SPECIAL HOSPITAL COMMISSION.

Otago Witness, Issue 3510, 21 June 1921, Page 6

SPECIAL HOSPITAL COMMISSION.

ASSETS OF OTAGO I3GARO. THE PROPORTIONATE CLAIM. Th Special Hospital Commission (Messrs. J. W. Boynton, S.M.. and Mr C G. Col--1 ns. Government Audit Inspector) sei up l>v the Minister of Public Health (Mr ('. J. Parr) to hear the argument of the parties regarding the apportionment of the assets and liabilities as between the Otago and the South Otago Hospital Hoards coir luded Law Courts on the 15th inst. Mr E. Killick represent d the Health Department. The sets ftl < ago lb ital Board were set down at £209,689, an.i the feoutn Otago Hospital claimed practically orr tilth of this amount— £39,934. MR BOYNTON’S T.ATEMENT. Cl irt m said that it \v ; usual in. opening a Royal Coinmi-s:on to v* ad t ’io c inmir ion to establish th ■ authority under which it v. s held. In this case it was not a Royal Gmnitn.-.-i u it was simply an inquiry under the Hospital and Charitable Institutions, Amendment Act, of 1920, providing for tiie division of the districts. The Minister, very wisely, he thought, in order to make no mistake, had order an inquiry to bo made os to wliat proportion of

| the property, contracts, debts, and liabilities j of the Otago Hospital Board should be j acquired by the new board. The court had |no interest in the matter. The procedure would be that the South Otago Board was 1 m the position of a plaintiff under a court. • The claim was that a cert u'n amx.nt was j owing to the Smith Or .go ;. iiv . j old hoard, and that being so South Otago j would commence the proceedings. The i Otago Board would reply, and the South j Id ago Board would have the right of a j further reply. The evidence would be ; limited to facts. Facts were what the j(a ufuiiiss/on wanted tie- eomiiii '-1 n would i form its opinion on the fact.-. Tin re were ! the four points -property, con! r ict , debts, a and liabilities due by the old board to the 1 new board. I The South Otago Board wa-- represented by Messrs A. North. A. S Mid: .din, M.P., •i. Moseley, and Jasper Clarke. Mr <'. J. While appeared for the Otago Hor.pital Board. The form;:! sfat-menf of (’aim as subunited by the Smith Otago B , I vsAllowing Tor the value o. 1 the existing as.-ei.- in South Otago—namely the K :i------tang.Tta Hospital and the Owaka site, the monetary elalm. estimated on the on "-fifth of the total assets bad . was £39,934. MR MALCOLM Oi'K.V-.h Mr Mula-dm, opening the ease lor South Otago, said they wished to empi-a dso ill the tii r-1 place feat the Ota an Hospital Board took it for grant'd t hat :ia A llnoi expenditure, and nuu'e :■ .-.upplemeiitury I vy, which, as they umlei-tood, reduced the whole indebtedness of the board to nil. They took no exception to (he. fact that ft was insisted that .South Otago should pay its full share ot the liabilim -i ar ; .| 1". 1 so doing the Otago iioaid cstabiisliLd tire

fact of partnership. It might be argued that the partnership had been dissolved forcibly, but that made no (Inference; it was only as if tile matter had been submitted to a court. It had been submitted to the Court of Parliament, and Parliai :nent had decided on the evidence heard [ that it was justified in decreeing a disso- ! lutiou. He. did not know that it would | help rev;/ much to go into the grounds on vhmh tic di.-ielution was decreed, but tfie main argument sire-sed by South t itagb was t tint the district had been grievously neglected. It was as if a junior partner had | been granted dissolution largely on the ground of the senior partner's neglect of J the junior partner's interests. It would bo j uo-iu'd tint a party against whom dissulu- : tton had been granted should he put in a [ betier j-..,-,': ion than before; one might exI ;>■ ■ rather tint 'he erring paitner would jbe penalised. South Otago, however, did i iid wish and did not ask that the Otago ; disu-iet should he penalised; all they were | they vere entitled to. The claim was a j wholly valid and just one and in no sense : l hat they had demo. '1 b<. facts ■u 1 mitted 1, the department showed that the people of .South Oi: had only titled to &JO, which was equivalent to only ! a quarter of the people entitled to hospital treatment receiving it, They could claim i that the a--us of the Otago Board had i been largely improved by what the hoard j had rayed out of South Otago. Buildings j had been gone on with rapidly in Dun ! edin ami the country districts, with very j few ■v; uiT us, had be m neglected. There j v.a th, K.iitiinga'a 110-pital. but that had been vi-.givu out of voluntary contrilju-

