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posed to err upon the safe side, and be contented with reclaiming to half way between high and low water mark, taking the material for reclamation from above low water mark. In this case the tidal volume would not be diminished, while, on sanitary grounds, the perpetual submersion of the mud flat in salt water would be of incalculable benefit to the community. Instead of conceding this operation to private parties, it appears to me that it should be undertaken by the Government. A report by the Provincial Engineer will be submitted to you, from which it will be seen that the probable profit by the transaction would amount to at least £20,000, an amount a portion or the whole of which might go towards the endowment of the Harbor Trust, and enable the Pilot and Harbor Dues to be done away with.

Referring to the question of a Harbor Trust I may say that application has been made to the Government to the effect that such trust might at once be constituted by ordinance and the Harbor Department transferred thence. I presume that a Harbor Trust in order to be effective must be paid, and must either be endowed or possess powers of raising revenue. So long as the Harbor Department has to be provided out of the ordinary revenue, I fail to see any advantage that would accrue from the Provincial Council divesting itself of the administration. If an amount such as has been indicated can be procured from harbor reclamation—and there is no reason why it should not be so—then it appears to me that the constitution of a Harbor Trust, in which might be invested the amount in question, would be a step in the right direction, otherwise such a trust would only involve additional expense without any adequate advantage. I may say that the work of deepening the approaches to Dunedin Wharf is being vigorously prosecuted, and that in the course of a month vessels drawing twelve feet can be berthed and swung at Rattray Street Pier.

Correspondence will be submitted to you upon the vexed question of diversion of natural watercourses for gold mining purposes. This is a subject upon which the Government will be glad to receive the benefit of your deliberations,—involving, as it does, grave questions of compensation and the rights of property.

Your Resolutions last Session embodying new regulations for the disposal of the Waste Lands became law. One of the most important of these modifications has been the practical removal of the administration of the Act from the control of the Executive Government, and the vesting thereof in an irresponsible Board. I regard this as the weak point in the Act, one which is very likely seriously to prejudice the public interest. Although it might, no doubt, be amended in as far as the representative branch of the legislature is concerned, there is little or no hope of such amendment being at present agreed to by the Legislative Council.

Your approval will be solicited in order to the declaration of the following blocks of land, as open for selection on deferred payments:—

2,500 acres near Tapanui
2,500 „ on the Waikaka
2,500 „ near Switzer’s
2,500 „ near Longford
2,500 „ near Ettrick
2,500 „ near Roxburgh

15,000

2,500 acres near Hawea
2,500 „ on Spott’s Creek
2,500 „ at Ida Valley
2,500 „ at McCraes
5,000 „ Tuapeka

15,000

Being in all 30,000 acres, the maximum area allowed by law to be dealt with in this shape during the present year.

I regret that this limitation precludes the setting aside of areas on similar terms in other Land on Deferred Payment districts; those now indicated being the best land and the most urgently required. Next year, however, it is hoped that the localities which we are now compelled to exclude will participate in the advantage of the deferred payment system.

I regret to say that the extensive depasturing district of Wakatipu has not been so satisfactorily administered as could be desired; the revenue derived from it compares somewhat unfavorably with that of the Tuapeka depasturing district.

With a view to promoting the interest of all concerned, a local Commission was lately appointed to enquire and report on the whole subject. The report of the Commission will be laid before you, and the Executive, prior to taking further action in the matter, will be glad to have your views thereupon.

It will be a question of consideration in the case of land of superior quality—the value of which will be greatly enhanced as the country becomes opened up by the extension of railways—how far it may not be expedient to increase the price, as provided by the Waste Lands Act. As you are aware, in the neighboring Province of Canterbury, in which agricultural settlement is being greatly extended, the price has never been under £2 an acre.