AN EXPLANATION

Hawera Star, Volume XLV, 19 August 1925, Page 5

AN EXPLANATION

IN AUDITOR-GENERAL’S REPORT

PRIME MINISTER'S STATEMENT.

REPLY TO ALLEGATIONS. (BY TEUGIUI’U. PRESS ABSOCIAIION.I AVEILLINGTON, Aug. 18. Ilk .the IfcLouise. iclnis. ■ the Prime Minister Ron. j. G. Uoaites) lead. a. iengtny sea tameuit in reply to certain, auegmuons mtw.e m rciie report ui cue .AutLitor-tieneral in liis annual

eeponc. recently presented l to Tabirameiiit. He said it was with lelucbanice t-bait the Government found it necessary L.> l.Liiiimienit on itiie Clouti'oiler aim Aud.iitor-.Genera.l’.s report, but several maJbteni had been .so set out and interpreted as to create the impression that there existed a state of laxity and failure to control the administration of finance, etores, etc., and the Governineuti felt that. Parliament. w,a(s entitled to some explanation concerning the various questions raised by the Auditor-General. The Auditor-General was one of the highest officers of the State, and he was in a position of independence and was responsible to Parliament only. His reports, therefore, were entitled to every respect and consideration, but at the .same time he must exercise judgment and tacit in dealing with matters which came before him. His reports should be .so conveyed .to Parliament as to preserve a proper perspective. 'With regard to the matters dealt with in his report this -year several matters referred to appeared to be out of proportion to the .actual ascertained facts. He (Air. Coates) therefore proposed to lay before members the notes and reports of the departments concerned .

The first matter dealt with by the Prime Minister was the question of the adu.it of .stores. In this connection he said that in 1922 the Public Revenue Act was amended so that all stores had to be accounted for a.s cash, and this meant that no loss or shortage of i-to.res could pass without being written off as cash in terms of the Act... This had .been made effective, and what the Auditor-General referred .to was prior to the above date, and: at. present the “door was not open to speculation and extra,vagence.” . : (The reply to the 'charge that a Government storekeeper in question had tendered his resignation, but owing to a shortage of hands lie was employed for a. further three months. At- -the time of his resignation he. wa's not. so far as the Premier knew, interested in the firm in question. When he resigned lie asked for a stock-taking and n clearance of his accounts. The Audit 1 department was asked to do this in March,- 1924, hut this, was not- (xirried cut till August. • The Prime Minister contended that the -system followed by depa.itment in ‘accounting for stoies wish and is a good due; it would bear comparison with that .set out- and adopted iri the best managed concerns carrying out similar undertakings. Coming to the question of .farming iiksbitntionja die Prime Minister saitl no evidence coukl be found to> support the sweeping statement that “generally irregularities in one shape or another exist” in oases where Government otfieeie own farms in the vicinity of State farms. In one case of alleged irregulaiiities which had been reported an investigation showed that, the tramshetions bad the sanction of the permanent head. A paragraph in the Auditor-General s report with regard to -a shortage, of motor spirits appeared to convey without any discrimination the impression that a system of .illicit .sales shortages and extravagant consumption of motor spirit existed generally in the. depaite ments controlling stores.- An>jhveistigation showed that whatever leakage, took plate was not of a fraudulent nature, but occurred through failure to enter up the books. The Prime Minister made reference in a similar strain ,t<> other matters of detail referred to by the AuditorGeneral, and concluded by saying it was eon-.si-de.ed tiiat the relatively small number of surcharges and also of prosecutions, if any,tiling redounded to the credit of members of the public service throughout the Dominion. New Zealand had every reason to be proud of its service, aiul the Government could not permit to pass unchallenged anything that- might tend to -detract from the high, standard of integrity known to exist. Stores purchased by tlie Government • luring the financial year totalled £4,400,000, a very large volume of buying compared with the small amount oi actual (stores’ losses reported. He fur,.her said that out of 36,000 permanent employees of the State only twelve prosecutions were made during the year •>ii account of theft, defalcations, etc. ALLEGED RING. RAILWAY PRINTING ORDERS. OFFICIAL EXPLANATIONS: j-aOM OUR PARLIAMENTARY REPORTER. WELLINGTON, Aug. 18. J One of the suggestions- in the Ainliio [--Cbiit roller-Ge nera IVs report was that, in view of the remarkable disparity between tlie prices for supplies- obtained in Dunedin and quotations for the same service in other -centres, - that a. ring must exist. A statement of the Prime Alinister’.s made to. the Hou-e, -co-day, based on the investigatidbs of che department officers, dealt with thus allegation. - • “it relates,” states the Prime .Minister, “to - urgent printing orders required by ‘the Railway Department for Invercargill. - The department’s pa,pens show, that the Qpntroller-Auditor-Gen-eral brought this matter under the notice of tlie - Pub.l io Service _ Clomnn istsioner, who . caused a. lull investigation to be made into the .circumstances by an accountant of wide commereiad experience. The conclusions arrived at ov the investigating accountant' shon (1) that the Dunedin fit in. in question quoted for special competitive reasons •and their prices were well below the ooßib of production, in this respect it,| may be mentioned that the renewal j priceis are considerably in advance of 'those in the original contract; (2) that the prices quoted to the Department by the firm in Invercargill were substantially fair and reasonable; (2) that in the comparison made by tlie Con-troller-Auditor-General he entirely failed to appreciate the sign ific an.ce of the 'ext.rai cost where urgency and thevolume of work were important factors; (4) that tlie disparity in the due ix> either eauises than •-influence of an alleged ring as suggested by the Auditor-General, is clearly evident by- tbe -fact that the iir estigiatirig accountant reported that the firm iii ! Dunedin and is a* leading •member of the tna.de association in question."’ The Piime Minister's reference to ’this subject pointed out that the results of his investigation were made

