"New Zealand's maritime interests in her own waters, and her dependent islands in the Pacific would, under the altered arrangements, be almost entirely represented by the Australian Fleet unit, and not, as at present, by the Imperial Fleet. This important fact, I consider, necessitates some suitable provision being made for New Zealand, which country has the most friendly feeling in every respect for Australia and her people, and I am anxious that in the initiation of new arrangements with the Imperial Government under the altered conditions, the interests of New Zealand should not be over-looked. I consider it my duty to point this out, and to have the direct connection between New Zealand and the Royal Navy maintained in some concrete form. "New Zealand will supply a _Dreadnought_ for the British Navy as already offered, the ship to be under the control of and stationed wherever the Admiralty considers advisable. "I fully realise that the creation of specific units, one in the East, one in Australia, and, if possible, one in Canada, would be a great improvement upon the existing condition of affairs, and the fact that the New Zealand _Dreadnought_ was to be the flag-ship of the China-Pacific unit is, in my opinion, satisfactory. I, however, consider it is desirable that a portion of the China-Pacific unit should remain in New Zealand waters, and I would suggest that two of the new "Bristol" cruisers, together with three destroyers and two submarines, should be detached from the China station in time of peace and stationed in New Zealand waters; that these vessels should come under the flag of the Admiral of the China unit; that the flagship should make periodical visits to New Zealand waters; and that there should be an interchange in the service of the cruisers between New Zealand and China, under conditions to be laid down. "The ships should be manned, as far as possible, by New Zealand officers and men, and, in order that New Zealanders might be attracted to serve in the Fleet, local rates should be paid to those New Zealanders who enter, in the same manner as under the present Australian and New Zealand agreement, such local rates being treated as deferred pay. "The determination of the agreement with Australia has, of necessity, brought up the position of New Zealand under that joint agreement. I therefore suggest that on completion of the China unit, the present agreement with New Zealand should cease, that its contribution of £100,000 per annum should continue and be used to pay the difference in the rates of pay to New Zealanders above what would be paid under the ordinary British rate. If the contribution for the advanced rate of pay did not amount to £100,000 per annum, any balance to be at the disposal of the Admiralty.