in Country districts, but you will not gather the slightest information respecting the qualifications of the teacher, or the amount or character of the instruction given. While I admit that these returns are in some respects unsatisfactory, still they show that the apathy which has hitherto prevailed in regard to education, has been to some extent overcome, and that a sense of the duty and importance of educating their children has been awakened in the minds of parents; by taking advantage of which, you may reasonably expect to spread the blessings of education throughout every part of the Province. Premising that the question of Education is an open one with the members of the Government, that the members of the Government—as a Government—neither insist upon, nor oppose, any particular scheme, I do not hesitate to express my own belief, that the present system is acceptable to the large majority of the inhabitants, and that no other would, ceteris paribus, have produced equal results; and I shall therefore regret any material modification of the principle on which it is based. At the same time I so fully concur in the opinion expressed by all parties, that no System without a constant and vigilant supervision of schools can ever realize our expectations, or yield its legitimate fruits, that I am prepared to make provision on the Estimates for an Inspector, who will be required not merely to superintend the schools already established, but who will be specially charged to organize schools in each district—to impart, if needed, to teachers the method of instruction—and to make periodical reports of the state of each school. And here I cannot refrain from recording my opinion—that limited as the funds necessarily are, that can be appropriated to Education, Government assistance ought to be confined almost exclusively to schools in country districts—that schools in towns, where there is a considerable population, ought to be self-supporting, or that if government aid be granted, it should only be for a limited period—and further that the amount of Government aid should vary according to the number and means of the settlers in each district. Unless some such rule as this be adopted, I fear, that we shall expend our funds in supporting schools in towns—in educating the children of those who ought to repudiate eleemosynary aid—that in short, we shall pauperize education in the towns, and then be obliged to starve it in the country.

You will be gratified to learn that the Revenue for the year ended the 31st Dec. 1858, fully realised my expectations; the receipts from all sources having amounted to £63,831. I need not say, that had it not been for the severance of the Hawke’s Bay district—and the stoppage of the sale of the Reclaimed Land, my estimate of £64,000 would have been exceeded by at least £15,000. The Expenditure for the year was £87,722. The chief items of which were—on Roads £34,803—on Bridges £4,253—on public Buildings including the Lighthouse £6,983—on Immigration £4,014—on Surveys £6,224—on Reclaimed Land £3,726—on Steam, Mail Service, Education, and other public undertakings, £5,745.

The expenditure on public works and undertakings, has from the establishment of the Provincial Government up to the present time, been in round numbers £230,000,—thus proving that a much greater amount of that expenditure has been defrayed out of your Surplus Revenues than out of the Loans.

It must be equally satisfactory to you to learn, that, with two or three exceptions, all the Public Works we ever proposed, or for which appropriations were made in previous Sessions, have been executed. Since I last addressed you, the Oharin, the Ngahauranga, the Greytown, the 5 Mile Bush, the Masterton, the Morrison Bush Road, the Turakina and the Wanganui Roads have all been completed. The Wangaeha Bridge which was swept away by a flood last year has been rebuilt; the Waiwetu and Turakina Bridges which met with a similar fate have also been replaced—the latter bridge consisting of a single span of 130 feet. The Hutt bridge has been repaired and extensive works constructed for its protection, at an expense which can only be justified by the works proving adequate for the purpose for which they were designed. The Waiohine bridge the length of which is 390 feet, was opened a few weeks since, thus removing the chief impediment to free communication between Wellington and Masterton, and lastly (not to enumerate other smaller works) the Wanganui Bridge—the bridge of the greatest magnitude yet undertaken in the colony its length being 890 feet, was commenced last June, and should no unforeseen difficulties occur, there is every reason to anticipate that we shall celebrate its completion in the course of the next twelve months.

But of all the works completed, there is none to which I refer with greater gratification, than the Lighthouse at Pencarrow Head—which was lighted for the first time on the 1st of last January—and which as regards the character of its light, is I believe second to none in the Australian Colonies. By the erection of this light, you have not only rendered this harbour accessible at all times, and to steamers in all weathers, but you have conferred an inestimable boon on all vessels passing through Cook’s Strait.

It is almost unnecessary for me to refer to the recommendation I made to you last session on the subject of steam communication with Victoria, to the fact of my having proceeded to Melbourne, and there made an arrangement (mutually advantageous) by which steam was once established and has been maintained for the last ten months between this Port and Port Phillip, for unfortunately, I have to express my regret, before announcing the success of my negotiation, that the arrangement ceases with the present trip of the Boomerang, in consequence of the Legislature of Victoria having declined to sanction it. The advantages however which it has already conferred on both Colonies are so manifest—the returns shew so clearly that while a large part of the Australian trade with this Port has by means of that communication been diverted from Sydney to Melbourne, we ourselves have derived a considerable influx both of capital and labour, that I do not despair of seeing it very shortly re-established.

With regard to the Expenditure for the current year, I estimate the ordinary expenses of Government at £12,600; of the Surveys, Land, Road Department at £5,100; Interest on Loans, £8,000; you will find placed on the