tions and Government subsidy. They were not asking for a penal reward; they were only asking for their share of the assets. So far as they knew precedent showed that they were asking a fair thing, but at the same time thw did not want to bind themselves to precedent. They were in the unfortunate position that they had no history of precedents. These, however, were in the hands of the Commission, in every, case of separation there had been such a division of assets as hail been agreeable to both parties. He did not know that a. hospital district separation had ever come to a commission previously. In quite a. number of cases the parties had agreed to the transfer of the hospital buildings and assets in their territories, but jJiey could well u!l'..id to do that because in these i asms the b>: rds h 1 establish* d buildings with an eye to the needs of the whole district, the result' being that all the buildings noees 1 ary for the carrying on were already in the new district. In the ease of South Otago, with the exception of the Kaintngaia Hospital, there v. as not a. building in the district. Tie understood i that in the case of one dissolution there | had not been sufficient buildings to meet ! |ho needs of the new district, and in tii.it ; ease inoiey passed. | The Chairman .said there was a case in '■ which money parsed. : Continuing, Mr Malcolm stated that the Otago Board had been going to build hospitals at Owaka and B-alelutha. A site had been bought at Owaka and an option had been taken over a site at Balclmha and plans prepared. In connection with these the Otago Board was committed to an ex--1 peuditure of from £20.000 to £30,000. Surely, lie said, if it was recognised at that time that thy Otago Board “was responsible

for these buildings that board stui stood committed if not to riie whole tost, at any rale to its share. ill.- new board recognised that it was of no use whatever to establish mere shells, badly equipped and badly statical. if they were to have hospitals ai rail they must have geed hospitals, and tile result was that to establish a proper hospital at Baich.tha. properly stalled, and properly e ;uij.ped, an expeiWliture estimated at £bl,soC was required. Continuing. Mr Malcolm said that they first required a main hi ipital, and a building would be nee i—ary to contain 40 beds. Jt was interesting note th In the two months up to the lir-r of this month —tin.t was. the tv.o months since separation took place -th numl er of patients from South Otago had increased in a remarkable way. Under arrangement the South Otago patients were still admitted to the Dunedin Hospital. Siunli Otago was paying £4 4s per week for these patients, and they- were charged £2 l?.s Cd. His board was to pay the difference. The average rate of patients from their district I for the year was now 320, as against 207. ! Therefore once they had a hospital established of their own the number of patients would be equal at least to the average for the Otago district. His own opinion was that it would be greater. As a consequence the accommodation at Dunedin would be available for Dunedin's own wants. Whatever award was granted, the half of it would be paid by the Government as subsidy. That, was according to the statutory law. Of the money required for the establishment of buildings at South Otago—say. £4O 000 —the department was willing to pay £20.000. Mr White asked if the department, was behind that statement. Mr Collins said ho did not know where Mr Malcolm got his information from. Mr White said that lie understood that the Minister was asked about this point, and that he had raised some doubt about it. Ml- Malcolm said that he had not got the information front the Minister, liut that ho thought it would he found to he the ease. He hoped that the commission would keep in min i the position -as he bail stated it. Mr Collins said that if the Otago Board had to pay anything to the South Otago Board for capital the Otago Board would lew half what it required and get the rest from the Government. The Chairman said that the point wits not relevant Tt did not come within the province of their inquiry. AIR WHITE’S ADDRESS. 3dr White, in opening, said ne took it that the inquiry must o-e restricted to an inquiry as to me capital expenditure which had been incurred since the Act oi i 909 was passed, ills reasons for so submitting were (lj by the passing ot that Act entirely new districts had been constituted and a new system of control inaugurated, and (2) that prior to that Act in Otago there were several *• stipulate institutions '’ ea< li controlled by i;.s boatd oi trustees. Hospital expenditure was then distinct from charitable aid expenditure. In Dunedin, Mr White continued, there was the Dunedin Hospital contributors, a body corporate controlling the Dun din Hospital, and the Otago Benevolent institution contributors, contiollmg the Benevolent Institution at Uavei-.-hr.nl. The boards were tlie Otago District Hospital Board, which looked after hospital administration in its district, comprising Waihemo, Waikouaiti. Peninsula, Taieri, Bruce, Clutha. and Dunedin, and the united District of Central Outgo, Dunedin, and Tua-poka, which looked after charitable aid administration. Neither of these boards had any. institutions of their own which directly tarried oui the actual work. As to hospitals, the Dunedin Hospital was the only hospital in tin- distiict. It was erected on Crown land i-et apart for hospital purposes. The origin::! buildings were erected out of Government funds, but many additions were made the result of private bequests and benevolence. An estimate of the expenditure for the year was made by the trustees, and ado of the revenue likely to be received, and an application was then made to the Otago Di.-rrict Hospital Board for tilt wh.-rev. dual to curry on. 1 lie Hospital Board then i.- ied on the contribu ing authorities and -T- -ho si -i lies allowed by the Act. and paid over the moneys require by the Hospital. Practically no capital expenditure was levied for up till the passing of the Act of 1909. As to charitable aid. Dunedin and surrounding distri ts wore attended to by the Otago Benevolent Institution contributors; the outlying counties administered their own charitable aid by arrangement with the district beard. On the passing of the Act. 1909. a new board was constituted with wider powers and with different bomicfaries. As to hospitals, it took in the Tuapeka Hospital district which up till then v :s on its own. and as to charitable aid it excluded Vincent, which tij) 1 ill then had been in *hn united district. The property of any old hoard or body corporaio b one vested in the new board subject to any trusts affecting the same. Gould it lie suggested, asked Mr White, that or. the --v; ing of the Act of 1909 ell these proper' n••• which by the operation of th" Act b-i .line vested in tho new board v r the property of tho respect ive contributory c ithorities? Each of the contributory authorities acquired a proprietary interest in these properties. He understood that the suggestion was that because the South Otago district paid approximately one-fifth of the maintenance levies they wire entitled to ore-fifth of the properties. He asked. What did tic- South Otago districts contribute to the properties which they sought lo claim to partly belong to them .' Nothing! The Benevolent Institution was, he unders nod. put up as the result of moneys raised in Dunedin by a large ba/aar. anti the Dunedin Hospital was partly built out of donations. The Tuapeka Hospital was par; i t built out of donations in the very curly gold digging dais. Those buddings can.-- to the new board with cert iiu trusts lit not expressed, at least implied), imposed on them by reason of the munnei in will'll they liad boon established--viz., that they were -for the benefit of rhe City ot Dunedin a;- d such of the surrounding districts as wished to make | use oi' tliein. It certainly was not an ob- ! jeefc of the trusts that portion of the money | w hich had la en given for certain objects I should he assigned lo a < isiri. ( which had voluntarily left" the united district in order j lo launch out on its own; it was not an j object of the trusts that ilie new district [ should get mono;, out of properties to 1 which it dicl not contribute a penny. With regard to the partnership suggestion, it must be characterised as the crudest conception of a partnership that had been laid before a judicial body. No mention was made of the capital put- into the concern ia > tlio hist instance, and no attempt was

