Sir,—I have now to transmit to you the Act " to grant a Representative Constitution to the Colony of New Zealand," which has received the Royal Assent.

2. When the seals of this Department were committed to me in the early part of the session of Parliament which has just terminated, I found the heads of a Bill for the same purpose already in preparation under the directions of my predecessor, Earl Grey; and on full consideration of the subject, [unclear: her] Majesty's Government did not hesitate to adopt the general outlines of the measure thus originated, which appeared to them calculated to fulfill the expectations of the people of New Zealand, and to confer on them Constitutional [unclear: rights] in a form the moat adapted to their peculiar circumtances.

3. The intentions with which that measure was framed were explained by my predecessor in a draft Despatch intended to accompany it: that draft has been printed for Parliament with a view to the discussions on this Bill: and I fully adopt the views set forth in the first 13 paragraphs of that draft, explaining the general purposes of the Bill, and the relation in which the Central Legislature will stand to the Provincial Councils: the only difference which it is necessary to note being that Her Majesty's Government have thought it advisable to add New Plymouth to the number of separate Provinces.

4. It has appeared, however, to Her Majesty's Government that the almost necessary effect of this subdivision into six Provinces, when effected, will be to supersede the present division into two Provinces, and along with it, the existing .wo Lieutenant-Governorships. The Commission and Instruc page 66 tions issued to you under the present Act will be framed with a view to this change. I do not offer any opinion whether the present system has worked in a satisfactory manner; but it was in its nature temporary only, and New Zealand will, as far as I am able to judge, be better governed in future under a single head, with the assistance of local officers in the several settlements only. This change will, at all events, have the effect of diminishing, in some degree, the civil expenditure of the colony, a result which I am anxious to effect.

5. In the remaining portions of the Act there are some important differences from the scheme of the late government; and without entering into these in great detail I shall proceed to give some explanation of the measure in the shape which it has now assumed.

6. It has been thought advisable that the Provincial Councils should consist of a single Chamber, consisting wholly of elected members. They have been led to this conclusion by the comparatively unimportant nature of the functions of these Councils; which will be limited to local objects such as would be considered here to be of a municipal character, rather than partaking of the higher attributes of Legislation.

7. For the same reason, Her Majesty's Government determined on submitting to Parliament another suggestion originated by yourself, although not actually reduced by you into practice; that of rendering the Superintendents of Provinces elective. They are aware that this is an innovation on ordinary usage, inasmuch as these officers have one function at least of a higher and more independent character than the electing chief magistrate of an English municipality—being, that they are to possess a negative voice in the passing of Local Ordinances. But they have not, on this account, thought it necessary to withhold what they have every reason to believe will be regarded by the colonists as a valuable concession; while they feel a confident hope that the electors will form the best judgment as to the persons qualified to serve the public interest in offices for which a knowledge of the wants and circumstances of each particular locality is peculiarly requisite.

8. After the best consideration which Her Majesty's Government have been able to give the subject, 'Parliament has determined, under their advice, to insert in the Act no provision respecting the payment of the Superintendents, considering it a subject best left to the decision of the Provincial Councils. I may here add that they have in a similar wav omitted all provision for payment of members either of the Provincial Councils or House of Representatives, not from page 67 having formed any judgment adverse to such a regulation, but from feeling satisfied that the manner and amount of such payment, if any is thought necessary, will be best settled by those respective bodies.

9. Nor have provisions been inserted giving executive authority of any kind to the Superintendents. This is a point on which Her Majesty's Government did not feel that they had sufficient information to adopt any definite course, while the general prerogative of the Crown and the power of the General and Local Legislatures, seemed amply sufficient to provide whatever might be ultimately deemed advisable.

10. It is, however, my wish that any such Executive Powers as may be found necessary in order to cairy on the functions of Government in the respective settlements, may be entrusted to these officers. This may be done by your own authority, as representing the Crown, or by Act of the Central Legislature, as the case may require; but they should, at all events, be always included in the Commission of the Peace for their respective localities.

11. Another point in which you will observe that your own suggestions have been adopted, is the leaving the power of allowance and disallowance of Provincial Ordinances in the Governor instead of the Crown.

