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Gentlemen—I need not say that the past year has been, in various respects, somewhat unpropitious to the onward progress of the Province. What with the political struggle in which the Province was engaged for six months of the year; the prolonged duration of unseasonable weather; the low prices of agricultural produce, and the severe losses incurred by the late floods; we have had no ordinary difficulties to contend against. Notwithstanding all these drawbacks, I believe the Province was never in a more sound and healthy condition than it is at the present time; the best proof of which is to be found in the fact, that, while depression of trade, and a consequent reduction in the Customs Revenue have fallen to the lot of most of the other Provinces, no such result has befallen ourselves.

The great want of the Province now is population; and one of the duties to which the Government is earnestly devoting itself is, that of influencing an adequate stream of immigration of a suitable class from the Mother Country. During the past nine months we have had thirteen vessels with immigrants from Great Britain and Ireland; and I believe we could have absorbed three times the number of immigrants with advantage.

Gentlemen—Perhaps the question in which we are most deeply interested at present, and to which it is probable that your attention will be directed, is, What is to be the future form of Government in New Zealand? This question is now exciting considerable interest in various parts of the colony. It is held by some that the Provincial system is, and has always been, an abomination; whilst others think that, although it has done good service in the past, it has now fulfilled its end, and ought to give place to something else. I confess I cannot admit either the one proposition or the other. Had the Provincial system been let alone, and been permitted exclusively to fulfill the functions assigned to it under the Constitution Act; and had the Central Government confined its attention to purely federal matters, it would have been to the advantage of the colony as a whole this day. As it is, I feel persuaded that, if New Zealand is to be successfully colonised, it must be by means of Provincial Governments; and that to supersede the Provinces indiscriminately, would be not only premature, but a measure decidedly regressive in its tendency. With all the disadvantages with which the Provincial system has had to contend from without, and with all its abuses from within, it is probable that, but for this system, these Islands would have been ten years less forward in material prosperity than they are now. And I think that every reflective mind, in this Province especially, would do well to pause before rushing into an organic change, the practical result of which will, I am perfectly persuaded, be one purse for all New Zealand. That is the true meaning of Centralism—one purse for the Colony; that is to say, the application of the Revenues of Otago to the supporting of Hospitals, Police, and Goals in other Provinces, the revenues of which are absorbed in payment of interest upon their loans.

It has become the custom in some outlying districts, whenever people fancy themselves aggrieved at the action of the Provincial Legislature, immediately to decry the Provincial system, and to demand its abolition. To those who take this ground I should say that, if they are successful, it is very certain the outlying districts will speedily discover the difference between the Colonial and the Provincial Treasury.

Gentlemen—It is my desire, as it is doubtless yours also, to appropriate the Revenue at our disposal equitably throughout every district in the Province; and I feel assured that the interests of the outlying districts will be much safer in the hands of this Council, where they are fairly represented, than they can possibly be in the General Assembly of the Colony.

It appears to me that the great object which those who have the interest of the whole Province at heart should aim at is—to get clear, if not of the political, at all events of the financial partnership with the North Island.

Gentlemen—Your number responded favorably to the object set forth in the circular, yet that expression of opinion was not so generally favorable as to warrant the action contemplated at the time, without obtaining a further expression of your views.

I am still of opinion, however, that an effort should be made to procure the building for the purposes indicated; and should you, on consideration, concur in that opinion, it is probable that arrangements might yet be made with the General Government to relinquish it. One of the chief purposes to which I think the building might be devoted would be that of a College and a New Zealand University. It appears to me the time has come when measures towards obtaining such an Institution should be commenced, and there is no part of the Colony in a better position to make the commencement than ourselves.

It is proposed that 100,000 acres of land should be reserved by way of endowment; the annual revenue from which, together with that which will be derived from other sources, will suffice to provide the living agency which will be required to institute an University worthy of New Zealand. All that is needed now to give effect to this arrangement is your concurrence.

Gentlemen—I am sure that it is not necessary for me to dilate upon the advantages, both material and moral, which such an Institution may be expected to confer; and I confess that to me it will be a source of no little satisfaction if, during my tenure of office, the Legislature of Otago should distinguish itself in this direction.

A Select Committee will be proposed to consider the whole subject.

I had hoped upon the present occasion to have been able to announce to you that arrangements had been concluded for the construction of the Southern Trunk Railway. It is possible, before the Session terminates, that I may still have that pleasure. From the correspondence with Mr Young, which will be laid on the table, it will be seen that that gentleman was not in a position to act definitely in this matter until the arrival in England of the January mails. I am in hope, from the tenor of his last advices, that ere now his mission has come to a satisfactory termination.

A commencement has been made towards deepening the Upper Harbour, and in a few months hence Inter-Colonial and Inter-Provincial traders will be able to load and discharge at Dunedin Wharf.

The new building for the Industrial and Reformatory School is now completed; and you will be asked to sanction the necessary expenditure, in order to place the School in operation.

An earnest desire has been expressed to me by the settlers in the northern districts of the Province that a Railway should be constructed from the River Waitaki to Moeraki, and thus to form part of the Great Trunk Line which will, no doubt, eventually extend from the Bluff to Cook’s Straits.

Looking at the extent and importance of the territory which will be intersected by this Railway, and to the beneficial effects which must eventually result from it, I do not anticipate that there will be the slightest hesitation on your part in conceding to the north the same advantages which have been already granted to the south. I may state that overtures have already been made to me on the part of capitalists willing to find the money for the construction of this Railway upon the same terms as are being offered in the case of the Southern Trunk Line, and, with the view of enabling me to deal with them, Resolutions will be submitted to you during the present Session. It is true that, by the recent action of the Colonial Legislature, we are now debarred from giving any such guarantee as we have done in the case of the Southern Trunk Railway. At the same time, I apprehend that it cannot be intended to maintain such a course of action to the prejudice of a Province, the resources of which are very far beyond any liability it has yet incurred, or which it is likely to incur.