the only satisfactory means of ensuring that men of ability receive the benefit to which they are entitled. The general practice has been to subordinate ' seniority ' to ' fitness,' but in actual practice it has been found that the human characteristic of sympathy to an old officer has in some cases led to the question