made to show why the share in the capital assets should he in propoiion to the amount paid to the board by way ot maintenance levies. In reality, from the point of view of partnership capital. St nth Otago tip to 1909 had contributed nothing. If it was a partner in the concern it was only to the extent of assisting to provide the anttual funds to carry on. and had no claim either in law or in reason to any of the capital assets of the united district. Up to this point, therefore, he submitted that there was no shadow of justification for the claim by the South Otago district to Ire paid anything whatever in respect of the properties which came into the hands of the Otago Hospital and Charitable Aid Board on the passing of the Act cf 1909 Dealing wit h the claims in respect of capital expenditure since the passing of the Act, Mr White said that arguments would be submitted which, he thought, would justify the commissioners in coming to the conclusion that, although the South Otago district had contributed a sum of £9439 towards capital expenditure, on which a subsidy of £8873 had been paid, yet it was not entitled to a refund of any of these contributions in view of the fact that the money had been expended oil buildings, etc., which were intended for the use of the district as a whole, and which had i:o greater value to the district which remained by reason cf the fact that the South Otago district had been cut off. It must be remembered that the South Otago people cut adrift with their eyes open. They were rot forced out. They expected to give their neople better treatment, and possil ly at a lower cost. The buildings of the hnird from which they had dissociated tliemscl'i - however, had little commercial value. The land was practically nil encumbered with buildings which could only he used for the one purpose. The Otago district was no better off by reason of the severance. Indeed, if was considerably worse off, because of the extra maintenance charges, which must now be spread over fewer coniributories. Counsel submitted figures to show that so-called capital expenditure had been incurred in respect cf—Land, £18,968; buildings, £96,876; equipment, £20,559; and special items, £3849: —a total or £143,252. 'the amount contributed by the Mouth Otago district was £1; .516. the period covered being 10 years. With regard to equipment, tin re was constant wear and tear and d< preciation, so that it would he maim- stly unfair to take that in at the full fjgttrt.-, and the same remarks applit d o the pic.-ent value- of the buildings. It mustbe remembered, further, that the extia capital expenditure was incurred partly because of the size - f the district as constituted and partly be' arise of the demands of the Government. Beds had to he provided for the requirements of the district and buildings for administrative purposes. The number of beds n- -i not nave been >o large had the district been smaller, 'j he result was that the braird would be left with more beds than arc really necessary. So also with rey : d to Wakazi. In 1910 permission was asked to erect a consumptive block to contain 36 beds. Permission was given, but the Government insisted on 52 beds being provio- d. Had Mouth Otago not been in the district the number of beds would have been le-.s, and the cost correspondingly lets. Counsel went on to direct attention to the very arresting fact that in no case of severance of a district had any money been paid over to the portion of the district going out of the combined district. The reasons were not far to seek. The assets of the main board, as he had already stated, were of a* nature rendering them indivisible. They were land and buildings provided for a parti' tlar t bj'-ct. and were practically useless for any - t - - - ; ct. The property produced little revenue, and its maintenance charges were extremely onerous. There was also the pos-vfi.jity iliat other portions j of the district might follow South Otago’s i lead t:t ! seek sept,ration. Ihe considers- : tions that- applit d in causing the Govern- j incut to pass the Bill would he equally I appffi able in the case of Waihemo and Waikouaiti, bcr.uwo those large districts j had no hospitals • it bin their boundaries. ! Taking a lead from South Otago, they j might claim til if share of the Otago I p„ ;ird’s assets, and would ask for them 1n ! c --h The City of D nedm .and the remain- ! hig di.-'i ; t- would then h ive an intolerable '■ them it having to find a 1 furt i have tho i don t-ep up the j eve; *: -1 v • i-.-tii a- a- eo-ted for the use ! of the vli le -list It the claim of the j M'.util Ot Jg I; vas gr 'tile. l ll would I he a dfct o.u’-"'I;.- nt in the di li’vfisi to apply fnr .-".e i.cv, ami the whole, scheme of t! e t zed with the very ] ■ ; s to provide | a wide field ni ~ finance would be defeated, j h mi 1 it further severance would not Le -’lowed, but why should other j, ■■ >a of 1 listrict nof get out if ihey wished to do so? Were the South Olago people, because they were first in the field, to get aw ly with a bagful of plunder, and leave tho other unfortunate parts of tho di strict, to put up with the heavy burden placed on them. Was it the reward of

