H.—s

X. Expenditure during Financial Year 1925-26. The sums voted for naval defence for 1925-26, and the amounts expended, were as follows : —

XI. Estimates for 1926-27. Estimates for the current financial year have been framed with the object of giving effect to the views expressed by the Admiralty as to the lines on which, in their opinion, Dominion naval policy should follow. The views are recapitulated below under the headings given by the Admiralty, in the order of their importance, with a brief statement of the proposals for the current financial year. (i.) Maintenance of Nucleus of Seagoing Squadron capable of Expansion by Cruisers and Oceangoing Submarines. —H.M.S. " Diomede " arrived on the station in January, 1926, and the Dominion now has on loan two modern seagoing cruisers of a very efficient type. The. addition of H.M.S. " Diomede " will be a great advantage from many points of view, the principal reason being that, with only one ship, it was impossible to carry out certain exercises of a highly important nature. The " Dunedin " and " Diomede " can now each perform certain services for the other, and a spirit of competition, which is, in my opinion, essential for efficiency, has been introduced, to the mutual advantage of both ships. Provision has been made for paying a proportion of the cost of a battlepractice target, which will considerably increase the efficiency of the cruisers. (ii.) Provision of Oil Reserves in the Dominion. —The second oil-fuel tank at Auckland is now constructed, and it is proposed to fill it during the present financial year. The pumping-apparatus is not yet completed, and certain subsidiary items are still required, but space is now available for a stock of approximately 10,000 tons of oil. (iii.) Provision of Bases, Docks, Depots, and Reserves of Stores and Fuel for War-vessels. —The Naval Base at Devonport, Auckland, is being gradually developed. The new storehouse for naval stores is completed, and many articles required for H.M. ships are now available for issue. Additional accommodation for guns and torpedoes has also been provided. Large stocks of coal are no longer maintained by New Zealand, the Admiralty having taken over the stocks maintained in the islands. (iv.) Provision of Local Protection of Trade and Storage of Guns for Merchant Ships and their Escorts, and providing Trained Personnel for them.—The necessary guns and mountings for protection of merchant ships and escorts are being provided at Auckland, and it is now proposed to begin the accumulation of ammunition for them. The necessary storage space is available. The Naval Reserves of the Dominion are growing, and the entries are of a very satisfactory type. Training is now being carried out, including training in cruisers at sea ; on the arrival of the trawler " Wakakura " training at sea in this vessel will be begun. (v.) Provision of Mobile Defence and Mine-sweeping Organization.—A very suitable trawler has been purchased for mine-sweeping and other duties, and this vessel should arrive early in the financial year. Provision has been made in the estimates for 1926-27 for the supply of suitable mine-sweeping gear of the most modern type, and, on receipt, the training in this duty will be started. XII. Summary of Estimates, 1926-27. The estimates for the naval defence vote for 1926-27 amount to approximately £85,000 in excess of the vote for 1925-26, the increase being principally due to the arrival of H.M.S. " Diomede " on the station.

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Item. Voted. Expended. * £ £ Full pay and wages, extra pay, &c. . . . . . • • 194,800 170,907 Administration .. .. .. .. .. • ■ • ■ 400 213 Victualling, clothing, and mess-traps .. . ■ • • • • 48,287 50,329 Medical services .. .'. .. • ■ • • • • • • 2,425 2,033 Repairs, docking, &c. .. .. .. •• •• 9,000 6,955 Fuel and lighting.. .. .. .. •• •• •• 73,220 70,742 Stores* .. .. •■ • ■ • • •■ • • 54,500 76,330 Works .. .. .. .. •• ■■ •• 24,900 19,334 Reserves .. .. .. ■■ 4,220 3,616 Effective services.. .. .. •• • •• 31,427 26,783 Non-effective services .. .. .. .. .. •• 30,640 27,345 Contingencies and claims from Admiralty . . . . .. .. 1,000 1,058 Gross totals .. .. • •• 474,819 455,645 Credits ..f? .. .. .. .. .. 25,737 14,442 Net totals 449,082 441,203 * Stores to the value of £13,000 (approximately) not paid for, 1924-28.