THE NATIONAL ACCOUNTS

Press, Volume LXXI, Issue 21639, 25 November 1935, Page 12

THE NATIONAL ACCOUNTS

MR HISLOPS CHARGES DETAILED REPLY BY MR COATES AUDITOR-GENERAL'S REPORTS tPBESa ASSOCIATION TELEOEAM.) AUCKLAND, November 24. A detailed reply was made to-day by the Minister for Finance, the Rt. Hon. J. G. Coates, to charges made by the Democrat leader, Mr T. C. A. Hislop, based on reports to Parliament of the Controller and AuditorGeneral. JMr Coates said:— "Mr Hislop continues to make an -election issue of the reports of the Auditor-General. I regard Mr Hislop's statements as being calculated to cast a serious reflection on the integrity of civil servants holding highly responsible positions. If his allegations of maladministration and financial jugglery are correct, this could only have occurred with the connivance and active support of treasury officials. In addition, these allegatons are calculated to instil mistrust and apprehension in the minds of the public. Hence, they transcend entirely the immediate question of the election.

"The reports of the Auditor-General have been open to Parliament and the public for the last two or three years. They have been available for discussion by Parliament at any time, yet neither Government members nor members of the Opposition have placed upon them the interpretation now adopted by Mr Hislop. .Mr Hislop professes to be actuated in his statements by a sense of responsibility to the pubiic. If this is the case, it is passing strange that Mr Hislop has withheld his strictures until the eve of the election, since he must have been aware of the nature of the Auditor-General's reports as they appeared. „ „ "Mr Hislop's tactics are all the more reprehensible because in his statement issued on or about November 21 he has quoted extracts from the Auditor-Generai's report without reference to their context. In this way he has managed to convey an entirely erroneous impression on the purport of the reports. I find it dimcult to believe that his misinterpretation of the position is entirely unintentional. "I refer now to the specific points raised by Mr Hislop. Cheviot Estate Account

"A special account kept in the books of the Treasury of the Cheviot estate was closed by incorporation in the general lands for settlement account pursuant to section 19 of the Finance Act, 1930, No. 2, the reason being that settlement operations on this estate were successfully completed, and it was desirable that the m-cfits earned should be available as additional capital for further land settlement. In any case these operations were similar to those of a great many other estates that were cut up for 'settlement, the transactions in respect of which were included in the lands for settlement account. In short, the Cheviot estate account, like many ether specal accounts that have been opened and closed in the past, had served its purpose, and was closed. The reference quoted in Mr Hislop s statement was taken from the 1932 report of the Controller and AuditorGeneral, the remarks being made as part of some observations on Parliamentary control of expenditure, but it should be noted that the Controller and Auditor-General's report contains no suggestion of maladministration, as is implied by Mr Hislop.

Payments Without Authority "The quotation under the heading of payments without authority was made apart from its context, evidently with tha intention of conveying the impression of wrongful expenditure of Dublic funds.l But if Mr Hisloo had been fair enough to quote the whole paragraph from the Controller and Auditor-General's report, it would be clear to all that the reference was to the redemption of some New Zealand Government debentures in Australia. The Controller and AuditorGeneral's contention was that the payment to a bank for this purpose should have been treated in the accounts of expenditure, whereas the Treasury treated it as an imprest advance, the expenditure being recorded later when the debentures in question had actually been redeemed by the bank. It will thus be seen that the point raised was purely a technical one, of how a certain payment to a bank for a lawful purpose should be recorded in the accounts.

Exchange "Under the head of exchange a sentence is quoted by Mr Hislop from some observations made by the Controller and Auditor-General in his 1934 report on the subject of 'the treatment of exchange in the public accounts,' as 'an outstanding example of deliberate juggling with the accounts,' although the Controller and Auditor-General in the report in question makes no such suggestion. The sentence quoted referred to sterling assets amounting to £19,700,000, which were later sold to the Reserve Bank at a price £4,700,000 greater. Mr Hislop obviously intends to imply that the accounts were o-.,t to the extent of the latter amount. Actually, the £4,700,000, being the amount paid by way of exchange on the purchase of the sterling, was included in the accounts, but as a separate item. "Juggling With Accounts"

"An example of certain transactions between two sub-accounts within the public accounts taken from the 1934 report of the Controller and AuditorGeneral is quoted by Mr Hislcp, to use his own words, 'so that the public may understand the methods used in juggling with the accounts.' Here, again, the example is quoted away from its context, which includes the .following statement by the Controller and Auditor-General: 'I would like to make it clear that in making these comments the Audit Office in no way raises, nor has it ever raised, any objections to the actual transactions thfmselves, which are quite legitimate, and in accordance with law, and have been subjected to audit investigation and duly passed as in order.' "In view of the very questionable tactics adopted by Mr Hislop and the Democrats, I would earnestly warn the electors against accepting at their face value any allegations which may be made during the next few days."

DEATH OF MRS COBBE MINISTER. CANCELS ENGAGEMENTS (FBESS ASSOCIATION TELEQBAM.) FEILDING, November 24. The death has occurred of Mrs Cobbe, wife of the Minister for Defence (the Hon. J. G. Cobbe). Mr Cobbe has cancelled all his engagements.