12. I now proceed to the Constitution of the General Assembly, in respect of which the principal deviation introduced by Her Majesty's Government from the scheme of their predecessors is, that a Legislative Council of Members nominated by the Crown is maintained according to the ordinary model of Colonial Governments, except that, as in Canada to which a somewhat similar constitution was granted by Act of Parliament, their nomination is for life. I need not here enter into the particulars of the reasons for this change, which will be readily collected from the Parliamentary debates which have taken place on the subject.

13. The number of the Council is limited by a minimum only, in order that it may be hereafter expanded as the exigencies of the public service may, from time to time require; but for the present it is proposed to limit it by your Instructions so as not to exceed fifteen. The Instructions will accordingly empower you to nominate not less than ten, nor more than fifteen persons to the office of Legislative Councillor. And it is desirable that, without waiting for those Instructions, you should at once proceed to make your selection, and report it immediately to Her Majesty's Government.

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14. It has been thought, upon the whole, most convenient to leave it the House of Representatives to make, on its first meeting, all the rules which may appear expedient for its own management, even to the appointment of a quorum for the conduct of business.

15. It has been the object of Parliament to give to the General Legislature, thus constituted, powers as extensive as it was possible to confer, consistently with the maintenance of the prerogatives of the Crown. Accordingly there is no restriction on those powers introduced into the Act on which I think it necessary to make any observation, except the reservation of certain sums for specific services, ordinarily called a Civil List; which reservation, however, by no means withdraws those services from the control of the Legislature, but only renders it necessary that this control should be exercised by way of permanent Act instead of annual appropriation, and, in certain instances, with the consent of the Crown. The extract which I annex, from the despatch addressed by ray predecessor to Sir Charles Fitzroy when transmitting the last Australian Constitutional Act, will more fully explain my meaning.^*

16. In fixing the sum thus reserved, Her Majesty's Government have been guided by the information which you have yourself supplied. They have not thought it necessary to place the salary of more than one Puisné Judge on this permanent footing. The sum defined as for the its "Establishment of the General Government," and that for "Native Purposes," you are empowered to appropriate in such manner as you may yourself think fit, taking care to keep the Secretary of State fully informed of the details of such appropriations, as well as to render accounts of them in the manner prescribed by section 05.

17. The object of the provisions of sections 62 and 63, establishing a distinction between gross and net Revenue, is to place the management of the Revenue in New Zealand as nearly as possible on the same footing as in this country, namely, by reserving the collection of the Revenue to the Executive. For the present the costs of the collection of Customs will be regulated and audited by the Lords Com-misioners of the Treasury. But whenever the control of the Customs is handed over to the local authorities, as is gradually taking place in the neighbouring colonies, their Lordships will be able to delegate this power, as far as needful, to those authorities.

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18. Her Majesty's Government, in framing the Constitution of New Zealand and submitting it to the decision of Parliament, determined not to except the control of the waste lands of the Colony from the general powers conferred on its Legislature. Without entering into the discussions to which this subject has given rise, it is enough for me to say that they felt satisfied that this Revenue was likely to be administered in a more efficient manner, both for the benefit of the Empire at large, and of the community of New Zealand, by the Local Legislature than by any other authority. And they were of opinion that this administration would be better entrusted to the General Assembly than to the Provincial Legislatures, not only by reason of its great importance, but also because an uniform administration of the waste lands is desirable in regard both to efficiency and to economy.

19. To this general concession there are, however, certain exceptions rendered necessary by the peculiar circumstances of New Zealand, both as respects the Native title to land, and the rights already granted by Parliament to the New Zealand Company.

20. It has appeared so essential to maintain the principle, that all acquisitions of land from the Native tribes should take place through the Local Government only, that this regulation which previously rested on the Royal Instructions only has now been incorporated in the Constitutional Act; and in order to secure its maintenance, the Governor is empowered to pay the purchase money to the Natives out of the first proceeds of all the Land Revenue.

21. He is, secondly, empowered to payout of the same revenue the sums which may become payable to the New Zealand Company.

22. In dealing with this very difficult portion of the question before them, her Majesty's Government have had only two considerations in view; the necessity of preserving the faith of the public already pledged to the New Zealand Company, and their own desire to do this in such a manner as should be least burthensome to the resources of the people of New Zealand.

