I.—lla.

4

[j. A. MURDOCH.

54. Then, cash payments in advance would stop prospecting and the development of further ground?— Quite so. I think the Manager should be given absolutely a free hand in connection with the water. The effect of the statement might have been peculiar to me. lam a solicitor practising in the town, and the miners might have thought I got better treatment than they did.

Tuesday, 19th September, 1905. J. K. Waebuhton, Controller and Auditor-General, examined. (No. 2.) i. The Ghaii■man.'] Will you explain to the Committee, Mr. Warburton, the nature of the dispute between the Audit Department and the Mines Department referred to in Paper 8.-20 of this year? —Yes. It is a case 1 reported to Parliament under section 22 of " The Public Revenues Act, 1891 " —a case of the disallowance by the Minister of Mines of a surcharge, and incidentally of the granting of water from the Waimea—Kumara Water-race on credit which is not authorised by law. In Paper 3 the Audit Office pointed out to the Minister of Mines that there appeared to be no authority in law for granting such credit. It was suggested that if it were necessary that, credit should be given the Government would doubtless consider whether the practice of the Manager in giving credit ought not to be lawfully authorised. The reply of the Minister is given in Paper No. 8: "I do not think it would be wise to authorise any Government to give credit, as, in my opinion, it will lead to far greater loss of revenue than at present obtains. The present system of voting off amounts which cannot be recovered affords every opportunity for inevstigation." Then I pointed out that, "the question having been settled by the Government that the miners should continue to be supplied with the water on credit, the point is whether the credit is to be granted with or without the authority of law." And I went on to explain in the same memorandum what the position was : " What is called ' the existing arrangement,' the arrangement by which the Manager has been giving credit, is not lawful, and it will consequently be the duty of the Audit Office at once to surcharge the Manager with the amount of the credit which he has already given, and to point out to him that the giving of credit is a breach of the law." That was in 1898. On the 20th May, 1904, the amount owing to the revenue having gone on increasing without anything having been written off or voted, I then pointed out that these credits were without authority of law, adding, " that the Minister will no doubt take immediate steps to stop these unlawful credits, and cause such proceedings to be taken as may be necessary to recover the amounts owing." On the 29th October, 1904, no reply having been received, the minute of that date was written. In that minute I say, " As, from the correspondence, it would appear to be with the concurrence of the Government that the Manager has been allowing the credit, the Government may consider the question of placing on the supplementary estimates a sum sufficient to make good to the revenue so much of the amount owing for water as may be found irrecoverable. And the matter being that money payable to the revenue is outstanding in consequence of failure to observe the requirements of law, the Controller and Auditor-General proposes to report such matter to Parliament." The papers from Nos. 12 to 13, inclusive, were enclosures with that memorandum, in the first one of which the Manager of the water-race, Mr. Alexander Aitken, states: "I am endeavouring to carry on the water-races here in a manner which I consider is in the best interests of the Mines Department, and if I insist on payment of amounts due as water is supplied, and sue for balances on the debit side, sales of water would almost cease, as the claims now being worked are very poor." One of the enclosures to my letter to the Minister of the 29th October, 1904, was No. 13. It was addressed to Mr. Alexander Aitken, sending him the surcharge itself. Then, on the 15th July, ! ' having- received ho reply from the Minister, I pointed out to him that the amount owing to the revenue for water supplied on credit was iJ2,127 16s. 4d. In answer to that letter the Minister informed the Audit Office that it was proposed to sue where there was any reasonable prospect of recovery, and to ask Parliament for a vote for the residue of the arrears. He accordingly disallowed the surcharge on the Manager of the water-races. What the Audit Office required was that no credit should be given without the authority of law, and that if credit was given the amount should be voted off—that is to say, there should be authority taken in the Appropriation Act to write oft the amount as irrecoverable. For instance, on the 7th June, 1900, I wrote to the Minister of Mines as follows: " There were, on the 31st March, 1900, old accounts unpaid amounting to £355 4s. 10d. for water supplied by the Mount Ida Water-race long ago, before it ceased to be supplied on credit. It appears to the Audit Office that there is little prospect of recovering the amount, and it is suggested that the Administration should inquire into the matter, and that if the result should be to confirm the opinion of the Audit Office, a vote should be taken to write off the amount, and in the Appropriation Act of 1900 the amount is authorised to be written off as unrecoverable." That seems to me to be the course which should have been taken year by year with the unrecoverable amounts for water supplied on credit from the Waimea-Kumara Waterrace. 2. Is that all ?—That is all. 3. Mr. Golvin.'] Do you take up the position that before a man gets water he must pay for it'?— That is the position as it at present stands. 4. Before he gets value for his money?— Yes. That is, whatever the Manager delivers he should first be paid for. 5. Do you not think it an impossible thing ? He is delivering the water every minute or every second, and until such time as so many heads of water are delivered he has no right to get paid ?— No ; it is just like the sale even of a postage-stamp, or anything else that brings revenue to the Government —you pay for it first.