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On the supposition that the highly remunerative works referred to above will be carried out by means of a Loan, it would have been quite possible to provide from the balance of ordinary Revenue and Land-premiums for the commencement, and for a con- siderable part of the construction, of another important work which must probably be very soon undertaken, viz., a New Gaol of sufficient size for the confinement of all the convicts on the separate system. This work will be a very costly one, the estimate for it being $420,000, or deducting $50,000, the sum likely to be realised from such portion of the present site as can be sold, $370,000. It is, however, one which is absolutely required if the present system is to be maintained under which there are always in con- finement and supported at the cost of the Colony, some three or four hundred aliens who have come here to practice their misdeeds from the neighbouring Empire. Governor, indeed, believes that under the very exceptional conditions which present themselves here, there would be very fully justified a change substituting short and sharp punishments, followed by banishment, for long periods of imprisonment; in which ease the number of prisoners would be so much reduced as to admit of the exclusive use of the Separate System in the present Gaol. But if, as is probable in the existing state of public opinion in England, Her Majesty's Government should be unable to sanction such a change, the provision of a new and much larger Gaol, would probably be an inevitable necessity. During the coming year the Governor intends to make strong representations on this subject; and meanwhile more time will be given to watch the effect of the severer discipline recently enforced, which has already much reduced the number of prisoners. And under any circumstances the building could not be under- taken at once without postponing a considerable number of the other proposed Works. For the Governor is advised that there will be much difficulty in obtaining the requisite number of sufficiently skilled native artisans even for the works on the list, and that it would on this account be impossible to provide for them and the new Gaol in addition.
It has been mentioned above that the balance of Ordinary Revenue cannot be es- timated with exactness owing to uncertainty as to the issue of certain recommendations which the Governor is about to make to the Secretary of State. The great rise which has taken place in recent years in the cost of living, especially in the matter of rent, demands in the Governor's opinion some consideration for the Government Officers. Those who have been appointed recently, even though as compared with their prede- cessors they may be required to do more work for emolument which is practically less, have comparatively little cause for complaint. There is however real hardship in the case of those appointed before the rise in question took place, especially those with small salaries. Some special relief also seems to be required in the case of officers appointed from England in consequence of the great fall in exchange. For their ability to make provision for the future of themselves and their families has been thereby largely decreased; and it seems right that as regards some proportion of their salaries, the difference between the rate of exchange at the time of the receipt of salary and that which prevailed at the date of their appointment should be made up to them. If this subject should be discussed in Finance Committee the Governor does not doubt that the Secretary of State would give due weight to the views expressed.
Another of the recommendations referred to is, with respect to the cost of the Gap Rock Light-house. It had been originally intended that this charge should be met by a special tax on the shipping of 1 cent per ton; and as the decision of the Government on this point was with the unanimous support of the un-official members of Council, communicated to the Secretary of State and approved by him, the probable return of such a tax, viz., $45,000 appears in the estimates of Revenue. But since the above decision was arrived at early in the year, the financial prospect has much improved; and as it is a fact clearly recognised by competent opinion, that taxes on trade affect it injuriously to an extent which is by no means measured by the amount of Revenue produced, it appears to the Governor specially desirable to render such an impost as light as practicable in a Colony to which its Commerce is of such paramount importance. For this reason the Governor will recommend to the Secretary of State that the special vote for this Light-house shall be a cent instead of 1 cent per ton. By this means the burthen will be distributed over a longer period; and it is probable that in the course of a year or two the condition of the Revenue may warrant the complete relief from it which at the present moment would be imprudent. Should this proposal be approved by the Council and receive the sanction of the Secretary of State, a sum of $30,000 will require to be deducted from the total estimate of Revenue; the balance of Revenue over expenditure being also reduced by a like amount.
As regards other remissions of taxation, the abolition of the licence for cargo- boatmen scarcely needs explanation. As the number of licences was unlimited. no advantage was obtained from the tax, and such an impost on mere unskilled labourers