23. It was indeed urged on her Majesty's Government that they should leave the New Zealand Company to their rights as defined by the Act 10th and 11th Victoria, c. 112. That act made the purchase money of their estates a first charge on the Land Revenue, after surveys and emigration. And her Majesty's late Government were advised that, from the manner in which the Act was framed, this charge was quite page 70 indefinite, there being no particular proportion thus fixed by law for survey and emigration.

24. But this uncertainty only made the charge more burthensome. If (to put a supposition which I do not believe would have been realized) the Legislature of New Zealand had thought proper to reduce the payment to the New Zealand Company to a mere fractional amount, they could only have committed this act of injustice (for such under the circumstances it would have been) by devoting the whole residue to surveys and emigration without being able to appropriate any portion whatever to any public work or other purpose of general advantage.

25. This had been so strongly felt by my predecessor, Earl Grey, that he had thought it advisable, by way of compromise with the New Zealand Company, to fix the proportion to be paid to them, by mutual agreement, at one-fourth of the gross proceeds. And after the best consideration I could give the subject, with the advice of the parties best qualified to assist me, I arrived at the conclusion that the arrangement thus practically in existence already was that which it was best to retain in the Act.

26. I regret that I have found myself unable to accede to your proposal, made to my predecessor, to transfer this charge from the Local Land Revenue to the Imperial Treasury; not seeing any grounds of justice for the change. It was Lord Grey's project on the other hand to alter the charge into a fixed debt, of less amount, chargeable on the whole Revenue of the province, and bearing interest-a project on which I offer no opinion of my own, merely stating that I have no doubt her Majesty's Government will at all times be ready, if called on, to assist in any reasonable scheme for the extinction of the debt which the Local Legislature may devise.

27. The remaining exceptions to the general transfer of the control over the waste lands consist in the provisions thought necessary to maintain the Canterbury Settlement, and to empower her Majesty's Government to maintain that of Otago, if it shall find the Crown bound by existing engagements to do so, or shall deem it expedient to renew the powers of the Association on fresh terms. For the present, therefore, the affairs of these settlements, and the distribution of their funds, remain as heretofore, and I will duly acquaint you with any decision at which her Majesty's Government may arrive respecting either of them.

28. I shall also address you farther as to the affairs of the other settlements of the New Zealand Company, so far as these may be affected by the present Act.

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29. In addition to these functions, the Act confers on the Legislature by sections 67, 68, and 69, the most extensive powers of introducing into the Constitution such changes as experience may indicate, or deliberate public opinion may require.

30. Your own powers and duties, with reference to the ultimate confirmation or disallowance of Acts of the General Assembly by the Crown, are defined by the 56th and following sections so fully as to render it unnecessary for me to enter into any details on the subject.

31. Before dismissing the subject of the General Assembly, I wish to point out that while five years is fixed as the period of its duration, the Act contains no provisions fixing the periods of its sessions, or rendering it imperative on the Governor to assemble it at stated times. It has been felt that, under the present circumstances of New Zealand, and with a complete machinery of Provincial Councils, it was possible, although no absolute prediction on this point can be hazarded, that for some time its meetings will be occasional only.

32. The provisions of section 70 have been introduced into the Statute in order that its enactment may not clash with any measures which you are taking, or may be advised to take, respecting the establishment of Municipalities. At the same time I wish to convey my own opinion that, considering the character and functions of the Provincial Councils, which must be eminently of a municipal character, it seems doubtful whether there will be any necessity for the creation of other local authorities subordinate to these, until New Zealand has attained a greater amount of population than is likely to be the case for some time.

33. It has farther been thought essential to preserve to the Crown by section 71, with power ol delegating it to yourself, the authority which you already possess, of portioning out districts in which the customs and usages of the natives may be preserved, and exempting them as it were from the common law of the settled portions of New Zealand. This is a power not to be exercised without strong ground, and which, it is rather to be hoped, you may not find it necessary at present to exercise, but under the power reserved by section 79 I have to inform you that the authority given to the Crown in that behalf, as well as for the formation of Municipal Corporations, by section 79 is, for the present, delegated by her Majesty to yourself.

