AUDITOR-GENERAL’S CHARGES

Evening Star, Issue 19023, 19 August 1925, Page 10

AUDITOR-GENERAL’S CHARGES

REPLY BY PREMIER HOUSE TAKES SERIOUS VIEW COMMITTEE TO INVESTIGATE [From Oue Parliamentary Reporter.J WELLINGTON, August 18. Strictures by the Auditor and Con-troller-General on the loose methods of control over stores in certain branches of the public services wore recently discussed in the House, and led to-day to a lengthy statement by tho Prime Minister, who explained that tho departmental heads had looked into these allegations, and ho had collected their replies. It was with reluctance the Government found it necessary to comment on the Controller and AnditorGeneraTa report, but several matters had been so set out and interpreted as to create an impression that there existed a state of laxity and failure to control tho administration of finance, stores, etc., and tho Government felt that Parliament was entitled to some explanation concerning the various questions raised by tho Auditor-Gene-ral. That gentleman was one of the highest officers of the State, placed in a position of independence, and responsible to Parliament only. His reports, therefore, were entitled to every respect and consideration, but at the same time he must exercise judgment and tact in dealing with matters which came before him. His reports should bo so conveyed to Parliamnet as to preserve a proper perspective. With regard to the matters dealt with in his report tliis year, several of them referred to appeared to bo out of proportion to the actual ascertained facts. Ho (Mr Coates) therefore proposed to lay before members notes and reports of tho departments concerned. Tho first matter dealt with by tho Prime Minister was tho question of the audit of stores. In this connection, he. said that in 1922 the Public Revenue Act was amended so that all stores must be accounted for as cash, and this meant that no loss or shortage of stores could pass without being written off as cash. In terms of tho Act this had been made effective, and what the Auditor-General referred to was prior to the above date. At present the door was not open to speculation and extravagance. The reply to the charge that a Government storekeeper had an interest in a firm supplying goods was that the storekeeper in question had tendered his resignation, but, owing to a shortage of hands, ho was intermittently employed for a further three months. At the time of his resignation he was not (so far as was known I interested in the firm in question. 'When he resigned he asked for a stock-taking and a clearance of his accounts. The Audit Department was asked to do this in March, 1924, but this was not carried out till August. The Prime Minister contended that tho system followed by the department of accounting for stores was a good one, and boro comparison with that set out and adopted in the best-managed concerns carrying out similar undertakings. Coming to the question of farming institutions, tho Prime Minister said no evidence could bo found to support the sweeping statement that “ generally irrefinh'ritios in one shape or another existed ” in cases where Government officers owned farms in the vicinity of State farms. In ono ease of alleged irregularity which had been reported investigation showed that the transactions had the sanction of the permanent head. *

The paragraph in the Auditor-Gene-ral's report with regard to tho shortage of motor spirits appeared to convoy, without any discrimination, the impression that a system of illicit sales, shortages, and extravagant consumption of motor spirit existed generally in the departments controlling the stores. Investigation showed that whatever leakage took place was not of a fraudulent nature, but occurred through failure to enter up the books.

With reference to urgent printing orders for the Railway Department at Invercargill, the Prime Minister said that this matter was, fully investigated by an accountant of wide commercial experience, and his findings were made available to tho Auditor-General, who had seen fit to refer to tho matter in a way which tended unduly to magnify the actual position. The Prime Minister made reference in a similar strain to other matters of detail referred to by the Auditor-Gene-ral, and concluded by saying it was considered that the relatively small number of surcharges and also of prosecutions, if anything, redounded to the credit of members of the Public Service throughout tho dominion. Now Zealand had every reason to be proud of its service, and tho Government could not permit to pass unchallenged anything that might tend to detract from the high standard of integrity known to exist. The stores purchased by the Government last financial year totalled £4,400,000. There was a very largo volume of buying compared with the small amount of actual losses of stores reported. He further said that out of 36,000 permanent employees of the State, only twelve prosecutions were made during the year on account of theft, defalcations, etc. The Prime Minister concluded his statement by moving that tho following Select Committee bo sot up to inquire into and report on tho AuditorGeneral’s charges:—Messrs G. Forbes, O. Hawken, IT. E. Holland, J. M'Comhs, F. J .Rolleston, T, K, Sidey, J. A. Young, Hons- A. 1). M'Leod and W. Nosworthy, and the mover.

