I.—7b

II

The method decided upon was to sell, to the amount of £30,000, stores, which had been charged to the Working Railways (Vote 60) —fifteen thousand pounds' worth to the Public Works Department, and fifteen thousand pounds' worth to Additions to Open Lines. This was accordingly done. The intention at the time was that these transfers were to be for the accommodation of the Working Railways, and that the stores were to be re-transferred as soon as circumstances would permit after the end of the financial year. It would appear from the date of service mentioned on the vouchers set forth in 8.-22, 1898, that the £15,000 worth of stores sold to the Public Works Department was re-transferred to the Working Railways Department on the 11th March, and the Audit Department was unintentionally misled on this point by the ' vouchers sent to it from the Stores Department. The Committee, however, has no doubt that the description of the " Date of Service or Supply " as the 11th March on the voucher was an error, and that no re-transfer of such stores took place until after the end of the financial year. The £15,000 worth of stores sold to the Public Works Department was re-transferred in July or August, 1898, but hitherto the Audit Office has declined to pass the vouchers completing such sale. By the operation of the provisions of section 41 of " The Public Revenues Act, 1891," the effect of these two sales of stores was to increase the recoveries to the credit of the Working Railways vote, and thus increase the appropriation under that vote to the extent of £30,000. The Government was compelled to adopt a course which it had used every effort to avoid, but the practical effect was to increase the balance to the credit of the Consolidated Fund on the 31st March, 1898, by the sum of £30,000 beyond what the said balance would have been if the " Unauthorised " had been available, and the same expenditure had taken place and been charged thereto. The evidence also goes to show that two other transfers of stores took place during the last financial year of the value of £8,580 and £13,908 respectively. These transfers were not for accommodation purposes, and consequently the Audit Department did not take exception thereto. The evidence with regard to the £13,908 is somewhat incomplete. The transfer of stores between departments has been a common practice for years past, and dates back to the year 1882; but the Committee has no evidence to show the nature of such transfers. The Committee is of opinion that the Auditor-General acted in strict conformity with the law in refusing to allow the transfer and re-transfer of the above-mentioned £50,000 except out of "Unauthorised" ; and that he was justified in reporting the transactions with reference to the sales of stores to Parliament; but, now that the matter has been explained to the Committee, it considers that under all the circumstances the Government was justified in the course it pursued, and that the £30,000 worth of stores would not have been sold had the " Unauthorised " not been diminished by £50,000 in an unexpected manner as already explained ; and, further, it is of opinion that authority should be given to the Auditor-General to sanction the re-transfer of the said stores if necessary. The Committee regrets that fuller information with reference to these transactions and their effect was not given in the paragraph of the Financial Statement (page 4) when referring to the limit of " Unauthorised" and the inconvenience caused thereby. The Committee notes that in the Consolidated Fund estimates the recoveries to the Working Railways vote are stated at £19,137, whereas the actual recoveries, as stated in Return (2) of the Railways Statement, were £187,964. There seems to be no sufficient reason for this, and the Committee is of opinion that the full amount of recoveries placed to the credit of the Railways vote should be stated in the estimates. The Committee makes the following recommendations:— (1.) That while it is undoubtedly necessary to make provision for an unexpected increase in Railway expenditure during the year, this should be done either by allowing the appropriation for the Working Railways vote to be increased by the excess of Railway revenue over the estimate during the year, or that the statutory limit of the "Unauthorised expenditure" should be increased by £50,000, solely for Working Railways. (2.) That, if practicable, the results of the accounts of the Working Railways Department should be brought into line with those of the Treasury, as the present dual system of accounts is very confusing, and the figures of the Railways Statement are difficult to reconcile with those of the Public Accounts. (3.) That an inquiry should be held into the method of keeping the Railway and Additions to Open Lines stores, such inquiry to include the means by which the value of the stock of stores at the end of the financial year is arrived at. William Wilcox Tanner, 3rd November, 1898. Chairman.