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and occupiers of lands who are subject to taxation even though they are not resident male householders; the change may theoretically be regarded as one of considerable importance, but, practically, its influence will be unappreciable. The extent to which unreclaimed land is intended to be taxed is reduced to the amount which was proposed when the Bill was submitted to you last year, but the principle which enables you to impose an Educational tax on unreclaimed land is one that cannot be sacrificed; for, independently of its being based on the soundest foundation, its influence in preventing the absorption of the country by speculators is wholesome, and cannot reasonably be objected to when the holders of the land have a voice in the imposition of the rates, and are eligible for the District Boards. Should you concur in my views, by adopting the proposed alterations, I trust we may consider this question as finally settled; for, as the chief suggestions of the confirming authority will have been accepted, there cannot exist any grounds for keeping a subject any longer in suspense.

While we have reason to be satisfied with the state of Education in this Province in its more elementary form, inasmuch as it is complete of its kind, and within the reach of all, we have grounds for humiliation in the total absence of all collegiate establishments; and in this respect we stand alone among the earlier settled Provinces of New Zealand. Provision was made by you in a previous session for the erection of a High School or College, and I shall ask you for an additional sum this year, and also for the means of providing such an efficient Educational staff as will make the higher branches of Education accessible to those desirous of availing themselves of them. The existence of such an establishment at Dunedin has become a matter of importance, and, hereafter, facilities for an education of a higher character than that which is now afforded must be obtainable in the remote centres of population, for, with political institutions of the most liberal kind, we shall be in a position of extreme danger if the cultivated intelligence of the community falls far short of being equal to the grave responsibilities which such electoral privileges and power entail.

The number and expense of the Schools required to be built this season induce me to suggest a reconsideration of that portion of the Ordinance where the entire expense of such buildings falls upon the Treasury. The rapid increase of the amount of the educational grants in Great Britain from £20,000 in 1832, to £800,000 in 1862, has necessitated a change of system in the home country, and it would be well that we ascertained precisely the tendency of our proposed arrangement.

I regret that it is necessary to submit to you an amended Road Bill, divested of these advantages which the disallowed Ordinance was intended to confer. However appropriate and beneficial the application of the "English Highways Act" may be in old established countries, traversed in all directions, and at convenient distances by suitable roads, its inapplicability is manifest in a country where, as in some districts not a single practicable road exists; in the former case it would be necessary to divest the proprietor of the land; in the latter, in express reservation and allowance for roads was made when the land was sold. The case not being analogous, the same treatment is inapplicable. It has, therefore, been considered expedient to adhere to our existing Ordinance on this point, and not, by repealing it, necessitate the adoption of the cumbrous machinery which would crowd the statute books with Road Acts; trusting that the General Government will introduce a Bill which will effectually meet the evil in those few cases where any doubt exists.

For information respecting the operations of the last half-year, I have to refer you to the interim reports of the heads of departments, whose usual annual reports will appear at the close of the year.

I am happy to inform you that the progress made in the Survey of the country is satisfactory. During the current half-year, not only will the survey of land preparatory to sale, keep well in advance of the demand, but, the department will, in a measure, be able to overtake the survey of those sections which have not yet been recorded, and the owners of which have hitherto been put to much inconvenience, if not to positive loss, by the delay. Circumstances, arising principally from the necessity of laying off rural land and townships in the neighborhood of the goldfields, have interrupted the ordinary course of operations; but, a slightly increased staff, as a temporary measure, will enable the department to meet all its requirements.

The Road Department has worked steadily and satisfactorily considering the extraordinarily heavy demands on its attention. Independently of what has been finished there are several miles of road under contract. The greater portion of the main south line, between Dunedin and the Taieri Ferry, a distance of 20 miles, will shortly be metalled. I had lately the opportunity of passing beyond Blueskin Bay, a portion of the Northern Trunk Road, and I readily avail myself of the opportunity which is now afforded me, of thanking the chief surveyor, Mr. Thomson, lately in charge of this department, for the accuracy and skill with which he has carried out the operations entrusted to him in this, as in all other directions. The arrival of Mr. Swire, the Provincial Engineer, will, for the future, bring this department under a more undivided supervision.

It is a subject of congratulation that, while the influx of population has increased the amount of sickness to such an extent as to fill the wards of the Hospital as fast as they could be created, the mortality has been comparatively very small. From frequent personal observations of the state of the patients arriving from the gold-fields, many of whom were far advanced in the last stage of typhoid fever and inflammatory disease, I can only ascribe the satisfactory result, as regards the small amount of fatal cases, to the professional ability and unwavering attention of the Provincial Surgeon, Dr. Hulme. During the whole period of my visits, I have only received two complaints, and those of a comparatively trivial character; and an extended experience of such institutions has induced the conviction that the Province is much indebted to the Provincial Surgeon and his subordinate staff for this absence of dissatisfaction.

The expenditure on account of Pilotage having been hitherto far beyond the amount received as dues, I found it necessary to apply for an increase of the pilotage rates. The necessary proclamation has been promptly made, in accordance with my wishes; but, even with the estimated revenue from this quarter, the expenditure will be slightly beyond the receipts.

The necessary authority for raising a Loan of £50,000, in order to carry out the provisions of an Harbor Endowment Bill, about to be submitted to you, having been readily accorded, the Government, or such body as by law may be appointed, will be in a position to advance the work of reclamation and improvement with rapidity--including that which has become absolutely necessary--a Light House at the Heads. I have included this, and also a few other Harbor improvements which it will be necessary to