I.—7b.

the country of If per cent, in respect of these local bodies' loans, inasmuch as we have to pay 4 per cent, on the money borrowed in the first instance, and we contribute 2 per cent, towards the sinking fund, of which If per cent, comes from the Consolidated Fund and f per cent, from the Land Assurance Fund, making 6 per cent, in all: would that not effect a saving of If per cent, on the money borrowed? —Yes; from that point of view. 57. Well, Mr. Heywood, with the altered position of money, would it, in your opinion, be good finance to convert this 6 per cent, operation for the local bodies' loans if by such conversion money could be obtained at 3f per cent., and a sinking fund provided at 1 per cent. ?—lt would be a much better operation. 58. Has the Treasury complied with the law, so far as they have been advised, in respect to these operations ? —Yes. 59. Have these operations been disagreed with by the Controller and Auditor-General ? —They have not. 60. Have the operations, so far as the issue of debentures against the accrued sinking fund is concerned, been passed by the Audit Department ?—Yes. 61. Hon. Sir B. Stout.] You say the sinking fund of the year and the accretions amount to £20,000?— Yes. 62. In the estimates you put down the amount of the sinking fund as £14,600. How do you reconcile these figures ?—They do not contain the accretions from the Land Assurance Fund of f per cent., which added makes a total of £20,000. 63. So far as the accretion debentures are concerned, when you consolidate this stock you get it at 3f per cent., do you not ?—lf it is inscribed in London. 64. Have you consolidated any of this stock ? —We have not. 65. Has any 3f-per-cent. stock been issued ?—No ; there has only been some converted. 66. Well, was that converted at 4 per cent. ?—Yes. 67. Why was it not done at 3f per cent. ?—lt has only been locally converted. 68. Well, suppose there was a conversion scheme at 3f per cent. ; if you converted with a 1-per-cent. sinking fund, you will need a longer period to make up the required amount?— Certainly. 69. Dr. Newman.] Is the position this, Mr. Heywood: that £6,000 are taken yearly from the Assurance Fund to make up this amount ? —f per cent, is taken upon the outstanding amount each half-year. 70. Then, to make up this £85,000 you have borrowed this £6,000 from the account ? —We have issued debentures against the f per cent, of sinking fund. 71. Mr. G. Hutchison.] Are you raising the money to lend to these local bodies at 4 per cent. or less?—At 4 per cent. 72. —None less ?—No ; none less. 73. Hon. Sir B. Stout.] I find in the paper supplied by the Treasury under date of the 6th August, 1895, that the interest paid for the year 1893-94 is shown as £1,761,994, and the interest for 1894-95 as £1,658,910 7s. 9d., showing apparently a decrease in interest amounting to £103,083 12s. 3d. Was there actually such decrease in interest? —Yes, of course there was; the figures show it. 74. Well, then, will you explain to me how it is that the actual interest paid varies so much?— It arises largely from the discontinuance of the old system of paying interest on the 1867 Consols in 1894-95. 75. You actually then, however, got back at the end of the year a repayment from the drawing loan ?—ln which year ? 76. In 1893-94 ?—Yes, we got back the amount into the Public Account. 77. So, looking at it from a colonial and not merely from an interest-entering-in-your-register point of view, the Consolidated Fund was not paying so much interest in 1893-94 as it was in 1894-95, because you got back repayments from the drawing loan of 1867, which was received in aid of revenue? —But that did not affect the interest charged. 78. It does not affect the interest charged, but it affects the interest paid ?—I cannot quite follow your idea. 79. From the interest paid you get back a certain sum, as against the interest paid—a refund at the end of the year from the drawing loan ?—Well, the amount that we get back is used in the reduction of the debt which was created to pay the interest. 80. Well ; that means the same thing, does it not ? You discontinued the system, did you not, in 1894-95 ?—Yes. 81. If you had continued the same system in 1894-95 that you had in operation in 1893-94, your interest would have shown an increase, would it not, of £22,685? —Yes. 82. So that this £103,083 was saved in the amounts charged in the interest when the new system was adopted, but there was no such saving in the actual expenditure ?—Roughly speaking, that is so. 83. Have you seen the interest figures in the Year-book ? —Yes. 84. Are they taken from the public accounts—from the actual payments of interest ?—They represent the actual payments of interest. 85. They are from the actual payments, taken from the public accounts ?—Yes. 86. I would like to know this, Mr. Heywood: Do you see that the tables in the Year-book, page 151, do not agree with any of the tables which have been supplied by the Treasury under date of 6th August, 1895 ?—So far as these figures are concerned, they absolutely agree with one another. 87. Suppose a stranger read this Year-book, Mr. Heywood, would he not assume that our interest payments had actually been less each year ?—I do not think you should ask me such a question.

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