THE PUBLIC TRUST.

Auckland Star, Volume LXI, Issue 286, 3 December 1930, Page 8

THE PUBLIC TRUST.

OPERATIONS OF THE OFFICE. COST- AND PROFITS. BALAXCE-SHEET CRITICISED. (By TIN TAX.) Recently I received a copy of the Public Trust Office report, comprising "G pages of eulogistic reference to the work of the Public Trust Office. An examination of the balance-sheet shows that the Public Trust Office costs the'people of New Zealand at least £130,000 per annum, made up as follows: — Loss to estates and funds of interest on money invested in Common Fund 90.0°° Loss to local bodies of rates on buildings owned by Public Trustee 6,000 Loss to Consolidated Fund of interest on reserves 34,001) 130,000 Of that figure about £10,000 was returned to the Consolidated Fund in some form or other. I venture to say, however, that this £10,000 would not equal the cost to the community of other statutory and customary privileges of the Public Trust Office. For examples of statutory privileges I mention freedom from certain stamp duties, reduced fees on obtaining administration, favourable method of assessing Land Tax and exemptions from,auctioneers' licenses. It would require a book to enumerate them. For an example of customary privilege one has only to refer to the balancesheet; £700 was paid for the audit. Would any private person audit the numerous 'branches for the salaries ot two audit clerks? Furthermore, does £SCI 3/ represent a fair Return for the work undertaken throughout New Zealand by the post office on behalf of the Public' Trustee? If one took into consideration the income tax which would be paid by private individuals if they did the work ! now done bv the Public Trust Office the cost of this "Department to the taxpayers must be colossal. In the Common Fund. The figures making up the total of £ So!oOO are easily proved: £24 000 000 is held in the common fund, of which £8 000 000 belongs to the debt redemption sinking fund account. Speaking ot S sum last year the late Sir.Joseph Ward stated that by leaving it in the Public Trust Office a loss of £30,000 resulted (I enclose newspaper cutting containing hie remarks), fthetota axnout held in the common fund of, the I übiic SSt Office is £24,000,000 a total erf £90 000 is being lost by those having money in the common fund of the Publ.c Trust Office.. The figure of £34,000 is arrived at by Trustee these reserves arc given vanous namce, but are in effect f vernmen money retained by the Public fiust land tax and 58 years of State guarantee and other special privileges. While referring to these reserves 1 that if the Public= Trust Office handed over all its trusU to another institution, sold all its assets and invested the proceeds in Government £££ at 5 per cent, the Public Trustee would without any staff, make a profit of £32',500 clipping coupons off the bonds. Even knowing him £1000 for this work he would make three times the profit shown in his profit and loss account. Furthermore, -even tnc alleged profit of £10 99G 15/2 does not appear to be a true one; £17,029 is written off as depreciation on nearly £500,000' of real property, of which the greater proportion would be represented by the buildings and £47.530 of furniture and plant, the latter being, no doubt numerous motor cars. I doubt whether this is sufficient. ' , The question of depreciation, however, is a minor matter compared with the losses on mortgage investments. ]So portion of this loss charged to the profit and loss account, although every year losses are made. The Appropriation Act shows that £7500 was written off in 1928, and £24,000 in 1929. The figures for this year are not yet available. It seems clear that these losses are charged to reserves, and. while no objection could be made if the reserves were built up out of amounts charged to profit and loss account, it is sheer camouflage when the reserves are made up of accumulated funds. Not Far Enough. By permitting the Public Trustee to retain these reserves free of interest, his whole financial operations are obscured. The present Government is to be praised for making the Public Trustee pay land tax and something to the Consolidated Fund for the cost to" the country of the Public Trust Office. Unfortunately, the Government has not gone far enough, and the method of assessing the contribution is wrong. By adjusting his figures the Public Trustee will this year pay the Consolidated Fund less than one-third of the amount he paid last year on figures prepared before he knew that half tbe*profits shown in his financial statement were to be paid to the Consolidated Fund. The following , method should be adopted: — (1) The Public Trustee and all other trading departments should pay to the Consolidated Fund interest at, say, 5J per cent on all reserves on the basis that it is loan capital. (2) All Government money should be specially invested, and not fall into, the Consolidated Fund. (3) The Public Trustee and other trading departments should pay rates, taxes and stamp duty exactly the same as an individual. (4) All those who are compelled by statute to deposit money with the Public Trustee should be given the option of depositing Government securities. For instance, insurance companies were compelled by statute to deposit about £1,000,000 with the Public Trustee, and. thus present him with about £7500 per annum. (5) All special privileges of the Public Trustee should be abolished, or if beneficial to the community should be extended to all trust companies of approved standing. If this were done it would relieve the general taxpayer of a tremendous buKden of unseen taxation, and there would be no further complaint regarding unfair competition with individuals.

In conclusion, I would like to, suggest that the Public Trustee be asked to bring out his financial statement *in such a way that it showed separately all Government funds held, and. also those funds which are deposited with the Public Trustee by virtue of some statutory provision, and that he also give details of the item "commission and other income, £312,219 19/6." These details would be illuminating.