known to the Auditor-General, and it was therefore surprising that -he"should have seen fit to refer to-this -matter by quoting the - percentages,. running Into -thousiauds,. when the total value of the business in Invercargill is less than £2OOO per annuim: - Thus it tended to unduly magnify the position. INQUIRY WANTED. HOUSE DISCUSSES STATEMENT.' 7 SELECT COMMITTEE SET UP. WELLINGTON, Aug. 19. A discussion on the matter followed. Air G. W. Forbes (Leader of the Opposition) said there were several matters mentioned which no doubt requir r ed investigation. In great departments such as we had there was great need of care to prevent waste, and in making the report which He did 1 the AuditorGeneral had done no more than his duty. There was a good deal of overlapping in connection with the travelling expenses of public servants, to which he (Air Forbes) had frequently drawn attention. -.

Hon. W. Nos worthy: Alembers are always asking for officers to visit their districts.

Air Forbes said that might be so, but Alinisters should take care to see that two officers should riot be where' one would do. At all events they should be careful not to depreciate the high status of the Auditor-General. Mr H. E. Holland (Leader of the Labour Party) said that when speaking in the House on the Auditor-General’s report some time ago he had referred to a case in his own district in connection with which the : Auditor-General bad made serious charges. The Prime ATinister’s statement had given a denial to these charges, and the House should have a further opportunity of going into the matter. He thought the Auditor-General himself should lie heard, because the Prime Minister’s statement- was tlie most serious l indictment of a public officer ever made in New Zealand. He suggested the fullest inquiry, and said- that a judge of the Supreme Court should be. appointed a commissioner to go into the whole matter. - •

There was the widest conflict between the Government and the departments' and the Auditor-General, said Air Holland, and either one ~or the other must be in the wrong. The House and the country ohght to know ivho was in the wrong, ’ Either the Auditor-General was making reckless charges or some departments were still going on under careless supervision. ll© asked the Prime -Alini&ter. to say in his reply whether, .he would or would not appoint a commission to inquire into the whole of the circumstances. > Air T. K. Sidev-(Dunedin South) suggested to the Prime Minister - that-he should send the Auditor-General’s .report and his reply to the- Public Accounts Committee for investigation and a report. ALr W. E. Parry (Auckland Central) said there were several points in the Auditor-General’s report which still called for a reply. Apparently the Government was endeavouring to discard the report and were using departmental replies to get themselves out of the difficulty. He considered the matter should be referred to the Public Accounts Committee, and he moved an amendment accordingly..' Air J. Ale Combs (Lyttelton), seconding the amendment, said the AuditorGeneral was not an officer of the Government, but was responsible to Parliament, and he should be asked to be present when the inquiry took place to give his side of the question. Air W. S. Glenn (Rangitikei) contended that many of the AuditorGeneral’s comments were most unfair.

Mr S. G. Smith (Taranaki) said there were wide differences between the Auditor-General and the departments, which should be cleared up. The Prime Alinister then intimated that a select- committee would be set up. It had been rightly said that the Auditor-General was an officer of Parliament, and the matter could not be left where it was, as a good many of his comments were reflections on controlling officers. The...whole matter should go to a select committee, as _it was a special job. Atr Parry then withdrew his amendment, and the Prime Minister moved that the following select committee be set up to inqjjuire into and report on the Auditor-General’s charges: Afessrs Forbes. Hawlcen, Holland, AfcLeod, AicComhs, Nosworthy. F. J. Rollestbn, Sidev, Young and the mover. The motion was agreed to.