their loyalty to the expressed wish of tho Legislature in 1909 that they were to bo more heavily rated to meet the unexpected and unreasonable demands of the South Otago district? An aspect of the position which had been rather overlooked was that the South Otago district would require to use the properties of the main board for some years to come, and in some cases the base hospital would require to be used for all time. The amount of £4 4s per week for the patients sent in from the South Otago district was barely sufficient to cover the actual cost 'of maintenance, attendance, etc. The large sum payable for overhead charges, and the annual sum required to make good depreciation of equipment, buildings, etc., had to be provided for, and if South Otago paid only £4 4s a week it paid nothing towards these extra charges. To show how this applied evidence would be given that South Otago was paying about £IOO per week to Dunedin at the present time. The total cost of the Kaitangata Hospital last year was £392. and of charitable aid in South Otago £489. The amount of maintenance contributions from South Otago was £7540, on which subsidies amounted to another : £6503. South Otagn would have the benefit of the Dunedin institutions, and on an esti- { mate would pay the sum of £slßl less than was recovered from the patients. The balance, £8862, it would pay towards the cost of administration of the Kaitangata Hospital and the cost of charitable aid, and they would be left with a handsome amount to utilise for their own purposes. A COMPREHENSIVE SUMMARY. Mr George Reid, accountant, presented the following statement regarding the figures be submitted to the board:— j I wish to make it clear at the outset : j 1. That I have taken no account of the values of properties vested in the board when it was first constituted, but have dealt only with actual cash receipts and payments on capital account during the period, April 1. 1910, to March 31, 1921 ; a period of 11 complete years. j 2. 1 hat I have not regarded myself as concerned with the question of whether or not South Otago can substantiate any cha in to a share in the capital assets of the board, but have aimed at submitting figures that would give a basis for calculating the present value of the actual cash contributions made by South Otago to the various assets of the board. 3. That I haw : ece.-sarily dealt with the figures on a- purely cash basis, without regard to the fact that the various assets. - from their special nature, cannot be regarded as having an actual realisable cash value in the ordinary commercial sense, or of being capable of distribution on a cash basis. Statement. A. —This shows the method of arriving at the total levies (both for capital and maintenance) made on the respective districts during the period of 11 years. The actual figures for each year have been taken out separately and then totalled for the whole period. The relative figures_ for the respective capital values, on which the levies art struck have been included to make the statement complete. It will bo seen ;hat i.l:e resulting figures for total levies are:— South Otago district ... £ 50.921 Otago district 220,857 Combined district ... £271.778 This statement leads on to: — Statement B. —Here, taking first the division for the combined district, the. figures for total levies given by statement “A” are shown, together with the appor- i tionment each year between “capital” and 1 “ordinary” (maintenance) in accordance I with the estimates and resolutions of the , board when making the levies. On the I j same basis, the total levies from the sepa- j | rate districts have then been apportioned I to “capital” and “ordinary.” strictly in the ! ratio given by the figures for the combined j district. The capital levies for the whole period of 11 years are shown to have ! been: — j Month Otago district £ 9.439 j Otago district 40,411 Combined district- ...£49,850 ! Attention must lie dtawn lo the footnote to the Btateine,i| regard in IT tho capital levies made in 1919-20 and 1920-21 for the Alex- j ( andi’a ward, as :he-e- b-i :i;g non stibsidisable, I i effect the aniond- colli - t:ocl as subsidies j I from the Government. S! • iemenis t’i. 02. I). ]’]. and 1',2 --1 ii • - --.e .".re --I t-e\"V iia i - tv, end vivo the following information (totals for tho (period of 11 years). — Mouth I Otago. Obi go. j Voluntary contributions towards capital expenditure £9O £18,772 Bequests for capital purposes X i). 1,849 General bequests partly used for capital purposes ... The relative figures for Government subsidies are also shown in these statements. As explained in a note to statement “El,”