34. The provision of section 80, defining the boundaries of New Zealand, requires a short explanation. It appears to me page 72 that, by your commission, the limits of your Government to the South are so defined as to include the Auckland Islands, on which a separate settlement has lately been established by British colonists, and which it would be inconvenient to place within the limits of New Zealand for the purposes of the present Act. The Southern boundary is, therefore, fixed at South Latitude 50°.

35. I have now to add a few words respecting the duties cast upon yourself by the Act, in order to bring the Constitution into operation.

36. By section 1 of the Act existing laws are preserved, and existing legislative authorities retained in action, until the new legislatures are established.

37. The duty of appointing the boundaries of Provinces, and of taking the necessary steps for the elections both Provincial and General, has been entrusted to yourself. This course has been adopted as, upon the whole, more convenient and simpler than that of causing the necessary regulations to be made by Ordinances of the Legislature. But although in terms vested in yourself, you will understand that it is desirable that they should be exercised with the advice of your Executive Council. I refer you to my predecessors's draft Despatch as to the principles on which this division should be made, paragraphs 9, 10, and 11.

38. I have now only to add that I have great pleasure in entrusting to yourself the conduct of this very important measure; and, in the commission of these extensive powers to the colonists of New Zealand, her Majesty's Government have had abundant opportunities of recognizing, in the correspondence which has taken place on this subject between yourself and their predecessors, your strong attachment to liberal Institutions, and the able manner in which you and your Council have both prepared the way for their introduction, and urged upon the Imperial Government the necessity of speedily creating them, as soon as the temporary difficulties which induced you at first to advise their suspension had past away. They are in fact, fully aware that the measure itself, now reduced into a law, owes its shape in great degree to your valuable suggestions. They, therefore, do not doubt that your proceedings in order to carry it into execution will prove satisfactory to the colonists, while an additional reason for their placing this reliance on you is the confidence with which you are personally regarded by numbers of her Majesty's subjects of the native race, who have been brought within these few years to participate in the blessings of religion and social culture. Whatever na page 73 tural anxiety may still attend the success of this experiment chiefly relates to the manner in which it may affect their feelings and their interests; but her Majesty's Government have the strongest hope that your administration of it may not only prove acceptable to them, but that at no distant time they may be found to avail themselves largely of the Constitutional privileges thus thrown open to those among them who have made progress in civilization in common with their fellow subjects of the British race.

Extract from a Despatch from Earl Grey to Governor Sir George Grey.

Sir,—I have to acknowledge your despatch No. 121, of August 30th last, transmitting the Provincial Councils Ordinance in the form in which it passed the Legislative Council, and explaining with great clearness and in much detail, your views with respect to the system of government best adapted to the existing condition of New Zealand. I have to thank you for the valuable information contained in this despatch. It has been of great service in preparing the enclosed leads of a Bill, which it is the intention of her Majesty's Government to introduce into Parliament in the present session, for the purpose of establishing the legislative institutions of New Zealand on a permanent footing. In transmitting to you these heads, it is necessary that I should explain, somewhat fully, the principles on which the measure is founded, and the reasons for the departure from your own recommendations which you will observe in some of its provisions.

2. The New Zealand Constitutional Act of 1846, together with the Charter and Instructions issued in consequence, so far as related to the establishment of representative institutions, were suspended for five years in 1848, in consequence of the page 74 representations made by yourself, of the danger of introducing those institutions, in a part at least of the islands, at that particular conjuncture. By the Act passed in order to effect that suspension, large powers were vested in yourself and the existing Legislative Council, to establish such institutions of a provisional character during the suspension as you might deem fit.

3. These powers you employed, in the first place, by constituting Provincial Councils on the model of the General Legislative Council. Subsequently, as the increase of the settlement and the quiet and orderly condition of the native population convinced you that the dangers which you had at first apprehended were in the course of removal, you urged on her Majesty's Government the expediency of commencing the introduction of the representative principle into the government of New Zealand, before the period allotted for the suspension of the Charter should expire.

