WAR ACCOUNTS

Dominion, Volume 36, Issue 271, 11 August 1943, Page 4

WAR ACCOUNTS

Opposition Seeks Royal Commission

AUDITOR’S REPORT

Prime Minister And Mr. Nash Reply The appointment of a Royal Commission to investigate the allegations of irregularities made by the Controller and Auditor-General in connexion with public accounts and stores was suggested by Mr. Polson (Opposition, Stratford) during consideration of the Estimates of the Audit Deparment in the House of Representatives yesterday. He said the Auditor-General bad drawn attention in his report to some serious defects in accounting, specially the War Expenses Account.

Mr. Polson said that if anything had justified the proposal of the Leader of the Opposition, Mr. Holland, that a committee should be appointed to supervise expenditure, it was tbe report of the Auditor-General. ’ It was difficult to see why the suggestion had not been adopted. The report contained a mass of criticism which revealed a shocking Incompetence on the part of those responsible for the expenditure of money which came out of the War Expenses Fund. The Minister of Internal Affairs, Mr. Parry: There had been similar reports before in other circumstances.

Mr. Polson: They have never been so condemnatory. Recommendations of the AuditorGeneral, Mr. Polson continued, had been disregarded, and things he had asked for had not been done. Audit officers had been unable to carry out their duties because of the failure to supply information. The position was so serious that the Public Accounts Committee of the House would have a substantial job if it were to undertake an investigation. What was wanted was a Royal Commission, and not merely an investigation by the Public Accounts Committee. Assurances were given by the Government last year that lhe Auditor-General’s complaints would be attended to, continued Mr. Polson, but the assurances had not been kept. In fact, the position was worse than last year. If the Prime Minister had heeded the suggestion of the Leader of the Opposition to set up a committee to examine war expenditure the country would have been saved a great deal of money. Reply By Prime Minister.

The Prime Minister, Mr. Fraser, replying to Mr. Polson, described the Auditor-General’s report as a valuable oue. As a servant of Parliament it was his duty to bring to its notice any inefficiency and dishonesty he had discovered. ‘‘During my 25 years in this House the Auditor-General and his predecessors have made reference in their reports to matters as serious as that now before the House,” Mr. Fraser said. “I am not surprised that the AuditorGeneral has found irergularities,” continued Mr. Fraser. “I can, however, express my surprise that it has been possible to bring the Army and Air Force into being from nothing and to expand the Navy to its present strength without more serious defects being revealed.” While not minimizing or condoning the irregularities pointed out by the Auditor-General, he would say that these related to a comparatively small number of items in the vast amounts of money expended on the fighting forces. He was nevertheless not pleased at what the Auditor-General had to report, and he resented incompetence and inefficiency. The practice was, when the Auditor-Gen-eral pointed out irregularities from time to time, for the Minister concerned to be notified and the Minister would then take action to have the matter remedied. The Prime Minister said he was pleased to say that there jvas no evidence of general dishonesty in the services concerned, though there had been isolated instances. Caso at Wigram. The Leader of the Opposition, Mr. Holland: Why was there no prosecution in the case of the Air Force engineer officer at Wigram?. The Prime Minister replied that the man concerned came to the Dominion with a high reputation, and he proved to be one of the most efficient men to have come to this country, to which he had given outstanding service. It was •doubtful if a prosecution could have succeeded. Mr. Holland: He was cashiered for it. The Prime Minister: Yes, but when the Crown Law Office went into the matter it reported that it was doubtful whether a prosecution would hold. Mr. Holland: There was a great deal of dissatisfaction in Christchurch that a police action was not taken. The Prime Minister: There is no sense in taking the risk when you are advised that there is no case. This man has suffered for his action. He has lost everything, and had to go. He is the type of man who could ill be spared, though his offence caunot be condoned. The Prime Minister added that there was a Dunedin case which appeared to be wholesale fraud, but taken oy and large he was glad that irregularities and inefficiency were not more widespread. The Auditor-General’s report compared favourably with those of other years, the peace years included. "Here we have pages and pages of trenchant criticism by the Auditor-Gen-eral and the Prime Minister endeavours to justify it by what has gone before,” said Mr. Goosman (Opposition, Waikato). “When the public get to know the facts they will be very upset to hear the Prime Minister speak ns he has done. The Auditor-General must have been alarmed when he took upon himself to submit a report like this to Parliament.” Mr. Sutherland (Opposition, Huuraki) urged a general tightening up in the control of service stores and accounts. The Minister of Finance, Mr. Nash, said that no oue. recognized to a greater degree than the Government that all stores should be accounted for and all accounts made to balance. The Government was the trustee and Parliament was supervisor of the Government. The period covered by the report was one of great expansion, due to the entry of Japan into the war. There was no evidence other than that in the report of theft and defalcations. Mr. Goosman: Who picked the men? The Minister: “You don’t pick men lit this time; yon have to take what is sent.” He added that it was not possible for any Government during the period' of the ’war when this country was faced wj.th possible invasion to keep the meticulous accounts that would normally be kept. Mr. Goodman: There was’plenty of ■middlemen t. . Records to Be Better Kept. The Minister said he agreed that the records had to be better kept, but one had to take into account the magnitude of the stores and that the country was at the most dangerous period of its history. Tlie report, showed that in several places improvements had been made, and steps were under way to ensure that competent accounts were kept. Whenever Ministers had been notified that things looked out qf order steps were taken to put them right. He was surprised that there hud not been even greater discrepancies during the 12 mouths. when we were near to invasion and trying to build up a force. De had arranged for the Auditor-General to attend the meeting of the Public Accounts Committee to Be held today, when he would answer any questions. ' ... Because there were difficulties in an emergency period that did not justify us shutting our eyes to the position, said Mr. Lee (Democratic Labour, Grey Lynn). He believed that the economies that could be effected in the War Department were terrific. , Mr. Broadfoot (Opposition, M aitomo) said that manpower difficulties were no excuse. We were today suffering from commitments entered upon on false premises. Stating that he was curious to hear what the Minister in Charge of War Expenditure. Mr. Hamilton, had to say, Mr. Doidge (Opposition, Tauranga) asked

why the Government had changed its policy in now refusing to have a special committee investigate war expenditure. “If no notice has. ibeon taken of tlie Auditor-General’s criticisms then someone is at. fault.” said the Minister in Charge of War Expenditure. Mr. Hamilton. “Immediately the Auditor-General's report is seen it is the duty of those concerned in the control of departmental officers to see that notice is taken of the report. It is gratifying to see that most of the Auditor’s comments relate to book-keeping rather than to the misspending of public money. The bookkeeping must be put right.” Referring to the master-schedule and cost-plus system of allocating war contracts. Mr. Hamilton said there was also the target system. A contract might, for example, be let to build a ship for a target of £2O,(MX). If the builder could do it for less, lie received a bonus. If he went, higher than the target price he got nothing except his profit on the £20.000 in (he ordinary way. Mr. Hamilton said he would not try to excuse looseness in the war accounts, and it was right that the Auditor-General should ibe critical. The vote was massed