I.—7b

V

H. J. H. Blow, Under-Secretary, Public Works Department; Hon. W. Hall-Jones, Minister for Public Works ; Hon. A. J. Cadman, Minister for Railways; and J. B. Heywood, Secretary to the Treasury. 2. The Committee finds, — That in the month of February, 1898, it became apparent to the Treasury that the sum appropriated for the Working Eailways vote would be insufficient to meet the increased requirements of the service for wages and other expenses up to the 31st March, and that there was not sufficient " Unauthorised " available for this purpose. 3. That that available "Unauthorised" vote was insufficient to meet this demand, for the following reasons : In January of this year a transfer of £50,000 had been made from the Consolidated Fund to the Public Works Fund. The Controller and Auditor-General refused to give his assent to such transfer except as a charge upon the " Unauthorised" vote. The £50,000 was, however, returned to the Consolidated Fund also from the " Unauthorised " vote. The combined effect of these transactions was to reduce the statutory limit of £100,000 for " Unauthorised " to £50,000. This unexpected result seriously hampered the Treasury, which was at the monent in possession of ample funds, but without parliamentary authority to utilise them for the requirements of the Working Railways. It then became necessary to defray from some other source the increased expenditure of the Working Railways Department. 4. The alternatives presented were, — (1.) To call Parliament together at once. (2.) To suspend the payment of wages and other liabilities of the Working Railways Department till the beginning of the next financial year. (3.) To adopt some extraordinary means of providing money. 5. The method decided upon was to sell, to the amount of £30,000, stores, which had been charged to the Working Railways vote —£15,000 to the Public Works Department, and £15,000 to the Additions to Open Lines. This was accordingly done in February last. 6. 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 fifteen thousand pounds' 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. 7. 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 fifteen thousand pounds' 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. 8. By the operation of the provisions of sections 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. 9. 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. 10. 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. 11. The transfer of stores between departments has been a common practice for years past under other Administrations, and dates back to the year 1882. 12. The Committee is of opinion that the Auditor-General acted in strict conformity with the law in refusing to allow the transfer of £50,000 from the Consolidated Fund to the Public Works Fund except out of " Dnauthorised " ; and that he was justified in reporting the transaction with reference to the sale 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 thirty thousand pounds' 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. 13. 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. 14. 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 all stores sold by the Working Railways Department should, before being sold, be first charged to the Working Railways Expenditure Account.