4. Her Majesty's Government, in the continued exercise of that confidence in your judgment and knowledge of the peculiar state of society in New Zealand which had originally induced them to accede to your proposal for deferring the grant of representative institutions to the colony, believed that no better course could be taken than that of relying on your opinion on this subject also; and you were therefore instructed to avail yourself of the power Parliament had entrusted to you, by taking measures for the establishment of Representative Provincial Legislatures. In accordance with these instructions, you have introduced the Provincial Councils Ordinance, which was first submitted to me in draft with your despatch of October 24, 1850, and which you have now transmitted in the form of a law.

5. I take the opportunity, while thus detailing the history of these transactions, to mention that my despatch of the 2d April last, acknowledging the receipt of the draft of this Ordinance, does not appear to have reached you before it was passed into law, as certain amendments which I then pointed out as desirable have not been inserted in it. I still trust, however, that may hear from you in reply to that despatch, if not before the Bill which has been prepared must be submitted to Parliament, at all events in time for the consideration, during its progress, of any remarks which may be suggested to you by ray observations on the draft Ordinance.

6. Under these circumstances, if no further steps were taken by Parliament with reference to the New Zealand Constitution, the suspending Act of 1848 would expire on March 7, 1853, page 75 The Provincial Councils Ordinance created under it would therefore also expire, together with the existing Legislative Council; and the Constitution framed in and under the Act of 1846 would, ipso facto, take their place.

7. Her Majesty's Government, however, on a deliberate consideration of the various despatches which you have addressed to me, have come to the conclusion that it would be ipexpedient to leave the Act of 1846 to come thus into force; because they are of opinion that the changes which have taken place in the state of affairs in New Zealand, and the additional information which has been obtained since that measure was passed, suggest the propriety of various modifications, both in its substance and form, although its essential principles ought, in their judgment, to be preserved.

8. The most important of these principles, and that which, in fact, formed the foundation of the whole measure, was the creation of co-existing General and Provincial Legislatures. On the question whether this arrangement ought to be adhered to, her Majesty's Government have not failed to give full consideration to your own views and statements, and to those also which have reached them through you from various bodies of settlers in New Zealand, both for and against the scheme of Provincial Councils. The result of their deliberation is, that they concur with you in believing that the natural features of the island, the distance of the settlements, the severalty of their local interests, however common those interests may be on some subjects, and the consequent difficulty of forming a General Legislature which should suffice to perform all the ordinary functions of legislation, all present arguments confirming the views entertained in 1846 in favour of the creation of local Legislatures.

9. With respect to the number of Provinces into which New Zealand should for the present be divided, her Majesty's Government have seen no reason for dissenting from your proposal; and it is intended to establish five Provinces accordingly; making, however, provision for the creation of additional Provinces by the authority of the Legislature, if this should here after become necessary, owing to the formation of new settlements.

10. It is intended that it should be left to yourself to define the limits of these Provinces, subject to this general rule, which is not contained in the heads of the Bill, but to be followed by yourself as a guide in the exercise of this power; that they are to extend only over the portions of the islands occupied by Europeans; reserving, however, a power of gradually extend page 76 their boundaries, as this may become necessary, by the settlement of the country.

11. It appears to her Majesty's Government that there remaining region, still of comparatively far greater extent, which is occupied by natives only, or almost entirely, ought, for various reasons, which will more distinctly appear in the course of this despatch, to be left under the control of the General Legislature alone; though hereafter the limits of the territory comprised in provinces will probably require to be from time to time enlarged.

12. With respect to the powers to be entrusted to these Provincial Counrils, I am disposed, for my own part, to believe (notwithstanding the alterations which you state to have taken place in your own views on this point) that in the progress of events, as colonization extends, and the several settlements are drawn nearer to each other in boundaries and interests, they will very probably assume more and more of a municipal character, while the functions of the General Legislature will increase. But T do not think it would be advisable to introduce any special provision either to accelerate or retard such a gradual change. Anticipations as to the course which political affairs may hereafter take are everywhere liable to be disturbed by many unforeseen events, and most of all in new and advancing societies. Hence it seems to be the wisest course to rest satisfied with adapting the institutions which are to be established, as well as may be practicable, to the existing state of things, leaving their future development, and the alterations which a change of circumstances may hereafter require, to be effected by the local authorities thus created.

