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It has been the practice for some years past to devote a very large portion of the surplus of the previous year in aid of the Public Works Fund. This will, after this year, have to be partially, if not wholly, abandoned, as it is clear that, with the increased expenditure chargeable on the Consolidated Fund, together with the reductions in the Customs duties and other concessions, this assistance cannot be kept up. On the other hand, if we are to maintain a progressive policy, the amount to be raised in aid of the Public Works Fund will be greater, and there will be a corresponding increase of the public debt. It must be, however, admitted that the moneys transferred from the Consolidated Fund have been expended upon works which are serviceable for all time. It is not unreasonable, therefore, to expect future generations, who will reap the benefit of the improvements and conveniences which have cost them nothing, to pay their share of the interest and to bear a responsibility as to the principal of further loans which may be required to complete the works inaugurated with surplus revenue. We owe nothing to posterity, for it does not exist. It would be unwise to overtax ourselves, and bear burdens, which, in after years, posterity may conclude were not required, and which should have been left to them ; they cannot repay us, for we shall have passed to worlds impervious to public debt. To leave our colony better than we found it, and to load posterity with such portion of our public debt contracted to prosecute works and for the development of the country, is not unreasonable. Those who come after us will derive the benefit of these works, and will not have good grounds to complain. It must be clearly understood that I do not favour piling up a huge public debt, and trusting to posterity to pay. Indiscriminate borrowing leads to squandering; and inflation and booms caused by a large expenditure of public moneys end in disaster. The lessons taught in the past in this respect must not pass unheeded. The necessity for more expeditiously prosecuting the construction of the North Island Main-trunk and other main lines of railway, with the view of developing the tourist traffic, promoting land settlement and industries, and connecting the large centres of population, is admitted and demands our immediate consideration. The completion of our main roads, and the construction of roads in the back blocks during the next summer, is an essential of paramount importance in order to encourage the close settlement of our lands. Therefore the borrowing proposals herein submitted, compared with those of previous years, are not unreasonable, and, after careful consideration, are found to be absolutely necessary to meet urgent requirements. There will be some disappointment that the amount proposed to be borrowed is not larger, but we must not overlook the condition of the money market, and that moneys could only be raised now at a considerable discount—in fact, it would be unwise to place a large loan on the market under the existing conditions, and prudence demands that we should only ask for sufficient authority to meet pressing demands. The fact of taking power this session to borrow largely would have a depressing effect on our existing stocks, and would at the same time prejudicially affect the raising of the money absolutely required this year to give effect to what I have herein foreshadowed, detailed particulars of which will be given by my colleague, the Minister for Public Works, when he brings down the Public Works Statement. I regret to have to mention that there has been no favourable opportunity up to the present to float the loan authorised last session. Temporary arrangements have been made under which moneys have been obtained with which to carry on our public works, to meet the requirements of the Advances to Settlers Office, and to complete the purchase of lands under the Land for Settlements Act. The anticipated speedy termination of the war in South Africa brightened the outlook in the money market, but the unexpected trouble in China has

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