H.—l9c

11

witnesses referred to had any " axe to grind " ; none of them had even a grievance ; and we felt that they were constrained simply by a sense of public duty. When the time came for us to personally visit the branches criticized we saw that there was in most cases more than a reasonable foundation for the adverse statements made, and we were confirmed in the opinion, which we gradually arrived at during the course of our inquiry, that these branches should be gathered together under a strong and experienced administrative head. We thought, however, that we would feel strengthened by having the opinion of Public Service officers of recognized standing and oiganizing-powers ; and we had the good fortune to obtain the consent of the Secretary to the Recruiting Board (Mr. J. I). Gray), the Government Statistician (Mr. Malcolm Eraser), and the Secretary to the Public Service Commissioner (Mr. P. D. Verschaffelt) to act as a committee to glance in a general way over the principal work of these branches and report to us. The result of their inquiry, which will be found as an appendix to this report, speaks for itself, and confirmed us in the feeling that had arisen in our mind. We desire to express our grateful thanks to these gentlemen, who very cheerfully carjied'out in their spare hours a task in no way agreeable. We hope and anticipate that, as a result of the organization, and co-ordination necessary in these various Record Branches, the staffs will be so reduced as to enable the whole of them to be housed under one roof. That would overcome a lot of the loss of time, unnecessary correspondence, and delay now obvious. With regard to the Recruiting Branch, it is clear to us that, instead of erecting this large branch, it would have been better to have developed the organization of the Groups and Areas, retaining only sufficient nucleus in Wellington to promptly supply information to the Minister when required. Some Groups and Areas are said to be inefficient to carry out this work, mainly because the principal officers connected with them have gone off to the war and temporary men have taken their places. It is admitted that this condition is improving ; and we consider it would be wise to take in hand the development and. instruction of Groups and Areas, so that as much as possible may be performed by them, because it must be remembered that, while the Recruiting Branch is purely a temporary branch, Groups and Areas will continue, and the present is an opportune time for affording them varied experience. The witness who early in the inquiry drew our attention to deficiencies in these Record Branches was the General Staff Officer of the Wellington Military District. Whatever the critical may aver as to his judgment in the matter, his courage was beyond praise, and we feel bound to say that we found by far the larger portion of his criticism, unpalatable as it must have been to the branches concerned, to have been supported by fact. He seems to have a great deal of energy, for which his present duties do not supply sufficient outlet. We understand that he is at the head of the list of officers eligible for a, District Command when it becomes vacant ; and it will be interesting to see what will be the result when his organizing sense has full play. 2. The Methods of Control or Supervision of Expenditure' The audit of Defence expenditure is governed by the Public Revenues Act, 1910, and regulations made thereunder. All costs of the Expeditionary Force are paid out of War F]xpenses Account; and the Financial Instructions and Allowance Regulations, issued under the Defence Act, 1912, fix the rate of pay and allowances for all others. There are, therefore, two classes of Defence expenditure :— (1.) Moneys voted annually by Parliament for the upkeep of the Defence Department and Territorial Force : (2.) Moneys raised by loan for war expenditure, which are paid into a separate account called the War Expenses Account, and all such moneys are, without further appropriation, expended for such purpose as the Minister of Defence thinks fit in connection with the war. Both the pre-audit and post-audit systems are in operation in dealing with expenditure ; and, so far as possible, the audit is concurrent with the work.