13. Without seeking, therefore, to determine whether the course of events will lead to an extension or restriction of the powers now about to be conferred on the Provincial Councils, it is proposed for the present to confer upon them a general power of legislation, subject to certain specified exceptions, which will be the same, or nearly so, as those established in your Povincial Councils Ordinance. The powers of the General Legislature, on the other hand, it is intended not to limit to any particular subjects. Its enactments alone would thus have the force of law on the subjects reserved to it, and they would also have paramount and superseding force on all those other subjects over which both it and the local Legislatures are meant to have authority. By this arrangement no conflict of powers can arise, since that of the General Legislature will always prevail whenever it may be exerted, and it will be left to experience, and to the judgment of the colonists themselves, page 77 to determine to what extent this power should be used, and the action of the subordinate Legislatures consequently restricted.

Extract from a despatch addressed by Earl Grey to Governor Sir C. A. Fitzroy, dated 30th August, 1850.

"13. The effect of sections 13, 17, and 18, is to give the legislature a considerably increased control over that part of the colonial expenditure now charged on what is called the Civil List. The legislatures will have the power to alter, by Acts passed for that purpose, all or any of the sums specified in the schedules. In the case of these alterations affecting the salary of the Governor, or the appropriation for public worship, it is required by the present Act of Parliament that the Colonial Acts should be reserved for the signification of her Majesty's pleasure.

"14. In the former Act there was a power given to the Governor, by the 38th section, of varying the sum appropriated to the purposes of Schedule B, and the savings accruing from such alteration were exempted from the control of the Legislative Council. This latter proviso has been omitted in the present Act, as there appeared to be no sufficient reason why the ordinary power of the legislative body should not extend to these particular savings.

"15. This extension of the authority of the legislature has been rendered expedient in the view of her Majesty's Government, by the evidence of the hitherto successful progress of constitutional government. The manner in which the people of New South Wales have hitherto exercised the powers they possessed through their Representatives seemed fully to justify the grant of the enlarged power which will now be entrusted to them in relation to their financial affairs; but it has been deemed right by Parliament, in order the more completely to maintain the independence of the judges of the Supreme Court, to provide that no diminution of judicial salaries by colonial enactments shall affect Judges appointed previously to the passing of such enactment.

"16. All other salaries, except those of the Governor and Judges, are placed by Parliament under the ordinary control of the legislature. With regard to the mode of exercising this control, you will, however, observe that reductions of fixed establishments, or of any expenditure provided for by permanent laws, can only be effected by Acts of the Legislature, which, of course, require the assent of the Crown, signified by page 78 yourself, and confirmed by her Majesty; but I wish you distinctly to understand that there is no desire on the part of her Majesty's Government to prevent prospective reductions of charges which, in the opinion of the colonists, will safely admit of being diminished. The interests of existing officeholders must be protected, because they accepted those offices with expectations which cannot justly be disappointed. But, subject to these interests, there is no objection to the legislature fixing whatever scale of emoluments they may think fit for public servants to be hereafter appointed. I should, for my own part, consider it highly injudicious to reduce the salary of an office so as to render it no longer an object of ambition to men of ability and of respectable station. But this is a matter in which the interests of the colonists only are involved, as they will be the sufferers from any failure to provide adequate remuneration for those by whom the public service is carried on; the determination, therefore, of what is sufficient must be left to the legislatures, with whom will rest the responsibility for the judicious exercise of the power.

"17. I consider it, however, absolutely essential that whatever may be the rate of payment, the salaries of all the principal officers of the Government should, for the reasons stated in the Report of the Committee of the Privy Council, be permanently granted; that is, not voted from year to year, but provided for in the same manner as charges on the Consolidated Fund in this country by Acts, and therefore only susceptible of alteration by Acts of the Legislature passed in the ordinary manner, with the consent of the Crown. You will therefore understand that you are not at liberty to give the assent of the Crown to any Act which may be passed reducing the salaries of those who are now in the public service, or rendering dependent on annual votes any of the charges now provided for by permanent appropriations. Any Acts of this sort you will reserve for the signification of Her Majesty's pleasure, unless you consider them so manifestly objectionable as to call for their rejection. Subject to this restriction, you are authorized to exercise your own judgment in giving or withholding your assent from Acts for the reduction of the fixed charges on the colonial revenue."