27

I.—7b

46. Then, when you increase your recoveries it puts so much on your cash?— That is it. 47. Mr. Montgomery] Does not every decrease in recoveries increase the expenditure as shown in the balance-sheet in the Financial Statement ?—I would rather stick to my own returns. It does not increase the railway expenditure—this £857,190. Ido not want to go beyond that. 48. I ask you this question : Does not every decrease in recoveries increase the expenditure as shown in the Financial Statement ?—Every decrease in recoveries would increase the vote as shown in Return No. 2of the Railways Statement. Ido not want to go beyond the Railways Statement. I get out of my depth if I do. Besides, there are Treasury people here who can answer all those Treasury questions. 49. Then you decline to answer the question ?—I do not decline, but I would certainly much prefer to be questioned on railway matters. I would like to make a statement in connection with the evidence I gave yesterday with regard to the £30,000 I spoke of as recovered. A question was asked me whether that was the only transaction for that year of that nature. I said it was, and I think I said so emphatically. I have discovered since that there was another transaction of £8,580 where stores were left in the custody of the Stores Manager. I was not aware of that £8,000 odd transaction yesterday when I gave my evidence, and I wish it to be corrected and to let you know that I am aware of this now. 50. Mr. Fisher] This transaction in regard to the £15,000 is not unusual or unprecedented, is it ?—That particular method is unusual, because that was simply for accommodation; but, so far as sales or interchange of stores between the two departments are concerned, that is quite a usual occurrence. 51. Bt. Hon. B. J. Seddon] This £8,000 odd transaction was not challenged by the Audit Office in any way, was it ? —No. 52. Mr. J. Allen] There is no date given in the voucher put in?—lt would be about the end of January. 53. Mr. Montgomery] Was this for accommodation purposes?—-Partly. I understand it was for fifteen miles of rails. These rails were taken over by the Public Works Department on the understanding that they would not require the whole lot. They were allowed to lie in the possession of the Railway, and the upshot was that they only required ten miles of them, which accounts for the re-transfer voucher being £17,860, whereas the transaction originally mentioned was £15,000 —-that is five miles of rails at £572 per mile. That is the difference between the amount of the original transfer and the transfer which we have yet to pay. 54. Mr. Fisher] Have you discovered any other transaction which was carried on for economical reasons—that is, to save storage and cartage ?—I should say that they were left in our custody simply on those grounds. The transaction I was speaking about yesterday was for the same accommodation, and we never intended the stores to be taken possession of; but this is a bond fide sale of ten miles of rails, representing two-thirds of the transaction. 55. Bt. Hon. B. J. Seddon] Then there are two transactions which have not been challenged by the Audit Office and two that have been challenged : there was one for £13,000 odd and one for £8,000 odd, and neither was checked by the Audit, or, at any rate, demurred to ? —-The £8,580 went forward in the usual course. Ido not know about the £13,000 —I am not aware of that. 56. If Mr. Warburton has said there was a transaction of £13,000 and another of £8,000, that would make two transactions that were challenged and two that were not challenged ? —That would be so. Mr. J. C. Gavin sworn and examined. 57. Mr. Montgomery] What is your name?— James Clark Gavin. 58. What position do you hold ? —I am Assistant Controller and Auditor. 59. You wrote the letters which appear in this return (8.-22, 1898) under your name?—l wrote those memoranda to which my name is appended. 60. Have you seen any reason since for altering any opinion you expressed in those letters ? —No. 61. Will you tell us, Mr. Gavin, what effect a sale of stores from the Working Railways Department to the "Additions to Open Lines" or Public Works has upon the surplus as shown in the Financial Statement ?—The effect of the sale of thirty thousand pounds' worth of stores on the balance of the Consolidated Fund is this: There is a sum of £849,923 Bs. 9d. in this Table 1, under " Class XL, Working Railways." That sum would have been £30,000 more than it stands if those sales had not taken place. If the £849,923 Bs. 9d. had been £879,923 Bs. 9d., the balance at the end of the year, instead of being £521,144 6s. 10d., would have been £491,144 6s. lOd. • 62. Do you distinguish in effect between any class of sales of stores —in other words, would the £13,000 alluded to, and the £8,000 alluded to, and these two lots of £15,000, all have had the same effect on the balance at the end of the year ?—Yes ; because all these recoveries are included in the £187,964 14s. credited during the year ; and if the transactions had not taken place which had the effect of increasing the amount of the recoveries the net expenditure would have been greater and the surplus less. 63. Then, these two additional transactions of £13,000 and £8,000 have had the effect, have they not, of increasing the surplus to the extent of £21,000 ? —Yes. 64. Why were these two transactions not challenged?— The transaction of £8,807 13s. Bd. odd was challenged. On the sth February, 1898, the Controller and Auditor-General minuted the voucher as follows : "In passing this transfer the Audit Office would observe that it has no means of checking it, and that the office must consequently rely entirely upon the certificates of the departmental officers, and on the approval of the Minister, which approval should be submitted to the Audit Office." The approval of the Minister was obtained. 65. Do you think the Audit Office is justified in passing transactions which have the effect of increasing the surplus in this manner ?—Yes, if the transaction were such as it ought to be. The