STEADY GROWTH

Evening Post, Volume CVI, Issue 32, 7 August 1923, Page 8

STEADY GROWTH

SUCCESSFUL STATE IN- , STITUTION

PUBLIC TRUST OFFICE REPORT

INTERESTING FACTS AND , v FIGURES. &9

Most interesting reading is furnished in the report of the operations of the Public Trust Office for the past. year. The "statement of the Minister (Hon. J. G. Coates) and of the Public Trustee (Mr. J. W. MacdonaJS), outlining- the widespread activities of this office, forms a State document of the first importance.

The growth of Business during the year, states the Minister, has been well maintained, 2450 new estates having been accepted for administration. At the end of the year there were 9779 estates and funds under administration, of a total value of £28,904,798. The outstanding feature of the year's work is the greatly improved financial position. The total revenue amounted to £246,692, as compared with £220,79* for the preceding year, while the expenditure decreased irom £209,741 to £187,991. Tl c result is that a profit of £58,700 has been earned on the year's working-, as compared with profits of £10,691 and £11,053 for the two previous years. This result has been achieved after providing for the expenditure which an ordinary commercial undertaking would have to meet, including the payment of income tax and depreciation of plant and buildings. The improvement in the financial position of the office has made is possible to consider the granting of further concessions to those persons who do busi- | "ess with it, the aim of tile present .Public Trustee on taking office, two years | ago being to substantially reduce the expenditure, so as to be in a position to confer further concessions on clients of the office The report will show how this ami has been realised. Kver since the office was founded its principal aim has | been to render efficient service to its clients and not to amass' profits. Whenever the surplus of revenue over expenditure has wan-anted the granting of concessions this has been done either by increasing the return to beneficiaries on amounts held in the Common Fund, or by a reduction in the charges made for the administration of estates. In last year s report reference was made to the raising of the rate of interest on amounts held in the Common Fund, and the liberalising of the methods under which the interest was computed, the value of tne concessions then given to estates and beneficianes under this heading being estimated at £57,500 ° In view of the favourable results of last year's working, further concessions of an important nature have been decided upon. As from Ist April, 1923 many classes of fees charged by the Public Trustee, in addition to the commission for the administration of estates will be abolished. Such fees include those charged for the obtaining of grants of administration, the preparation and tiling of stamp accounts, the supervision ot repairs to properties, the settlement of mortgages, the registering of the Public irustee's title to property, and the preparation of conditions of sale. It has also been decided to abolish the charges made for the inspection of rural properties by the Office Rangers, except in very special cases where a charge may be warranted. ' STATE TRUSTEESHIP. In last year's report reference was made to'the interest displayed in other parts of the Empire and in foreign countries regarding the principle of State trusteeship. and it was then mentioned that'inquiries had been roceived from the United States of America and from Canada. .During the year just closed further inquiries have reached the Public Trustee from Rhodesia, Ceylon, and the ■Province of Alberta, Canada. In each case the inquirers have been supplied with full information regarding the constitution and working of the Public Trust Office of New Zealand. It is gratifying to find that the principle which has been m operation in New Zealand for so long a period is commending itself more and more to the authorities in other parts of the British Empire. 100 AGENCIES. Attention is directed to the following features appearing in the Public Trustees report:—(l) The increase in bal- ' ' Sf™, credit of estates and funds from , £15,329,126 to £17,466,787. 12) The in- ! crease of £3,407.019 in the total value of estates and funds administered by the office, making the total value as at 31st March, 1923, £28,904,798. (3) The investment of further sums, totalling £2 - 441,404, from the Common Fund during i the year. Out of this amount £1,275 659 ?^ K o™al\ ced, to f™* 6 mortgagors, and £955,877 to local bodies for works of public utility. (4) The increase of the oftce reserves to a total of £491,775 (5) iiimo6o^^^ deP°sits t° value of ii.ui^.bOO from insurance companies in -erms of the Insurance Companies' De- : posits; Act, 1921-22. (6) The closing of the administration of 461 estates in the | year m which they were accepted, thus giving convincing evidence of prompt administration. In each of these cases the realisation of the assets was undertaken at the request of the beneficiaries or because the market conditions were favourable On the other hand, where it is advantageous to retain the properties, the Public Trustee has special financial facilisales. (7) The reduction of tv.enty-one in the number of staff employed, in.addiI tion to the reduction of 121 effected durmfnt J V% S year- (8) The development of the system of training junior officers to provide adequate staff for future requirements. (9) The establishment of one permanent full-time branch office • five part-time offices; and six aeencira of the office, making the total number of offices and agencies 100 During the past year 4383 additional wills have been deposited with the Public Irustee for safe custody, making the Marchr^ts^ 61'0514 °» *' H

COMMON FUND SYSTEM.

