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1.—7.

MINUTES OF EVIDENCE.

Thursday, 27th August, 1885. Mr. Charles Y. O'Connor examined. Eakaia to Ashburton Forks Bailway. 1. The Chairman.] The Committee, Mr. O'Connor, have decided to inquire into each of the lines in the order in which they are placed in trie Schedule to the District Bailways Purchasing Bill now before trie House. What is your official designation ?—"Under-Secretary for Public Works. 2. Mr. Dargaville.] As to the Eakaia to Ashburton Forks line, the estimated cost of it was £74,000, was it not ? —Yes; that was the company's original estimate of cost. 3. Was it part of your duty to inform yourself whetrier that cost was a correct one, and how it was arrived at ? —That was the certified cost of the railway, in terms of the District Bailways Act. The system under which district railways are constructed is that, before trie railways are commenced at all, trie companies undertaking them submit to the Government — that is, the Minister—an estimate of the cost of the line, and the Minister then obtains from the Engineer-in-Chief, or from the District Engineer, a report on triis estimate, and the company also submits its estimate, amongst other information, to the local bodies of the district concerned and to the ratepayers; and the project is launched on the basis of triis estimate. If the project is affirmed by the Minister, this estimate is the amount on which, rates can afterwards be made payable. In this case £74,000 was the amount laid down by the company in their estimate; and as it was affirmed by the Minister as reasonable, that is the amount upon which, by law, the company is entitled to get interest at 7 per cent. I will read, with your permission, the clause of the Act upon this portion of the subject, and this is the clause which governs the whole of the after proceedings. It is clause 11 of "The District Eailways Act, 1877," and it enacts as follows: "Within thirty days after such deposit (that is, the deposit of the first plan and book of reference) the company shall transmit to the Council of each county, wholly or partly comprised in the proposed district, a notice containing or accompanied by the following particulars : (1) a copy of the plan and book of reference, and an estimate of the cost of the proposed railway, and of the equipment thereof; (2) a statement of the maximum rate of tolls and charges for the carriage of animals, goods, merchandise, and passengers proposed to be charged on such railway ; (3) a statement of the maximum rent or charge to be made for the storage of goods, produce, or merchandise; (4) a statement of trie minimum number of trains to be run daily ; and (5) a specification of the rate it is proposed to levy in respect of the various classes of land hereinbefore mentioned." That is the governing clause; and the Act goes on to state that trie amount of the estimate, as so lodged, if approved by the Minister, shall be the amount on which, interest is afterwards guaranteed; and also that the rate thus proposed to be levied shall be trie maximum rate which the company shall be, under any circumstances, entitled to levy in respect of each class of land. The £74,000 before referred to was the amount announced to the County Council and to the ratepayers concerned as the estimated cost of the Eakaia to Ashburton Forks Eailway at the time that the railway was projected, and that amount was approved by trie Minister, and he gave a certificate on the 7th January, 1881, that that was to be the amount for rating purposes. Trie certificate was given in the form of the fifth schedule of the Act of 1878. The effect of this certificate is defined in clauses 22 and 37 of the Act of 1878. Clause 37 says : " For the purpose of deciding the amount of guaranteed interest to be paid on any district railway, the cost of such railway shall in no case exceed the estimate of the cost of the proposed railway and of trie equipment thereof, transmitted by trie company in accordance with trie provisions of trie 11th section of the said Act." 4. What I wanted to get at is: before the Minister signifies approval of the estimate, what steps are taken to inform him as to the reasonableness of it ?—The Engineer-in-Chief is instructed to examine the company's estimate, and to report whether or not it is reasonable. 5. Then, in this case, the Engineer-in-Chief did send an officer to report ?—Yes; and I have got here a memorandum made from the correspondence relating to that part of the subject. It amounts to this : that in October, 1880, a certificate was given by Mr. Blair, then Engineer-in-Charge, Middle Island, to the effect that the value of this railway was £80,000, " including £5,500 for works to be done but not in hand." 6. It was, I suppose, on Mr. Blair's estimate or report that the Minister approved of the the amount of £74,000? —Yes; I presume that the Government considered they were not authorized to guarantee interest on any amount beyond the amount of the estimate, as set forth in the original prospectus ; so that, although Mr. Blair's estimate of the cost of the railway was £80,000, the certificate was only given for £74,000. If the Government engineer's estimate had been less than the original estimate, then, I presume, the guarantee would have been for less than the original estimate accordingly; but the Government engineer's estimate being more than the original estimate, they fell back upon the original amount. 7. Well, in this instance, the officer of the department estimated the amount of cost at £80,000? —Yes; when it was quite finished. Works to the value _of £5,500 still remained to be done—that is to say, he estimated that, at the time he saw the line, its cost (or value) was £74,500. 8. And the £5,500 worth of works were subsequently completed?—Possibly so; but I am not myself in possession of any evidence that they were. 9. They were necessary portions of the line ?—lt is to be presumed so, from the tenor of Mr. Blair's report; but I cannot say for certain.