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It will be recollected by the Council that this "Reserve Fund" was adopted in order to prevent a violation of the Audit Act, by the Superintendent paying moneys for works contracted for, the vote for which would otherwise have lapsed with the Appropriation Act, and the payment of which could not be deferred.

A similar course would have been pursued this year having the same end in view but unfortunately there is no balance in the hands of the Treasurer from which to deduct the same; the Superintendent, therefore, is compelled under these circumstances, although in direct violation of the Audit Act to pay accounts as they are presented, and to trust to the Council passing the same when presented in the Appropriation Act. The accounts are as a matter of course examined by the Auditor as to their correctness before being paid, but cannot have the certificate required by the Act attached to them until the Appropriation Act is passed.

In my last report I mentioned an amount that I considered due from the Marlborough Province, as the share of Exchange paid for the transmission of Interest to the holders of Debentures in Sydney. The matter has been brought under the notice of the General Government but from the reply received it will be necessary to forward further particulars upon the subject.

Last year, I regret to have inform the Council, one of the Government Stores on the Wangapeka was broken into, and stores to the amount of £67 13s. 9d. stolen there-from. The Government, on receipt of the information immediately sent proper parties to enquire into the matter, but nothing has as yet transpired sufficient to lead to the apprehension of the offenders. The stores consisted of tea, flour, sugar, tools, clothing, nails, &c., and were under lock and key, and close to a store in the occupation of private parties.

I have also to report that the Province has sustained a loss of £53, through the forgery of an order to that amount by a man named Anquitel, who was tried for the same at the Supreme Court and convicted.

During the sitting of the Council in September last, an addition was made to the Appropriation Act of £200, for Provincial Council expenses, Printing, &c., of this sum £135 has been carried to "Provincial Council," and remaining £75 to "Miscellaneous Printing, &c."

Under the head of "Police Department," there still remains to the credit of this vote the sum of £157 13s. 11d. although a large amount has been paid out of the Miscel-laneous account; it arises from only £50 having been votes for contingencies and the rest for salaries. The amount for salaries had not been expended by the above named sum of £157 13s. 11d.; but the amount for contingencies has been exceeded by £279 18s. 4d. (the sum found in Miscellaneous Account).

"Collingwood Gold-fields."—The last three months' expenses for this department have not been paid, owing to Mr. Mackay being away, and no statement having been received.

"Medical Department."—A large amount for contingencies (£300 7s. 9d.) has had to be carried to Miscellaneous Account, owing to the sum voted, £747 not having been sufficient; against this, however, a considerable sum has been received from Hospital patients, and from the Provincial Government of Marlborough on account of patients from that Province.

"Scab Act Department."—The Chief Inspector and the Sub-Inspector commenced their duties, the former on the 24th December last, and the latter on the 16th January; the one at £300 per annum, and the other at £200. A Town Inspector is also appointed, who receives a fee of £50 per annum, and £1 additional for every day actually engaged in the work of inspection.

"Miscellaneous."—Under this heading the sum of £4,754 was voted by the Council, and £65 has been subsequently added by Session II., making a total of £4,819.

This vote, I beg to inform the Council, has been over expended by a sum of £702 16s. 8d., for which the Provincial Council will require to pass an Act indemnifying the Superintendent for such unauthorised expenditure.

Some of the Sub-votes included under this head "Miscellaneous" have been considerably exceeded, and others are considerably under the amount voted.

It will be seen by the Council that when any particular vote has been expended, any amount afterwards required to be paid under that head, has been carried to "Miscellaneous Contingencies"—hence the over expenditure referred to.

"Repayment of Balance of Education Loan."—The sum of £500 has been paid towards this debt during the past year, leaving the sum of £1,750 still due.

"Education."—The amount voted for this department was £5,000—out of this amount the sum of £3,108 7s. 0d. has been paid, and under the Waste Lands Act the further sum of £674 7s. 1d., making the total amount received by the Central Board during the past year £3,782 14s. 1d. The amount collected for Education Rate is about £1,500 per annum.