GROWN, NOT PLANNED

Evening Post, Volume CXII, Issue 134, 3 December 1926, Page 8

GROWN, NOT PLANNED

DOMINION'S ACCOUNT KEEPING

INCOMPLETE AND CONFUSING

(By "Taxpayer.")

It is now four or five years since the New Zealand Taxpayers' Federation first urged upon the Government the importance of each Department of State keeping its accounts on a sound business system and submitting them each year to Parliament for the inspection o£ members and the public. The proposal was approved by the Auditor-General, warmly supported by the Secretary of the Treasury, acclaimed by the newspapers of the Dominion, ahnpst without exception, and endorsed by many leading politicians, including the late Mr. Massey, then Prime Minister, who promptly gave directions that it should be put into operation by the various Departments at the earliest possible moment. The Departments, speaking generally, were not enthusiastic in their reception of the edict. A few of them prepared balance-sheets, which were intelligible and illuminative, and a larger number submitted masses of figures which probably a skilled accountant could have put into shape; but the majority of them either displayed not the slightest notion of what was required or refrained from making any return at all. Mr. Massey up to the time of his last illness persisted in his demand for the preparation of proper accounts, "but with one excuse and another the recalcitrant Departments have managed so far to defeat both the letter and the .spirit of the demand. In this respect the Railway Department, whose figures would be of particular interest to the public, is one of the chief delinquents. A HORRID EXAMPLE. Just to ascertain what need there is for more effective bookkeeping in the Railway Department it is necessary only to turn to its annual statements for. 1924, 1925, and 1926, in which all the information vouchsafed to Parliament and the public in regard, to its activities is embodied. On page 3 of the statement for 1925 the house factory and sawmill at Frankton, one of the State enterprises of doubtful value upon which the Department has embarked, is capitalised as at 31st March at £114,978 17s 9d, while in the corresponding statement for 1926 the amount is brought forward as £146,323, an unaccountable increase of £31,344 5s 9d. A few thousands more or less may seem a mere trifle to an accountant toying with millions in the course of his day's work, but the taxpayer obviously is entitled to know why/this extra capital expenditure was omitted from the accounts of 1925, and then surreptitiously introduced into tho accounts of the following year. Then, again, the Department has a reserve account covering its sawmills, stock, timber, and no forth, which in the general statement for 1924 showed a balance of £24,GBl 2s 3d. In 1925 the sum of £3510 18s 5d was added to this account, making the total, a. it seemed, £28,198 0s Bd, and yet on its next appearance it was down to £16,649 14s 9d, between £11,000 and £12,----000 having disappeared without leaving in the customary returns any trace of its whereabouts. JUGGLING WITH FIGURES. As the account keeping of the Railway Department,- as already stated, is of particular interest and consequence to the public, it may not be unprofitable to pursue its vagaries a little further. In the Railway Statement submitted to Parliament towards the end of 1923 it was an-; nounced that the house factory and sawmill at Frankton both had been completed, and members who had been perturbed by th? lavish expenditure upon those experimental undertakings took to themselves the consolation that at last it was at an end, and that no further additions would be made to capital account. But, notwithstanding the assurances given on this point, in 1924 £7020 was expended; in 1925, £78,509; and in 1926, £27,972. These figures added to the undisclosed addition to capital account in 1925 give the total of £144,845. Possibly there is some sufficient explanation of this apparent juggling with words and figures, but it cannot be discovered in such light as is thrown upon the position by the Department's statements and returns. The need for clear and definite information on the whole matter is made all the more urgent by the fact that the Railway Department has entered into active competition with private enterprise in supplying timber and building accessoires, while paying neither land nor income tax, neither interest on building- accessories, while paying neither the cost of sidings nor the ordinary expends of distribution. This opens up a very big question of public policy which there may be an opportunity to discuss later on. ECONOMISTS SPEAK. Meanwhile it will not be irrelevant to the subject in hand to quote a passage or two from a recent bulletin dealing with the national accounts prepared by the Department of Economics of Canterbury College. "In New Zealand, as in other countries, the Budget has grown rather than been planned," is the pronouncement of this impartial authority. ".. . . In the selection, arrangement, and presentation of the matter there are at present, despite last year's improvement, defects both of omission and commission. The arrangement is still confusing and in places illogical. It is overloaded at almost every stage with digressions on policy where facts and opinions tend to become confused. No estimates are given of either revenue or expenditure on capital account, and altogether the relation of the trading departments to the Consolidated Fund is unsatisfactory. Each Department should stand clearly on its own feet, subsidiary to the consolidated revenue and expenditure. The final statement should be built up from the net entries transferred from these departmental accounts. An incidental result of such a change would be that the true position of the Public Debt would be much clearer. ... It is necessary that the utmost care and economy should be exercised. The first necessary steps toy da that desirable end are a simplification and clarifying of the national accounts and more effective, because better informei, criticism of these accounts when they are presented." The Minister or the Government that will give effect to these recommendations will deserve political immortality.