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in the absence of additional guarantees, our half-million loan will continue for a considerable time undisposed of; the only course I can confidently recommend is, that by resolution or otherwise, you join me in strongly urging upon the General Government of the Colony the absolute necessity for their immediately pledging the country to a guarantee of the loan, so that it may be placed in the British market on as favourable a footing as the Colonial War Loan, which is now in course of negotiation through an accredited member of the New Zealand Government.

On the subject of future loans which, in connection with Public Works of permanent importance, and especially with reference to railways, it will be found necessary to resort to a well defined system, by which Foreign capital may be made available for their construction. The concomitants of such a system as would meet the requirements of this Province deserve, and I feel assured will receive, earnest consideration at your hands. Looking at the relationship at present existing between the General Government and the various Provinces of New Zealand, I can suggest no means by which a sufficiently comprehensive financial scheme can be matured and rendered efficient without the fullest sanction and concurrence of the General Assembly of the Colony. To this end it will be necessary to secure the co-operation of the other Provinces, which, in a matter so plainly calculated to promote the prosperity and financial stability of each, and of the colony as a whole, will, I believe, be willingly accorded. As an initiatory step, I would suggest the desirability, during the present Session, of your making an approximate estimate of the cost of the principal Public Works (inclusive of railways) which will require construction during the ensuing five years, and towards which Ordinary Revenue cannot be made available. As a guide to the construction of such an estimate, important data on various subjects will be laid before you.

The collective amount required during the period specified being approximately ascertained, and care being taken that no works shall be included in such estimate but such as are manifestly of a permanent and reproductive character, the financial position of the Province might be placed upon a satisfactory footing, were such loans sanctioned by an Act of the General Assembly, under condition by which assurances are afforded that the borrowed capital shall be devoted to the specific purposes defined by such Act, and ample security be effected upon lands within the Province, to provide for payment of interest and the repayment of capital.

The plan, the bare outlines of which I have thus offered for your consideration, appears to me to possess the advantage of adaptation to the circumstances of every New Zealand Province; of constituting every Provincial loan a New Zealand loan, thereby affording the greatest facility for its negotiation, with the fullest security for its liquidation; of being based upon principles financially and politically sound; and of being reasonable in its demands upon the Government of the colony.

Reports from the various Commissions appointed by me, in pursuance of resolutions of your Houses, will be laid upon your table. They contain much valuable information upon the subjects of inquiry; and resolutions will be submitted to you, having for their object the practical benefits which it was your desire should result from the labours of the Commissioners.

One of the Reports—that of the Commission on Roads and their Construction, with accompanying evidence—I would especially commend to your earnest consideration. The labours of this Commission have not only been great, but have resulted in the collection of a body of evidence of great interest and value to the Province.

A series of resolutions, specially bearing on the subject of railways, will be prepared and submitted to you. If you concur with me in believing that the time has arrived when the position of the Province demands those increased facilities for the conveyance of passengers and goods which railways alone can afford, I shall be prepared to join with you in the adoption of such measures as may be considered best calculated to effect the desired object.

In connection with this subject, I have to refer with satisfaction to the extension of road communication which has been effected during the past year; and I would particularly notice the progressive state of the road from the Dunstan to the Lake districts via the Kawarau River—a work long believed to possess features of peculiar difficulty in its construction. A great portion of the work is now completed, and in a few months’ time an unbroken line of communication, by means of a good road, will exist between Dunedin and Queenstown.

When the Estimates are under your consideration, your attention will be directed to the urgent necessity for the construction of pack tracks to some of the outlying portions of the goldfields. I have already sanctioned the commencement of tracks from the Arrow township to the Twelve-mile Creek, and from Arthur’s Point to the Upper Shotover district, and trust to receive your sanction to the completion of works, without which habitation in those localities during the winter season must be attended with extreme privation and danger.

Considerable additions have been made during the recess to our geographical knowledge of the western portions of the Province, through the explorations of Dr. Hector, Mr. M’Kerrow, Mr. Caples, Mr. Alabaster, and others. The first-named gentleman has discovered and succeeded in traversing an available pass through the mountains from Martin’s Bay to the Wakatipu Lake. The character of the entrance to Martin’s Bay, and of the surrounding country, do not, however, appear to justify any immediate steps being taken by the Government to encourage settlement in that direction.

Our goldfields claim particular notice. Large areas of auriferous country have been added during the past year to the previously proclaimed districts, the progress of discovery having, during that period, been rapid and extensive. Keeping in view the limited population, and the simple appliances employed in mining operations in this Province, the returns for the year are highly satisfactory. So far from giving reason to fear the diminution of our mineral resources, these returns, as well as the known existence of auriferous reefs in various districts, and the vast extent of country over which the precious metal is now found to be distributed, prove beyond doubt, that although this branch of industry may be subjected to fluctuations and seasons of depression, yet gold mining in Otago will, for many years to come, prove a source of remunerative employment to thousands of its population.

I desire to invite your attention to the New Land Regulations, as finally passed by the General Assembly, with a view to your taking into consideration how far such alterations may prove obstructive or otherwise to the sale of lands and the settlement of population thereon. The alteration by which the tax of 2s. per acre per annum upon unimproved lands is made to commence from the date of purchase, I cannot view otherwise than as calculated to affect future sales in a prejudicial manner, and to operate harshly on purchasers whose object is the improvement of the lands purchased by them. Other alterations of some importance have been made since these Regulations received your sanction, but to which, as they will not escape your notice, it is unnecessary for me now more particularly to allude.