all bequests from Otago from 1917-18 to 1820-21 inclusive were of a general nature and were carried to general account, being treated as available either for ordinary or capital expenditure. They have been used only partly for capital expenditure, as will be seen in due course from statement “II.” i The figures included in statements “Cl” j and “C2 ’ tire tho only amounts traceable directly to the South Otago district. Statement F. —This also is self-explana-tory, and shows that the sum of £2OBI was realised during the 11 years from tho sale of assets in the Otago district and was made available for further capital expenditure. Statement G.—This gives a summary of the figure s extracted from the books for the actual capit.il expenditure of the board during the whole period of 11 years on the. various institutions and on special items. The expenditure has been further analysed according to its nature, and the following results are obtained:— Capital expenditure on land ... £18.968 Capital expenditure on buildings 96,876 Capital expenditure on equipment and miscellaneous 20,559 I Capital expenditure on special items ! radium, etc.) 6,849 ! Total £143 252 'J iie heading “special items” has been included to cover expenditure which scarcely tails under any oi tne other three head- J ings, as, for example, purchase oi radium, plans for buildings not yet erected, and I purchases of ambulances. -No, further comment appears necessary at this stage on the i information given by this statemnet. Statement if. ibis statement embodies | the results of tho p.eceding statements 13 j 1 to i-\ and du;" o that the total actual expenditure of the board mi capital account ! was (otitrii; , -d by the respective districts ! as follows (after taking into recount all I Government tul.-hlies oil capital monies c. heeled by the board : j South t itago district ...£ 18,516 Olago district 124,736 Total £143,252 The total shown agrees with the total capital expenditure given by statement G. Statement I.—in my opinion this statement is tile c-rv.x ct the whole investigation, it is framed on the basis that, with, few exceptions, the capital monies t used by the board mid ail subsidies thereon are “pooled” for practical purposes, tile general fund thus made available being drawn upon for the various items ot capital expenditure incurred by the board. My investigation shows that it is impossible to earmark each pound oi capital monies raised and to ascertain in what particular way it was spent. This is particularly the case with i - the .larger sources of capital receipts- ■—e.g., j capital levies mid subsidies thereon. It is i therefore neccs.su: y for practical purposes to treat- all sources of capital re-eipts as having contributed pro rata to all classes of canit'd expend:: ure. On this basis, statement I shows that the total amount of ■ £13.516 contributed by the South Otago town! ds capital was expended as follows: On land £ 2,452 On buildings 12,520 On equipment and miscellaneous ... 2,603 On special items 886 , Total £18.516 I Conclusions Drawn from Sta tenter, is.—The conclusions suggested by tho foregoing figures are : (1) That if South Otago can substantiate any claim at all to a share of the assets of the board, such claim must be based on what the South Otago district has act.u ally contributed . towards j these assets, plus possibly the subsidies : < collected from the Government on such 1 . contributions. _ _ < (2) That the maximum claim South ; Otago could have on that basis would be : the present remaining value of : ho actual contributions made. (3) That such present remaining value can be ascertained only by depreciating the contributions made by Mouth Otago with due regard to (a) the nature of the t expenditure towards vrhich such confri- : t buttons were applied; (b) the t ime that, j . has elapsed mucc each item of expendi- j : turo was incurred. It lias not. boon tbought nee< s«ary as i ' pari of the present inve.-i :gr,*.r-u l!1 go us far as making the ealtwianous no-. e-.-;:iq lo , arrive at the present ld< preceded) value | ; referred lo under (3) above. I he follow- j ( jug comments indicate, however, the nrm- j ciples which, in my opinion, would be ei- j velvet! if it became necessary to fix 1 hat ! , value: — ■ , I.and. —In this case, depreciation would ; not arise, and in ail probability the actual : ( cost would be found satisfactory as an indication of present value. Building.— Depreciation is a factor here, I anti the time element would have to bo : taken into account, together with tho con- I . sideration of the exact nature of each item ■

of expenditure. In commercial circles, the rates of depreciation laid down by the Commissioner of Taxes for income tax purposes are generally regarded as satisfactory— -viz.. 3 per cent, per annum on buildings of ifood and iron and 2 per cent, per annum on i buildings of brick or stone, j Equipment and Miscellaneous.—ln this case a heavy rule of depreciation would be essential for the following reasons, viz. : Much of the expenditure under this heading is undoubtedly more in the nature of renewals and annual upkeep of equipment than of genuine capital expenditure creating a new or additional asset. Even where the expenditure is true capital expenditure for additional equipment the wear and tear , would obviously be heavy and the rate of depreciation would necessarily be high—probably as much as 20 per cent, per annum for the greater part of the items. Included under “ miscellaneous ” are items that should not. strictly speaking, have been capitalised in the books at all, while many others are of such a nature as to scarcely have any present realisable value. I he fell, wimjr are tvpical examples of tho i items referred to:—The painting of build- j ings. labour on hospital ground, installa- ! j firm or telephone, installation of electric ; a ud further expenditure thereon, installation of drainage and of water supply, J architects’ fees and engineers’ fees, expendi- . ture on street crossing and roads. Special Items.—Taking the items in the J appropriate column of statement “ G.” it ; will bo apparent that each item would ref|;!ne special consideration according to its nature. T he expenditure on the plans for proposed hospital buildings may probably ■ be regarded ns worth their cost value, especially if the build mgs are at any time proceeded with. The items for ambulance i anti _ motor truck would require to be de- - j itecl at appropriate rales. I A special foatiu'c arises in connection with the items “ Nurse- Cavell .Ambulance.” j a" I understand it has since been handed over to the Mt. -Tohn Ambulance Association. and is therefore no longer vested in the board. Tho item “radium” is of an tin usual nature. It is on--- of the few inU inces where a special fund was raised and con Joe definitely traced to this specific ex- , penditure : and tins might he considered : a special actor bv the contributories. -"'"jet? m the M-.-ith Otago District.—Tn concluding. -,t may be advantageus to com- ■ menr on the figures enn.'armg in the board’s ’ ; '-"T hir assets situated in Mouth Otago District, and T presume vdl of noces-i.v be retained b.v South Otago. The-e assets appear m the bocks nt the following: figures ns at March 3}. 1921: Kaitangata Hospital— Lend £ 20 0 0 Buildings 1071 0 0Equipment ... 200 0 0 „ , TT £1291 0 0 «nvi;.-:a Hospital site 807 0 0 o\take ambulance 75 0 0 Bale’iitha ambulance ... ... 82 0 0 Architects’ plan for proposed Mat entity Hospital— Kaitangata ... £ 38 0 0 Oivaka 115 0 0 Pro: -used BaTclutha Hospital 257 0 0 Total £2665 0 0 Tn the event of any claim being substantiated by South Otago, these assets would have to be taken into account, and some adjustment of values might ho necessary. REPLIES TO QUESTIONS. Mr Malcolm said tie only desired to ask one question from Air Reid. Could he tell them tne total amount of capital expenditure since 1909? Mr Reid said the exoenditure was £143,252. * j Mr Reid said he had not taken into ae fount the question of appreciation. The greater purl of tho capital expenditure incurred m tho buildings had. been incurred in the war period, and be did not think there would be any appreciation. CHAIRMAN" OF THE OTAGO HOSPITAL 1 BOARD. The Ch.iiruum of tin- Oia.go Board (Mr ‘ TV. E. M. Knight), in tho course ot a st at mat’lit-. said tha Olago Board considered that it any payment siiould be made it .should fie made by the Mom fi Otago district. because it had been relieved from the liability of contributing to a base hospital and its rub-mimy imnrutiunri Mr Knight cn'm gcd tv by on the whole question of L ose hospitals and the heavy expenditure in i-f-ssurily aitwhed to their upkeep. Mouth Otago had mind from the united board, and j"t a-bed the Olago Board to treat‘the ; '• . !.:! tv ago pa: leiits _at a cost barely cover- : ivy their actOal maintenance, and in the j saute i r uth demanded £40,600. That j sum, invested, would return £2400 per annum, almost sufficient to pay the fees of the South Olago p.ulienis in the Dunedin Hospital, and South Otago would have all its levies and subsidies in addition. On the other hand the Otago Board, which had no money, would require to levy for any amount, granted to South Otago, and this would mean a most unjustifiable increase on <

