PUBLIC ACCOUNTS

Evening Post, Volume CXX, Issue 124, 21 November 1935, Page 10

PUBLIC ACCOUNTS

MR. HISLOP'S CHARGE REPLY TO MINISTERS need for Inquiry Mr. T. C. A. Hislop, Leader of the Democrat Party, today issued a statement in reply to the Prime Minister (the Rt. Hon. G. \V. Forbes) and the Minister of Finance (the Et. Hon. J. G. Coates), who criticised Mr. Hislop's remarks with reference to the Public Accounts and the reports of the Auditor-General. The statement reads as follows: "The Prime Minister charges me with being new to the political game, but I do not see any particular fault in this. If the desire to tell the truth is new, then I must plead guilty. As far as my capability to read and understand the reports of the Auditor-General is concerned, I do not think it is for Mr. Forbes to question this. I have had a long and extensive business experience, and balance-sheets and accounts are the same the world over. The accuracy of the Auditor's reports, I have never questioned, and I am surprised at the Prime Minister's doing so. "So seriously do I regard the whole

matter that I propose to give a few > typical extracts from the Auditor's reports during the last four years. Further, my party is pledged to investigate the whole position, and clean it up immediately it occupies the Treasury benches. "For Mr. Forbes's benefit, let me first quote something that is near at home to him. Here are the exact re-;, marks of the Auditor-General, with re-" spect to the Cheviot Estate:—

The closing of the separate account has not only made it impossible to trace the transactions relating to the Cheviot Estate, in the statement of the revenue and expenditure of the Public Account, published in Book 1 (Parts 1 and 2), but it has also had the effect of rendering the annual revenue account and balance-sheet relating to the Cheviot Estate inaccurate and misleading. "May I remind the Prime Minister that this change took place in 1930, when, strangely enough, he was Minister of Finance. • "WITHOUT AUTHORITY." "Under the heading of 'Payments made without authority,' the AuditorGeneral states:— The system followed is contrary to law, and, in the opinion of the audit offict is also unsound from an accountancy point of view. The attention of the Treasury was drawn to the matter in October, 1931, and the introduction of a more correct system was suggested, but no action

was taken. The audit office has reason to believe that there are other similar cases, in which . payments have been made from the imprest account, but not brought into the abstract, and for which the vouchers have not been submitted for audit in accordance with section 64 of The Public Revenues Act.

"Regarding the treatment of exchange in the Public Accounts, the Auditor-General says:—

The cost of, or premium receivable on exchange, has in some cases been added to or deducted from the cost of the goods or services, while in other cases it has been charged or credited to some other head or account, and yet in other cases has not been brought to account in any way.

"In a later statement on exchange, the Auditor-General said: —

The method of treating exchange in the public accounts lacks uniformity, and in the opinion of the Audit Office is unsatisfactory, and in many cases causes the public accounts to

be misleading and inaccurate.

"Further, with regard to exchange, we find an outstanding example of deliberate juggling with the accounts, in this statement of the Auditor-Gen-eral:—

The same asset which was shown in the public accounts as £19,700,000 (approximately) was shown in the first published statement of the assets and liabilities of the Reserve Bank, as £24,400,000 (approximately), a difference of roughly £4,700,000, due to the erroneous method of treating exchange in the public accounts. JUGGLING WITH ACCOUNTS. i "So that the public may understand the methods used in juggling with the accounts, I quote an example shown by the Auditor-General:— A and B are two sub-accounts within the Public Account. A has £217 cash in hand; B has £1,960,540 cash: the total of both is £1,960,757. B transferred to A £IO,OOO, which obviously reduced B's balance by that sum, and increased A's balance corpublished, however, B's balance still remains at £1,960,540, whilst A's is increased to £10,217, and the corresponding total of the two sub-accounts is shown as having been increased to £1,970,757, whereas in reality no increase took place in the total.

"This statement speaks for itself. If a public company manipulated its accounts in this manner, the promoters would soon find themselves behind bars.

"That my complaints regarding the juggling of public accounts are well founded is borne out by the AuditorGaneral when he states: —

During the recent years the changes in the form and classification of the public acccounts of the Dominion have been so numerous and so frequent that it is almost impossible to obtain a correct comparison of the receipts and expenditure relating to individual services extending over a period of years.

"The Prime Minister can never justify the scandalous position of our public accounts and finances. I want to say to the people of New Zealand that they must place their affairs in the hands of an holiest and responsible Administration. The present Government has shown itself to be without scruple in its mismanagement and downright political corruption." A SORE SPOT. "Apparently my quotation from the reports of the Auditor-General have touched the Government on a sore spot. First Sir Alfred Ransom rushed into print in a frantic endeavour to refute my statements, chiefly by abusing me, then the Prime Minister (the Rt. Hon. G. W. Forbes), and now the Rt. Hon. J. G. Coates, nearly tripping over his leader in his agitation. "Nothing that any one of them has said has disproved any single statement appearing in the reports of the Auditor-General—reports which, to my mind and to the mind of any thinking man, must reveal what can only be termed a major political scandal. "Mr. Coates states that I should have realised that 'such a palpable fraud was too good to be true.' Also that I should have known that 'such a splendid find could hardly be reserved for a late beginner.' "What an extraordinary defence! Mr. Coates discovered many things very late in the day. The whole of his

election promises are being brought down after four barren years. I would remind Mr. Coates that the AuditorGeneral complained of irregularities in the Native Affairs Department at least four years before any reluctant action was taken by his Government. Now I have drawn the attention of the public to other grave irregularities, mismanagement, and juggling of the accounts, Mr. Coates says that there must be something wrong with my point because the members of the late Parliament overlooked it. It simply emphasises my belief that there is an urgent need for a change in our Parliament and its members.' AUDITOR NOT SATISFIED. " The m °st vital point of all is this: All three Ministers who have attempted to rush into the breach have quoted a report which came from a Committee of Parliamentary members, known as the Public Accounts Committee, in 1933. That the Auditor-General was not satisfied with affairs generally and the ideas of the Committee is shown by the fact that he addressed several memoranda to the Committee in (hefollowing year, and drew (he attention of Parliament to his action, 'in (he hope that consideration may be given to Ihc anomalies which appear to exist.' "Now, this report was issued in 1933. and it stated, inter alia, that 'wc are of the opinion that the public accounts represent the true and correct position of the financial administration of the Dominion.'

"Only one year later the Native Inquiry Commission revealed irregularities that had been taking place for some years. What reliance can the people place on the opinion of the Public Accounts Committee, which probably in reality had not the faintest idea of what was actually going on, as would apply to the other matters which are raised in the reports of the Auditor-General, and to which I have referred?

"I repeat that the whole of our public accounts need an immediate investigation, and in the public interest it should be put in the hands of n responsible and competent administration. I deem myself fortunate in having so many candidates qualified by ability, training, and practical experience to undertake what, will be an immense task in the rehabilitation nf our national affairs."