As will be seen, the estimate for War Pensions shows a decrease compared with that in the budget for 1932-33, and reflects the reductions in pensions carried into effect last autumn subject to a number of adjustments which have been made in cases of special disability. In addition to these adjustments, a larger contribution will be made during the year under the heading of Compassionate Allowance to War Veterans. It is with regret that the Government made these reductions, for we well remember how the sons of Newfoundland responded to the nation's call in her hour of danger and the debt which we owe them.

  While I am on the subject of estimates of budgetary expenditure during the forthcoming year, I think that a special reference is desirable to the salaries, and the pensions, of the Civil Service. No one has been more concerned than myself at the severe reductions which have been made in salaries and pensions in the emergency which has confronted the country in the last two years, and no one appreciates more than myself the spirit in which they have been accepted. Apart altogether, however, from this emergency, I cannot help stating that in my view there is a very great need for the reorganisation of the Civil Service. The Service has grown up over a considerable number of years, and in a manner which has by no means been systematic. It will be the object of the Government during the coming financial year to bring into effect a reorganization which, among other things, will adjust more closely the substantive salaries payable to the actual duties carried out, will correlate posts of the same or similar standing in the different Departments, and will modify the existing pension system in order to bring it into a more close correspondence with those systems in force in other countries. During the past year the Government have decided that no appointments to the Civil Service, unless of a purely provisional and temporary nature, shall be made without an educational test, and this test will be maintained. For the future the competence of the individual to carry out those duties to be entrusted to him will be his sole qualification for appointment; and promotion will in every case be based solely upon the individual's ability to undertake responsibilities commensurate with those of his new position.

  My last reference to the expenditure side of the Budget concerns the Postal and Telegraph Department, and the Railway Service. Very large reductions have been made in the expenditure of both these Services during the past year. In each of them expenditure has been very much below the figures estimated in July, 1932; and I would like to say here how indebted the Government are to the efforts made by the Commissions which are concerned with the Services, to the Minister of Posts and Telegraphs and the Manager of the Railway. It is, of course, axiomatic that Commercial Services of this kind should balance their revenue and expenditure, with the necessary provision for depreciation, replacements, and interest on capital. But in present economic circumstances, with the serious decline in revenue which has to be faced and the impossibility of reducing expenditure below a certain minimum level without discontinuing the Services altogether, I cannot disguise from myself that apart from a revival in trade to an extent which I dare not anticipate, a certain deficit in these Services must still be expected during the coming year. It would be foolishness, and indeed dishonesty, to pretend otherwise; and to concoct a worthless equilibrium between revenue and expenditure. I have hopes that when more normal conditions are restored, both the Postal Telegraph Service and the Railway will not only balance their accounts, but will produce an annual surplus; although for a time at least, I suppose, not one of any considerable amount. The present Estimates are based upon the most careful examination of the prospective situation and cover only the minimum payments necessary to keep the Services in being.

  So much, then, for the expenditure side of the budget for the forthcoming year. The figures of estimated revenue for the year are as follows:--

  This total, namely, $8,819,338, is to be compared with the estimate of $10,180,000 for the current year and the actual expected figure of $8,050,000 for the year. As I stated earlier, the revenue figures for the current year were seriously over-estimated, and they have fallen short of expectations by more than $2,000,000. For the coming year the Government have been at pains to ensure that this over-estimation shall not be repeated, and all sources of revenue have been most carefully examined with a view to as exact an estimate as possible being prepared. The tabular statements, which will be annexed to the printed Budget, will show in detail the Estimates under each head of revenue, compared with the expected revenue for the current year and the Estimates for the year which were laid before the Committee when the Budget for the year 1932-33 was introduced.

  It will be seen from the figures which I have just read that out of the total estimated revenue of $8,819,338, I anticipate that Customs duties will produce the sum of $6,400,000. On the subject of these duties I must refer first to the provisional Agreement made with H.M. Government in the United Kingdom on August 20th, 1932, as the result of the Imperial Economic Conference held in Ottawa last summer. I propose later to-day to bring forward a Resolution that this Agreement be approved by the House and that it be brought into effect to-morrow.

  I think that the Committee is well aware of the general terms of the Agreement. It provides first for the continued free entry into the United Kingdom of Newfoundland goods, as compared with the duty, normally of 10 per cent, which was imposed at the beginning of 1932 on a very wide range of imports into the United Kingdom. Further, in order to assist the trade of the Dominion, the Government of the United Kingdom have agreed to the imposition of a special duty on all foreign importations of cod liver oil and of chilled or frozen salmon. The Dominion is confirmed in all the privileges which we at present enjoy in the markets of the Colonies and Protectorates, including the preference on our codfish in the West Indies; and we shall receive, generally, any preference which may be granted by any Colony or Protectorate in any other part of the British Empire.

  In return for these concessions, which will be of particular value to us in building up our cod liver oil and salmon industries, the Dominion has accorded to the Government of the United Kingdom a range of preferences which covers sixty-one items of the Customs tariff; these include for the most part articles of hardware, certain types of textiles, and a number of miscellaneous items. Generally speaking, the Colonies and Protectorates will also receive the preferences given to the United Kingdom, and in the case of five articles of interest to the Colonies, a special preference has been arranged.

  Further, it was agreed that a general revision of the Customs tariff of the Dominion now in force is to be carried out. Resolutions will be submitted to-day, covering a number of items in the tariff, which are designed in the main to remove existing anomalies. The Government propose to complete the revision at a very early date; but I would like to take the present opportunity of giving an assurance that it is being undertaken with a view to simplification only, and not for the purpose of imposing any additional burden of taxation. The body of the present tariff has grown up by degrees, rather as circumstances dictated from time to time than in accordance with any scientific or systematic method. Its simplification is much needed and will be systematically undertaken.

  There is, in addition, the proviso in the agreement that, if and in so far as budgetary considerations permit, the Government will make provision for new and more favourable conditions in regard to the valuation of the pound sterling for Customs purposes. The Government have been in some doubt whether it would be proper in the existing financial situation that this proviso should be carried into effect; but the clause, although it may be called optional in form, is an integral part of the Agreement, and in all the circumstances the Government have decided to take legislative provision enabling the necessary action for revaluation to be taken but to defer for the present the question of its application.