! the bodies remaining with the board, and i tliis increase would be in addition to tho increased charges due to South Olago sev ring its connection, the reduced district having to carry the whole burden formerly shared by South Otago. FURTHER ADVERSE CRITICISM. Mr A. F. Quelt-h said, that Mr Malcolm had made mention of tue fact that only 207 patients had come Ironi their district. They must remember, however, that their board had not to piuvide for any specific number —but for all those who required treatment. Air Queleh went on to state that, under tho i present arrangement, if the South Otago district did not get their buildings erected within the next three years it would have saved about £40,000. He asked them what the position would bo if all the other districts tried to break away from the Otago Hospital distric t. The law, however, said that the wealthy must pay for the poor. Tho sanatorium at Palmerston was put there not because the Palmerston people I wanted it. but in the interests of the whole j hospital district. j Dr Falconer strongly combated the statement that the South Otago district had been neglected. He maintained that .South j Otago had been allowed to separate on an ' absolutely false issue. j The Chairman: That is too late so far as we are concerned. : Continuing, Dr Falconer paid that tho Government had changed its policy in regard to Wakari— tho soldiers were n - -.r being taken to Cashmere Hills- and tboy would be left to carry the baby. The Government was also changing its policy in regard to the Palmerston Sanatorium, and there were certain portions of the Dunedin ; TTos.’i<nl whi'-i were now practically done. ! The South Otago people now wanted to claim on these buildings as assets, j Tn answer to Mr Malcolm, Dr Falconer said that the Defence Department had pairt a subsidy on the Alexandra. Ward. Tho Defence Department did not pay one. penny towards the cost of the Wnk.tri Hospital. Apart from the Alexandra Ward, the del partment had paid nothing towards capital , expenditure. William Allan, representing the Mosgiel I Borough and the Taieri County, said none ■ of the assets was within tho boundaries of these places. The local’ bodies were becoming alarmed at tho increasing am an of tho levies. From Mosgiel in 1809-10 they had paid to the board £SB 16s. arid in 1921-22 tin y had paid £651 2s 2d—practically one-half of their general rate. They would derive no benefit from ihc separation by South Otago. They would have to assist in building three hospitals in South Otago, and they .had no hospital in tiuir own district. They looked on it as a moils- ! trous proposition altogther. The Taieri County’s figures were on the same lines. In 1910-11 the Taieri County’s levies came to £1305; in 1921-22 they amounted to £4215. They protested very strongly against being asked to pay any amount ro South Otago. If South Otago was successful in its claim then they would have to appeal to Mr Malcolm to help them out also. (Laughter.) Cr Daley. Waikouaiti County Council, said lie emnhatically opposed the claim, and that Jic did net think there was one resident in Waikouaiti who did not think it was robbery under arms. —(Laughter.) Dr Barnett said that the South Otago Board did not seem to have yet grasp J the difference between the expense con. no-cted with a bn=o hospital and the expense connected with an ordinary hospital in the country. It was true that if Mouth Otago had country hospitals of its own it would not need to send any very large proportion of its cases to the base hospital tn Dunedin ; still, those cases it would send would lie just such as required expensive and elaborate instillments, special and skilful attention. Dr Barnett gave many specific inslances of the kind of cases he meant, particularly dealing with complicated operations and cases requiring treatment by some of the highly specialised and costly departments of the hospital. Ho concluded by stating that lie understood it was the intention of the Mouth Otago to continue to use the Dunedin Hospital as a bare, hospital for special types of cases as in the past, and therefore Mouth Otago could not justly claim any return of the expenditure that had b en necessary for the establishment of the base hospital. The Hon. M. Cohen, M.L.C., said that he had to protest in the name of those people who had stthsoril "d to many public henefa, ’ ions in Dunedin against onv of their subscriptions bring subverted to !’. in pay for the Mouth Otago hospitals. Air J. Jacobs (s it I ary of the Otago Hospital Board) said ti nt through the efforts of Mr Hugh, Ward and Miss Grace Palotfca about £SOOO had been raised towards the cost of the Alexandra Ward. The Government had granted a special subsidy of 24s in the £ on this sum. Air Malcolm said that he would like time to look through the figures submitted to the Commission, and the chairman then adjourned the sitting.