The moneys comprising the Common -bund are invested by the Public Trustee, and the Office retains the proceeds ctthe investments, whilst the beneficiaries and estates receive a fixed rate of interest prescribed by the Governorbeneral, and payment of both interest and capital is guaranteed by the State Apart from the special legislation authorising the application of the system to J^e public Trust Office, the pooling of the funds into a common fund would be illegal {or the Public Trustee, as it is for a private trustee. The objection however, which exists in general against tne pooling of funds by a trustee is removed m the case of the Public Trust Office by the statutory guarantee of the integrity of both capital and interest in every estate.

There is a widespread impression that no other system than the Common Fund system is in existence in the Public Trust Office. As a matter of fact, however, provision now exists, and has always existed, for the special investment of estate funds in any case where the testator so desires. In such.a case the Pcblic Trustee will act exactly as a private trustee acts. He will invest the moneys in trustee securities returning the current

market rate of interest, and he will be liable for the funds' to exactly the same ! extent as a private trustee would be liable. It is therefore perfectly open to* persons who do not favour the Common Fund system to provide for the specialinvestment of their funds, when exactly the same result will accrue as if the estate were administered by a private trustee. The Public Trustee adopts an unbiased and impartial attitude as between the two. systems, and where special investment is directed be loyally and unreservedly observes such a direction. Nevertheless, although the two systems have been in existence in the Office side by side since 1873, it is found that the cases in which testators provide for the special investment of their funds are almost negligible. The slight advantages of the system are greatly outweighed by the special benefits resulting from Common Fund investment: Firstly, the possession of the absolute State guarantee; secondly, the fact that no delay occurs in finding suitable investments; thirdly, the fact that once the money forms parts of the Common Fund the interest runs without intermission; fourthly, that the interest is raid promptly, regularly, and in full; fifthly, that immediately capital funds are required for distribution they are available. PROFIT OF £58,700. 4 , The operations of the year have resulted in a profit of • £58,700, ■ as compared with £10,691 and £11,053 respectively for the last twc. preceding years. This Tesult is very satisfactory, more especially in view of the fact that, for the reasons already referred to, the income lor the year has been adversely affected. The increase in the profits is due to a large extent to economies effected as enumerated in.last year's report. For the year ended 31st Mai-ch, 1922, the total expenditure of the office was less by £23,904 than that for the previous year, and for the year ended 31st March. 1923. a further reduction of £22,913 was made. ■ It will be seen, therefore, that notwithstanding the facts that it has been necessary to make provision for such inevitable increases in expenditure as statutory scale increments •f salary, increase in cost of stationery and requisites, and increase in cost of travelling, and that the business of the office lias increased to the extent of £6,540,479. the annual expenditure of the office has been decreased within the past two years by £46,817, the principal economies affected being in salaries (£20,303) and in printing, stationery, and requisites (£5,025).

The gross income of the office for the year was £246,692, an increase o£ £25,----898 as compared with that of the previous year.

■ The value of the assets (realised and unrealised) under the control of the Public 'Trustee on the olet March, 1923, was £28,904,798, representing an increase of £3,407,019 for the year now under review.

Attention is drawn to the gratifying increase under the heading of "Investment Agencies." The Publio Trustee is empowered to act as agent for the investment of money either within the Common Fund or in securities outside of the Common Fund without the State guarantee.

Having had. money at its disposal during the greater part of the year, the office has been able to render financial assistance throughout the year to many estates and beneficiaries at reasonable rates of interest.

The surplus moneys derived from the Common Fund of the office have been kept closely invested during the year. The total investments of the Common Fund now amount to £15,349,301.

The Public Trustee also holds investments on behalf of the Public Service Superannuation Board to the amount of £1,797,041.