OPPOSITION COMMENT A CASE FOR INQUIRY. The Leader of the Opposition (Mr G. W. Forbes) said lie had followed the report with interest. While admitting that officers of the Public Service were men of integrity, ho thought a close watch should be kept, and the opinion of the Auditor-General respected. it would bo a pity if anything were done by the House which would have a contrary effect. The Auditor-General had not gone beyond what he was allowed by law to do, and the House should not weaken his position. “ This matter Is, I think, very serious. and it should be discussed by the j House immediately,” declared Mr I Holland. ” The Auditor-General’s rei marks concerning a business house and ! a certain official, if they contained only the elements of truth, should certainly I furnish matter for prosecution against I that firm and that officer. The Prime I Minister’s statement, ns far as I was able to follow it, is in direct contradiction to that of the Auditor-General, and what applies in this- case applies in a number of other cases. It seems to me that the fact that we have such wide divergence in the statements is I sufficient reason for carrying the matter j further. Either the Auditor-General I is . correct or ho is not correct. If his 1 statement is made carelessly or deliberately, someone must take action in regard to him. If the statement is tme surely some action otherwise must he taken. If we take the statement of one side, then the statement of the other side is immensely wrong. I think the Auditor-General himself has a right to be heard.” (“ Hear, hear.”) “ The Prime Minister’s statement is one of the most serious indictments of a public ! officer ever made in this country.” The Prime Minister: "What was that? Mr Holland: The Auditor-General gives specific statements of what he alleges to be specific cases, and the Prime Minister’s renlr is that there ia

no foundation for them. Tho AuditorGeneral holds a position which is among the most important held by any public officer in this dominion. If the statement made to tho House to-day through the Prime Minister is correct, then surely every hen. member must adroit that it constitutes a serious indictment against the Auditor-General. If tho Auditor-General’s department is so loosely conducted that it is possible for statements to be put into a public document unjustifiably alleging criminal offences against departmental officers and against citizens outside, then surely there is need for further investigation. If, on the other hand, the AuditorGeneral’s statements are correct, tho same thing applies tho other way about. What I want fo see, is the whole matter either fully discussed in the House or some investigation made by an independent- tribunal. The situation that has arisen is one of the most serious that has ever arisen in the history of this dominion—ono of the most extraordinary situations. It puts tho departments and the Government on ono side and the Auditor-General on tho other. It places the Auditor-Gene-ral in the position of either being incapable of properly administering his high office or of deliberately falsifying the position. On tho other hand, if the Auditor-General is correct, it still leaves tho departments loosely conducted, and a number of departmental officers guilty of criminal offences, according to the Auditor-General's statement.

Mr Sidey declared that tho Government was under the lash of an independent depart incut. The Auditor-General had reported that the low prices quoted by a Dunedin firm for supplies compared with those obtained from other centres showed that there was a ring. Ho thought the whole matter should bo ho referred to the Public Accounts Committee.

The only cheek possessed by Parliament, said Mr Parry, was tho AuditorGeneral's report. It was extraordinary to expect members to accept the position taken up by tho Prime Minister, whose statement was merely an evasion of a report printed in plain English. He moved as an amendment to tho Prime Minister’s motion to print his statement that the whole matter he referred to the Public Accounts Committee for inquiry. The Prime Minister announced after further discussion that he would set up a select committee to consider the Auditor-General's report and the reply, ft had rightly been said that the Auditor-General was an officer of Parliament, and the matter could not bo left where it was. ns a good many of the comments constituted a reflection on tho controlling officers. The matter should go to a special select committee, and perhaps even further. Mr Parry, in view of the Primp Minister's statement, withdrew his amendment. and subsequently tho Prime Minister moved and the House agreed to the following special select committee being appointed to consider the Controller and .Auditor-General's report and his comment thereon:— Messrs Forbes, Hawkon. M'Leod, F. J. Pollestnn. Nosworthy, Sidey, Young, and the Prime Minister.