SECOND DAY. The Special Hospital Commission re sinned on the 16tli. STATEMENT BY MR MALCOLM

Mr Malcolm, m a lengthy address, said: Mr Reid has presented ns with the accounts from 1910 to 1921, hut has omitted the balance brought forward. Mr White also devoted himself to consideration of accounts between 1910 and 1921. Tliis, I claim, is most arbitrary and unjust. Why should they count in our contributions only from 1910, At that rate, why not make it from 1919? I understood Air White to try to justify his position by stating that the present Act came into force in 1909. and tiiat no levies for capital were allowed before that; but from the original Act in 1385 levies have been provided for, and those levies could be expended on capital, though the section authorising the levy does not say so. But section 3C of the Act of 1885 says (condensed) : ” The board may apply any of the moneys in their hands in the erection of any buildings.” That is the essential clause, and it was repeated in the amending Acts up to the present Act of 1909. Tlie practice, then, of spending moneys on capital expenditure has prevailed since 1885. the date, as far as I can find, of the first Act on the subject; but the practice must have prevailed from the date of the establishment of hospitals, and during the whole of the time South Otago has been associated with Otago. The present Otago Board came into existence in 1909. but it was the successor and heir to the previous Otago Board, to which, .as I say. South Otago belonged. South Otago claims its share of the balance. In fact, if we are going to enter on refinements, South Otago can claim a greater proportion than one-fifth before 1910, for this reason: Trior to 1909 the Otago district was smalt r (owing to Tuapeka not being in) than it is now, and South Otago’s contributions would therefore probably be more than one fifth of the total. That may bo noted, but the point T wish to emphasise is that South has all along been paying its share to the Otago Board, and is therefore entitled to its share of the balance. But in Mr Reid’s figures that balance, as exiting in IPIO. has not been brought forward. Accordingly, we get this extraordinary result : that the total capital expenditure of the combined districts is stated at 13343.252, and yet the capita] value, in the very low valuation set out in the appendix, is set down at £209,689. What is to be done with the balance of £66.437, Let us put the boot on the other foot. The figures show that Otago has spent on capital account £124.7.36. Let us take it, then, that Otago is entitled to that only, and let South Otago t'ke the balance of £203,689 —namely, £74.963. We are quite willing. If that argument is not sound for one side, it is not sound for the other. We hold that the argument is wholly unsound. arbitrary, and would in its application bo grossly unjii i. We take it a“ rather a compliment to our case that Mr White has be< *n driven to use such a contention. Wo hold that the effort to confine credit for contributions to those made since 1910 cannot be defended. But we wish to eoint out that grave injustice is also done v seeking to give South Otago civdit only for such items of contribution «.= can be definitely picked out as having been made by South Otago. It simply means that any doubtful or overlooked item is appropriated by Otago. It i.; impossible even for ue to check the accounts, but even in

the hasty perusal of Mr Reid’s figure? afforded us we note:—

1. 11iut the levies for the „Alexandra ward are described as being 11011-subsidisable. We learn now that they were subsidised by the.Defenco Department to the extent of 24s in the £. 1 need not say that it does not matter who subsidised the levies, so long as the subsidies were received. There is thus a sum of £672 not credited to us that should be. Our total levies and subsidies should be shown as £18.990 instead of £18,318. which, even then docs not appear to tally with the figures in statement B, which seems to show the following positions : —Ordinary capital lew, £9439; subsidy, £ for £, £9439; levy for Alexandra, ward, £560; subsidy, £672. Total, £20,110. If we add the £l9B of voluntary contributions we get a grand total of £20,308, which is apparently all Mr Reid could credit us w ith. 2. We also note that South Otago is not credited with any share of the Hospital Saturday collections, or with any share in the contributions to Tapanui Hospital, or to any of the other amounts shown therein. Now, the collections for various objects in Dunedin are generally held on days when the town is crowded with country folk. We believe .South Otago people contributed fully a fifth of such Dunedin collections—(Laughter)—but because each coin was not marked a? a South Otago .subscription we are to get no credit for our contributions. ■ Dr Falconer explained that the Dunedin Hospital had not benefited from this collection for the past five years. The collection had been made by the Hospital Helpers’ Association, which allocated the money to various institutions. At no time during the j past 10 years had the whole of the fund I gone to the Dunedin Hospital. As a | matter of fact, very little had gone to the Dunedin Hospital. Mr Molcolm continued : We strongly object to this system of computation, under which it is impossible for South Otago to gat credit for what I it gives. ! As to Tapanui Hospital, a considerable | portion of the contributions to that would '■ certainly come from the people of Glenkenicli and Waipalii Ridings, adjacent to the Tapanui Hospital; but such undoubted contributions which came from these ridings, which ore in South Otago, are not credited to South Otago. Of course, we arc not suggesting that, such gifts as the | John Roberts’ Hospital at Middlemnrch, I were other than purely Otago contribu- ! tions, but we claim again that in the j genera! collections it is impossible to say i what came from South Otago; but our j belief is that a fifth certainly would. In j regard to bequests, these were all made to i the old Otago district, of which South Otago was a part, and were therefore as ! much to us as to Otago. We note in the J statement G that though the expenditure 1 of £645 on Kaitangata Hospital is roj nothing is said of the contributions from the South Otago people for that, j This, of* course, is due to the absurd re- | fus'd to take any notice of contributions made prior to April 1. 1910. And yet we understand flint Kaitangata Hospital ; cost the board nothing. This- was the Otago Board’s proposal to the Kaitangata | people: “'Hint, if the district would prn--1 vide a free site. £3OO towards ' tic cost, of ! the building, and (rTgeiher with Mr l ee 1 £IOO for the first year and £6O per year 1 for five succeeding years towards the cost ! of a resident nurse, the board would

erect a hospital of six beds and dwelling at a cost not exceeding £1000.” The people, it will be noted, were asked not only to build the hospital, but to help to maintain it. They accented the terms, and before March 8,1909, handed over to the board a beautiful and valuable site and £409, being £390 for building and £IOO for maintenance. The board erected a building at a cost exceeding £llOO and spent another £2OO in furnishing. Ido not know whether they paid the £6O a year for the five succeeding years. If they did the‘position would work ot thus : People’s voluntary contributions ... £7OO Subsidy at 24s 840 Total £1540 While the board expended in building ant* equipment £I3OO, I do not know the value of the site; but that and the subsidy must have amounted io a considerable sum. The Kaitangata Hospital and site value is now stated in the appendix at £1254. No credit is given to South Otago for contributions to the radium fund, classed in statement “G ” as capital expenditure, though L>r Barnett was kind enough to acknowledge the contributions of one guinea each from each of the members of the now defunct South Otago Hospital Committee. I do not blame anyone for these omissions. 1 say it is simply impossible to pick out all the items with which South Otago should be credited. The system, quite apart from, the limitation of time, is an impossible one. There is one amusing item in “ G.” Otago and Balclutha are credited in “Cl ” with paying £9O for ambulances, which, with Government subsidy, is shown to amount to £l9B. Yet in 'G”it is shown the board paid only £157 for the ambulances —a clear gain of £4l to the board. Concluding, Mr Malcolm said he wished to emphasise that he did not claim to have made a, careful analysis of the accounts as presented, but he thought that he had established facts enough to show that it was an improper method of computing the balance as between Otago and South Otago. C:ty people, it was admitted, were bound to make greater use of the Dunedin Hospital than country people. His arguments in support of South Otago’s claim for £40.000 had not been contraverted. All that had been urged against it had been pleas of mitigation. Mr White brought up an alternative scheme, but had not denied the fairness or justice of his (the speaker’s) scheme. It had been urged that the Otago Board’s buildings had no commercial value. That was questionable. They had a real value. He was thoroughly in accord with the general principle that base hospitals must not be weakened. Ho noticed that the number ol patients sent from smaller districts for special treatment at Dunedin Hospital was only from 3 to 4 per cent. South Otago had to erect three hospitals, which with equipment would cost £61,500, which was a burden, and one which they did not want 1o escape. But it made it more necessary that they should get the assets they were asking for. They had contributed to the up-building of the Otago Board’s assets since tlie very beginning. Dunedin was not. building this year, while South Otago, on the other hand, must build. Prior to separation the Otago Board was committed to build two hospitals in the South Otago district at an estimated cost of between £20,000 and £30,000, without equipment MR WIIITK RE I’l IKS. Mr C. G. While (representing the Otago Board) was permitted to reply on any n< w matter that had been brought up.

Mr White contended that the claimants had failed to establish their claim. tie understood that the commission was only taking into consideration capital which bail been expended ou land aiul buildings since 1999, plus any capital levies which had been made on tile contributing bodies for capital expenditure prior to 1909. If the commission dealt with capital levies that was all he c-ared for. The onus of proof was ou South Otago to prove their voluntary contributions. If the South Otago claim was admitted it would' mean that they would gv-t a share of the Benevolent Institution and the Dunedin Hospital, neither of which had been built out of capital levies ai all. THE COMMISSION CONCLUDES. Mr Boynton said that the commission would visit the different hospitals in the afternoon. They were very thankful to both sides for the extremely able way in which they had put their cases. They could not possibly have put them more clearly and more concisely. The members of the commision will report to the Minister, who will afterwards issue an Order-in-Council making the apportionment of the assets, if any.